The most incisive guide to issues facing the American family today . . . An invaluable resource for anyone wishing to stay on the cutting edge of research on family trends.
-W. Bradford Wilcox
Associate Professor of Sociology, University of Virginia
This list of adjectives the media used to characterize the economic meltdown of 2008 runs long: grim, catastrophic, unprecedented, stunning, devastating, unexpected, confusing . . . . The adjective no news writer or broadcaster has used to describe the economic crisis is unnoticed. With the exception of the election of Barak Obama as President, no development in 2008 commanded more media attention than the meltdown. Time put the meltdown first in its list of “Top 10 News Stories of 2008.” Yet the headline preceding Time’s retrospective discussion of the ‘meltdown—”When We Realized the Sky Was Falling”—points obliquely to an often-forgotten truth: the sky may start falling before the media begin to realize it.
As late as May 2008, the Florida Times-Union was still assuring readers, “The economy doesn’t look great, but it doesn’t appear headed into recession, either.” Surveying the economic data during the same month for the Register-Guard of Eugene, Oregon, an analyst went even further in predicting that the stimulus package Congress enacted in February “should make the second-quarter numbers look better.” A month later, the Los Angeles Times was still carrying assurances from a UCLA economist predicting that although the financial outlook was “subprime,” the U. S. “economy w[ould] likely avoid falling into a formal recession.”
Policymakers were generally just as myopic. In January 2008, the Congressional Budget Office (CBO) authoritatively declared, “Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession.” Things still did not look too bad in May 2008 to Treasury Secretary Henry Paulson, who declared, “Later this year, I expect growth will pick up.” Referring to the two quasi-governmental agencies at the very center of the credit crisis that triggered the broader economic collapse, Democratic Congressman Barney Frank assured his constituents, “Fannie Mae and Freddie Mac are fundamentally sound. They’re not in danger of going under. . . . I think they are in good shape going forward.” Speaking of the financial meltdown in September 2008, Republican Senator John McCain admitted, “I . . . rely on a lot of smart people that I have that are both in my employ and acquaintances of mine. And most of them did not anticipate this.” It would appear that even a sober financial analyst would initially have been dismissed as just another Chicken Little by the media’s cheery-minded financial analysts and policymakers.
The fact that Time named the meltdown as its Number 1 story of 2008 indicates that eventually reality prevailed over wishful thinking: the sky of the American economy was falling—and hard. And virtually all of the American media ultimately did report this unpleasant reality.
The Meltdown the Media Still Denies
However, when it comes to other aspects of American life, observers may suspect that the media and policymakers have been living in illusions not just for months but for years—even decades. Although the tenor of typical media commentary on family life suggests otherwise, the sky has in fact been falling for some time. Observers don’t need to listen to Chicken Little in this instance: the U.S. Census Bureau has reported since the late 1960s that the number of intact American families has dropped sharply—partly because of high divorce rates, partly because of plummeting marriage rates—while the number of children living with an unwed or divorced parent has skyrocketed. Ironically, the media—who view themselves as vigilant in detecting threats to the nation’s well-being—have paid little attention to indicators that suggest a social calamity.
To be sure, journalists have reported the numbers, but with little sense of concern. Reports that the Arctic ice pack is shrinking prompt far more editorial handwringing than do reports that fathers are disappearing. Justifying their de minimis treatment of family disintegration, journalists claim that the collapse of the American family is no more than a change in “lifestyle preferences.” Americans are living in new family forms because adults are making new choices. Why worry about that?
Typical of the media voices, Cindy Gonzalez, Joe Kolman, and Paul Goodsell acknowledge in a 2001 article in the Omaha World-Herald that in some cases the multiplication of new family forms does reflect “unfortunate circumstances,” yet they choose to emphasize the way “less-conventional lifestyles are chosen” and to foster acceptance of these new freely chosen lifestyles. Readers consequently hear from a homosexual man insistent that “the door should open wider to change” in family life; from a sociologist appreciative of how society is now “accepting of households other than the two-parent version;” from a therapist certain that “there are many different ways to be a good family, and it’s not always traditional;” and from a group of activists delighted at how “diversity” in household structure “makes for a more interesting community.”
In the same spirit, in his 2003 survey in the Charleston Gazette of the “steady, profound change in Americans’ concept of family,” David Crary admits that the upsurge in “other forms of family—same-sex couples, unmarried heterosexual couples, single parents” is a development that some “politicians, preachers, and conservative activists” find “horrifying.” But Crary’s reportage is clearly intended to discredit such concerns: after all, the last word in his article comes to readers from a sociologist urging Americans to “embrace the diversity of family forms.”
Even when the family trend is the upsurge in legal abortions since Roe v. Wade and the consequent disappearance of shotgun weddings, journalists and editorialists see nothing more worrisome than the triumph of shifting lifestyle preferences. Acknowledging that “the vast majority of abortions today are for reasons of lifestyle,” Christopher Caldwell uses a 1999 New Republic commentary to fit such abortions into a reassuring larger pattern in which “questions of lifestyle [serve to] determine one’s identity, one’s rank in society, one’s allegiances, one’s loves and hates. . . . Indeed, lifestyle as a values system grows steadily more powerful as capitalism grows steadily more beneficent.” In the new lifestyle freedom Americans now enjoy, Caldwell discerns nothing troubling or distressing—quite otherwise, since it means “a vastly expanded roster of life choices: education, travel, career advancement, class advancement, money, fine dining, entertainment, and sports, plus a recreational-sex career that can run at full-throttle (if that’s what you want) for 30 years or more.”
Again and again for the last thirty years, the message from the media about family change has been the same: Don’t listen to the conservative Chicken Littles. The sky is not falling. Relax. Enjoy life. Watch TV. This attitude looks astonishing nonchalant to anyone familiar with the empirical evidence linking widespread family disintegration to the impoverishment of women and children, to violent crime, to mental and physical illness, to drug and alcohol abuse, to child abuse, to academic failure, and to teen suicide. But journalists do not seem to understand these linkages—or their implications. Not particularly quick to recognize the financial realities that unfolded in 2008, the American media seem much, much slower to understand that the breakdown of the family signals a calamitous collapse of the sky far more serious than the economic sky-falling that Congress and the Bush and Obama Administrations have been dealing with through massive government bailouts. One is indeed tempted to apply to the media Chateaubriand’s famous complaint about political leaders: “Nowadays,” the French writer remarked, “statesmen understand only the stock market—and that badly.”
The nation is indeed poorly served by journalists who have become so blinkered that they anxiously respond to every twitch in the stock market yet ignore the continuing erosion of marriage and family life. However, anyone who studies how family life ultimately affects economic life will understand that in time the harsh realities consequent to family disintegration will finally intrude upon even journalists blind to realities not measured on Wall Street. Inevitably, the day may finally come when even the editors of Time will look at marital and family breakdown and reprise the headline they recently used when reflecting on the economic meltdown of 2008: “When We Realized the Sky Was Falling.”
The Significance of Social Capital
Americans may discern just how even obsessive stock-market observers will finally recognize the catastrophe implicit in widespread family disintegration if they investigate a concept of powerful conceptual importance to economists and sociologists alike: namely, that of social capital. A concept initially developed by sociologists James Coleman, Jane Jacobs, and Robert Putnam, social capital now figures prominently in the economic and social analyses of many researchers. Though these researchers vary somewhat in how they define the term, the World Bank’s 1999 definition expresses well what is at stake: “Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society’s social interactions. . . . Social capital is not just the sum of the institutions that underpin a society—it is the glue that holds them together.”
Journalists who cover financial developments generally understand the economic importance of ordinary capital—the kind measured in dollars, marks, yen, and pounds. The American financial system bears the name of capitalism for a very good reason. In underscoring the importance of monetary capital formation, Ludwig von Mises asserts:
Progressive capital formation is the only means by which the position of the great masses can be permanently improved. The greater the capital fund becomes, the higher does the marginal productivity of labour rise and the higher, therefore, are wages, absolute and relative. The progressive formation of capital is [thus] the only way to increase the quantity of goods which society can consume annually without diminishing production in the future –the only way to increase the workers’ consumption without harm to future generations of workers.
Because they understand the critical importance of monetary capital, journalists have included in their meltdown coverage a number of timely and perceptive analyses of the difficulty of raising new capital in the newly straitened circumstances. But these same journalists typically do not have a clue as to the importance of social capital. To be sure, social capital profoundly affects many aspects of culture outside of the financial realm. When sociologists Terry L. Besser, Nicholas Recker, and Kerry Agnitsch list the consequences of high levels of social capital, they include a number of outcomes unlikely to register with a balance-sheet mentality: “Communities with high social capital,” they write, “are more likely to have high levels of volunteerism, more effective local government, lower levels of crime, more socially responsible businesses, more successful businesses, and generally positive economic outcomes.”
Because the benefits resulting from volunteerism and socially responsible business policies resist economic measurement, psychologists Ed Diener and Martin E. P. Seligman aptly titled their 2004 study of social capital “Beyond Money: Toward an Economy of Well-Being.” Nonetheless, the last two positive outcomes that Besser, Recker, and Agnitsch trace back to social capital—namely, “more successful businesses, and generally positive economic outcomes”—fit squarely within the analyses of economists and of financially-minded journalists. Despite their concern for how social capital fosters non-pecuniary benefits, Diener and Seligman still seem to recognize positive economic benefits as a favorable result of social capital when they point out how “people prosper in neighborhoods where social capital is high, that is, where people trust one another and are mutually helpful.” It should come as no surprise, then, that social capital is a term attracting the analysts at the World Bank.
In other words, though social capital may yield outcomes beyond those of interest to the economist, it nonetheless does deserve attention even within a strictly economic paradigm. In fact, when a team of economic analysts compare America’s economically flourishing rural counties with America’s economically languishing counties in a 2009 study, they conclude that it is “social capital [that] distinguishes the prosperous counties.” With good reason Putnam asserts, “Social capital is coming to be seen as a vital ingredient in economic development around the world.” Some sociologists now indeed refer to social capital as “the ‘missing link’ in theories of economic development.”
Development economists, Putnam asserts, have reason to pay attention to the wealth-fostering role of social capital: “The social capital embodied in norms and networks of civic engagement,” he writes, “seems to be a precondition for economic development, as well as for effective government.” Economist Gaute Torsvik provides a more technical explanation of the way social capital generates monetary wealth. “Social capital,” Torsvik writes, “can produce two kinds of trust, both of which can reduce transaction costs.” The two kinds of trust—one based on “repeated interaction and reciprocity” and the other based on “prosocial motivation”—both derive from social capital. “Social capital,” Torsvik comments, “plays a positive role here since it increases the costs of opportunism and raises individual stakes.”
The Source of Social Capital
While economic theorists have been limning the wealth-generating potential of social capital, sociologists have been probing its origins. Researchers have indeed identified a number of institutions and groups—including service clubs, churches, neighborhood associations, and recreational leagues—as incubators of social capital. But the family—especially the intact married-couple family—has emerged as the vault that best safeguards this indispensable kind of capital. When that vault has been cracked, vital social capital simply spills out, no longer available to foster prosperity—monetary or otherwise—in the community.
Thus, in a 2002 study of “social capital” as “a theoretical metaphor,” researchers from the University of California, Los Angeles, and Tulane University identify the intact family as the household configuration most likely to give children a strong network of trust and to give in those children a “constructive, goal-oriented” outlook on life. This study shows that “the depth and intensity of ties between parents and children” depends upon family socioeconomic status, two-parent family structure, and organizational involvement on the part of both parents and children.” Statistical analyses identify family structure as a significant predictor not only of favorable child outcomes—such as a desire for higher education and a willingness to work hard to reach that goal—but also of a healthy parental engagement with neighbors, school and civic organizations, and religious groups. These same analyses indicate that single-parent family structure predicts that children will aspire for less and achieve less in school and that parents will involve themselves less in school, community, and church associations.
To counter the perception that their findings merely reflect differences in monetary resources, the UCLA and Tulane scholars stress that the gap between two-parent and single-parent homes persists even in sophisticated multivariate statistical models that take into account differences in economic and demographic background. Thus, “children in single-parent families engage in fewer activities with their parents, even after [researchers] control for economic circumstances.” Likewise, “single-parent family structure is associated with fewer links between parents and the social circles of children,” even when background differences in households are taken into account. The researchers also adduce evidence that “the negative association between single-parent family structure and school performance” reflects, at least in part, the way “single parents . . . tend to be less involved in [civic and school] organizations” and the way single-parent behavior results in “a lack of intergenerational closure in single-parent families.” Although the authors of the 2002 study regard their findings as relevant for all Americans, they see them as particularly meaningful for one struggling minority group: “The prevalence of single-parent families among black students does statistically explain part of the negative association between being black and school outcomes, a finding that is consistent with the social capital process.”
The importance of social capital generated within the family receives further elucidation in research conducted by sociologists Frank F. Furstenberg Jr. and Mary Elizabeth Hughes. Examining life outcomes specifically among at-risk youth, these two researchers discern a “strong and fairly consistent pattern: Most of our measures of social capital were related to markers of socioeconomic success in early adulthood.” Among the findings that the researchers regard as “statistically significant and robust,” the presence in a young adolescent’s home of his biological father emerges as an important indication of social capital, one that predicts a number of favorable educational and economic outcomes—including graduating from high school, enrolling in college, and being in the labor force. As they consider how some at-risk teens “beat the odds,” Furstenberg and Hughs conclude, “Social capital, broadly considered, plays a role in youth negotiating their way out of disadvantage.”
Confirming the power of family structure to predict levels of social capital, sociologist Ming Wen reports in a 2008 study evidence of a pronounced shortfall of social capital within a household type that family disintegration has made common in recent decades:
The lack of parental socializing resources in single-parent families . . . [appears] as a deficit in what James Coleman calls social capital. Such a deficit, typically manifested in a lack of commitment, reciprocity and trust in a child’s social relationships, can undermine a child’s trust in people in general, increase his or her risk of behavioral problems, and impair the child’s development in the long run.
The lack of “trust in a child’s social relationships” that Wen documents in her research inevitably translates—as a trust-barren child matures into distrustful adult—into consequences that matter to economists as well as psychologists. For as scholar Gary A. Anderson has remarked, “Linguistically, faith and finance are closely linked: It is no accident that the word creditor in English comes from the Latin credere, ‘to believe.’ When creditors make loans, they are acting on a belief in the trustworthiness of a client.” Financial commentator James Surowiecki recognizes this essential link between belief and credit when he argues that “endemic mistrust” always proves “corrosive” to credit markets: “As long as mistrust prevails, people will be pulling money out of the system—sometimes even at gunpoint.”
The kind of child-rearing that destroys social capital and so incubates economy-maiming mistrust becomes all too common even when divorced or previously unwed parents do remarry—so forming a stepfamily. In a 2002 study, sociologists Don Kerr and Roderic Beaujot report that, compared to peers reared in intact families, “children living in both stepparent and female lone-parent families are more likely to experience difficulties,” difficulties traceable to “the impact of family type on the transfer of financial, human, and social capital to children.” Kerr and Roderic suggest that the rise in the number of stepfamilies and single-parent families holds “important repercussions with regard to the amount of financial, human, and social capital that comes to children from their parents.”
The Current Capital Crisis
These repercussions are evident to political scientist Jean Bethke Elshtain, who warns in a 1996 study of “a crisis in ‘social capital formation,’” a crisis that translates (just as Torsvik, Wen, and others have pointed out) into highly destructive mistrust: “Americans at the end of the twentieth century,” observes Elshtain, “suffer from the effects of dramatic decline in the formation of social bonds, networks, and trust.” Quite predictably, recent changes in family structure appear at the heart of Elshtain’s analysis of how this crisis in social capital is spreading: “Widespread family breakdown generates unparented children who attend schools that increasingly resemble detention centers rather than safe places of enduring training, discipline, and education.”
It requires no genius for economic analysis to recognize that this “crisis in social capital formation” is already negatively affecting the nation’s economy—and by more than a little. Adults whose rearing in single-parent or stepparent families has taught them little about trust or commitment are now underproducing employees who handicap American employers and reduce the available goods and services in the economy. Because they are too distrustful to invest any excess income they do earn in stocks or bonds, these same adults starve an economy desperately in need of new infusions of monetary capital.
Worse, adolescents and young adults whose upbringing in a broken home has left them vulnerable to the blandishments of criminals and drug pushers are now consuming monetary resources diverted from productive investment into salaries for corrections officials, parole officers, therapists, and divorce-court functionaries. This diversion of resources may mitigate some of the social evils attendant to family disintegration but it does not enlarge the goods and services available in the market. Americans thus see a partial recognition of the dollars-and-cents effects of the crisis in social capital formation in a study released in 2008 by the New York-based Institute for American Values estimating that “family fragmentation costs U.S. taxpayers at least $112 billion each and every year, or more than $1 trillion each decade.” Working from “cautious assumptions,” the authors of this study emphasize that “the $112 billion figure represents a ‘lower-bound’ or minimum estimate” of the economic impact of family disintegration.
A number this large might even start to catch the attention of journalists generally so intent upon tracking the stock market that they do not pay attention to trends affecting social capital. However, even the staggering estimate of $112 billion per year for family disintegration captures only a fraction of the monetary cost of our crisis in social-capital formation. This number reflects only the costs associated with the depletion of social capital among the men, women, and children actually living in American households. Analyst David P. Goldman exposes an even more profound crisis in social capital formation when he confronts the economic consequences of the pronounced retreat from child-bearing evident during a “half century [during which] America has changed from a nation in which most households had parents with young children” to “a mélange of alternative arrangements in which the nuclear family is merely a niche phenomenon.” Goldman raises provocative questions about the financial realities that such a social development creates:
The declining demographics of the traditional American family raise a dismal possibility: Perhaps the world is poorer now because the present generation did not bother to rear a new generation. All else is bookkeeping and ultimately trivial. This unwelcome and unprecedented change underlies the present global economic crisis. We are grayer, and less fecund, and as a result we are poorer, and will get poorer still—no matter what economic policies we put in place.
Goldman reminds his readers, “Our children are our wealth. Too few of them are seated around America’s common table, and it is their absence that makes us poor. Not only the absolute count of children, to be sure, but also the shrinking proportion of children raised with the moral [and] material advantages of two-parent families diminishes our prospects.”
To be sure, not all intact families prove equally effective in conferring advantageous social capital on their children. Not surprisingly, researchers have found strong evidence that maternal employment adversely affects “the amount of social capital available to the child.” Indeed, research indicates that by sharply reducing fertility, wives’ employment significantly reduces the likelihood that there will even be a child to benefit from the family’s social capital.
The Political Extortion of Social Capital
Ignoring the irreplaceable role of the intact family in fostering social-capital formation means distorted reporting for journalists—a serious cultural and political problem to be sure. However, it means nothing short of catastrophe for policymakers. It undercuts the very possibility of long-term prosperity. Unfortunately, policymakers have actually tended to subvert the family as a producer of social capital. Though largely indifferent to the non-monetary manifestations of family-generated social capital, many lawmakers and bureaucrats have adopted policies that suggest a recognition that the social capital of the intact family does yield financial surpluses—surpluses that they can divert into tax revenues for the state’s machinery. This diversion actually constitutes a far bigger problem in twenty-first-century America than does the alleged capitalist extortion of “surplus value” out of workers that has so exercised the disciples of Karl Marx.
This extortion receives illuminating attention when historian Allan Carlson limns the ominous turn of American policymakers away from the kind of family-friendly tax policy advocated by Theodore Roosevelt and actually in place during the 1940s and 1950s toward decidedly family-unfriendly tax policies during the 1960s and 1970s, with only modest improvements in tax treatment of families since then. Carlson stresses that marriage and at-home maternal child care—both essential to the fostering of the social capital of trusting social relations—have been hard hit by this overt government attempt to extract more “surplus value” from intact families.
What has proven even more harmful to the long-term formation of social capital is the diversion of this “surplus value” from heavily taxed intact families to tax-subsidized fractured families. This diversion of monetary resources from households that typically generate social capital well to households that usually struggle to produce social capital understandably worries sociologists Randal Day and Wade C. Mackey. Day and Mackey believe that by promoting the formation of what they have called “the mother-state-child family,” this diversion of resources has helped depress marriage rates and accelerate out-of-wedlock fertility rates. Because of the sharp increase in mother-state-child households, Day and Mackey fear that married fathers must now “pay directly for their own children, and, in addition, must pay a heavy tax burden to support the state, as the state takes the role of the supportive ‘traditional father’” to the children of unwed and divorced mothers.
If policymakers wish to strengthen intact families as the essential incubators of social capital, they will want to look for ways to end the unhealthy diversion of “surplus value” from these families into single-parent families. Since two-career families—distinctively vulnerable to divorce and distinctively infertile—offer much less promise for growth in social capital than do one-career intact families, they will also want to end tax policies that divert “surplus value” away from families that care for their (typically more numerous) children themselves and toward two-career families that place their (typically few) children in daycare. To help policymakers looking for measures that will reinforce the intact family, analysts Allan C. Carlson and Paul T. Mero have recommended a number of changes in the tax code, including measures that would:
Policymakers wanting to renew and strengthen intact, child-rich families need also to look at the nation’s Social Security system. Analysts increasingly recognize that depressed fertility (especially among affluent whites) threatens the long-term viability of this system—and of those like it in other industrialized countries. Yet policymakers have been slow to recognize the implications of international research showing that “the level and scope of a country’s social security program is causally and inversely related to fertility levels.” In other words, a Social Security system that desperately needs a healthy and sizable rising generation of young workers actually diminishes the likelihood of such a replacement generation. Perhaps it is time to recognize the very regressive first-dollar FICA taxes collected for this system as a dangerous diversion of “surplus value” from intact child-rich families to sterile individuals.
Acutely aware of this growing problem, some European analysts are now talking about the “radical policy” of “relating children to pensions”—that is, of keying the size of retirement benefits to the number of children a person has raised. More immediately, policymakers could at least significantly reduce FICA taxes for parents with minor children. Even more helpful in ending the harmful diversion of “surplus value” away from intact social-capital-producing families would be—as Carlson and Mero have recommended—a change in policy that would “extend Social Security work benefits and credits to stay-at-home parents.”
Unfortunately, such policy reforms are currently nowhere on leading policymakers’ agendas. Meanwhile, the crisis in social capital formation can only loom ever larger in a socially unhealthy nation bereft of the children that might have been born had there only been more intact traditional families for them to be born into. The all-too-real economic implications of that crisis grow ever more ominous. Given that the number of children born in intact families keeps shrinking and that the number of children affected by family break-up just keeps growing, those implications can only continue to mushroom.
These implications may yet elude journalists and policymakers who see only stock prices and budget numbers. But because the implications of the crisis in social capital already affect and will increasingly dictate these prices and these numbers, these journalists and policymakers must eventually realize what they finally realized in late 2008: The sky is indeed falling. Perhaps it is time to start trying to prop up that sky.
Dr. Christensen, editor-at-large of The Family in America, teaches composition and literature at Southern Utah University. His related essay, “The Message in the Meltdown: How the Downturn Reveals Forgotten Family Assets,” appeared in the Fall 2009 issue.