America, the land of limited opportunity. We must open our eyes to the truth.

More first-rate research from the OECD:  “Economic Policy Reforms: Going for Growth 2010“.  Of special interest to Americans is chapter 5:  “A Family Affair: Intergenerational Social Mobility across OECD Countries“.  Like the massive body of research preceeding it, this contracts one of the key myths about America.  A nation that steers by myth, not reality, will eventually crash on the rocks.

The authors carefully avoid pointing fingers or mocking us.  They let the graphics tell the story of increasing inequality of income and declining social mobility — both washing away the foundations of the American Republic.  Worry not about America becoming like Zimbabwe. Worry about becoming like Argentina.

Education is a ladder to social mobility in America.  That’s getting pulled up, even faster now with increases in State tuiton.  This graph shows the result:

For more information

  1. Poverty Rose, Median Income Declined, and Job-Based Health Insurance Continued to Weaken in 2008“, Arloc Sherman et al, Center on Budget and Policy Priorities, 10 September 2009
  2. Share of Aggregate Income Received by Quintile of Households, ugly numbers from the US Census
  3. Changes in the Distribution of Workers’ Annual Earnings Between 1979 and 2007“, Congressional Budget Office, October 2009
  4. Have we fallen behind our parents?“, Katharine Mieszkowski, Salon, 14 May 2008 — “Author Nan Mooney argues that the middle class is slipping, and fixing it is going to take more than cutting out lattes.”
  5. Income inequality and poverty rising in most OECD countries“, OECD, 21 October 2008
  6. Striking it Richer: The Evolution of Top Incomes in the United States“, Emmanuel Saez, 5 August 2009 — First world levels of income; third world income distribution.
  7. Conservatives and Economic Mobility“, Mark Zeitlin, 10 January 2010
  8. “Inequality, Living Standards, and the Middle Class”, Scott Winship (Pew Economic Mobility Project), Progressive FIX, 12 January 2010 – Part One and Part Two.
  9. Top 400 Earners in U.S Averaged $345 Million in 2007, IRS Says“, Bloomberg, 18 February 2010 — “Each household in the top 400 of earners paid an average tax rate of 16.6%, the lowest since the agency began tracking the data in 1992, the Internal Revenue Service statistics show. Their average effective tax rate was about half the 29.4% in 1993…”

Other FM posts about income inequality and social mobility

  1. A sad picture of America, but important for us to understand, 3 November 2008
  2. America’s elites reluctantly impose a client-patron system, 5 November 2008
  3. Inequality in the USA, 7 January 2009
  4. The latest figures on income inequality in the USA, 9 October 2009
  5. Graph of the decade, a hidden fracture in the American political regime, 7 March 2010

One thought on “America, the land of limited opportunity. We must open our eyes to the truth.

  1. Trends in U.S. Family Income Mobility, 1969–2006“, Katharine Bradbury (Senior Economist), Federal Reserve of Boston, 20 October 2011 — Abstract:

    Much of America’s promise is predicated on economic mobility — the idea that people are not limited or defined by where they start, but can move up the economic ladder based on their efforts and accomplishments. Family income mobility — changes in individual families’ income positions over time — is one indicator of the degree to which the eventual economic wellbeing of any family is tethered to its starting point. In the United States, family income inequality has risen from year to year since the mid-1970s; given this rising cross-sectional inequality, changes over time in mobility determine the degree to which long-term income is also increasingly unequally distributed.

    Using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature, this paper examines family income mobility levels and trends for U.S. working-age family heads and spouses during the time span 1969–2006, based on a post-tax, post-transfer concept of income adjusted for family size. By most measures, mobility is lower in more recent periods (1995–2005) than in the late seventies and the eighties (the 1977–1987 or 1981–1991 periods).

    Comparing results based on pre-government income suggests that an increasingly redistributive tax and transfer system contributed to rising mobility into the 1980s, but that its impact has since waned. Overall, the evidence indicates that over the 1969-to-2006 time span, family income mobility across the distribution decreased, families’ later-year incomes increasingly depended on their starting place, and the distribution of families’ lifetime incomes became less equal.

Leave a Reply