Friday, April 18, 2014
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25

The Lost Generations

NEW YORK – A country’s economic success depends on the education, skills, and health of its population. When its young people are healthy and well educated, they can find gainful employment, achieve dignity, and succeed in adjusting to the fluctuations of the global labor market. Businesses invest more, knowing that their workers will be productive. Yet many societies around the world do not meet the challenge of ensuring basic health and a decent education for each generation of children.

Why is the challenge of education unmet in so many countries? Some are simply too poor to provide decent schools. Parents themselves may lack adequate education, leaving them unable to help their own children beyond the first year or two of school, so that illiteracy and innumeracy are transmitted from one generation to the next. The situation is most difficult in large families (say, six or seven children), because parents invest little in the health, nutrition, and education of each child.

Yet rich countries also fail. The United States, for example, cruelly allows its poorest children to suffer. Poor people live in poor neighborhoods with poor schools. Parents are often unemployed, ill, divorced, or even incarcerated. Children become trapped in a persistent generational cycle of poverty, despite the society’s general affluence. Too often, children growing up in poverty end up as poor adults.

A remarkable new documentary film, The House I Live In, shows that America’s story is even sadder and crueler than that, owing to disastrous policies. Starting around 40 years ago, America’s politicians declared a “war on drugs,” ostensibly to fight the use of addictive drugs like cocaine. As the film clearly shows, however, the war on drugs became a war on the poor, especially on poor minority groups.

In fact, the war on drugs led to mass incarceration of poor, minority young men. The US now imprisons around 2.3 million people at any time, a substantial number of whom are poor people who are arrested for selling drugs to support their own addiction. As a result, the US has ended up with the world’s highest incarceration rate – a shocking 743 people per 100,000!

The film depicts a nightmarish world in which poverty in one generation is passed on to the next, with the cruel, costly, and inefficient “war on drugs” facilitating the process. Poor people, often African-Americans, cannot find jobs or have returned from military service without skills or employment contacts. They fall into poverty and turn to drugs.

Instead of receiving social and medical assistance, they are arrested and turned into felons. From that point on, they are in and out of the prison system, and have little chance of ever getting a legal job that enables them to escape poverty. Their children grow up without a parent at home – and without hope and support. The children of drug users often become drug users themselves; they, too, frequently end up in jail or suffer violence or early death.

What is crazy about this is that the US has missed the obvious point – and has missed it for 40 years. To break the cycle of poverty, a country needs to invest in its children’s future, not in the imprisonment of 2.3 million people a year, many for non-violent crimes that are symptoms of poverty.

Many politicians are eager accomplices to this lunacy. They play to the fears of the middle class, especially middle-class fear of minority groups, to perpetuate this misdirection of social efforts and government spending.

The general point is this: Governments have a unique role to play to ensure that all young members of a generation – poor children as well as rich ones – have a chance. A poor kid is unlikely to break free of his or her parents’ poverty without strong and effective government programs that support high-quality education, health care, and decent nutrition.

This is the genius of “social democracy,” the philosophy pioneered in Scandinavia, but also deployed in many developing countries, such as Costa Rica. The idea is simple and powerful: All people deserve a chance, and society needs to help everybody to secure that chance. Most important, families need help to raise healthy, well-nourished, and educated children. Social investments are large, financed by high taxes, which rich people actually pay, rather than evade.

This is the basic method to break the intergenerational transmission of poverty. A poor child in Sweden has benefits from the start. The child’s parents have guaranteed maternity/paternity leave to help them nurture the infant. The government then provides high-quality day care, enabling the mother – knowing that the child is in a safe environment – to return to work. The government ensures that all children have a place in preschool, so that they are ready for formal schooling by the age of six. And health care is universal, so the child can grow up healthy.

A comparison of the US and Sweden is therefore revealing. Using comparable data and definitions provided by the Organization for Economic Cooperation and Development, the US has a poverty rate of 17.3%, roughly twice Sweden’s poverty rate of 8.4%. And America’s incarceration rate is 10 times Sweden’s rate of 70 people per 100,000. The US is richer on average than Sweden, but the income gap between America’s richest and poorest is vastly wider than it is in Sweden, and the US treats its poor punitively, rather than supportively.

One of the shocking realities in recent years is that America now has almost the lowest degree of social mobility of the high-income countries. Children born poor are likely to remain poor; children born into affluence are likely to be affluent adults.

This inter-generational tracking amounts to a profound waste of human talents. America will pay the price in the long term unless it changes course. Investing in its children and young people provides the very highest return that any society can earn, in both economic and human terms.

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  1. CommentedFabio Souza

    I believe that there are some different things about US and Sweden, we must see the size of each country and its population. In US there were an influx of immigrants for long time from many countries (very few were refugees like in Sweden and nordics countries) and they now have their kids and grandchild.
    Say that healthy and educated people can find easier jobs and companies can invest more it's NOT true today in US and Europe (we can see at unemployment rate among youngters in Portugal, Greece, Spain and Italy).
    Last year US production increased to the same level it was before the 2007-2008 financial crisis, but with around 2 million of lost positions in the industries. It means that US production improved with less man power, so there is these people going to different jobs (precarization, less growth, less income per person etc).

  2. CommentedKariuki Kiragu

    This is so clear that one may be forgiven for seeing it as deliberate marginalization.
    More so in the background of phenomena such as crack and Iran-Contra affair

  3. CommentedRoman Bleifer

    In times of serious crises begin discussions about the lost generation. The current crisis is no exception. The world began to shift to a new mode of production. This process can not be painless ( crisismir.com/analiticheskie-materialy/ekonomika/13-mirovoj-ekonomicheskij-krizis-prichiny-i-posledstviya-quo-vadis.html ). The share of manual labor and unskilled labor invariably falls. Knowledge workers are the dominant factor. Unfortunately the education system does not have time to change to the extent that it requires a modern production.

  4. CommentedZvonimir Miletić

    Also, problem with rich countries is because I think they want to retain current situation and the gap between rich and poor countries. They don't want to end poverty , mainly in Africa, even it is surely possible with genuine effort. They don't do that because they will lose they affluence in that way and ,maybe, they will lose advantageous position that is foundation of their power and affluence.
    In poor countries the biggest issues are corruption and lack of education, especially in young people. Most of them cherish wrong values and see no point in education and think they hard work will be in vain. Cause of that is high corruption in all institutions that is criteria for employment and success. Few young people see chance in fight with it and well-educated among them regularly leave the country to seek for better opportunities (brain drain).

  5. CommentedPaul Hanly

    Some focus on the lost generations in the PIIGS as they battle recession and unemployment, particularly youth unemployment would be the logical follow on.

  6. CommentedJerry Guberman

    I think media make it worse for us... Idolizing success and pop, sport, fashion models/movie stars... Making them big and purposely not revealing process of star-making. That's 99% of our stars were rich before their official public success. They've been managed and breed for success. That makes poor people stars look pathetic like rednecko back yard dirt fighters pretending UFC. Excluding self made stars or role models for all minorities plus low education, plus dis-functional families, plus medical psychological problems creating not only gap, but perfect future for civil war.

  7. CommentedLeo Arouet

    Un excelente artículo sobre el déficit del gasto público que en muchas naciones son comunes. Las minorías étnicas son las más olvidadas del un país; esto mismo sucede en mi país (Perú), que posee una diversidad étnica y que cada vez más vulnerables y son relegados.

  8. CommentedCarol Maczinsky

    You can't have socialism without a people. A population won't do, you need solidarity, a common fate and history and ethnic homogenity. The USA show that it is impossible to get social cohesion when there is no cohesion but unlimited competition and selfishness, adoration of power rather than allegeance to the common good.

  9. CommentedOscar Andres Esquivel

    Mr. Sachs forgot to mention that Costa Rica, due to its “social democracy philosophy” filled with opportunities, we now have 21% poverty rate, 5% of the population are extremely poor, 10% unemployment rate, homicide rates double those in the U.S. Most of our delinquents instead of being incarcerated are walking very happily on the streets, awaiting their next victim, or as he prefers to call it; a new opportunity.

  10. CommentedKodjo Adadevoh

    Professor Sachs couldn’t have said this any better. Any great nation can only remain great when all of its citizens are included in the union. Inclusion isn’t attained through lip service, but rather through carefully designed policies that aim at the education system, housing, healthcare, employment and safety of all citizens.

    Fundamentally or dialectically, it should be obvious to any clearly thinking person that a country full of well-educated and productive citizens is much better than a fractured and divided country. We are all our brother’s keeper i.e. united we stand and divided we fall. Keep up the good work Professor Sachs!

  11. CommentedAlireza Rezghi

    Professor Sachs point of view shows the lack of vision in politicians, the sample is US but it's the same in many other countries. The Scandinavian countries are of course an exception in many aspects of their commitment to humanity, ethics and the future generations.

  12. CommentedJorge Simao

    There are some good points and interesting comments for this article. But the article is also sound, backed by data, and very reasonable. The problem is that it has no power what so ever to change the status quo, nor it presents concrete measures to change it.
    Asking for more state responsibility this days usually means increases taxes -- which most often hit harder the poor than the rich, and get a smaller share of the common resource pool.
    Also, has point out in other comments, educating people for the sake of finding employment (rather to say, be creative, knowledgeable, and intrapenuers) also suggests the ideology that markets are the answer -- not to say, as suggesting that people are meant to work for other (richer) people.
    This is clearly not true, as this day even very well educated people have hard time to find a job that is well payed -- that could be enough to create more educated children.
    Poetic and romantic perspective on human condition -- that "refuse" to see the competitive and exploratory nature of all human societies in all times -- are as dangerous has something else. They only work to give a false sense of security to people, and appeasement so that they can not clearly see the nature of the status quo.
    Any way, it is a well written article, and deserves respect for that.

  13. CommentedEpicuro Samos

    "When its young people are healthy and well educated, they can find gainful employment, achieve dignity". So young people exist to serve people with money (market nobility: the grocers)? The dignity is make something that please money people (work)? To money people (grocers) give his authorization (money is a grocer authorization) to survive to the market they made over all? This author has the typical medieval thinking: plebs exist to serve the market nobility. Why should young people obey to money people? Money is made from thin air, and people should pay for him. This is not economy, is market, and market is the grocers regime. The grocers regime is a dictatorial regime where plebs should pay the money that market nobility made over thin air. Why should people find a employment? to serve this society? the society where plebs should pay to exist to the nobility? Serve the grocers society that abuse of every one that has no money (the grocers authorization). Why should people obey to the grocers regime (market)? Market never was economy. Economy is not obey to people with money. Money never was a economical qualification. Any idiot can have money because money is not a economical qualification, is only the grocers authorization, made by grocers, to impose the grocers power over the others. Why these ridiculous authors keep doing the grocers game, to put people obeying to grocers? Until when should we support the abuses of grocers? By economy rules no body can spend excessively, by grocers rules (market rules) any fat grocer (money person) can spend what ever they want. Market don't fallow any economy rule, grocers pride is showing that they don't follow economical rules (they like show that they spend excessively, with all uneconomical toys they like to show). So if market is not economy why should we support market, and obey to grocers rules? Why people should stay all live obeying to grocers in an employment? Until when?

  14. Commentedlynda scott

    everytime i read a piece by Mr. Sachs, i'm reminded of the encounter with Hugh Hendry. just seems odd to me that an apologist for banks that loot other countries treasuries would really care about real people, unless, of course, there's a way to extract more wealth out of them.

  15. CommentedZsolt Hermann

    The main problem is the purpose of education.
    The education system is serving the actual prevalent socio/economic model.
    And it basically has not changed since the industrial revolution, we are still producing good workers keeping the production machine ticking, while the more general education through society is aimed solely at one thing: consumption.
    Everything that enters our sphere from earliest childhood is pushing us towards consuming everything the production machine is churning out.
    Our whole existence is around these two pillars, working to produce and earn in order to consume.
    Even traditional values like family, friendship, love or religion have been sacrificed for these "more important values" of production and consumption, everything has become commercialized, we talk, walk even make love as it is programmed in us from outside.
    If it was a problem before it has became an even greater problem now when the prevalent production/consumption machine started collapsing in the form of the global crisis.
    The myopic education has become completely obsolete now as growing number of young people, up to 50% in certain countries according to some statistics, find no future prospects, and even if they received a degree they have no use for it. Immigration can help to a certain extent, especially if you mother language gives you an option to relocate and your degree is accepted, but even this avenue is swiftly closing as the crisis continues to bite deeper.
    As analyzed on other pages the constant quantitative growth system has no hope of revival since it is unnatural and unsustainable for multiple reasons. The whole society with all its institutions is facing a total rethink, a total adjustment.
    The main problem is that the structure humanity exists in today, the main values, drivers, purposes simply do not much the external conditions, the global, interdependent human network within the closed and finite natural living system.
    Even if people today start to grasp this they still try to introduce partial solutions, looking at the individual details but not the whole picture.
    Financial institutions cannot be modified without changing the whole economic model, the economic model cannot be adjusted without adjusting the whole society, its values, abandoning the general consumerism attitude, and all this depends on a completely new education program not only for children and youth but for the whole global society about the system we evolved into, about the problems with the present structure, why it lead to the global crisis, and why we need something completely new to build a more predictable and sustainable future.
    We already have the necessary scientific data around us, we just need to put it together into a comprehensive picture and we need the people who are capable of seenig, understanding the whole interconnected global picture to teach it.

    1. Commentedradek tanski

      paleo-anthropologists have a cool term which is relevant I think. "diversification and decimation"

      Just part of nature this crisis thing.

  16. CommentedSilvio Valdissera

    Not necessarily true. In Brazil, poor people live in poor neighborhoods with poor schools and many grow up to be richer than they where born with little to none help from the government, but mostly through will and private practice. If the gov't plays a significant role here is to increase security of honest citizens by arresting criminals and installing pacifying units in traffic-dominated shantytowns.

  17. CommentedMark Pitts

    Where I live (New Jersey), we spend $15,000 per student per year. And we spend more per student in the inner cities than in the suburbs. If money were the issue, the problem would already be solved.
    The problem is ossified self-serving unions running the educational system. The educational system should be run by parents and citizens, not by those who stand to gain by gaming the system.

  18. CommentedMarten Klein

    The ability to adjust to the labor market is a phrase that perfectly represents your arrogance. We never asked for a global labour market or desired to compete with Chinese slave workers. We were not compensated for the alleged benefits of the globalisation process to the capital owners.

  19. CommentedJohn Doe

    Every time I read one of these pieces by Mr. Sachs I have the same two or three questions.

    1) Why should I worry about a community of people who on the whole choose on their own to be drug users?

    2) Does he have children or grand children? Is he so confident that in his drug on every street corner world he can keep them away from meth and other drugs that will totally screw them up for the rest of their life from one use. What about people not so fortunate as him? Say a single mom who has a gap in child care from 3 to 6 and all during the summer, when she is working. How do we best help her try to keep her kids away from drugs?

    3) If we let all these thugs have drugs on every street corner will he promise not to write stories about how terrible it is that we let pimps and others turn 13 year old girls in the ghetto into whores by giving them meth or similar super addictive drugs?

    Mr. Sachs is an economist. He needs to understand that people react to incentives. Poverty in America and all its problems will start to go away when we put enough incentives in place that poor people decide for themselves to straight up their act and take control of their own lives and communities. Compare the wealth of of today's urban poor with the wealth of the people who were still moving to Northern Minnesota and building the Twin Cities less than 100 years ago. Why were far poorer people 100 years ago so much more law abiding and self sufficient than today's inner city dopers?

    1. CommentedAndrew N Mason

      A couple main comments on this:

      1) Mr Sachs has never in this article advocated for making drugs more available; therefore I don’t see how you come up with your second or third remark. In fact, Mr. Sachs is proposing a possible solution to actually break the cycle and get people out of poverty and drugs.

      Suggesting that kids will "do drugs when their mom is out working" completely misses the point that’s being made. Mr. Sachs suggests investing in education and avoiding the situation in which we have single parent households. This solution addresses precisely this issue! The facts are stated: "poor households are likely to remain poor" and incarcerating one parent does not help the problem.

      2) You speak of poor people remaining poor as if the proper incentives were not already in place. Do you think being hungry is not enough of an incentive? Do poor people not want a better life? Wouldn’t they rather keep away from drugs if they knew the alternatives and the consequences?

      Incentives are in place; and people make choices given the INFORMATION they have at hand and the space they have to move. Yes, people "choose" to do drugs, but no man is an island and those "choices" are dictated by the actions (or inaction) of society at large. To say that they choose for themselves and therefore we should not care is condescending and out of touch with the reality of the problem

  20. CommentedProcyon Mukherjee

    In the economic discourse of our times I have seen normative references to employment as a fundamental value driver for the economic progress, some have referred to Okun’s Law, some to Philips Curve, some have taken refuge in the empirical relationship that if growth is to be sustained those in work cannot feed those who are not in work beyond a threshold, which extrapolated over the entire society have sometimes driven many to the debate that the working population must earn more to take care of the liabilities that society carries for the previous generation, who cannot rely on the paltry pension given the inflation scenario; I have rarely seen the discussion moving to the quality of employment, or to the value of employment to the society seen from the standpoint that such an activity in the least should bring in prosperity to the very individual family who engages in such an activity. This small write-up of mine captures some of the extreme situations that poverty leads to in India:

    "The winding road outside our premises will take us to small heaps of earth, concrete, mix of materials and garbage left to the scavengers, who come from a remote village in Chattisgarh and the local tribe of Kharias join them. They are all women and children, who have been ‘gainfully’ employed to pick up the smallest pieces of aluminum dust, coalescence of solidified waste from the floors and concrete, which could have some material value still left in it and for each small shining element of discovery from these heaps the competition mounts, as gains and losses are mutually exclusive. Their clothes are black with soot, their faces resemble a miner with long hours of agony in darkness and their pallor mounts with the scorching rays of the sun beaming on them. After a hard day’s work they get back to get their only piece of meal, which is offered in a polythene packet, boiled rice, that is cold and there is water in it, so that they do not have to look for any other. I have never seen them eating anything else other than only rice.
    The economics of their labor pays a lasting tribute to the preponderance of poverty as I estimate that their daily collection of one kilo of aluminum (Rs.120/kg) scavenged from the dust and garbage would be a profitable venture given that their cost to the employer is the amount of government sponsored rice they eat which is available at Rs.2 / kg.
    So if even 15 of them could get one kilo of Aluminum it is break even!"

    With such extreme conditions, where do we go with education and the rest?

    Procyon Mukherjee



    1. Commentedradek tanski

      Hi Procyon.

      I often think that given Indias long history, and evolved social system of castes under conditions of scarcity, where human family strains adapt and evolve to fill every single energy/value niche available - no matter how miserable, don't you think that the caste system, and extreme poverty of India could be likened to a future vision of social evolution under similar circumstances of over population and resource scarcity?

      Do you think that the caste system is the future of the world?

    2. Commentedradek tanski

      I'm curious about how old the caste system is? Do you know?

      Considering the long history of India, and evolution under scarcity of its gene strains, don't you think its possible that the caste system, and extreme poverty of India may very well be an advanced version of the rest of the world?

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