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Feature
Legacy Nation
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?
(Page 2 of 3)
Did the Founders think, then, that America would be a country of perfect mobility? That was the subject of a famous debate between Jefferson and Adams, after both had left politics and patched up their quarrels. Both opposed what they called an “artificial aristocracy” of wealth and privilege and applauded the “natural aristocracy” in which the self-worth of eminent men and women is recognized by all. In each generation such people emerge, and a just state should recognize their worth and employ their services. Jefferson thought that some of their virtues might be passed on to their children, but thought that “the equal rights of men will rise up against” a permanent aristocracy of this kind.
Adams would have expected a higher score on the Pew scale, for he thought that a famous name would confer on its bearers an eminence which, if decayed, might nevertheless last through generations. That wasn’t good enough for his great-grandson, Henry Adams, who a hundred years later bemoaned the decline of his family. Even in our own day, however, a name such as Kennedy or Clinton confers a wholly undeserved advantage in life.
Beyond the celebrity attached to a name are the genetic advantages that come from the wise choice of parents. This was the great theme of Charles Murray’s The Bell Curve, which the debate about the book’s racism obscured. Murray prized the idea of America as the land of opportunity and worried that the transformation of America from a manufacturing to an information economy would confer lasting benefits for smart gene pools. The winners in the new economy are the more intelligent people amongst us, and if 40 to 80 percent of what makes us smart is inherited, as Murray suggested, then a class of the more intelligent might persist over generations, leaving the generations of Little Brains in the dust. That message is reinforced by the Pew Economic Mobility Study, in which measures of parental intelligence are strongly correlated with the economic outcomes of their children.
We haven’t yet reached the point where people are penalized for their intelligence, and we’ll never reach the point where we shun John Adams’ celebrity families. That is to say that we should not expect or desire perfect intergenerational mobility, with a Pew score of 0, in any society. Those with more intelligent parents are more likely to be more intelligent themselves, and wealthier too.
The Puzzle: Why So Little Mobility in the U.S.
This doesn’t explain why the U.S. ranks so poorly on the Pew study, however. There are smart people everywhere, and we’d expect the same degree of mobility in each country, if intelligence were the only driver. Similarly, the move to an information economy can’t explain the differences, when this affects all first world countries in so similar a manner.
That leaves several explanations for the difference. For some people, the first thing to come to mind is racism. For some people the first thing to come to mind is always racism. In a racist society, the disfavored class finds it impossible to move up the ranks, and this would reduce mobility and increase the Pew ratio. I don’t know how to prove or disprove such claims, but nevertheless am skeptical that racism explains much of the difference. First, America is not the only diverse society around. Other countries, especially those which, compared with the U.S., have high immigration ratios, are also diverse, and often more racist than the U.S. Second, if racism explains the difference, what was affirmative action all about? What a waste all such efforts would have been, if it all comes down to irreversible racism.
Then there are cross-country differences in welfare systems. There is a strong positive correlation between economic mobility and a country’s top rate of marginal taxation. That might seem like a paradox, since the wealthy have less to leave to their children under progressive taxation. The paradox disappears, however, if the tax revenues are applied to level the playing field through welfare policies. Once again, however, I don’t buy it. As a percent of GDP, America spends less on welfare than most first world countries, but the value of the welfare payouts in America per recipient are among the highest in the world. One might think that government subsidies for higher education would account for much of the difference, since higher education is a powerful escalator for economic advancement, and since college tuition is much higher here than in comparable countries. However, university completion rates in the U.S. are the second-highest in the world. It may be expensive, but people still go to college here.
That leaves two things, which I think do help to account for the lack of income mobility in the U.S., and which conservatives in particular would find objectionable. The first is a culture of poverty in which the desire to get ahead is abandoned. To succeed, what children need are the habits of industry and learning, the willingness to defer immediate gratification, which professional and wealthier parents who are married to each other can more easily pass on to their children. That is the most important head start program society may offer, compared to which state-run Head Start programs are a joke.
Might this explain why America lags on cross-country measures of income mobility? Some evidence of this is provided by how America’s 15-year-olds fare on the OECD Program for International Student Assessment tests, where they rank 17th in science and 25th in math, with a statistically significant relationship between the science scores and the Pew mobility rankings. America’s kids do however lead the world in one category—self-esteem. The gap between performance and self-image is highest in this country, and the sense of self-contentment and happy mediocrity plausibly helps to explain America’s income mobility ranking. There is no need to pursue happiness if it comes without effort.
The second factor that might help account for the income mobility ranking is how America fares on measures of the rule of law. There is a broad understanding that the rule of law is crucially important in explaining economic development, without much agreement about what the term might mean. However, one thing it has always been taken to denote is a distinction between the rule of law and that of men. How the state treats one shouldn’t depend on whom one knows. In that sense, America seems not to rank particularly well, when compared with the other countries on the Pew mobility index. On measures of the rule of law, the World Justice Project ranks America about 9th or 10th out of the 12 countries surveyed in Western Europe and North America. Transparency International puts the U.S. in 24th place in its measure of perceptions of public corruption.
The Transparency International ranking is significantly correlated with the Pew mobility index. That’s what one would expect. The more corrupt a country, the more it matters whom one knows, and the less mobile the society. In highly mobile countries, it matters less whom one knows and more what abilities one brings to the table.
Explaining the Demand for Aristocracy
Jefferson thought that Americans wouldn’t tolerate the lack of income mobility I have described. Why was he wrong? Here I offer an explanation. Suppose that (1) people are concerned about how their children will fare; (2) people have relative preferences (they care about how they and their children rank compared to others); and (3) a class of people, small in size but large in influence, composed of opinion leaders and the very rich, has a disproportionate ability to shape our policies. Put all that in the hopper and don’t be surprised if what comes out is aristocracy.
Milton Friedman advanced a model in which people care only about themselves and not about their children. That was just a model, and it was inconsistent with the solid evidence that people do care about how their children fare. That’s why high estate taxes are wasteful. If people care about their kids, they produce more than they can spend on themselves during their lifetime in order to bequeath what is left to their children. Take away the right to pass on income on death, and people will react by producing a lot less. Caring about succeeding generations is not a vice. It’s a virtue, and conservatives in particular will recognize this.
About the Author
F.H. Buckley is Foundation Professor at the George Mason University School of Law.
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Ryan| 3.27.12 @ 9:47AM
I'd also add a few things, and probably add some elaboration.
Income mobility is also undermined by welfare - both personal and corporate. In a sense, both people and companies need to be made "desperate" so that they will get imaginative and get to work providing for themselves and their families.
That's why corporate welfare (in the form of targeted tax favors and loopholes) and personal welfare (AFDC and other general forms of welfare) prohibit human productivity.
We need an environment in the US where small businesses can thrive on startup. If we want all these people to go back to work, they need to also have the opportunity to work for themselves and truly advance.
skip| 3.27.12 @ 2:17PM
Once again you are consistently rock solid. Your contributions to the discourse on various issues have not been lost on me. Kudos.
'The Ten Cannots'
William Boetcker ( 1873 - 1962 )
You cannot bring about prosperity by discouraging thrift
You cannot strengthen the weak by weakening the strong
You cannot help the poor man by destroying the rich
You cannot further the brotherhood of man by inciting class hatred
You cannot build character and courage by taking away man's initiative and independence
You cannot help small men by tearing down big men
You cannot lift the wage earner by pulling down the wage payer
You cannot keep out of trouble by spending more than your income
You cannot establish security on borrowed money
You cannot help men permanently by doing for them what they will not do for themselves
Indiana Alex| 3.27.12 @ 10:11AM
"Individualizing" social security would be the single most impactful policy to eliminate generational poverty, and stagnatin in the working class.
Today the working class mostly work very hard their entire lives, some in more than one job, yet most die penniless. Accumulating assets from this lifetime of work, that could be passed down generationally opens up the door to the middle class and beyond.
Of course liberals prefer an empty promise from the government that some amount of check may be sent monthly that can be taken away at the whim of congress. They look at themselves and figure that people aren't smart enough to manage their own assets.
Of course the true objection from big government types in both parties is the loss of power to buy votes inherent in the collectivist system.
And the rich stay rich, and the poor stay poor.
DTOM| 3.27.12 @ 10:27AM
F.H.
How can you measure "inter-generational income elasticity" when over half the live births in this country have no father of record?
Your sample is largely restricted to two parent families which are well documented to be positively correlated with income. Thus your measurement understates economic mobility in the US.
Sort of like when pollsters' results were unknowingly biased by the fact that not everybody had a telephone.
Don't Tread On Me...
Hoads| 3.27.12 @ 10:42AM
While Mr. Buckley dismisses the impact of our evolution from an industrial economy to an information society, one cannot dismiss the impact of our American economic evolution from production to consumption. The rise of a global economy has resulted in the export of a significant amount of our manufacturing base even as our manufacturing productive capacity has increased secondary to technological advancement.
The availability of cheap labor in a global economy has markedly decreased the price of consumer goods overall for everyone such that, those at the lower economic scale can now afford all the conveniences of modern life as compared to previous generations. The old Maslow Heirarchy of Needs comes to mind- the ability to acquire basic human needs of food, shelter, clothing, air, sleep frees the individual to pursue the more intangibles of life such as safety, security, happiness, creativity, etc. The same goods and services are available for all income scales with variances in price and quality. Vera Wang has a line of clothing at Walmart. One can buy a steak dinner at Golden Corral or Morton's. Consumer satisfaction is achieved on both ends of the scale as is measures of happiness and well- being.
It doesn't require a top down analysis and wringing of hands in recognizing that drive and ambition are generally positively correlated with the degree of hunger/inferiority. Perhaps Americans are so consumed with our cheap goods and the never ending array of entertainment that we've become fat and satiated at the expense of drive and ambition.
Perhaps we are the victims of our own "success" when we perceive our ability to consume the toys of life as the measure of our success and happiness. The real problem then is our moral degradation- we're losing the character traits that fuel the rise up the income ladder.
Petronius| 3.27.12 @ 11:21AM
Oh, So right about those "progressive aristocrats". They are motivated as the moneyed industrialists of old who's primary mission was keeping "the other kind" out of their sphere of privilege. The fact is that the old Ivy League blue bloods and the hard core liberals are of the same type. They believe in upward mobility for those of like mind and downward for all of us who are not but demand the Right to live by and for ourselves without hindrance from Them. Political PC not withstanding, their social control is absolute. The paid protesters assaulting Conservatives doing their bidding don't care a wit that their rice bowl comes from the heads of foundations living like royalty so long as they can paralyze any business that does not function as a support group for losers. And they love the N.Y. Times telling the struggling middle class wannabes to give up and accept their preordained place on the liberal plantation. The message hasn't changed. The animus of our oppressors has.
Still at the bottom of it all is that sand box mentality the "little guy" takes as gospel who's knowledge of economics is summed up in the three words, "have, get, and benefit". His chain is easily pulled by liberal plutocrats as he goes his destructive way knowing that they will attack the middle class trying to accumulate wealth, but not Them! They are secure in the knowledge that when the windows of Their banks get smashed, Their insurance companies cover the losses and the middle class they all despise gets the bill. Don't you just love it when a plan comes together? All this proves is that the tactics of social coercion have shifted from the market dominance exercised by Rockefeller and Carnegie to the cultural warfare waged by the nouveau riche deploying miscreant adherents of Rousseau wearing the cockade who would rather ruin the lives of their betters than improve their own. And it's not really about money. It's about displacing God and deifying themselves. I fear what will happen to the children and grand children of my friends. We cannot defeat liberalism politically.
PCC| 3.27.12 @ 12:33PM
An excellent article, cogently presented.
Mike 3/505| 3.27.12 @ 1:45PM
Petronius,
Please, Please...Paragraphs! You write some good stuff...but my old eyes have a hard time reading it.
Regards,
Mike
Petronius| 3.27.12 @ 3:53PM
Mike
Beg your pardon for being so verbose. I should have stated plainly and forcefully that the ruling class utilizes government, academia, and cultural institutions to prohibit any commerce they cannot overtly control. Ergo, upward mobility for the white middle class is now defunct.
cicero| 3.27.12 @ 3:46PM
Petronius et al, Well said. The thing that amazes me is that these guys think that they are living in the real world. The WSJ has been reporting all month about the haircut the CEO's have been taking, because they finally admitted that they have been running their publicly traded companies into the ground. Instead of $20 million, they will only be getting $12 million in their pay envelopes. Poor babies! Then there is the inverstment banker who is going to jail for the next 11 years because, although he has made tens of millions of dollars in the past few years, he tried to game the system to make a few more million. In the meanwhile, the middle class makes their $50 thousand a year, raises their kids, goes on a vacation to the beach every so ofter, and brings in the next generation. And they achieve the really heavy lifting with a sense of humor, and fatalism. This they achieve even though the beaurocracy conspires against them on a continuing basis.
The fact that the income plateaus have been static at the top and the bottom is not very relevant. Those who make the millions and billions will die, as everyone does, and their heirs will dissipate the wealth, as they always do. Those at the bottom will remain there until there is a societal change that stops institutionalizing poverty. The upward and downward movements in income distribution will continue within the confines of the great American middle class. Those making between $45,000 and $250,000 will vary within those parameters, and life will go on until the Left, if allowed to, kills our capitalistic economy.
Petronius| 3.27.12 @ 3:59PM
There's an old fashioned App for this: Black markets.
JP| 3.27.12 @ 3:58PM
The "mobility" problem in this nation has nothing to do with education, money, government programs, or class. It is ultimately a moral issue, and morality isn't something that can be subsidized.
Teflon93| 3.27.12 @ 5:48PM
The author seems unaware that one way to achieve "income mobility" is to confiscate the income earned by one unfavored group of people and give it to a favored group of people.
This is why socialist countries in the table have greater "income mobility". It is because the term is synonymous with corruption and tyranny.
Bob K.| 3.27.12 @ 8:14PM
Well this is news to me!
I thought that our long time government policy of Affirmative Action for everybody but white males would finally even things out!
Apparently it hasn't.
Are you now having trouble finding enough males of the right color for you in the Country Clubs, Universities and Board Rooms of America, Mr. Buckley?
POST American| 3.27.12 @ 11:13PM
---------------------FINAL WORD---------------------------
--NONE of the above!
The issue ---IS---NOT the actuarial breakdowns
from the capstone 'authorized' press.
The issue ---IS---- the destruction of liberties
---endless interference ----criminal tax schemes
---nearly a century of ILLEGAL, seditious
machinations from the ultra rich, TAX FREE
'chair--'IT'--Abel' foundnations and the 'FED'.
In this, the 11th hour of the CFR-RED China
handover, sellout, takedown, TREASON and
FINAL EUGENICS OP -----we can't afford
to mince words.
-----------------HUAC/ Nuremberg 2012--------------
John Kettlewell| 3.28.12 @ 5:09AM
Flawed study is...flawed. Always amusing to see attempts at quantifying life. We have a population equal to al other listed nations. We attempt to not have socialism, well we used to. I see no mention of minimum wage or any mention of inflation (including debasement and cost associated). Decrease in manufacturing? Mass litigation? How about actual ownership of property? Lifespan increases?
You can't possibly list all variables and accurately compare them between different societies. I feel like I just took an anthropology course...and it was just as useless as a real one (or sociology, etc.). You speak of university level education but not of the uselessness of courses, degrees, and abundance.
You can't measure happiness, and that is our pursuit.
aware| 3.28.12 @ 7:43AM
You completely miss the real cause of economic, cultural, and societal breakdown, the State.
Society has always had remedies to the problems we face but is now prevented from applying them by the State. When the State replaces fathers with handouts it is an act of war on society.
A host of aberrant behaviors is not only forced upon us by the State, it is subsidized. No society that gives equal footing to deviancy, whether homosexuality, bastard children, handouts for non-productivity, and worst of all prohibiting stigmatizing those engaged in such, can survive.
This article only points out one more symptom of the poison forced on us by the State. Until "conservatives" understand the true pathology of the State, which is force, they will continue to believe that changing the faces will change the pathology. Force is violence, which the State seeks a monopoly on, and violence is not building, it is destruction. Society is being suffocated by the State.
Even to call the State "government" is to soften the reality. It makes you think somehow you have a role in this destruction when the truth is you have little or no power over it. In fact, you are a victim.
The State can never be the instrument of bringing a "good" society into being. As Nock said, it is a harrow that you are to believe can be used to plow. But no matter how much you try, no matter who you have driving it, and no matter what "new" theories invented to support it, it will never make a furrow to plant a crop.
What's more, the State is totally resistant to any and all attempts to "reform" or "rehabilitate" like any career criminal. The founders innately understood this and created a prison for it. They wasted no time on "reforming" and instead severely restricted it with the shackles of the constitution.
Now we are faced with the hard reality that it will never go back to those shackles, and worse, will continue driving down the path of self destruction. It is a well traveled path and always ends at the same destination.
POST American| 4.1.12 @ 12:53AM
---------------------TRUTH OPENED-------------------
"--And in the 1920s, the foundations et al
were paying off ministers across America
to preach that 'Jesus was FOR EUGENICS."
-Endgame
(docoumentary)
10 MILLION views online
Unaccountable, inter-generational, psychopathic,
INTER-national USURY ----is-----EUGENICS.
EUGENICS -------IS------actuarial psychopathy
turned on the human soul and substance.
----------------HUAC/ Nuremberg 2012---------------
CASE OPENED