Thursday, May 31, 2007
We've discussed before whether increasing income inequality, independent of the absolute level of deprivation of the poor, should be a concern of Catholic social thought. Maybe we would have more consensus on the blog that economic mobility -- the extent to which people's incomes move from one family generation to the next, both in absolute terms and relative to others -- is an important matter, especially but not solely as regards the ability of the poor to move up. Absolute mobility as a measure is consistent with the idea that a rising tide lifts all boats. But as a recent report from the newly established Pew Economic Mobility Project argues, relative mobility is also important because it indicates the extent to which people's economic success or failure is determined by the income of their parents -- a factor outside of one's control and at odds with the ideals of rewarding individual merit, work, creativity, etc. The Pew report finds that the U.S. has problems on both absolute and relative measures. Men in their 30s today earn less income in real terms than the generation of 30 years ago (family incomes have risen only because of the increase in two-worker couples). And "[u]sing the relationship between parents’ and children’s incomes as an indicator of relative mobility, data show that a number of countries, including Denmark, Norway, Finland, Canada, Sweden, Germany, and [yes!] France have more relative mobility than does the United States."
Significantly, a recent article in The Atlantic adds this point about mobility for the poor:
Strikingly, the research [a collection of other studies] 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.
The Atlantic piece suggests remedies: not "an all-fronts assault on income inequality," which might dampen incentives to move up, but an effort to strengthen "ladders out of poverty." Improve the worst and poorest schools (for which I expect many of us on the blog, left and right, think school choice would be one good means); expand the Earned Income Tax Credit to supplement the wages of the low-paid. And at least to keep things from getting worse, retain the estate tax: in America, of all places, "a little less tolerance of inherited privilege would not seem amiss."
UPDATE: Opinio Juris has more discussion of the report, including some interesting comments and the observation that the Pew Economic Mobility Project "is a joint effort of the The American Enterprise Institute, The Brookings Institution, The Heritage Foundation, and The Urban Institute." So this is a concern that ought to cross ideological lines and spur those remedies on which we can get sufficient consensus, even if other proposed remedies differ. (Thanks to Patrick O'Donnell of Santa Barbara City College for the pointer.)