On the Hardening of American Income Mobility

Mitt Romney is a big talker.  He loves to talk about America as a “land of opportunity.”  The trouble is, the data don’t support that anymore.  Oh, they used to.  Back in the 1950s and 1960s, it could be said that each generation would did economically better than every previous generation.  America’s children would more often than not do better than their parents and their grandparents.  But not so much anymore.

The best way to measure a nation’s merit-based status is to look at its intergenerational economic mobility: Do children move up and down the economic ladder based on their own abilities, or does their economic standing simply replicate their parents’? Sadly, as the American middle class has thinned out over recent decades, the idea of America as the land of opportunity has become a farce. As a paper by Julia Isaacs of the Brookings Institution has shown, sons’ earnings approximate those of their fathers about three times more frequently in the United States than they do in Denmark, Norway and Finland, and about 1 1 / 2 times more frequently than they do in Germany. The European social democracies — where taxes, entitlements and the rate of unionization greatly exceed America’s — are demonstrably more merit-based than the United States.

But should we be surprised?  Those social programs and union protections ensure that everyone starts from a fairly level playing field.  America used to have that mobility, but we don’t anymore.  What we have is a Darwinian “free market” that ensures those that have, keep and those that don’t have, never get.  And that is regarded as a virtue.

Intragenerational Income Mobility (from INTERNATIONAL COMPARISONS OF ECONOMIC MOBILITY BY JULIA B. ISAACS, The Brookings Institution)

The policy failures of Republican ideology are written in the data.  Children are not moving up, they are not doing better than their parents.  Poverty, like wealth, is inherited and our economic policies are reinforcing that.

Markets do not create an more equitable distribution of national income or facilitate equality in opportunity for all Americans.  Instead, the “free market” ideology serves to reinforce the stratification in the American economy.

So much America as a land of opportunity!  If you want your kids to have the opportunity to do better than you, you’ll need to emigrate to Canada, Finland, Norway or Denmark.


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