Comment June 2007

Rags to Rags, Riches to Riches

Maybe it’s time to stop calling America the “land of opportunity.”
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More telling, maybe, is the international comparison. America stands lower in the ranking of income mobility than most of the countries whose data allow the comparison, scoring worse than Canada, all of the Scandinavian countries, and possibly even Germany and Britain (the data are imperfect, and different studies give slightly different results).

Strikingly, the research suggests that mobility within America’s middle-income bands is similar to that in many other countries. The stickiness is at the top and the bottom. According to one much-cited study, for instance, more than 40 percent of American boys born into the poorest fifth of the population stay there; the figure for Britain is 30 percent, for Denmark just 25 percent. In America, more than in other advanced economies, poor children stay poor. Other data show that in America, more than in, say, Britain, rich children stay rich as well.

The findings are still tentative, and the causes complicated—hardly a firm basis for prescription. Still, if the government needed another reason to retain the estate tax (aside from the fact that it is one of the most economically efficient taxes), this might serve. In general, a little less tolerance of inherited privilege would not seem amiss (hard for Americans to hear from a Brit, I understand, but look at the facts). Would it hurt, for instance, if the admissions preferences granted by America’s most prestigious universities to the children of benefactors and alumni aroused more disgust, or maybe just some mild disapproval? Or if the richest Americans bequeathed less of their wealth to universities that patently have no need of it (Harvard’s endowment is more than $30 billion), and more to those that do?

Cleansing as such gestures might be, however, aiming to go further, and improve economic mobility with an all-fronts assault on income inequality, would be misconceived, even if it could command political support (which, for now at least, it could not). The sad truth is that such inequality serves a purpose. It spurs effort and ambition—provided, of course, that poor people, through their own skill and industry, can reach the higher tiers.

The real focus of any effort to restore social and economic opportunity in America ought to be ladders out of poverty. An especially good one already exists: the Earned Income Tax Credit. Its coverage should be wider and its terms more generous, but the principle is exactly right: Supplement the wages of the low-paid to reward work, discourage idleness, and relieve poverty. More fundamentally, America needs to improve its worst and poorest schools, which sharply delimit the prospects of many poor children. Education cannot do everything. But dismal school performance is the biggest problem that policy makers concerned with opportunity in America can fix. So far, it ranks low—or not at all—on the list of issues being addressed by the 2008 presidential candidates.

America has no roots in feudalism, no notion of inherited orders of society, no instinct for deference or regard for nobility. And yet the economic mobility that is thought to follow from such freedom, and indeed ought to follow from it, appears to be a myth. Myths that defy the common experience can persist for only so long. Perhaps in the future the country will try harder to foster the opportunity it thinks it already provides. Or perhaps the culture will simply come to accept this un-American reality: a society of rigid economic orders, maintained by inheritance, blessed by its elites, and impotently endured by its underclass.

Clive Crook is an Atlantic senior editor.
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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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