The issue of our time is not income inequality but income mobility, of which there is in the U.S. less and less. Are conservatives paying attention?
American Exceptionalism has taken a few hits of late, with the country lagging in important measures of performance. We used to think America was the freest country in the world, but now the Heritage Foundation begs to disagree. It ranks America in tenth place, as “mostly free,” behind a group of “free nations.” We used to think that this was a country of small government, but that was before Obama. And we used to think that, more than any other country, this is a place where people can get ahead no matter where they come from. However, the Pew Economic Mobility Project 2011 tells us that that’s not true either.
The Pew study was produced by the Pew Charitable Trusts. While one wouldn’t describe them as a conservative foundation, they’ve co-partnered with our friends from the Heritage Foundation and the American Enterprise Institute on their mobility project. The table at right, from their study, measures income mobility, and reports that the U.S. is one of the least mobile societies in the first world. The study measures “intergenerational elasticity,” defined as the relationship between a child’s and his parent’s rank on the income ladder. An elasticity of 0 denotes a highly mobile society, with no relationship between the income levels of parent and child. An elasticity of 1 describes a society with no mobility between the two generations.
|Comparable Estimates of the Intergenerational|
|Elasticity of Earnings between Fathers and Sons|
The study finds that, of the countries sampled, income mobility is greatest in the Nordic countries and least in the U.K., where half the earnings advantage is passed on by parents to their children. That’s not surprising, as we’re apt to regard Britain as a class-ridden society. The surprise is that we seem almost as immobile a society as they are. If so, this would strike at the heart of this country’s self-image, as expressed in the idea of American Exceptionalism.
Nothing is more central to the idea of America than the belief that anyone can move up the ranks with the proper amount of industry and discipline. What we don’t want are permanent classes of peasants and aristocrats. That’s our idea of what Europe is or was, and we’ve always seen the U.S. to be different from that. We see America, not Denmark, as the land of opportunity. If it turns out that we are more class-ridden than the Europeans, then a core understanding of what American Exceptionalism means will have been lost.
Income mobility can be expected to become a major issue in the coming decades. Progressives have already picked up on the problem, in their campaign to reshape our economy. This was the message behind the President’s Osawatomie speech last December. Here’s what he said:
We tell people—we tell our kids—that in this country, even if you’re born with nothing, work hard and you can get into the middle class. We tell them that your children will have a chance to do even better than you do. That’s why immigrants from around the world historically have flocked to our shores.
And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. You know, a few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance had fallen to around 40%. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class—33%.
The President repeated the same idea in his January State of the Union speech. In both cases, conservatives have wrongly taken the message to be about income inequality. That’s in there, but the deeper message was about income mobility.
For decades progressives have complained about income inequality, about differences in wealth and earnings in the U.S. That’s what the Occupy Wall Street folks mean when they talk about the 1 percent and the 99 percent. For the most part, however, those complaints have fallen on deaf ears. Income inequality doesn’t bother most Americans, so long as there is income mobility. We aren’t bothered by the fact that other people are richer than we are, provided that our children have an equal shot at the brass ring. We’ve always believed that this was true of America, more than most countries, and that is why, according to Seymour Martin Lipset, “it didn’t happen here” and socialism never took hold. Take mobility away and income inequality presents progressives with transformational opportunities. That’s the story of Venezuela.
The absence of income mobility might also weaken the sense one has of belonging to a single American nation. With separate classes of citizens, one loses the sense of a united country with commonly shared expectations in life. In the past Americans have been quick to volunteer their services in times of peace and enlist in times of war, and I suspect that one reason is the belief that we all have an equal chance at life, that this is a country of income mobility. Otherwise we’re left with the two nations of Sybil, Disraeli’s England of 1845, and that’s a possibility which should concern people, particularly conservatives, who think American nationalism valuable. At present, the left is claiming the income mobility issue. Concede that to them, and say goodbye to a good many Tea Party supporters.
If income mobility is desirable, just what is the best mobility ratio, on the Pew scale? Did Denmark get it right, with its figure of 15 percent? Or would a score of 0, denoting perfect mobility, be better still? Just what kind of mobility to expect was a subject that greatly interested the Founders. They were self-consciously creating a new nation, and with it a new society, and what they wanted was something different from what they saw as an aristocratic England.
There had been sharp social distinctions in the Ancien Régime of colonial America, and the Founders worried that these might persist. They knew nothing of statistics but nevertheless understood the idea of reversion to the mean, the tendency of exceptional parents to beget ordinary children, and as they opposed aristocracies took comfort in this. In a letter to John Adams, Jefferson described this process as the “natural degeneration” of mankind. The Chinese expressed the same idea with the saying “shirtsleeves to shirtsleeves in three generations.” Our modern version features a entrepreneurial grandfather with dirt under his fingernails, a father with a Harvard MBA, and a son on Ritalin.
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