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:
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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.
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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%.
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Education, race, health and state of residence are four key channels by which economic status is transmitted from parent to child.
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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.
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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.
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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.
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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
For More Information
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Thank you for the article and the commentary. I too am worried by the thought that the US may be governed by a corrupt system that gives wealth to the few at the expense of the many in a tragically unsustainable way. But, because we are now in a realm of hard realities not sweet morality tales, why don’t we consider the other side of the coin? Perhaps we should ask, is it even mathematically possible for an increasingly complex and diverse society not to experience rising income inequality?
The purpose of reflecting on the underlying dynamics of the situation is not to deny the need for action, but to guide it towards the areas where it can really make a difference.
As food for thought, here are the 12 countries compared in the OECD paper for intergenerational income elasticity, listed from lowest to highest, alongside the total population of each country:
The more socially mobile half:
The less socially mobile half:
Thank you for that information!
As you imply, however, it is not relevant to the two key points in this post.
(1) Income mobility is falling in the US.
(2) It does not exist — even remotely — to the extent implied by conservatives (eg, Cowen), and so does not justify our high and rising income and wealth inequality.
To highlight the last point, an essay like Cowen’s would read differently if he mentioned that US social mobility was less than that of France, Spain, and Germany. But we’re better than Italy (in this respect)!
ALSO: Your data is from figure 5.1 on page 7. You stated it correctly, but to be clear for other readers — it measures not mobility but the opposite: “The strength of the link between individual and parental earnings”. The sequence is from high social mobility to low, with the US near the bottom.
Just as a technical point, the US is listed in the OECD paper as having slightly *higher* social mobility (slightly lower intergenerational income elasticity) than Italy. My bad for the confusing ordering– I split the overall list in half and left it as is, when I should have flipped the order of the “high” group because of the way I worded the labels.
Doesn’t social mobility reflect more on the attitudes instilled by parents in their kids?
Maybe we should be looking at low motility being correlated/caused by less parental involvement and the nature of that parental involvement.
We have exceptional examples of college dropouts becoming the wealthiest people in the country. (Steve Jobs, Bill Gates, Larry Ellison, Michael Dell).
The better question is what made it work for them.
Can you cite any research supporting your theory? The data and analysis in the attached report suggests that broad factors associated with social structure determines most of a society’s social mobility.
Looking at the success stories, esp without knowledge of their family background (eg, wealth) tells us nothing. They become, like Kipling’s “Just so stories”, fables told to justify the existing social order. You see, the giraffe wanted to eat leaves and stretched his neck every day …
Megan McArdle made a recent post exploring income inequality that I found interesting, though I grant I don’t have enough expertise to know how much water it holds. Nevertheless, I hadn’t even considered the idea before:
McArdle is IMO a font of superficial conservative thinking, supported by fallacy. Your quote provides a great example (you probably didn’t think of it because you have common sense). One could spend thousands of works deconstructing the lies and myths underlying it. I’ll mention just three points.
Anyone with actual experience with the lower-middle class knows that that a large proportion of them work far harder than (for example) investment bankers. Many have physically demaning jobs, closely supervised to maintain a fast pace, with long hours and little pay. I suggest McArdle put in a few weeks as a waitress at a diner or field hand on a farm, then re-write this.
History consists of mostly stable aristocratic systems based on inherited wealth and power. I know of no research showing that they are less stable than, for example, democracies and republics.
Our plutocracy (calling it an aristocracy is wrong, on several levels) works by limiting mobility more than “bequeathing skills”.
Does this have to be a question of either/or? Isn’t it possible that the rich stay rich because they work hard, AND because they work smart, AND because they inherit connections and priviledges, AND because they inherit good manners and effective habits, AND because they inherit boatloads of money, AND because they tend to give favors to friends and relatives, not poor strangers?
Also, I would point out an important difference between the hard work of the poor and the hard work of the rich– the poor work hard because they are forced to. If they had any other choice, they would by definition not be “poor”. When the rich work hard, it is because they choose to. Frequently the sons and grandsons of wealth choose not to work hard enough, and so they crash and fail.
These annecdotal, make stuff up, discussions contribute little in my opinion. There is a massive body of real research on these question, much of which I cite in my posts. Which people do not read, prefering non-quantitative guessing that supports their preconceived ideas.
Which is why our ruling elites steadily gain power and wealth, while we contentedly consume our daily bombardment of chaff. Becoming more ignorant year by year.
Now the Federalist Papers is readable (except in tiny birtes) mostly by seniors at good colleges — although written for a mass market of farmers, merchants, and craftsman. Now speechs on the level of the Lincoln-Douglas debates are understandable only MacArthur “Genius Awards” winners, although the originals were done at County Fairs.
The Flynn Effect increases our IQs, but skillful information programs more than offsets that. Domesticated animals are usually dumber than their wild ancestors.
From your own source (OECD):
You may also notice, that there is no footnote on this comment, no source cited. That is because this is called *making a reasonable assertion*. Not every reasonable assertion has to have a bibliography attached to it before it can be allowed to enter the discussion– that would be a very unreasonable standard, and would result in no real discussion at all.
It is usually a good idea to actually read your own sources before you use them as a cudgel to swing at people.
I don’t understand what your point is. Yes, everybody knows there are a host of factors affecting it. Some, like genetics, are beyond our ability to affect at this point.
That mobility is falling — and below that of our peers — shows that social factors are involved. Coupled with the deterioration of our educational system, stratification of college access, and rising income inequality — all affected by public policy — shows that much of this results from our choices. Our collective decisions. {the other sources cited discuss these things in greater detail)
Your allegience to our ruling elites appears quite strong, based on your willingness to accept the most flimsey of justifications for these trends. Will they reward you for this?
Well, I agree that much of what is happening now is strongly influenced by our collective decisions, and I also believe that size and scope can put an incredible strain on the collective decision-making process. Therefore, things falling apart does not seem very much to imply a conspiracy. I am hesitant to affix blame narrowly for what is essentially a systemic problem. Just because someone is at the top of the pyramid doesn’t mean they have any meaningful control over the shape of the structure– there is a grander architect that decides these things.
That said, I am on completely board with your call to action, and I appreciate your efforts to spread awareness.
“I am on completely board with your call to action, and I appreciate your efforts to spread awareness.”
Good to hear! Over the past 5 years on the FM website we’ve tried many methods to arouse Americans, all unsuccessful. Now we’re trying anger. So don’t take this personally — it’s about how to see our situation.
(1) “things falling apart does not seem very much to imply a conspiracy”
This is a commonplace rebuttal: “it cannot be a conspiracy, so its not happening.” Totally daft. Rich conservatives have pursued their efforts to increase their share of power and wealth in full daylight. Funding magazines, conference, think-tanks — capturing the Republican Party (see below). No secret meetings, no decoder rings. That we’re too dumb to see this is sad, one of their structural advantages.
The most important article of the year, from one of the finest outlets for journalism in America: “How the GOP Became the Party of the Rich“, Tim Dickenson, Rolling Stone, 9 November 2011 — “The inside story of how the Republicans abandoned the poor and the middle class to pursue their relentless agenda of tax cuts for the wealthiest one percent.”</
(2) “I am hesitant to affix blame narrowly for what is essentially a systemic problem”
Much of this results from public policy changes, so your reluctance to affix blame seems odd. Perhaps by “narrowly” you imply that we’re complicit, being complacent and uninvolved. In that sense I agree.
(3) “Just because someone is at the top of the pyramid doesn’t mean they have any meaningful control over the shape of the structure – there is a grander architect that decides these things.”
When priests would say that the unequal social order was God’s will, that was part of their job — for which they were paid. Quite well paid, at least for those at the top of the ecclesiastical machine. So I hope you are being paid to utter such nonsense.
Speaking just of America, for which I have marshalled quite a large body of studies on the FM website, the public policy changes during the past 3 decades resulted from a large-scale and patient investment of work and money. It continues today. Ignorance of the processes at work, as displayed in your statement, will end the Republic. Irresistably. Inevitably.
Ok, so your basic argument is:
(a) Social and economic mobility are a cornerstone of the “social contract” of the United States, and an indispensable part of what has made America great.
(b) Federal government investments in “infrastructure, science and education” (Dickinson, 2011), funded by a progressive tax system, are the foundation of social and economic mobility in the United States.
(c) Persistent efforts to reduce the progressivity (progressiveness?) of the US tax code over the past 3 decades have reduced the federal government’s ability to invest in infrastructure, science and education, thereby reducing economic and social mobility, thereby breaking the social contract and imperiling not only America’s greatness but her continued existence as a beacon of liberty and progress in a dark and tyrannical world.
Is this an accurate representation of your position? Please correct me if I have misstated any key points.
(d) Based on this interpretation of events, you posit that a concerted political effort by an informed and united citizenry to restore tax progressiveness to previous levels would allow for redoubled federal investments in infrastructure, science and education, probably end the budget deficit, too, and, most importantly, save America.
(e) My only question on that plan would be, What if it doesn’t? What if bringing America’s super-rich back into line doesn’t actually save America? What if endemic strife over the size and role of the federal government and the distribution of the tax burden is only a symptom, and the root causes run much wider and deeper?
(f) I think that (re-)taxing the rich would be a positive step, and I wish you luck in motivating action towards that end. But I am not sure that this step will be easy to achieve at this stage, and even if it was achieved I don’t think it would address any of the real issues currently clouding the horizon. It probably wouldn’t even improve social and economic mobility by that much.
First let’s discuss the most important aspect of your comment. There are almost 19 thousand comments on the FM website (only a small fraction are by the authors). If the WordPress system had a “top commenter” designation (as does ThinkProgress), you’d deserve it for your efforts to understanding the opposing viewpoint — something seldom seen on the Internet, neither by those on the right or left.
For good reason. Misunderstanding opponents’ reasoning maintains solidarity on both sides, preventing learning and discovery of common causes by Americans. Who knows where that might lead? For example, note the warmistas’ silly characterization of the skeptics concerns about AWG.
I’m off to work now. Later today I’ll post a reply to the substance of your comment.
OK, now let’s look at your mirroring of my reasoning.
(a) “Social and economic mobilitya cornerstone of the US “social contract”.
Agreed.
(b) “Government investments in infrastructure, science and education funded by a progressive tax system, are the foundation of social and economic mobility”
(c) “Persistent efforts to reduce the progressivity (progressiveness?) of the US tax code over the past 3 decades have reduced the federal government’s ability to invest in infrastructure, science and education”
You are conflating distinct issues: who pays, how much is raised in taxes, how much is spent, and how it has been spent. Policy about who pays (progressivity) has shifted the burden from the rich to the middle class. Household taxes are down as percent of GDP. We are spending enough, but it is spent on things other than infrastructure, science and education. Prison, homeland security, military — and a wide range of expenditures benefiting the wealthy (corporate welfare, like R&D for drug companies, subsidies for agri-corps and exporters).
(d) “most importantly, save America.”
It is a small, if important, part of the solution.
(e) “What if endemic strife over the size and role of the federal government and the distribution of the tax burden is only a symptom, and the root causes run much wider and deeper?”
Of course it is only a symptom. The Constitution is not a “machine that works by itself.” We’ve disengaged, and our elites are running it for their benefit. it’s a circle of life kind of thing.
(f) “But I am not sure that this step will be easy to achieve at this stage”
Agreed. I have said so at great length in many posts.
“I don’t think it would address any of the real issues currently clouding the horizon”
Agreed. I have said so at great length in many posts.
“It probably wouldn’t even improve social and economic mobility by that much”
Yes, there is always an excuse for inaction. You can wait for the Blue Fairy to hand you the easy, quick, magic bullet that solves all our problems. I hope rest of us will start the long difficult job of reforming America.
So is the degree of progressivity of the tax code an important issue in and of itself? Taxes in the last 30 years have fallen in absolute terms on the middle class as well, so each family actually has more money to spend on education/economic mobility than before. The imploding quality and exploding price of education really seem like a separate issue. The degree of emphasis on early childhood education also seems like a separate issue. The distribution of federal spending yet again seems like a separate issue. Could it be that restoring progressivity to the tax system would be more of a symbolic step, a logical result of the middle classes re-asserting their political dominance? Or is it an important practical step that would actually drive results?
I do not understand why you find this difficult to see.
Now a post has gone up at Ezra Klein’s blog, based on another Pew report:
Which makes me wonder how much of the gap is due to how much of the onus for educating kids our system places on parents, intentionally or otherwise. Presumably, high-educated parents would not only have more information to teach their kids, but also more time (not at work) to spend teaching.
The American Dream is dead, long live the American Dream.
Dont forget the untaxed economy which doesnt show up in gov stats .
( Italy ! )
Jean Gebser, pioneer of integral theory (consciousness studies) stated that the crisis of modernity results in PARADIGM REGRESSION to “deficient states” of culture. Habermas stated that one feature of the crisis of modernity is that “systems colonize lifeworld”.
So, the dominance of the paradigm of scientific rationalism, participatory democracy, free markets, the industrial revolution (etc.) has reached a point of cultural decline/regression because it fails to satisfy the coherence needs of a newly emerging form of culture based on a new paradigm (holism/integralism).
So, the forms of belief characteristic of earlier paradigms of social organization, such as rigidly conformist, mythic feudal/premodern culture (AS SUPPORTED BY MASSES OF SLAVES/SERFS AND CONQUEST/THIEVERY OF INDIGENOUS LAND AND RESOURCES) are re-emerging within outwardly “modern” cultures in their regressive/deficient stage.
Economic marginalization and exploitation of poor and working and middle class people is the main feature of such regression. It is fueled by technology on several levels (global trading vastly accelerates concentration of wealth for the top “1%”).
A “real” libertarian would never subscribe to such paradigm regression. Ayn Rand’s followers and such ilk are total, absurd fakes. They are radioactive mutant zombies in terms of consciousness studies.
What remains to be resolved is the legitimacy of “anti-statist” libertarian/conservative sentiments.
As “real” libertarian Keith Preston explains in the following article, the entire structure of State Capitalism (plutocracy) is premised on massive state intervention in support of wealthy/corporate (plutocratic) interests. See here.
SEEKING CONSENSUS ON REFORM:
Here is an example of a (relatively) politically sophisticated constructive conservative/libertarian perspective as influenced by Integral Theory:
Fabius, haven’t you already tried anger on this website? I’ve been reading for quite a long time and some of the most memorable posts are where you ended with two quotes: “Anyone can become angry – that is easy, but to be angry with the right person at the right time, and for the right purpose and in the right way – that is not within everyone’s power and that is not easy.” from Aristotle and I think, “Telemachus, now is the time to be angry” from a version of the Odyssey. Really just a quibble, probably not worth interrupting the evening’s regularly scheduled programming.
“haven’t you already tried anger on this website?”
Yes! My first post recommending anger was September 2008. That’s only three years.
Big things often take time. Big things are often expensive.
“The liberty of local bullies“, Noah Smith (student), 26 November 2011 — Excerpt:
re: liberty of local bullies: “the main “oppressive” features of feudal society that libertarians would oppose would be slavery and serfdom.”
all imperial systems require war and enslavement. Noah the Student is a typical establishment liberal who is attempting to justify liberalism’s role in the american imperial system of state-capitalism. Noah completely ignores the full spectrum of “local bullying” done in the name of liberalism! american fully became an imperial power when it defeated Spain in the SPanish-American war, 100_ years ago. The imperial impulses that were “imported” from Spain were combined with the economic power of industrialization to create modern state-capitalism.
the modern american plutocratic empire has its “slaves”. Its war schemes aren’t worth commenting on since they are obvious.
have libertarians really thought about what a non-imperial america that no longer provides huge public support for industrial monopolies would consist of? probably not as much as they should. What would presumably be crucial would be cleaning up the court system so that the legitimate role of local police in enforcing laws that protect people’s liberty could be returned. The current system is increasingly corrupted by absurd drug laws designed to further impoverish poor communities and enrich fat cat lawyers, judges, prison guard unions, etc.
The national security apparatus is now capable of accusing any dissident of being a “terrorist”, and removing them from the justice system. This is teetering on the brink of fascism.
If you think that pulling back from that brink is a return to a feudal society, I don’t know what to say.