Summary: Today, like every day, we get a serving of glittering myths from a conservative economist. Today we get a”just so” story justifying our high levels of unemployment and income inequality. Another of the barrages of chaff shot into our minds keep us docile, our OODA loops confused. We must see the true situation in order to even begin reclaiming America.
“Whatever Happened to Discipline and Hard Work?“, Tyler Cowen (Prof Economics at George Mason U), op-ed in the New York Times, 12 November 2011 — Excerpt:
The United States has always had a culture with a high regard for those able to rise from poverty to riches. It has had a strong work ethic and entrepreneurial spirit and has attracted ambitious immigrants, many of whom were drawn here by the possibility of acquiring wealth. Furthermore, the best approach for fighting poverty is often precisely not to make fighting poverty the highest priority. Instead, it’s better to stress achievement and the pursuit of excellence, like a hero from an Ayn Rand novel. These are still at least the ideals of many conservatives and libertarians.
The egalitarian ideals of the left, which were manifest in a wide variety of 20th-century movements, have been wonderful for driving social and civil rights advances, and in these areas liberals have often made much greater contributions than conservatives have. Still, the left-wing vision does not sufficiently appreciate the power — both as reality and useful mythology — of the meritocratic, virtuous production of wealth through business.
… The third problem is that the pro-wealth cultural vision may be overly optimistic about human willingness to embrace the idea of responsibility. … Yet how can such a culture of discipline be spread? At least as far back as John Bright, a classical liberal in Victorian England, it has been argued that society should grant respect to business creators and to stern parents who instill discipline. And today, conservatives often say that supportive economic policy, including lighter taxation and greater freedom from regulation, will support this vision. BUT are such moves, when carried out, actually shifting popular culture in a properly disciplined and conscientious direction?
… Nonetheless, higher income inequality will increase the appeal of traditional mores — of discipline and hard work — because they bolster one’s chances of advancing economically. That means more people and especially more parents will yearn for a tough, pro-discipline and pro-wealth cultural revolution. And so they should.
Very pretty words. Is Prof Cowen truly ignorant that social mobility in America is below that of our peers — and falling. The Ayn Rand meritocratic paradise gives way to stratification based on parental wealth and class. Prof Cowen echos Mr. Potter, who had a similar message but said it better in this scene from It’s A Wonderful Life (1946) — Idea for this comparison from Prof Richard Green (Prof Policy Planning, USC.
“What does that get us? A discontented, lazy rabble instead of a thrifty working class. And all because a few starry-eyed dreamers like Peter Bailey stir them up and fill their heads with a lot of impossible ideas.”
–- Henry F. Potter, leading banker and first citizen of Potterville.
Research about America’s low and falling social mobility
(A) New research continues to confirm the grim news about social mobility
(1) “Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data“, Bhashkar Mazumder, Federal Reserve Bank of Chicago, May 2005 — Abstract:
Previous studies, relying on short-term averages of fathers’ earnings, have estimated the intergenerational elasticity (IGE) in earnings to be approximately 0.4. Due to persistent transitory fluctuations, these estimates have been biased down by approximately 30% or more. Using administrative data containing the earnings histories of parents and children, the IGE is estimated to be around 0.6. This suggests that the United States is substantially less mobile than previous research indicated. Estimates of intergenerational mobility are significantly lower for families with little or no wealth, offering empirical support for theoretical models that predict differences due to borrowing constraints.
(2) “Understanding Mobility in America“, Center for American Progress, 26 April 2006 — Key findings:
Children from low-income families have only a 1% chance of reaching the top 5% of the income distribution, versus children of the rich who have about a 22% chance.
Children born to the middle quintile of parental family income ($42,000 to $54,300) had about the same chance of ending up in a lower quintile than their parents (39.5%) as they did of moving to a higher quintile (36.5%). Their chances of attaining the top 5 percentiles of the income distribution were just 1.8%.
Education, race, health and state of residence are four key channels by which economic status is transmitted from parent to child.
African American children who are born in the bottom quartile are nearly twice as likely to remain there as adults than are white children whose parents had identical incomes, and are four times less likely to attain the top quartile.
The difference in mobility for blacks and whites persists even after controlling for a host of parental background factors, children’s education and health, as well as whether the household was female-headed or receiving public assistance.
After controlling for a host of parental background variables, upward mobility varied by region of origin, and is highest (in percentage terms) for those who grew up in the South Atlantic and East South Central regions, and lowest for those raised in the West South Central and Mountain regions.
By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.
(3) “Economic Mobility: Is the American Dream Alive and Well?“, Isabel Sawhill (The Brookings Institution) and John E. Morton (The Pew Charitable Trusts), undated (2007?) — Summary:
For more than two centuries, economic opportunity and the prospect of upward mobility have formed the bedrock upon which the American story has been anchored — inspiring people in distant lands to seek our shores and sustaining the unwavering optimism of Americans at home. From the hopes of the earliest settlers to the aspirations of today’s diverse population, the American Dream unites us in a common quest for individual and national success. But new data suggest that this once solid ground may well be shifting. This raises provocative questions about the continuing ability of all Americans to move up the economic ladder and calls into question whether the American economic meritocracy is still alive and well.
For a wealth of information see the website of Pew’s Economic Mobility Project.
(4) “A Family Affair: Intergenerational Social Mobility across OECD Countries“, OECD, 2010 — Summary:
Policy reform can remove obstacles to intergenerational social mobility and thereby promote equality of opportunities across individuals. Such reform will also enhance economic growth by allocating human resources to their best use. This chapter assesses recent cross-country patterns in intergenerational social mobility and examines the role that public policies play in affecting mobility. Intergenerational earning, wage and educational mobility vary widely across OECD countries. Mobility in earnings, wages and education across generations is relatively low in France, southern European countries, the United Kingdom and the United States. By contrast, such mobility tends to be higher in Australia, Canada and the Nordic countries.
(B) Articles about social mobility in America
- “Ever higher society, ever harder to ascend“, The Economist, 29 December 2004 — “Whatever happened to the belief that any American could get to the top?”
- “A Closer Look at Income Mobility“, New York Times, 14 May 2005
- “Upper bound“, The Economist, 15 April 2010 — “The American dream is simple: work hard and move up. As the country emerges from recession, the reality looks ever more complicated.”
- “Social Immobility: Climbing The Economic Ladder Is Harder In The U.S. Than In Most European Countries“, Dan Froomkin, Huffington Post, 21 September 2010
(C) Other posts about social mobility
- A sad picture of America, but important for us to understand, 3 November 2008
- America, the land of limited opportunity. We must open our eyes to the truth., 31 March 2010