Income Mobility

INCOME MOBILITY….David Brooks writes about income mobility today:

The big difference between poor Republicans and poor Democrats is that the former believe that individuals can make it on their own with hard work and good character. According to the Pew study, 76 percent of poor Republicans believe most people can get ahead with hard work. Only 14 percent of poor Democrats believe that.

Elsewhere in the New York Times we learn who’s right:

New research on mobility, the movement of families up and down the economic ladder, shows there is far less of it than economists once thought and less than most people believe. In fact, mobility, which once buoyed the working lives of Americans as it rose in the decades after World War II, has lately flattened out or possibly even declined, many researchers say.

The incomes of brothers born around 1960 have followed a more similar path than the incomes of brothers born in the late 1940’s, researchers at the Chicago Federal Reserve and the University of California, Berkeley, have found. Whatever children inherit from their parents ? habits, skills, genes, contacts, money ? seems to matter more today.

The Times has more graphical detail here.

Ever since World War II, the United States has done a phenomenal job of sorting people by talent. Not a perfect job, but an astonishingly good one nonetheless. All four of my grandparents, for example, would almost certainly have gone to college if they had turned 18 in the 1960s, but that just wasn’t in the cards for any of them a century ago. Today, though, as a matter of deliberate policy, the vast majority of people who have the talent to succeed in college get the chance to try. As a result, they moved upward into the middle and upper classes decades ago, and their children have followed them.

But there’s only a moderate amount of sorting left to be done. Random chance, both in nature and nurture, will always play a role in life outcomes, but that role has gotten smaller and smaller as the sorting has progressed. The result is that life roles have become more hardened. While incomes of the well-off have skyrocketed over the past 30 years, working and middle class incomes have stagnated. At the same time, the incomes ? and jobs ? they do have are far more unstable than they were a few decades ago. And as recent research indicates, most of them are increasingly stuck in these grim circumstances: every decade, fewer and fewer of them ? and fewer and fewer of their children ? have any realistic chance of moving up the income ladder.

In the face of this, Brooksian paeans to the hardworking Republican poor are little less than appalling. Clap your hands and you can be rich!

What this faux optimism masks is the astonshing real-life pessimism of modern conservatism. Among advanced economies, the United States is by far the richest, youngest, and fastest growing country in the world. By far. And yet, we’re supposed to believe that an increase in Social Security costs from 4% of GDP to 6% over the next 50 years is cause for panic. We’re supposed to believe national healthcare would bankrupt us ? never mind that our current dysfunctional system is the most expensive and most unfair on the planet. We’re supposed to believe that broader unionization would ruin American industry, home of the highest profits and most highly paid executives in the world. We’re supposed to believe that the nation’s millionaires, having already had their tax rates slashed by a third over the past two decades, are still being bled to the bone by federal taxes.

It’s a grim view. But then, modern conservatives are grim people, with little hope that things can ever be made better than they are today. I guess that’s why I’m a liberal.

Brad DeLong has some additional thoughts on this.