Reflections on the American dream

Back in November I wrote glowingly in a column for the FT about Creating an Opportunity Society, a new book by Isabel Sawhill and Ron Haskins. Earlier this week I attended a dinner with other journalists, scholars, and policy-makers to talk over some of its ideas. The conversation (off the record, in any event) was frustrating, because the budgetary obstacles to any action requiring outlays are so severe at the moment. If nothing else, though, it moved me to recommend the book again. It's the best thing of its kind I've read for a long time.

The finding that would surprise most Americans is that the American dream is something of a fraud. Intergenerational social mobility--your chances of moving up from poverty, or down from great wealth--are lower in the US than in most of Europe. This is something I have written about before. Research suggests plenty of mobility in the middle part of US income distribution, but not much at the ends. The American dream is a kind of opportunity club, and the very poor and very rich aren't members.

Why not? The American Idea exalts equality of opportunity over equality of outcomes. A related notion is that you must look out for yourself: society does not owe you a living. In anti-poverty policy, this expresses itself as a strong preference for conditional (EITC) or in-kind (food stamps) benefits over European-style welfare payments. My instincts are strongly in favor of this approach. The problem is, equality of opportunity and equality of outcome are not neatly separable. In America, if you are born into a very poor family, your opportunities are shut down too--more than in other countries. In other words, anti-poverty measures that succeed up to some minimum may be a condition for membership of the opportunity club.

Perhaps that seems obvious. But the question then becomes, why do Americans tolerate their striking inequality of opportunity? My speculation would be, for two related reasons. The first is the political and cultural invisibility of the American underclass. Washington DC is a poor city, but members of the wide middle class (and the genteel poor) would never know it. They never see the housing projects. This is an economically segregated town. The same is true across the country. European cities are more integrated: the European poor are more in the faces of the middle class, and harder to ignore.

Speaking of segregation, is this invisibility really all about race? To many that will seem obvious too but, myself, I doubt it. My impression is that white Americans are less given to racism than white Europeans. (See who they elected president.) They are more prejudiced against poverty than they are against black people. The idea of the "deserving poor" has little purchase in American culture. If you are poor, it is probably your fault, says the culture: it might be better all round if you and the other losers live together and stay out of our way. The poor seem willing to put up with it.

The second reason may just be an illustration of the first. The American left, it seems to me, is much more energized by the injustice of wealth than the injustice of poverty. It often appears that, in their view, the remedy for any social injustice is to tax the rich. Consider the energy spent on that issue in the past few years, and compare it with demands from the left for bigger cash benefits for the poor. (What demands, you might say?) Bear in mind that the US income tax system is already highly progressive by international standards. The American anomaly is not the way high incomes are taxed, but the way very low incomes are supported. (This was true both before and after welfare reform.)

I think that left-liberal equivocation over school choice--a cause that unites conservatives and many urban blacks--is another instance of this mindset.

A prejudice against poverty--if I am right to say there is one--would support effort, ambition, and economic growth, of course. It might make the country a great success, on average, and serve the interests of the wide middle class very well. Politically speaking, it could dig in and get entrenched. But if you are born too poor to join the opportunity club, tough luck.