A recent editorial in the New York Times claims that during the 1980s leveraged buyouts “contributed significantly to the growth of the income gap, moving wealth from the middle class to the top end.” First Things editor R.R. Reno explains why the real story is more complicated, more interesting, and explains much more than income inequality:
The upper middle class world responded to the leveraged buyout revolution by upping their commitments to education and economically oriented self-discipline. The old white-collar social contract subsidized three martini lunches and all they represented. Junk bonds put an end to that culture. And the white-collar parents who suffered from that sudden and severe change in corporate culture told their kids that it’s a very tough, competitive world out there, one with no guarantees.
I’ve seen the difference this makes. As college students in the late seventies and early eighties, members of my cohort still presumed the old social contract, which unbeknownst to us was already being broken. We didn’t worry very much about majoring in something practical or lucrative. We coasted along in the decadent final years of post-sixties heedless hedonism, enjoying the youth-culture equivalents of three martini lunches.
