OUR CHARTS BECOME FLESH AND BLOOD

After we finished with our conference on the charts, I took a walk down through the Chautauqua Institution village toward the amphitheater. My mind drifted toward memories of a conversation I’d had with Robert Putnam, author of Bowling Alone, a brilliant book about the collapse of communities in America. As it happened, he was in Chautauqua to give a public lecture that week based on his latest book, Our Kids, about inequality in America.

When I got back, we convened again, and I told Andrew and Dave that I’d spent the past hour thinking about how my conversation with Putnam, as well as his lecture, confirmed the consequences of the numbers we’d been discussing earlier. As well as anyone, Putnam knew how to put flesh and blood on the issue of inequality of opportunity.

In his lecture and in our casual conversation, he had said that people weren’t aware of how precarious the country’s situation is, and we agreed that we saw this in our own circle of acquaintances. To be honest, I was a little startled that somebody who had gone to Oxford would be seeing the impact of inequality among people he knew.

He elaborated on some of what he’d said in his talk at the amphitheater, a story about his granddaughter, Miriam, whose parents had the privilege of attending Harvard, and Miriam had attended an equally prestigious university as well. One would assume that his granddaughter had a good future. There’s a reason for that. He’d grown up in Port Clinton, Ohio, which was not a thriving corner of the economy, but he was lucky enough to get into good schools. This wasn’t true of many of his friends in high school. One of them, Joe, didn’t go to college after graduation. He became a firefighter.

It was one of the only paths available to his friend. Putnam talked about how the factories had shut down in Ohio, how the Rust Belt had declined, and how Cleveland had lost jobs and industries, along with the rest of America, to offshore suppliers. Prospects for a better future evaporated along with those jobs.

Joe has a granddaughter, too: Mary Sue. Her parents were never able to find steady jobs after industry moved out. Her parents split up, and her mother became a pole dancer.

I asked Robert whether he had been close with Joe as a youth. Yes, he had. But their lives couldn’t have turned out in more dramatically different ways. Joe’s granddaughter was physically abused and neglected. She described having a yellow mouse as a companion in their trailer. That was her sole, regular companionship.

It sounded like the movie Room.

Now she was grown and had moved beyond that squalor and had a boyfriend. She claimed she could find a job as a model in Toledo. I suspected I knew what that meant. She was the same age as Putnam’s granddaughter Miriam. Putnam and Joe were close friends, from the same town; yet because of the growing opportunity gap, their progeny couldn’t have been further apart.

He said it was simply indicative of what was happening to the economy as a whole.

As I got to this point, recounting the conversation I’d had, Andrew said, “He doesn’t have to tell us. That’s what we’ve been looking at all morning.”

“Those girls don’t live in the same universe, let alone the same zip code,” I said.

Sitting around our dining-room table, the three of us unpacked all the ways in which our economic straits are becoming greater and greater liabilities: one thing leads to another. In his lecture, Putnam had said that this story reflects a broader, nationwide pattern that has developed over the past thirty years. What you earn determines how much time you are able to spend with your children, he pointed out. Studies have shown that those with a college degree are more likely to have family dinners together. And families that have meals together generally raise children who have higher aptitudes for learning. All of this is especially crucial in the earliest years of a child’s life, but expenditures on children have an impact all the way to adulthood: summer camps, higher-quality day care, even visits to a zoo or Disney World help a child’s ability to learn and grow intellectually. It’s all mental stimulus that’s dependent on a family’s ability to earn and spend.

The Miriams of the world—growing up in families of means—have lots of people in their lives who want to help them. But that isn’t the case for the Mary Sues, growing up in families without means. Increasingly, your chances in life are determined by one decision that you were never able to make—whether you would have college-educated parents or high-school educated parents. The caste you are born into is the one that almost invariably constrains you for the rest of your life.

As income has stalled and unemployment becomes structural, families are slowly falling apart. Everything conspires to keep a poor family, or a middle-class family that’s merely struggling, exactly where it is. Education has declined precipitously in the zip codes where real estate doesn’t generate enough tax revenue to support good schools. America is in the lowest quartile in the developed world in rankings for secondary education. Drop-out rates in those impoverished zip codes are more than 60 percent. Even those who get to college often quit because they lack adequate funds, haven’t developed strong learning habits, or lack social support from family—especially if their parents haven’t completed college themselves.

We’ve learned that two-parent households provide an advantage for children in multiple ways. More than half the less-educated, lower-income households are headed by one parent. Couples share parenting responsibilities in more than 80 percent of upper-income, highly educated households. The mother, who works more than one job to feed her kids, usually heads those single-parent families. Where are the dinner conversations in these homes? Where is the sympathetic ear for stories about trouble at school or with friends? Who has the time to simply listen to the children when one parent is working two shifts, especially when there is more than one child in the home? Except through her example of hard work, how is she to pass along lessons in morality and ethics?

In the past decade, science has determined that a child’s brain requires formal education of some kind as early as the age of three. The brain needs organized stimulation to develop learning pathways—it accelerates learning, beginning in first grade and continuing beyond it. A child born to parents in the top quintile of income benefits from this research because those parents know about it and enroll their children accordingly in preschool. Pre-K learning centers are booming because there’s a market for them among the people who can afford it. It’s easy to see how this system handicaps the majority of America’s school children from the very start.

Statistics show the importance of high-quality pre-K education and the consequences, years later, of its absence: drug and alcohol abuse, crime, and high unemployment—all of which create a vicious cycle of persistent poverty for children who have no access to high-quality early education. We know that the publicized 5 percent unemployment rate is a fantasy that overlooks the larger number of those who have quit looking for work. The ultimate outcome of this structural unemployment is a much lower quality of life and lower life expectancy. In fact, if you take the top 1 percent and bottom 1 percent of the income strata, the difference in the average life expectancy is fifteen years. While some of these issues may have a greater impact on African American and Latino families, the number of white Americans falling into poverty and persistent unemployment is growing fast. The death rates for Caucasian men and women has risen sharply since 2001, and it has been attributed to problems with drugs and alcohol, as well as suicide.

The hopelessness this induces in struggling families is one of the worst outcomes. They live in a constant state of worry: anxious about unpaid bills, ill health, crumbling social structures, and other issues that threaten their future—from drugs to crime. Brain science tells us that the stress of poverty alone inhibits a child’s mental development and future mental capacity. Growing up in an economically and socially deprived environment inhibits learning, primarily because a poverty-laden home increases the amount of stress a child is subjected to. This affects brain development in a way that hinders cognitive skills.

Studies have shown that fear and dread and tension release the hormone cortisol into the blood, which prepares the body for fight or flight. Over time, and with continuous exposure to that chemical, the brain begins to suffer cognitive impairment. Not only do the household debts get larger all on their own, the tension and conflict of hopelessness multiplies itself as the individual becomes less able to cope with it cognitively—because it slowly dampens and shuts down the brain’s ability to function effectively.

Science is now capable of measuring this effect. An inability to delay gratification is one example of poverty’s effect on the brain and behavior. Cortisol erodes, specifically, the area responsible for executive function in the prefrontal cortex. Ultimately, it grooves pathways into the brain that make aggressive survival behavior more likely over the long term. These pathways take priority when it’s time to exercise higher decision-making functions in day-to-day behavior. The stress of debt and economic deprivation actually lowers fundamental motivation as well: it robs an individual of hope and grit, physiologically.

When it comes to education under these conditions, set aside questions about the syllabus for later. With kids wound up this way—coming to class in the morning without breakfast, restless and hungry and on edge—how can teachers get them to sit still and focus long enough, regardless of the curriculum? In the end, you have a vast segment of the population whose default setting is simmering anger, or at least frustration and resentment. Meanwhile, they have lost the ability to focus on the long-term requirements of higher education and therefore are even less likely to find paths to the few openings for the moderately skilled that still exist in this diminished economy.

With despair in his voice, Ken Langone has told me about scores of job applicants who desperately want to work at Home Depot yet are turned away because they cannot read, write, or count. This is happening in our country, right now. “More and more people are living on the edge and dealing with continuous stress,” I told my companions at the table.

I handed them printouts of a story I’d read in Kathryn Edin’s book $2.00 a Day: Living on Almost Nothing in America. It was about a poor mother of two young girls who sold her plasma to pay bills. The family resided in Johnson City, Tennessee, where the mother had been choosing the best possible option out of all the available lines of work: drug trafficking, sex work, or off-the-books temporary labor. She had to take iron supplements to enable her blood samples to pass quality tests for donation. The story said that her husband had too many tattoos: the risk of contamination disqualified him from being a blood donor.

“Here’s the thing,” I said. “They were still three months behind in rent. I learned this morning that more than half the population is getting deeper into debt every month. We’re heading for a big fall unless somebody does something.”

Millions of Americans in what used to be the middle class are losing their battles with the banks. Foreclosure rates are staggering. And with that, whatever equity a family has disappears. Displacement of this sort is tragic, often inevitable for families who have zero wealth-generating assets. The middle class, whose spending fuels free-market capitalism, keeps getting smaller and smaller. As a result, opportunity itself becomes an elite privilege, rising increasingly to the highest levels, where social mobility isn’t even needed. The end game is that Americans are locked in place, economically and socially. We have developed an economically determined caste system, much like India’s social one. It’s nearly impossible to escape it. There are now two simple ways to predict a child’s future: the education level of the parents and the child’s zip code.

Years ago I had a drink with my boss, back when I still had one. It was an opportunity to share some thoughts after having worked together for a decade. He was brilliantly creative, and he was also a good businessman. Those two qualities don’t often converge, so I admired him greatly. At times, Frank (as I’ll refer to him) had a hot temper, and he could be insensitive and needlessly tough on his people. But he was always thoughtful and fair with me.

On this evening, I asked how he got to be my boss. (He was only eighteen months older than I was.) He had grown up in Pittsburg. His father had worked in the steel mills, hadn’t even finished high school. But Frank’s destiny was to be quite different.

He went to the only high school in the area and became a great athlete. It was a good school at that, not atypical of most public schools in the 1950s and ’60s. Turned out Frank was also very smart. He learned as easily as he wowed on the playing field. That high school provided another social role in town: it brought everyone together, from all income groups and cultural backgrounds. Frank said it was one of their two melting pots; the other was the church. Every young person in the area went to that high school. Every good Catholic attended the same parish. It was like this in nearly all American towns.

Sue, the girl Frank courted, came from generations of bankers. But there they were, two highly intelligent kids attracted to each other physically and intellectually. It was the most natural attraction. Not surprisingly, Sue’s parents came to disapprove of Frank. Clearly, the son of a steal-mill worker wasn’t fit for their daughter—he was the classic boy from the wrong side of the tracks.

Both Sue and Frank applied and got into great colleges—Frank on scholarship to Yale, and Sue at one of the most socially acceptable sister colleges. They stayed together as a couple throughout college. Sue’s parents continued to disapprove, but the couple eventually eloped, and some fifty-five years later the love affair is still alive.

But those high schools and churches no longer bring together children from such diverse economic backgrounds. Our two Americas don’t mingle this way anymore. The schools are socioeconomically mostly segregated. Those on the right side of the tracks have finally managed to keep their children isolated from economic groups other than their own. Very few of the Franks of this country ever get to these charter or private schools—or even to the public schools in expensive (higher-tax-paying) neighboring towns. The top 20 percent of Americans hang together in their zip codes and country clubs. The Franks of the other America attend the less-funded schools we spoke about earlier. Too many of them get stuck at that level, unless athletic talent, serious intervention, or luck get them scholarships to good colleges.

Isolation has become a curse on these American neighborhoods. Too few of us “20 percenters” take a look across the highway or enter the run-down environs of those in pain, the ones who have to borrow money to put food on the table.

I happen to be lucky. My job got me involved with an entire cross section of America. They were, after all, our clients’ customers. Most of our clients marketed to averages, age segments, education, and income. The national averages looked good enough. Few looked at life behind the averages. I remember reading stories about the explosion of women who entered the work force in the 1970s and ’80s—by the millions. These were the women who got good jobs, and many went to graduate business and professional schools. All of them, including the married ones, had visions of career progress and advancements.

Yet I recall when we went into the marketplace and conducted ethnographic studies with these newly emancipated ladies that the segregation hit one in the face. Most of these middle-class wives and mothers went into the workforce because the household no longer could keep up with the cost of living. “This Christmas, my kids will finally have some presents under the tree. Or birthday wishes fulfilled.” That was our middle class trying to simply hold on to the quality of life one income would have garnered only a couple of decades earlier.

But times were getting tougher. Jobs kept disappearing. The schools kept declining in the lower-income zip codes. It was really about isolation, about two societies—one knowing nothing of the other. But the have-less kept watching the movies and the TV shows and kept hearing the music from the country club lofting over the tracks.

Then our clients, the CEOs, had, and continue to have, their own issues. Their daily schedules are measured in minutes, and they face the pressure of competition, calls from around the globe at all hours, never-ending reports, shareholders watching their every move, and analysts lurking in the long grass. And they have their families, plus all the issues, all the challenges, and a few delights thrown in to keep everyone energized.

But isolation was, and is, the rule. The media is diverted mostly by other news: we know more about Palestinians on the West Bank than we know about the “other America.” We are terrified that ten thousand Syrian families vetted by as many as seven government agencies can produce irreparable harm to our country of some 330 million people. Stories about this populate the media for weeks. We read about drunken orgies and sexual harassment at exalted private schools, and we are appropriately indignant. But we don’t read about rats running loose in public schools with broken windows unrepaired in winter. And how many of us read about Ta-Nehisi Coates’s struggles as a high school student in Baltimore, plotting how to get to his grandma’s house in order to stay alive and avoid bodily harm from the gangs in the school. It’s an everyday reality that the elite in Manhattan and Washington don’t experience; they know it’s there, but they don’t feel it. We were shocked to read about the Ferguson or Baltimore eruptions. How could they happen in our country? The question ought to have been, why aren’t they happening more often?

Isolation is the rule for our business leaders. We live in a separate universe parallel to the one in which the majority of Americans struggle from day to day. One of the top financial executives in the world (his firm controls more than $1 trillion in funds) told me, “I can’t change. I have a fiduciary responsibility.” Of course, one knows exactly what he means—the shareholders, the market, the analysts.

But is that the extent of it? Is that sustainable? Here we have a system, a free-market capitalist system, that is cannibalizing itself. It is clearly not serving the country as a whole. The numbers show it. The election process, in which Bernie and Donald have connected viscerally with the populace, is all the evidence you need that a huge swath of America is fed up; the other America is a big part of it. Are we simply going to double down and protect a dysfunctional, broken system? Maybe that’s what we’ll try to do politically, but can we as wise business leaders just keep doing what has gotten us here? America is pleading for help. And the system we already have, with some shifts toward a more inclusive sense of responsibility to a wider set of stakeholders, will enable it to thrive once again. Shareholder primacy is what’s holding us back. Eventually, it will destroy us. A new (and proven) way forward can bring back hope, and it can also prove that free-market capitalism remains the best economic and social system in the world.

But first, how did we get here?