Upward Mobility

[kalm]

And it looks like some conks are starting to recognize the problem

At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths.

By emphasizing the influence of family background, the studies not only challenge American identity but speak to the debate about inequality. While liberals often complain that the United States has unusually large income gaps, many conservatives have argued that the system is fair because mobility is especially high, too: everyone can climb the ladder. Now the evidence suggests that America is not only less equal, but also less mobile...

Former Senator Rick Santorum of Pennsylvania, a Republican candidate for president, warned this fall that movement “up into the middle income is actually greater, the mobility in Europe, than it is in America.” National Review, a conservative thought leader, wrote that “most Western European and English-speaking nations have higher rates of mobility.” Even Representative Paul D. Ryan, a Wisconsin Republican who argues that overall mobility remains high, recently wrote that “mobility from the very bottom up” is “where the United States lags behind.”

http://www.nytimes.com/2012/01/05/us/ha ... wanted=all" onclick="window.open(this.href);return false;

[AZGrizFan]

Honest question: What incentive does the bottome 1/5th have to move up when everything is handed to them for free if they stay where they're at? All the entitlement programs have done is created generational dependency on the government. They're BORN that way and have absolutely NO incentive to change.

Also: What does it take to move into the top 1/5th in America vs moving into the top 1/5 in Denmark?

[JohnStOnge]

There are numerous qualifications in the second half of the article. Also, the article hints at differences in demographics but understates those differences. I'm talking about this quote:

While Europe differs from the United States in culture and demographics, a more telling comparison may be with Canada, a neighbor with significant ethnic diversity.

The implication is that Canada is similar in terms of demographics to the United States. But I don't think that it is. "Similar" is a subjective term. What's "similar" to one may not be "similar" to another. However, for example, only an estimated 2.2 percent of Canada's population is "Black" (http://www.hrsdc.gc.ca/eng/lp/lo/lswe/w ... file.shtml" onclick="window.open(this.href);return false;) as compared to an estimated 12.4 percent of the US population (http://factfinder.census.gov/servlet/AC ... _1&_sse=on" onclick="window.open(this.href);return false;). To me that alone is a substantial difference and I have no doubt that I could find many others.

A fair analysis would have to take those demographics into account and I saw no indication in the article that any of the referenced studies did that. They may have, but I didn't see any indication in the article.

A fair analysis would also take innate ability into account. Something like IQ at the least. IQ is highly correlated with success. And it presents a "chicken or egg" conundrum. To what extent does low IQ "cause" being poor and to what extent does being poor "cause" low IQ? But it is not correct to just assume innate ability is not a factor. I would expect that if we looked at the mobility of all those who started in the bottom 20 percent of the income distribution and compared those in that group with IQs > 115 to those in that group with IQs <85 we would find much more upward mobility among those with IQs >115.

Without taking such things into account any effort to hypothesize with respect to the causes of the differences in mobility is virtually pointless. Especially innate ability. If you cannot or do not take innate abilitiy into account you have ommitted an obvious substantial factor and whatever else you do has a big asterisk by it.

Back to the numerous qualifications. Here is one that I think is particularly important:

The income compression in rival countries may also make them seem more mobile. Reihan Salam, a writer for The Daily and National Review Online, has calculated that a Danish family can move from the 10th percentile to the 90th percentile with $45,000 of additional earnings, while an American family would need an additional $93,000.

Under circumstances like that, a fair comparison on the extent to which people advance would be based on absolulte rather than relative movement. If an American family and a Danish family each advance by $45,000 then they have advanced to the same degree. Yet the approach used by the referenced studies creates the impression that the Danish family has advanced by substantially more.

[JohnStOnge]

BTW, the entire premise behind the mindset I think is implied here is flawed. It's the "relative benefit" mindset holding that the objective should be to make sure there is "equality" rather than focusing on whether or not people have advanced or regressed in absolute terms.

Take this for instance:

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts.

Is there something wrong with that? Is it "good" if fewer who start in the top fifth remain in the top fifth? Suppose the entire population advances substantially but advances to the same degree? Then everyone is better off but there has been no mobility in terms of where they fall in terms of percentile groupings at all. Is there something "wrong" with that?

The whole deal with looking at relative well being is flawed egalitarian nonsense. There should be no focus at all on narrowing gaps or changing relative distributions. The focus should be on raising the entire distribution.

[kalm]

BTW, the entire premise behind the mindset I think is implied here is flawed. It's the "relative benefit" mindset holding that the objective should be to make sure there is "equality" rather than focusing on whether or not people have advanced or regressed in absolute terms.

Take this for instance:

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts.

Is there something wrong with that? Is it "good" if fewer who start in the top fifth remain in the top fifth? Suppose the entire population advances substantially but advances to the same degree? Then everyone is better off but there has been no mobility in terms of where they fall in terms of percentile groupings at all. Is there something "wrong" with that?

The whole deal with looking at relative well being is flawed egalitarian nonsense. There should be no focus at all on narrowing gaps or changing relative distributions. The focus should be on raising the entire distribution.

Generational wealth can hurt competition and opportunity. I think I remember a few of the founders and Teddy Roosevelt saying as much.

[Ivytalk]

BTW, the entire premise behind the mindset I think is implied here is flawed. It's the "relative benefit" mindset holding that the objective should be to make sure there is "equality" rather than focusing on whether or not people have advanced or regressed in absolute terms.

Take this for instance:



Is there something wrong with that? Is it "good" if fewer who start in the top fifth remain in the top fifth? Suppose the entire population advances substantially but advances to the same degree? Then everyone is better off but there has been no mobility in terms of where they fall in terms of percentile groupings at all. Is there something "wrong" with that?

The whole deal with looking at relative well being is flawed egalitarian nonsense. There should be no focus at all on narrowing gaps or changing relative distributions. The focus should be on raising the entire distribution.

Generational wealth can hurt competition and opportunity. I think I remember a few of the founders and Teddy Roosevelt saying as much.

JSO makes a valid "apples to apples" point about the flaws of comparing mobility in a cradle-to-grave society like Denmark to the USA. As for folks like Franklin and Paine, I don't think their economics writings focused on "competition and opportunity." They were more focused on things like primogeniture and other feudal vestiges that ticked people off in Revolutionary America. Jefferson didn't give away his plantation, now, did he?

[UNI88]

Honest question: What incentive does the bottome 1/5th have to move up when everything is handed to them for free if they stay where they're at? All the entitlement programs have done is created generational dependency on the government. They're BORN that way and have absolutely NO incentive to change.

Also: What does it take to move into the top 1/5th in America vs moving into the top 1/5 in Denmark?

A key issue IMO is entitlements vs. safety nets. Safety nets are good in that they help create an atmosphere in which people feel better about taking risks and trying new things/creating new products/services. Risks lead to innovation which is good for the economy. Safety nets taken too far become entitlements and actually discourage risk, innovation and even employment.

[AZGrizFan]

The biggest flaw in ANY of these studies is using countries like Denmark as some sort of benchmark for success. The harsh reality of it is this: There is NO country that compares to the U.S. in terms of where each dollar of revenue is ultimately spent.

For one small example, Denmark provides a much greater "safety net" of social services like unemployment insurance (up to 4 years!), government paid health care, etc., etc., but they can do that because they spend just over 10% of their annual budget (of approxmately $200 billion) on defense expenses. The US, on the other hand, while serving as the world's policeman, spends roughly 42-57% of it's budget on defense (including non-DOD defense-related expenditures such as homeland security, veterans affairs, counter-terrorism, etc.).

Sure, we can wish that we WEREN'T the world's policeman, but that doesn't change the fact that we ARE. So, until THAT changes, using pretty much ANY other country's model as a comparison to our own intimates a deeply flawed study from the very outset.

If we had that extra $500 billion to throw around at healthcare, entitlement programs, retraining and the like we might have a little more upward mobility here, but the world woud probably implode.

Then again, that might not be a bad thing.

[GannonFan]

As much as JSO has plenty of off the wall postings, he does bring up good point in terms of the flaws in a comparison like this. And with that said, the study looks at the results, primarily. It says that people "don't" move up, at least as much as compared to other countries. It doesn't say that they "can't" move up or if they "won't" move up, meaning it doesn't speak to whether a person is able to and doesn't or if they are restricted in some way from moving up. And lastly, the ultimate question behind all of this is what would be the answer if absolute mobility was the desired outcome - is it a government solution or would it be something more cultural (or to be fair, both).

[AZGrizFan]

One other thing: Denmark embraces the philosophy that you can fire a worker at any time, for any reason. Hmmm...

[YoUDeeMan]

Damned ignorant, racist Danes...they support cartoonists who make fun of other people's religious leaders.

[grizzaholic]

I figured a thread about 'Upward Mobility' would have at least one

[kalm]

I figured a thread about 'Upward Mobility' would have at least one

You need to wait for my "Lateral Mobility" thread.