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This is the second segment of a two-part Q&A with economist Jonathan Rothwell. Read the first part here.

In his new book A Republic of Equals, Gallup senior economist Jonathan Rothwell traces the forces driving the dramatic rise in inequality in the United States. In the first half of our conversation, we talked about how elite professions in the United States perpetuate inequality, both now and historically, and how this contributes to inequality and low productivity in the U.S. economy.

In this part of our interview, Rothwell addresses how unequal educational opportunities in the United States contribute to inequality, and he explains how a more just society would reward people for productive or otherwise socially valuable contributions while also taking care of the poor and those unable to work. Our conversation has been condensed and edited.

In the book, you revisit territory associated with the controversial 1994 book The Bell Curve. You parse the connections or lack thereof between IQ or intelligence, education, skills, opportunity and economic outcomes. Tell us about this.

In The Bell Curve, Richard Herrnstein and Charles Murray argued that IQ is important to many outcomes in life, that IQ is mostly determined by genes, and that racial differences in social status may be at least partly genetic. I criticize these views in the book in some detail, because I think they are untrue—especially the last two points—and have been detrimental politically and culturally.

We now know that IQ—which basically means how people perform on tests of literacy and numeracy—is relevant to the labor market and the sorts of occupations people enter. But we also know that other skills are roughly as important as IQ to the labor market. These include things like conscientiousness, extroversion, integrity, and emotional stability.

As for the genetic component of IQ, modern scholarship and actual analysis of genes has resulted in greater appreciation for the importance of environmental factors, which are now deemed the dominant source of individual variation in IQ and educational attainment. The most compelling evidence has come out since The Bell Curve was published.

“When children are more or less randomly assigned to different neighborhoods, they have much different economic and educational trajectories.”

We know that IQ and other measures of cognitive performance are strongly linked to the quality of educational experiences that people have—not just what students learn in a classroom but also what they absorb through their interactions with their parents and their communities and even in their neighborhoods. There’s now very compelling evidence that neighborhoods matter. When children are more or less randomly assigned to different neighborhoods, they have much different economic and educational trajectories.

Likewise, evidence from adoption studies suggest that growing up in more educated households where the parents are regularly reading to the children has a big effect on cognitive performance when they become teenagers and young adults. And evidence from immigration shows that when children from countries with very poor performing school systems come to the United States, if they come at a young age, they move up dramatically in terms of cognitive performance and IQ measures. But if they come, say, after age 10 or in late adolescence, the effect is much more muted. The obvious explanation there is that they’re benefiting from the higher quality educational experiences and exposure to the native population’s culture and resources to a greater extent when they spend more years in that country. All of that is pretty powerful evidence that cognitive ability is a very mutable outcome.

When it comes to groups, there really is no evidence to suggest that genetics has any role in explaining differences. I revisit the history of group averages in IQ scores and show that group scores have changed dramatically over the last 100 years. African Americans raised in the north before Jim Crow had higher scores than European immigrants—and, by the way, were heavily involved in coming up with inventions during the Industrial Revolution. Groups that, in recent years, have showed above-average performance on cognitive tests spent decades with relatively low performance, and there is no genetic explanation for how these patterns and reversals could have occurred.

Likewise, international evidence makes it clear that there are no groups of people who consistently outperform others. This is consistent with scientific evidence that genetic differences between ancestry groups are basically trivial and matches what we know about how social and political factors created opportunities for some, while suppressing opportunities for others.

So how much does education factor in here, and by that I mean unequal access to education?

Studies that allow for comparisons across school districts and communities certainly suggests that African American and Hispanic children and lower-income children generally go to schools that perform worse. We know that there’s a large gap there. And we also know that using more sophisticated measures, such as teacher quality, reveal large gaps. I find large racial differences in exposure to the highest quality classrooms in preschool. We also have very strong evidence that randomly assigning children to higher-quality classrooms or higher-quality teachers has a large effect on learning and on their cognitive performance on standardized exams.

To what degree is our access to education determined by location, where we live?

I’d say the first order problem in educational inequality is unequal access to neighborhoods. Neighborhoods are separated by zoning laws and the types of homes that are available. And that creates many other ancillary problems, the most urgent of which is unequal access to education. The consequences are that African American children in particular, and lower-income children generally, are stuck in the neighborhoods with the lowest-performing schools. And not just low-performing schools, but worse public goods and services on every dimension, including policing services.

“If people were paid based just on their productivity, we’d have inequality roughly like that of Sweden.”

If you’re African American, you’re far more likely to be arrested or incarcerated for committing a crime than someone living in a white neighborhood who commits the same crime. Policies like “stop and frisk,” which target African Americans and African American neighborhoods, create dramatically different enforcement than the what you find on college campuses: If you went to a fraternity party on any U.S. college campus you’d find high rates of drug use with nobody getting punished.

In a very intriguing chapter in the book, you talk about the need for merit-based egalitarianism. Can you tell us a little more about what you mean when you say that?

Skills and competencies do differ across people for a variety of reasons, but the variation is much less dramatic than the variation in income that we see in the United States. If people were paid based just on their productivity, we’d have inequality roughly like that of Sweden.

I think we can have a society that rewards people for productive or otherwise socially valuable contributions while also taking care of the poor and those who can’t work. If people were paid based on performance and we removed the political advantages that certain professional elites have carved out for themselves, we’d be much better off in terms of both inequality and economic growth.

Merit-based egalitarianism gives everyone opportunities to acquire valuable skills throughout childhood and eliminates the market privileges that come from uneven political power. Because the vast majority of people are perfectly capable of contributing to society when given a chance, this arrangement will result in an egalitarian society. There would still be rich people—because of extraordinary ideas, contributions, or luck, but their fortunes would be seen as essentially fair. Extreme inequality is unfair because so much of it is not based on merit. Low to moderate inequality could be fair and merit-based.

When most urbanists today talk about zoning they talk about zoning restrictions that limit density and make urban centers more expensive. But you say there’s another, more insidious side of zoning—exclusionary suburban zoning, which denies low-income and minority people access to better schools that white professional people have access to. Seems like this the bigger problem?

I’m much more worried about the exclusionary suburbs. Most cities have more relaxed zoning laws and obviously they are denser, so there are wide swaths of most cities that permit housing of any type. So they tend to have more poor people and low-income people and they’re used to accommodating diversity of economic buying power potential. The biggest problem is the suburbs. Upper middle-class people wanted to preserve their social distinction and so they moved out to the suburbs, carved out new jurisdictions, and made it very difficult for lower-income people to move there, by essentially closing off housing markets. That legacy is still very much with us.

What should we do to limit inequality and get out economy back on track?

A lot of the proposals being offered to reduce income inequality are focused on a 1950s version of the economy, where major U.S. multi-national corporations were dominant and their executives comprised a very large share of the rich. Now we’re in a world where there are fewer corporations than there used to be, and the types of people who have become rich include a wide range of professionals and people involved in finance as well as CEOs and managers of Fortune 500 companies. So we shouldn’t design policies that act upon the mistaken impression that the only rich people are leaders of multinational corporations: We also have to deal with the power of professional interest groups and industry interest groups.

The subtitle of your book is “A Manifesto for a Just Society.” How do we do get there? What are the foundations of a truly just society?

Plato essentially said that a just society is one where people do what naturally suits them. To do that, you need equal opportunities for education and for skill development. They can’t be restricted by race or ethnicity or gender. You have to give everyone the chance to reveal their own talent. That requires a commitment to invest in everyone.

John Rawls argued that we need to prioritize the welfare of the least-off. Income inequality should be allowed to the extent that it benefits the least-off. To my mind, this is not is a critique of capitalism or of markets, but an empirical question about whether a market-oriented society can raise the long-term living standards of the least well-off. I believe the evidence suggests that it can, and a politically equal market-based society would create a more productive and less unequal economy, and a more just society.