Yes, Wall Street Helps the Poor

It was a scene to curdle liberal blood. A ballroom full of New York hedge-fund managers
playing poker … to raise money for charter schools.

That’s where I found myself last Wednesday: at a Texas Hold ’Em tournament to raise
money for the Success Charter Network, which currently runs nine schools in some of
New York’s poorest neighborhoods.

While Naomi Wolf was being arrested for showing solidarity with the Occupy Wall
Street movement, there I was, consorting with the 1 percent the protesters hate. It’s no
surprise that the bread-heads enjoy gambling. But to see them using their ill-gotten gains
to subvert this nation’s great system of public education! I was shocked, shocked.
Except that I wasn’t. I was hugely cheered up. America’s financial elite needs a
compelling answer to Occupy Wall Street. This could be it: educate Harlem … with our
poker chips.

Life, after all, is a lot like poker. No matter how innately smart you may be, it’s very hard
to win if you are dealt a bad hand.

Americans used to believe in social mobility regardless of the hand you’re dealt. Ten
years ago, polls showed that about two thirds believed “people are rewarded for
intelligence and skill,” the highest percentage across 27 countries surveyed. Fewer than a
fifth thought that “coming from a wealthy family is essential [or] very important to
getting ahead.” Such views made Americans more tolerant than Europeans and
Canadians of inequality and more suspicious of government attempts to reduce it.
Yet the hardships of the Great Recession may be changing that, giving an unexpected
resonance to the Occupy Wall Street movement. Falling wages and rising unemployment
are making us appreciate what we ignored during the good times. Social mobility is
actually lower in the U.S. than in most other developed countries—and falling.

Academic studies show that if a child is born into the poorest quintile (20 percent) of the
U.S. population, his chance of making it into the top decile (10 percent) is around 1 in 20,
whereas a kid born into the top quintile has a better than 40 percent chance. On average,
then, a father’s earnings are a pretty good predictor of his son’s earnings. This is less true
in Europe or Canada. What’s more, American social mobility has declined markedly in
the past 30 years.

A compelling explanation for our increasingly rigid social system is that American public
education is failing poor kids. One way it does this is by stopping them from getting to
college. If your parents are in the bottom quintile, you have a 19 percent chance of
getting into the top quintile with a college degree—but a miserable 5 percent chance
without one.

Your ZIP code can be your destiny, because poor neighborhoods tend to have bad
schools, and bad schools perpetuate poverty. But the answer is not to increase spending
on this failed system—nor to expand it at the kindergarten level, as proposed by Nicholas
Kristof in The New York Times last week. As brave reformers like Eva Moskowitz know,
the stranglehold exerted by the teachers’ unions makes it almost impossible to raise the
quality of education in subprime public schools.

The right answer is to promote the kind of diversity and competition that already make
the American university system the world’s best. And one highly effective way of doing
this is by setting up more charter schools—publicly funded but independently run and
union-free. The performance of the Success Charter Network speaks for itself. In New
York City’s public schools, 60 percent of third, fourth, and fifth graders passed their math
exams last year. The figure at Harlem Success was 94 percent.

The American Dream is about social mobility, not enforced equality. It’s about
competition, not public monopoly. It’s also about philanthropy, not confiscatory taxation.
I’ll cheer up even more when I hear those words at a Republican presidential debate. Or
maybe next week we should just tell the candidates to shut up and play poker

finance economics
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