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it still leaves a lot of areas open for linguists to argue about. And the study did not build an exhaustive tree of any of the language families, in part because we probably don't have enough information to classify all of them at this point.

Still, it's hard to imagine any further details could overturn the gist of things, given how badly features failed to correlate across language families. And the work might be well received in some communities, since it provides an invitation to ask a fascinating question: given that there aren't obvious word order patterns across languages, how does the human brain do so well at learning the rules that are a peculiarity to any one of them?

Dr Altuna not only includes the lack of involvement of teaching staff amongst the limitations for incorporating ICT, but also that of the involvement of the families. It was explained that families showed interest in the use of Internet and ICTs as educational tools for their children, but that these, too, excessively delegate to the schools. The researcher stressed that the families also need guidance, as they are concerned about the use by their children of Internet but do not know the best way to go about the problem.

Educational psychologist Dr Jon Altuna has carried out a thorough study of the phenomenon of the school 2.0. Concretely, he has looked into the use and level of incorporation of Internet and of Information and Communication Technologies (ICT) into the third cycle of Primary Education, observing at the same time the attitudes of the teaching staff, and of the students and the families of the children in this regard. His PhD, defended at the University of the Basque Country (UPV/EHU), is entitled, Incorporation of Internet into the teaching of the subject Knowledge of the Environment during the third cycle of Primary Education: possibilities and analysis of the situation of a school. Dr Altuna’s research is based on a study of cases undertaken over eight years at a school where new activities involving ICT had been introduced into the curricular subject of Knowledge of the Environment, taught in the fifth and sixth year of Primary Education. The researcher gathered data from 837 students, 134 teachers and 190 families of this school. This study was completed with the experiences of ICT teachers from 21 schools.

His answer is that both utilitarianism and deontology inherited the ideas of right, wrong and duty from Christianity, but endeavored to do without Christianity’s own answers to those questions: the law is given by God and the duty is toward Him. Taylor says that Mill, Kant and the like simply absorbed the Christian concept of morality while rejecting its logical foundation (such as it was). As a result, utilitarians and deontologists alike keep talking about the right thing to do, or the good as if those concepts still make sense once we move to a secular worldview. Utilitarians substituted pain and pleasure for wrong and right respectively, and Kant thought that pure reason can arrive at moral universals. But of course neither utilitarians nor deontologist ever give us a reason why it would be irrational to simply decline to pursue actions that increase global pleasure and diminish global pain, or why it would be irrational for someone not to find the categorical imperative particularly compelling.

The situation — again according to Taylor — is dramatically different for virtue ethics. Yes, there too we find concepts like right and wrong and duty. But, for the ancient Greeks they had completely different meanings, which made perfect sense then and now, if we are not mislead by the use of those words in a different context. For the Greeks, an action was right if it was approved by one’s society, wrong if it wasn’t, and duty was to one’s polis. And they understood perfectly well that what was right (or wrong) in Athens may or may not be right (or wrong) in Sparta. And that an Athenian had a duty to Athens, but not to Sparta, and vice versa for a Spartan.

But wait a minute. Does that mean that Taylor is saying that virtue ethics was founded on moral relativism? That would be an extraordinary claim indeed, and he does not, in fact, make it. His point is a bit more subtle. He suggests that for the ancient Greeks ethics was not (principally) about right, wrong and duty. It was about happiness, understood in the broad sense of eudaimonia, the good or fulfilling life. Aristotle in particular wrote in his Ethics about both aspects: the practical ethics of one’s duty to one’s polis, and the universal (for human beings) concept of ethics as the pursuit of the good life. And make no mistake about it: for Aristotle the first aspect was relatively trivial and understood by everyone, it was the second one that represented the real challenge for the philosopher.

For instance, the Ethics is famous for Aristotle’s list of the virtues (see Table), and his idea that the right thing to do is to steer a middle course between extreme behaviors. But this part of his work, according to Taylor, refers only to the practical ways of being a good Athenian, not to the universal pursuit of eudaimonia. Vice of Deficiency Virtuous Mean Vice of Excess Cowardice Courage Rashness Insensibility Temperance Intemperance Illiberality Liberality Prodigality Pettiness Munificence Vulgarity Humble-mindedness High-mindedness Vaingloriness Want of Ambition Right Ambition Over-ambition Spiritlessness Good Temper Irascibility Surliness Friendly Civility Obsequiousness Ironical Depreciation Sincerity Boastfulness Boorishness Wittiness Buffoonery</t

How, then, is one to embark on the more difficult task of figuring out how to live a good life? For Aristotle eudaimonia meant the best kind of existence that a human being can achieve, which in turns means that we need to ask what it is that makes humans different from all other species, because it is the pursuit of excellence in that something that provides for a eudaimonic life.

Now, Plato - writing before Aristotle - ended up construing the good life somewhat narrowly and in a self-serving fashion. He reckoned that the thing that distinguishes humanity from the rest of the biological world is our ability to use reason, so that is what we should be pursuing as our highest goal in life. And of course nobody is better equipped than a philosopher for such an enterprise... Which reminds me of Bertrand Russell’s quip that “A process which led from the amoeba to man appeared to the philosophers to be obviously a progress, though whether the amoeba would agree with this opinion is not known.”

But Aristotle's conception of "reason" was significantly broader, and here is where Taylor’s own update of virtue ethics begins to shine, particularly in Chapter 16 of the book, aptly entitled “Happiness.” Taylor argues that the proper way to understand virtue ethics is as the quest for the use of intelligence in the broadest possible sense, in the sense of creativity applied to all walks of life. He says: “Creative intelligence is exhibited by a dancer, by athletes, by a chess player, and indeed in virtually any activity guided by intelligence [including — but certainly not limited to — philosophy].” He continues: “The exercise of skill in a profession, or in business, or even in such things as gardening and farming, or the rearing of a beautiful family, all such things are displays of creative intelligence.”

what we have now is a sharp distinction between utilitarianism and deontology on the one hand and virtue ethics on the other, where the first two are (mistakenly, in Taylor’s assessment) concerned with the impossible question of what is right or wrong, and what our duties are — questions inherited from religion but that in fact make no sense outside of a religious framework. Virtue ethics, instead, focuses on the two things that really matter and to which we can find answers: the practical pursuit of a life within our polis, and the lifelong quest of eudaimonia understood as the best exercise of our creative faculties

&gt; So if one's profession is that of assassin or torturer would being the best that you can be still be your duty and eudaimonic? And what about those poor blighters who end up with an ugly family? &lt;Aristotle's philosophy is ver much concerned with virtue, and being an assassin or a torturer is not a virtue, so the concept of a eudaimonic life for those characters is oxymoronic. As for ending up in a "ugly" family, Aristotle did write that eudaimonia is in part the result of luck, because it is affected by circumstances.

&gt; So to the title question of this post: "Is modern moral philosophy still in thrall to religion?" one should say: Yes, for some residual forms of philosophy and for some philosophers &lt;That misses Taylor's contention - which I find intriguing, though I have to give it more thought - that *all* modern moral philosophy, except virtue ethics, is in thrall to religion, without realizing it.

“The exercise of skill in a profession, or in business, or even in such things as gardening and farming, or the rearing of a beautiful family, all such things are displays of creative intelligence.”So if one's profession is that of assassin or torturer would being the best that you can be still be your duty and eudaimonic? And what about those poor blighters who end up with an ugly family?

Doctors and other health-care workers can provide patients and families with probabilities for improvement or recovery, but statistics are hardly what is wanted. Even after profound injury or the diagnosis of an illness that statistically is nearly certain to be fatal, what people hear is the word nearly. How do we not allow the death of someone who might be saved? How do we avoid the equally intolerable salvation of a clinically dead person?

Injecting political agendas into these end-of-life complexities only confuses the problem without providing a solution.

The questions are how, when, and on whose terms we depart. It is curious that people might be convinced to avoid confronting death while they are healthy, and that society tolerates ad hominem arguments that obstruct rational debate over an authentic problem of ethics in an uncertain world.

Any seriously ill older person who winds up in a modern CCU immediately yields his autonomy. Even if the doctors, nurses, and staff caring for him are intelligent, properly educated, humanistically motivated, and correct in the diagnosis, they are manipulated not only by the tyranny of technology but also by the rules established in their hospital. In addition, regulations of local and state licensing agencies and the federal government dictate the parameters of what the hospital workers do and how they do it, and every action taken is heavily influenced by legal experts committed to their client’s best interest—values frequently different from the patient’s. Once an acutely ill patient finds himself in this situation, everything possible will be done to save him; he is in no position to offer an opinion.

Eventually, after hours or days (depending on the illness and who is involved in the care), the wisdom of continuing treatment may come into question. But by then the patient will likely have been intubated and placed on a ventilator, a feeding tube may have been inserted, a catheter placed in the bladder, IVs started in peripheral veins or threaded through a major blood vessel near the heart, and monitors attached to record an EKG, arterial blood pressure, temperature, respirations, oxygen saturation, even pressure inside the skull. Sequential pressure devices will have been wrapped around the legs. All the digital marvels have alarms, so if one isn’t working properly, an annoying beep, like the sound of a backing truck, will fill the patient’s room. Vigilant nurses will add drugs by the dozens to the IV or push them into ports. Families will hover uncertainly. Meanwhile, tens and perhaps hundreds of thousands of dollars will have been transferred from one large corporation—an insurer of some kind—to another large corporation—a health care delivery system of some kind.

While the expense of the drugs, manpower, and technology required to make a diagnosis and deliver therapy does sop up resources and thereby deny treatment that might be more fruitful for others, including the 46.3 million Americans who, according to the Census Bureau, have no health insurance, that isn’t the real dilemma of the critical care unit.

the problem isn’t getting into or out of a CCU; the predicament is in knowing who should be there in the first place.

Before we become ill, we tend to assume that everything can be treated and treated successfully. The prelate in Willa Cather’s Death Comes for the Archbishop was wiser. Approaching the end, he said to a younger priest, “I shall not die of a cold, my son. I shall die of having lived.”

best way to avoid unwanted admission to a critical care unit at or near the end of life is to write an advance directive (a living will or durable power of attorney for health care) when healthy.

, not many people do this and, more regrettably, often the document is not included in the patient’s chart or it goes unnoticed.

Since we are sure to die of having lived, we should prepare for death before the last minute. Entire corporations are dedicated to teaching people how to retire well. All of their written materials, Web sites, and seminars begin with the same advice: start planning early. Shouldn’t we at least occasionally think about how we want to leave our lives?

Flannery O’Connor, who died young of systemic lupus, wrote, “Sickness before death is a very appropriate thing and I think those who don’t have it miss one of God’s mercies.”

Because we understand the metaphor of conflict so well, we are easily sold on the idea that we must resolutely fight against our afflictions (although there was once an article in The Onion titled “Man Loses Cowardly Battle With Cancer”). And there is a place to contest an abnormal metabolism, a mutation, a trauma, or an infection. But there is also a place to surrender. When the organs have failed, when the mind has dissolved, when the body that has faithfully housed us for our lifetime has abandoned us, what’s wrong with giving up?

all these figures need to be taken with a good deal of salt. We need these kinds of estimates — don’t get me wrong — but we shouldn’t pretend that they are more precise than they are.

why did family planning lose steam in the last couple of decades? I think one factor was the coercion that discredited programs in India and China alike. Another was probably that enthusiasts oversold how easy it is to spread family planning. It’s not just a matter of handing out the Pill: it’s a question of comprehensive counselling, multiple choices, aftercare, girls’ education, and a million other things. Contraceptive usage rates can increase even in conservative societies (Iran has actually demonstrated that quite well), but it’s not just a matter of airlifting in pills, condoms and IUD’s.

amily planning got caught up in the culture wars. Originally, many Republicans were big backers of family planning programs, and both Richard Nixon and George H.W. Bush supported such efforts. Bush was nicknamed “Rubbers” because of his enthusiasm. But then in the 1980’s, UNFPA, the UN Population agency, was targeted by conservatives because of China’s abortion policies. This was deeply unfair, for UNFPA was trying to get China to stop the coercion. In addition, UNFPA had nudged China to replace the standard Chinese steel ring IUD with a copper T that was far more effective. The result is 500,000 fewer abortions in China every year. Show me any anti-abortion group with that good a record in reducing abortions! But the upshot is that one Republican president after another defunded UNFPA. Indeed, in the last Bush administration, officials didn’t even want to use the term “reproductive health.”

we can rebuild a consensus behind voluntary family planning, including condoms as one element of a package to fight AIDS. The Vatican clearly won’t join, but many conservatives do recognize that the best way to reduce abortion numbers is to reduce unplanned pregnancies.

The Minister was quoted as saying: “My &nbsp;parents had six children.&nbsp; My first home as a young boy was a rental flat in Zion Road.&nbsp; We shared it as tenants with other families” Citing individuals who made it, may be of no “statistical” relevance, as what we need&nbsp;are the statistics as to the proportion of poorer kids to richer kids, who get&nbsp;scholarships, proportional to their representation in the population.

“More spent on primary and secondary/JC schools.&nbsp; This means having significantly more and better teachers, and having more programmes to meet children’s specific needs” What has spending more money, which what most countries do, got to do with&nbsp;the argument whether poorer kids are disadvantaged?

Straits Times journalist, Li XueYing put the crux of the debate in the right perspective: “Dr Ng had noted that ensuring social mobility “cannot mean equal outcomes, because students are inherently different”, But can it be that those from low-income families are consistently “inherently different” to such an extent?”

Relevant statistics Perhaps the most damning statistics that poorer kids are disadvantaged was the chart from the Ministry of Education (provided by the Straits Times), which showed that the percentage of Primary 1 pupils who lived in 1 to 3-room HDB flats and subsequently progressed to University and/or Polytechnic, has been declining since around 1986.

Professor Malamud and his collaborator, Cristian Pop-Eleches, an assistant professor of economics at Columbia University, did their field work in Romania in 2009, where the government invited low-income families to apply for vouchers worth 200 euros (then about $300) that could be used for buying a home computer. The program provided a control group: the families who applied but did not receive a voucher.

the professors report finding “strong evidence that children in households who won a voucher received significantly lower school grades in math, English and Romanian.” The principal positive effect on the students was improved computer skills.

few children whose families obtained computers said they used the machines for homework. What they were used for — daily — was playing games.

negative effect on test scores was not universal, but was largely confined to lower-income households, in which, the authors hypothesized, parental supervision might be spottier, giving students greater opportunity to use the computer for entertainment unrelated to homework and reducing the amount of time spent studying.

The North Carolina study suggests the disconcerting possibility that home computers and Internet access have such a negative effect only on some groups and end up widening achievement gaps between socioeconomic groups. The expansion of broadband service was associated with a pronounced drop in test scores for black students in both reading and math, but no effect on the math scores and little on the reading scores of other students.

it is not quite true, even among tenured professors in the humanities, that idea-mongers can entirely ignore "external" checks. Even academics want to be respectable, which means they can't entirely ignore the realities that others notice. There were lots of academics talking about the achievements of socialism in the 1970s (I can remember them) but very few talking that way after China and Russia repudiated these fantasies.

THE MOST DISTORTING ASPECT of Sowell's account is that, in focusing so much on the delusions of intellectuals, he leaves us more confused about what motivates the rest of society. In a characteristic passage, Sowell protests that "intellectuals...have sought to replace the groups into which people have sorted themselves with groupings created and imposed by the intelligentsia. Ties of family, religion, and patriotism, for example, have long been rated as suspect or detrimental by the intelligentsia, and new ties that intellectuals have created, such as class -- and more recently 'gender' -- have been projected as either more real or more important."

There's no disputing the claim that most "intellectuals" -- surely most professors in the humanities-are down on "patriotism" and "religion" and probably even "family." But how did people get to be patriotic and religious in the first place? In Sowell's account, they just "sorted themselves" -- as if by the invisible hand of the market.

Let's put aside all the violence and intimidation that went into building so many nations and so many faiths in the past. What is it, even today, that makes people revere this country (or some other); what makes people adhere to a particular faith or church? Don't inspiring words often move people? And those who arrange these words -- aren't they doing something similar to what Sowell says intellectuals do? Is it really true, when it comes to embracing national or religious loyalties, that "the proof of the pudding is in the eating"?

Even when it comes to commercial products, people don't always want to be guided by mundane considerations of reliable performance. People like glamour, prestige, associations between the product and things they otherwise admire. That's why companies spend so much on advertising. And that's part of the reason people are willing to pay more for brand names -- to enjoy the associations generated by advertising. Even advertising plays on assumptions about what is admirable and enticing-assumptions that may change from decade to decade, as background opinions change. How many products now flaunt themselves as "green" -- and how many did so 20 years ago?

If we closed down universities and stopped subsidizing intellectual publications, would people really judge every proposed policy by external results? Intellectuals tend to see what they expect to see, as Sowell's examples show -- but that's true of almost everyone. We have background notions about how the world works that help us make sense of what we experience. We might have distorted and confused notions, but we don't just perceive isolated facts. People can improve in their understanding, developing background understandings that are more defined or more reliable. That's part of what makes people interested in the ideas of intellectuals -- the hope of improving their own understanding.

On Sowell's account, we wouldn't need the contributions of a Friedrich Hayek -- or a Thomas Sowell -- if we didn't have so many intellectuals peddling so many wrong-headed ideas. But the wealthier the society, the more it liberates individuals to make different choices and the more it can afford to indulge even wasteful or foolish choices. I'd say that means not that we have less need of intellectuals, but more need of better ones. 

s it a proper mission of the State to demand that its citizens not think these thoughts? Is it the proper use of State power to deny or severely limit access to such ideas? It is all the more ridiculous when this film The Kids Are All Right has been nominated for four Oscars this year — for Best Picture, Best Original Screenplay, Best Actress and Best Supporting Actor. Much of the world is talking about the film and the issues it raises, and the Singapore government is determined to make up our minds about the matter and give Singaporeans as little opportunity as possible to see the film for ourselves. All the while, the propaganda goes on: We are a world-class global city.

The root problem, as I have argued many times before, is the failure of our government to respect the constitution, which mandates freedom of expression. Instead, their guiding policy is to allow majoritarian views to ride roughshod over other points of view. Worse yet, sometimes it is even arguable whether the view being defended has majority support, since in the matter of film classification, the government appoints its own nominees as the “public”&nbsp; consultation body. How do we know whether they represent the public?

As the press report above indicates, the government is waving, in this instance, the film classification guidelines because somewhere there is the clause that ‘Films that promote or normalise a homosexual lifestyle cannot be allowed’, words that the government itself penned. The exact words, not that I agree with them, in the current Guidelines are: Films should not promote or normalise a homosexual lifestyle. However, nonexploitative and non-explicit depictions of sexual activity between two persons of the same gender may be considered for R21. – http://www.mda.gov.sg/Documents/PDF/FilmClassificationGuidelines_Final2010.pdf, accessed 17 Feb 2011.

By the example of the treatment of this film, we now shine new light on the censorship impulse:&nbsp; gay sex can be suggested in non-explicit ways in film, but gay people living ordinary, respectable lives, doing non-sexual things, (e.g. raising a family and looking after children) cannot. It really boils down to reinforcing a policy that has been in effect for a long time, and which I have found extremely insulting: Gay people can be depicted as deviants that come to tragic ends, but any positive portrayal must be cut out.

You would also notice that nowhere in this episode is reference made to the 2009/2010 Censorship Review Committee’s Report. This Committee I have already lambasted as timid and unprincipled. Yet, its (gutless) words are these: It is also not surprising that the CRC received many submissions calling for a lighter hand in the classification of films and plays which contain homosexual themes.&nbsp; Homosexuality and other nontraditional lifestyles remain contentious issues for Singapore. While the MDA’s content regulators have to calibrate their decisions on ratings according to the majority, the CRC agrees that minority interests should also be considered and that a flexible and contextual approach should be taken for content depicting homosexuality. At the same time, clear and specific audience advisories should accompany the ratings so that the content issues will warn away those who think they may be offended by such content. – http://www.crc2009.sg/images/pdf/CRC%202010%20Report%20%28website%29.pdf, accessed 17 Feb 2011, para 24.

The government, in its Response to the CRC’s Report, said 63. Recommendation: A flexible and contextual approach for homosexual content should be adopted. Govt’s response: Agree. The current practice is already sufficiently flexible. Industry and artists must also be prepared to be more explicit in advising consumers on homosexual content. – http://www.crc2009.sg/images/pdf/Govt%27s%20Response%20to%20CRC%20Recommendations.pdf, accessed 17 Feb 2011.

And what do the civil servants do? They tighten up. They seize up like frigid vaginas and assholes at the very introduction of an Other. These civil servants create a new rule that limits the classified film to just one copy. They violate their own name and mission — “Film Classification” — by doing more than classification, branching into distribution limitation. To serve whose agenda?

The local papers have a long record of publicly endorsing the PAP-led government's position, according to Tan Tarn How, a research fellow at the Institute of Policy Studies (IPS) and himself a former journalist. In his research paper "Singapore's print media policy - a national success?" published last year he quoted Leslie Fong, a former editor of the Straits Times, saying that the press "should resist the temptation to arrogate itself the role of a watchdog, or permanent critic, of the government of the day".

With regularly briefed and supportive editors, there is no need for pre-publication censorship, according to Tan. When the editors are perceived to get things "wrong", the government frequently takes to task, either publicly or privately, the newspaper's editors or individual journalists, he said.

The country's main newspaper, the Straits Times, has consistently stood by its editorial decision-making. Editor Han Fook Kwang said last year: "Our circulation is 380,000 and we have a readership of 1.4 million - these are people who buy the paper every day. We're aware people say we're a government mouthpiece or that we are biased but the test is if our readers believe in the paper and continue to buy it."

Jeffrey Sachs, an advisor to the United Nations and director of Columbia University's Earth Institute, is one such expert. In books and countless speeches and television appearances, he has argued that poor countries are poor because they are hot, infertile, malaria-infested, and often landlocked; these factors, however, make it hard for them to be productive without an initial large investment to help them deal with such endemic problems. But they cannot pay for the investments precisely because they are poor -- they are in what economists call a "poverty trap." Until something is done about these problems, neither free markets nor democracy will do very much for them.

But then there are others, equally vocal, who believe that all of Sachs's answers are wrong. William Easterly, who battles Sachs from New York University at the other end of Manhattan, has become one of the most influential aid critics in his books, The Elusive Quest for Growth and The White Man's Burden. Dambisa Moyo, an economist who worked at Goldman Sachs and the World Bank, has joined her voice to Easterly's with her recent book, Dead Aid. Both argue that aid does more bad than good. It prevents people from searching for their own solutions, while corrupting and undermining local institutions and creating a self-perpetuating lobby of aid agencies.

The best bet for poor countries, they argue, is to rely on one simple idea: When markets are free and the incentives are right, people can find ways to solve their problems. They do not need handouts from foreigners or their own governments.

According to Easterly, there is no such thing as a poverty trap.

To find out whether there are in fact poverty traps, and, if so, where they are and how to help the poor get out of them, we need to better understand the concrete problems they face. Some aid programs help more than others, but which ones? Finding out required us to step out of the office and look more carefully at the world. In 2003, we founded what became the Abdul Latif Jameel Poverty Action Lab, or J-PAL. A key part of our mission is to research by using randomized control trials -- similar to experiments used in medicine to test the effectiveness of a drug -- to understand what works and what doesn't in the real-world fight against poverty. In practical terms, that meant we'd have to start understanding how the poor really live their lives.

This is why, for example, large numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors’ labor unions wasn’t so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated. As of November 2010, congressional Democrats are of a mixed mind as to whether the Bush tax cuts should expire for those whose annual income exceeds $250,000; that is in large part because their constituents bear no animus toward rich people, only toward undeservedly rich people.

envy is usually local. At least in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise. It’s directed at the husband of your wife’s sister, because the brand of beer he stocks costs $3 a case more than yours, and so on. That’s another reason why a lot of people aren’t so bothered by income or wealth inequality at the macro level. Most of us don’t compare ourselves to billionaires. Gore Vidal put it honestly: “Whenever a friend succeeds, a little something in me dies.”

Occasionally the cynic in me wonders why so many relatively well-off intellectuals lead the egalitarian charge against the privileges of the wealthy. One group has the status currency of money and the other has the status currency of intellect, so might they be competing for overall social regard? The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most. That class composes a very small group, however, so the upshot is that growing income inequality won’t necessarily have major political implications at the macro level.

All that said, income inequality does matter—for both politics and the economy.

The numbers are clear: Income inequality has been rising in the United States, especially at the very top. The data show a big difference between two quite separate issues, namely income growth at the very top of the distribution and greater inequality throughout the distribution. The first trend is much more pronounced than the second, although the two are often confused.

When it comes to the first trend, the share of pre-tax income earned by the richest 1 percent of earners has increased from about 8 percent in 1974 to more than 18 percent in 2007. Furthermore, the richest 0.01 percent (the 15,000 or so richest families) had a share of less than 1 percent in 1974 but more than 6 percent of national income in 2007. As noted, those figures are from pre-tax income, so don’t look to the George W. Bush tax cuts to explain the pattern. Furthermore, these gains have been sustained and have evolved over many years, rather than coming in one or two small bursts between 1974 and today.1

At the same time, wage growth for the median earner has slowed since 1973. But that slower wage growth has afflicted large numbers of Americans, and it is conceptually distinct from the higher relative share of top income earners. For instance, if you take the 1979–2005 period, the average incomes of the bottom fifth of households increased only 6 percent while the incomes of the middle quintile rose by 21 percent. That’s a widening of the spread of incomes, but it’s not so drastic compared to the explosive gains at the very top.

The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary. Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat. Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2

Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all. Robert J. Gordon, an economist from Northwestern University who is hardly known as a right-wing apologist, wrote in a recent paper that “there was no increase of inequality after 1993 in the bottom 99 percent of the population”, and that whatever overall change there was “can be entirely explained by the behavior of income in the top 1 percent.”4

And so we come again to the gains of the top earners, clearly the big story told by the data. It’s worth noting that over this same period of time, inequality of work hours increased too. The top earners worked a lot more and most other Americans worked somewhat less. That’s another reason why high earners don’t occasion more resentment: Many people understand how hard they have to work to get there. It also seems that most of the income gains of the top earners were related to performance pay—bonuses, in other words—and not wildly out-of-whack yearly salaries.5

It is also the case that any society with a lot of “threshold earners” is likely to experience growing income inequality. A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.

The funny thing is this: For years, many cultural critics in and of the United States have been telling us that Americans should behave more like threshold earners. We should be less harried, more interested in nurturing friendships, and more interested in the non-commercial sphere of life. That may well be good advice. Many studies suggest that above a certain level more money brings only marginal increments of happiness. What isn’t so widely advertised is that those same critics have basically been telling us, without realizing it, that we should be acting in such a manner as to increase measured income inequality. Not only is high inequality an inevitable concomitant of human diversity, but growing income inequality may be, too, if lots of us take the kind of advice that will make us happier.

Why is the top 1 percent doing so well?

Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&amp;P 500. The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount. The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.

Many of the other high earners are also connected to finance. After Wall Street, Kaplan and Rauh identify the legal sector as a contributor to the growing spread in earnings at the top. Yet many high-earning lawyers are doing financial deals, so a lot of the income generated through legal activity is rooted in finance. Other lawyers are defending corporations against lawsuits, filing lawsuits or helping corporations deal with complex regulations. The returns to these activities are an artifact of the growing complexity of the law and government growth rather than a tale of markets per se. Finance aside, there isn’t much of a story of market failure here, even if we don’t find the results aesthetically appealing.

When it comes to professional athletes and celebrities, there isn’t much of a mystery as to what has happened. Tiger Woods earns much more, even adjusting for inflation, than Arnold Palmer ever did. J.K. Rowling, the first billionaire author, earns much more than did Charles Dickens. These high incomes come, on balance, from the greater reach of modern communications and marketing. Kids all over the world read about Harry Potter. There is more purchasing power to spend on children’s books and, indeed, on culture and celebrities more generally. For high-earning celebrities, hardly anyone finds these earnings so morally objectionable as to suggest that they be politically actionable. Cultural critics can complain that good schoolteachers earn too little, and they may be right, but that does not make celebrities into political targets. They’re too popular. It’s also pretty clear that most of them work hard to earn their money, by persuading fans to buy or otherwise support their product. Most of these individuals do not come from elite or extremely privileged backgrounds, either. They worked their way to the top, and even if Rowling is not an author for the ages, her books tapped into the spirit of their time in a special way. We may or may not wish to tax the wealthy, including wealthy celebrities, at higher rates, but there is no need to “cure” the structural causes of higher celebrity incomes.

to be sure, the high incomes in finance should give us all pause.

The first factor driving high returns is sometimes called by practitioners “going short on volatility.” Sometimes it is called “negative skewness.” In plain English, this means that some investors opt for a strategy of betting against big, unexpected moves in market prices. Most of the time investors will do well by this strategy, since big, unexpected moves are outliers by definition. Traders will earn above-average returns in good times. In bad times they won’t suffer fully when catastrophic returns come in, as sooner or later is bound to happen, because the downside of these bets is partly socialized onto the Treasury, the Federal Reserve and, of course, the taxpayers and the unemployed.

if you bet against unlikely events, most of the time you will look smart and have the money to validate the appearance. Periodically, however, you will look very bad. Does that kind of pattern sound familiar? It happens in finance, too. Betting against a big decline in home prices is analogous to betting against the Wizards. Every now and then such a bet will blow up in your face, though in most years that trading activity will generate above-average profits and big bonuses for the traders and CEOs.

To this mix we can add the fact that many money managers are investing other people’s money. If you plan to stay with an investment bank for ten years or less, most of the people playing this investing strategy will make out very well most of the time. Everyone’s time horizon is a bit limited and you will bring in some nice years of extra returns and reap nice bonuses. And let’s say the whole thing does blow up in your face? What’s the worst that can happen? Your bosses fire you, but you will still have millions in the bank and that MBA from Harvard or Wharton. For the people actually investing the money, there’s barely any downside risk other than having to quit the party early. Furthermore, if everyone else made more or less the same mistake (very surprising major events, such as a busted housing market, affect virtually everybody), you’re hardly disgraced. You might even get rehired at another investment bank, or maybe a hedge fund, within months or even weeks.

Moreover, smart shareholders will acquiesce to or even encourage these gambles. They gain on the upside, while the downside, past the point of bankruptcy, is borne by the firm’s creditors. And will the bondholders object? Well, they might have a difficult time monitoring the internal trading operations of financial institutions. Of course, the firm’s trading book cannot be open to competitors, and that means it cannot be open to bondholders (or even most shareholders) either. So what, exactly, will they have in hand to object to?

Perhaps more important, government bailouts minimize the damage to creditors on the downside. Neither the Treasury nor the Fed allowed creditors to take any losses from the collapse of the major banks during the financial crisis. The U.S. government guaranteed these loans, either explicitly or implicitly. Guaranteeing the debt also encourages equity holders to take more risk. While current bailouts have not in general maintained equity values, and while share prices have often fallen to near zero following the bust of a major bank, the bailouts still give the bank a lifeline. Instead of the bank being destroyed, sometimes those equity prices do climb back out of the hole. This is true of the major surviving banks in the United States, and even AIG is paying back its bailout. For better or worse, we’re handing out free options on recovery, and that encourages banks to take more risk in the first place.

there is an unholy dynamic of short-term trading and investing, backed up by bailouts and risk reduction from the government and the Federal Reserve. This is not good. “Going short on volatility” is a dangerous strategy from a social point of view. For one thing, in so-called normal times, the finance sector attracts a big chunk of the smartest, most hard-working and most talented individuals. That represents a huge human capital opportunity cost to society and the economy at large. But more immediate and more important, it means that banks take far too many risks and go way out on a limb, often in correlated fashion. When their bets turn sour, as they did in 2007–09, everyone else pays the price.

And it’s not just the taxpayer cost of the bailout that stings. The financial disruption ends up throwing a lot of people out of work down the economic food chain, often for long periods. Furthermore, the Federal Reserve System has recapitalized major U.S. banks by paying interest on bank reserves and by keeping an unusually high interest rate spread, which allows banks to borrow short from Treasury at near-zero rates and invest in other higher-yielding assets and earn back lots of money rather quickly. In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.

the “going short on volatility” strategy increases income inequality. In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society. In other words, financial crisis begets income inequality. Despite being conceptually distinct phenomena, the political economy of income inequality is, in part, the political economy of finance. Simon Johnson tabulates the numbers nicely: From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.7

There’s a second reason why the financial sector abets income inequality: the “moving first” issue. Let’s say that some news hits the market and that traders interpret this news at different speeds. One trader figures out what the news means in a second, while the other traders require five seconds. Still other traders require an entire day or maybe even a month to figure things out. The early traders earn the extra money. They buy the proper assets early, at the lower prices, and reap most of the gains when the other, later traders pile on. Similarly, if you buy into a successful tech company in the early stages, you are “moving first” in a very effective manner, and you will capture most of the gains if that company hits it big.

The moving-first phenomenon sums to a “winner-take-all” market. Only some relatively small number of traders, sometimes just one trader, can be first. Those who are first will make far more than those who are fourth or fifth. This difference will persist, even if those who are fourth come pretty close to competing with those who are first. In this context, first is first and it doesn’t matter much whether those who come in fourth pile on a month, a minute or a fraction of a second later. Those who bought (or sold, as the case may be) first have captured and locked in most of the available gains. Since gains are concentrated among the early winners, and the closeness of the runner-ups doesn’t so much matter for income distribution, asset-market trading thus encourages the ongoing concentration of wealth. Many investors make lots of mistakes and lose their money, but each year brings a new bunch of projects that can turn the early investors and traders into very wealthy individuals.

These two features of the problem—“going short on volatility” and “getting there first”—are related. Let’s say that Goldman Sachs regularly secures a lot of the best and quickest trades, whether because of its quality analysis, inside connections or high-frequency trading apparatus (it has all three). It builds up a treasure chest of profits and continues to hire very sharp traders and to receive valuable information. Those profits allow it to make “short on volatility” bets faster than anyone else, because if it messes up, it still has a large enough buffer to pad losses. This increases the odds that Goldman will repeatedly pull in spectacular profits.

Still, every now and then Goldman will go bust, or would go bust if not for government bailouts. But the odds are in any given year that it won’t because of the advantages it and other big banks have. It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw. In any given year, this practice may seem tolerable—didn’t the bank earn the money fair and square by a series of fairly normal looking trades? Yet over time this situation will corrode productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it. And it leads to periodic financial explosions. That, in short, is the real problem of income inequality we face today. It’s what causes the inequality at the very top of the earning pyramid that has dangerous implications for the economy as a whole.

What about controlling bank risk-taking directly with tight government oversight? That is not practical. There are more ways for banks to take risks than even knowledgeable regulators can possibly control; it just isn’t that easy to oversee a balance sheet with hundreds of billions of dollars on it, especially when short-term positions are wound down before quarterly inspections. It’s also not clear how well regulators can identify risky assets. Some of the worst excesses of the financial crisis were grounded in mortgage-backed assets—a very traditional function of banks—not exotic derivatives trading strategies. Virtually any asset position can be used to bet long odds, one way or another. It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.

For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.

Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy. More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking. Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense. They still have millions in the bank, lots of human capital and plenty of social status. We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.

Why don’t we simply eliminate the safety net for clueless or unlucky risk-takers so that losses equal gains overall? That’s a good idea in principle, but it is hard to put into practice. Once a financial crisis arrives, politicians will seek to limit the damage, and that means they will bail out major financial institutions. Had we not passed TARP and related policies, the United States probably would have faced unemployment rates of 25 percent of higher, as in the Great Depression. The political consequences would not have been pretty. Bank bailouts may sound quite interventionist, and indeed they are, but in relative terms they probably were the most libertarian policy we had on tap. It meant big one-time expenses, but, for the most part, it kept government out of the real economy (the General Motors bailout aside).

We probably don’t have any solution to the hazards created by our financial sector, not because plutocrats are preventing our political system from adopting appropriate remedies, but because we don’t know what those remedies are. Yet neither is another crisis immediately upon us. The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe. They are sitting on money rather than lending it out. The biggest risk today is how few parties will take risks, and, in part, the caution of banks is driving our current protracted economic slowdown. According to this view, the long run will bring another financial crisis once moods pick up and external scrutiny weakens, but that day of reckoning is still some ways off.

Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.