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January 3, 2005 9:23 AM

"A growing body of evidence suggests that the meritocratic ideal is in trouble in America. Income inequality is growing to levels not seen since the Gilded Age, around the 1880s. But social mobility is not increasing at anything like the same pace: would-be Horatio Algers are finding it no easier to climb from rags to riches, while the children of the privileged have a greater chance of staying at the top of the social heap. The United States risks calcifying into a European-style class-based society."
posted by Krrrlson (90 comments total)

While these statistics are no doubt disturbing, I believe rumors of our society's impending social stasis are quite premature.
posted by caddis at 9:36 AM on January 3, 2005

The inequality arguments generally overlook the considerable income mobility in the United States. Here are some posts.
posted by trharlan at 9:54 AM on January 3, 2005

I am anecdotal evidence to the contrary but I'm therefore invalid.
posted by u.n. owen at 9:59 AM on January 3, 2005

The inequality arguments generally overlook the considerable income mobility in the United States

Um, did you read the article? :
Most Americans see nothing wrong with inequality of income so long as it comes with plenty of social mobility: it is simply the price paid for a dynamic economy. But the new rise in inequality does not seem to have come with a commensurate rise in mobility. There may even have been a fall.
posted by Boydrop at 10:08 AM on January 3, 2005

Say Joe has
1. debt , because of his family needs (I'm excluding gambling and other money wasting compulsive activities like excessive smoking and drinking..nice money sinkholes)
2. is paying debt
3. is trying to get himself a better education to end up in a better position with an higher pay

Say John has
1. all of the above, except debt

They both work for company X , which casually promotes both of them to a better position that pay 1$ more . Hell yeah !

Now who deserves the better position more ? All other conditions equal, some will say Joe because of the burden of debt John didn't have. Of couse Joe debts doesn't subtract from John ability, yet the two would (almost certainly) receive the same compensation in real dollars ..even if Joe was exposed to the risk of cash flow crisis (that is to say, running out of money).

So what's meritocracy, what definies who deserves what, why and when ?
posted by elpapacito at 10:10 AM on January 3, 2005

The Death of Horatio Alger, by Paul Krugman

The other day I found myself reading a leftist rag that made outrageous claims about America. It said that we are becoming a society in which the poor tend to stay poor, no matter how hard they work; in which sons are much more likely to inherit the socioeconomic status of their father than they were a generation ago.
The name of the leftist rag? Business Week, which published an article titled "Waking Up From the American Dream."
The article summarizes recent research showing that social mobility in the United States (which was never as high as legend had it) has declined considerably over the past few decades. If you put that research together with other research that shows a drastic increase in income and wealth inequality, you reach an uncomfortable conclusion: America looks more and more like a class-ridden society.
And guess what? Our political leaders are doing everything they can to fortify class inequality, while denouncing anyone who complains--or even points out what is happening--as a practitioner of "class warfare."
Let's talk first about the facts on income distribution. Thirty years ago we were a relatively middle-class nation. It had not always been thus: Gilded Age America was a highly unequal society, and it stayed that way through the 1920s. During the 1930s and '40s, however, America experienced what the economic historians Claudia Goldin and Robert Margo have dubbed the Great Compression: a drastic narrowing of income gaps, probably as a result of New Deal policies. And the new economic order persisted for more than a generation: Strong unions; taxes on inherited wealth, corporate profits and high incomes; close public scrutiny of corporate management--all helped to keep income gaps relatively small. The economy was hardly egalitarian, but a generation ago the gross inequalities of the 1920s seemed very distant.
Now they're back.
posted by matteo at 10:17 AM on January 3, 2005

Um, did you read the article?

Um, yeah. Hence the word "generally" in my post.
posted by trharlan at 10:20 AM on January 3, 2005

counter argument:

I'm from the hood stupid what type of facts are those
If you grew up with holes in your zapatos
You'd celebrate the minute you was havin' dough
...
I don't know what you take me as
or understand the intelligence that Jay-Z has
I'm from rags to riches nigga I ain't dumb
I got 99 problems but a bitch ain't one
Hit me
posted by matteo at 10:21 AM on January 3, 2005

As you now see, Boydrop, my links were a pre-emptive strike against the Church of Krugman.
posted by trharlan at 10:21 AM on January 3, 2005

Yeah, that was dumb of me to call you out like that trharlan, a bit of a knee jerk reaction and all. However, wouldn't it have been a bit more helpful to challenge specific points in the article, rather than just posting general opposing links? And does the Heritage Foundation really have as balanced a view as the Economist?
posted by Boydrop at 10:29 AM on January 3, 2005

Yeah, I've noticed this trend before - notably with the coming demise of the "death tax" <- a piece of conservative wording as inaccurate and made up as "partial birth abortion." The estate tax was designed to prevent the rise of an economic aristocracy here in the US.

Hmm... I wonder if the population wakes up one day and realizes what happened if their will be a push for reform. Will our democracy be strong enough to buck the trend or will the conservative elites have dissembled the machinery of our representative government by then?

Orwell felt that totalitarian governments were inevitable... in recent decades his fear has not materialized, yet perhaps he was more forward looking than we give him credit for.
posted by wfrgms at 10:36 AM on January 3, 2005

I'd like to take this moment to thank Middle America for realizing the Estate Tax is the greatest danger facing America today.
posted by orange clock at 10:40 AM on January 3, 2005

yeah, fuck the Church of Krugman, they're all so blindly, unhelpfully partisan. I mean, unlike the Heritage Kids and Bush/Cheney advisor *snicker* Drezner.
thanks for the links tho. it's always interesting to observe those who try their best to conceal the elephant in the room
posted by matteo at 10:46 AM on January 3, 2005

I believe that the falling upward mobility statistics and trends we are seeing now would be even more grim if they were age-adjusted over time. Instead of comparing each income group to the general population over time, if we corrected for the "kids working at the college bookstore before graduating and taking a real job" factor we would see significantly less "upward mobility" in the numbers.
posted by Sidthecat at 10:48 AM on January 3, 2005

sidthecat: from your link

Furthermore, rotating 15 percent of the population in and out of poverty does not negate the fact that 15 percent of our population is in poverty at all times

Damn me for not noticing it immediately. Thanks, a nice link.
posted by elpapacito at 10:54 AM on January 3, 2005

matteo: Bush/Cheney advisor *snicker* Drezner.

Dan Drezner voted for Kerry. Or maybe you knew that, and that's what the snicker was for. I'm not good at snicker interpretation.

In any case, of course Heritage has an agenda. So does the labor-backed EPI, which the Economist cited.
posted by trharlan at 11:01 AM on January 3, 2005

I believe that the falling upward mobility statistics and trends we are seeing now would be even more grim if they were age-adjusted over time... if we corrected for the "kids working at the college bookstore before graduating and taking a real job" factor we would see significantly less "upward mobility" in the numbers.


But, then, wouldn't the statistics lamenting the low income of the bottom bracket be less grim?
posted by trharlan at 11:09 AM on January 3, 2005

Just some thoughts on the matter...

I'm a college student now hoping to attend law school. My father runs a ranch where we raise cattle. We are not in the top 10%, probably middle class in Western Nebraska terms and higher lower class in United States terms. My family is from a county where the median household income is roughly $24,000. We border Loup County which is the poorest in the nation, the average earner makes $6,200.

I'm looking at law schools now and regardless of merit I may be narrowed down to what I can choose due to financial constraints. My situation is much different than what the current President George W. Bush faced. He had achieved very poor scores on his SAT, yet he was able to graduate from Yale and Harvard Business School.

Comparing me and the president, what type of opportunities do we have? Although I may have equal or better merit than what the President had, I am not able to achieve his level of opportunity. I may be looking at a third tier law school, if that. I may not even be able to afford to go to law school at all. In fact I can barely afford a college education as it is.

There are loans and financial aid, but they aren't keeping up. Increasingly, money from mom and dad is needed, but when mom or dad can't or aren't there I'm out of school. Such aid probably won't keep up when tuition for law school is triple. I should be content with what I will have, but why should I be relegated to not pursue my dreams when others with the same merit or worse can? Remember what Bush was able to achieve and he still can't figure out the difference between "is" and "are."

Sure over the 1990s things did improve for us, but there still lacked a respect for merit. We got a computer, a new car, but we can't buy the same advantages that a higher class person has. For example we can't attend the best school's with the brightest students although a Bush can. Merit is all about fairness and income equality is about fairness.

I'm one of the few who at least has a fighting chance, but most people who are born into poor families still end up attending the worst schools and receiving the worst health care. That's just the way it is. For a competitive economic system to work properly, there must be fairness. Capitalism is based on competition, however, when a social class is rendered noncompetitive, the economic system fails. Capitalism needs a socialist aspect to protect it from itself. That is the reason why the nations with the highest living standards have high equality in wealth. They have competition among classes. Compare the Netherlands with Brazil for instance. The Netherlands have good income equality while Brazil does not. The two countries appear to be going in opposite directions.

What does the United States want to be like? The Netherlands or Brazil? Canada or Mexico? I don't blame conservatives for thinking the way they do. If I was an oligarch in Brazil I would want to increase my wealth and power and if I was an oligarch in America I would want to increase my wealth and power. Such thinking is only logical, but what I don't understand are people who agree to such policy and who do not come from a high class family.

A friend of mine posed this question to me and like me he doesn't come from a rich family. "Rockefeller was the richest man in the world, but he never enjoyed the lifestyle which we enjoy today, would you choose Rockefeller's life of wealth or a modest life today with the technology which we have?" he asked. I said without question Rockefeller, but he said that he would choose a modest life. The idea behind income equality is not an easy one to grasp, but to grasp it one must have aspirations. That's the difference between me and my friend, I want to go place and he wants to settle down and have kids. Fair enough for you.

By ignoring income equality this country is going against freedom to pursue their dreams and aspirations. I can see and understand a conservative point of view. Whether you agree with it or not depends upon what side of the fence you are on or whether you have aspirations. I don't blame conservatives for thinking the way they do. It is only natural to protect one's kin. If I was the one who controlled the wealth I wouldn't want a challenger taking my child's place. The American dream- from rags to richest, has become a joke for most people. Americas identity is not one of settling down, but rather one of aspiration.

What America needs is an education system based on merit and not financial ability. That is the only way which this country can render income inequality a moot point. The only reason income equality is an issue is because inequality is an affirmative action policy which protects the rich.
posted by j-urb at 11:11 AM on January 3, 2005

You know, some of this is a load of hogwash. I had a friend that worked for a company that went through an IPO. All of the employees could buy stock at the IPO price but had two months to come up with the cash to do so. The IPO price was close to half of the then-current selling price. The employees could contribute about 5% of their salary.

This friend is the lowest paid in their department, and one of two that could pay the whole sum, up front, in cash.

What does that mean? The friend is frugal, drives an old car, and saves & plans with their money. The people that couldn't put up the dough buy huge pickup trucks, huge SUV's, trendy clothes, houses way bigger than they need, etc. etc. If these people could just forego a few small things, you would think they could save 5% of their damn salary over 5 years or so. All of them probalby make in the top 50% of earners in the US for sure. Some are probably in the top quarter. None of them had 5% of their salary in cash.

How many of us really need $200 nikes, or whatever crap they are selling this month. A lot of the lack of economic mobility here is due to people being complete idiots and squandering the benefits they do have while complaining the world won't cut them a break.

I had another friend, that would bitch and moan and ask for money to pay his gas bill. I'd say cancel your cable with all the movie channels at $50+ per month, and maybe i'd loan you some, otherwise your priorites are just out of whack. He never cancelled the cable.

Anyone with a decent job and some degree of self restraint can be upwardly mobile. All it takes is a willingness to plan for the future and to not give in to the monkey that wants a new whatever every month or so. Everybody is so busy keeping up with or blaming the joneses' that they don't bother to get their own house in order.
posted by jester69 at 11:21 AM on January 3, 2005

But, then, wouldn't the statistics lamenting the low income of the bottom bracket be less grim?

It depends. But I think it'd answer a question. Right now it sometimes seems that people unconcerned about income disparity tend to assume the lowest brackets are something most of the population simply grows out of -- that the low bracket is pretty much staffed entirely by teenagers and college students who will over the next 20 years move to $40-$60k salaries and eventually to an IRA and nice retirement. Conversely, people very concerned about it picture the low bracket populated largely with struggling full-fledged adults who started without much and were troubled enough with just keeping body and soul together at a low wage that they couldn't get the education they needed to move into the middle class.

Breaking out income distribution by 5 year age brackets would at least tell us which we're looking at.
posted by weston at 11:36 AM on January 3, 2005

trharlan, Drezner was a Bush-Cheney Presidential Campaign advisor in 2000.

if, like about half of US voters and most of non-USians, one considers last year's Bush or Kerry choice as, basically, an IQ test, well, Drezner's 2004 vote means he's not so stupid/in bad faith as to consider Bush's disaster of a first term (economics: 2.7 million jobs lost since 2001, Bush the first president since Hoover to preside over a net loss of jobs during a four-year term, blah blah blah. not to mention that little Iraq thing) as successful.

I happily concede that Drezner's smarter than, say, Glenn "We're making progress in Iraq" Reynolds. but then, almost everybody is.

the point is the elephant in the room, trharlan. the American right's constant shifting of parameters: net loss of jobs? "irrelevant". "outsourcing kills American jobs? "it's a good thing in the long term". record income inequality? "you must look at social mobility". 50% or more of personal bankruptcy cases originate from ilnesses and health care expenses for the ill-insured or insured? "the alternative is Hillary-style Socialism and that'd be unAmerican".

that's what the *snicker* is about. (it is also a tasty candy bar)

a pet peeve of mine: the argument, dear to Drezner and his buddies, that America's poor are better off now than they were decades ago seems, frankly, disgusting. morally disgusting, to use a way of framing that is dear to the American right. especially because it comes from those same guys who don't have a problem with CEo compensation jumping from 100 times that of a salaryman to 20,000 times.

funny how the Heritage-style "conservatives" cringe at the mention America's 2 million prison inmates (most of them minorities) when they talk about unemployment figures, but I'm digressing. locking up the unemployed or unemployable seems a cute way to deal with the problem
posted by matteo at 11:36 AM on January 3, 2005

How many of us need 1000 shares of yaddayadda.com to watch go through the roof upon IPO, then through the floor two years later, due to the mismanagement of those you are working for?

My two best financial moves were to cash in my stock in my Financial Services employer before the '80s Junk Bond Crash did it in, and putting 80% of my 401K money into bonds paying 5-6% right before the dotcom crash. My worst financial moves were (a) trying to keep a psychotic spouse under control by buying her gifts (b) sharing a house with people who turned out to be criminally inclined (c) becoming clinically depressed and giving up any pretense of budgetkeeping and (d) getting physically ill (which actually did more damage to my wealth than the others combined, thanks to this country's toxic medical system).

But then, I don't need $200 nikes - the $20 kmart sneakers work just fine, and their wide widths fit me better. But, if I keep writing about television, I can make that $50 cable bill a tax deduction.

In other words, YMMV - a lot. But the culture today that heaps fame and esteem (and political power) on those who inherited/won/cheated their way into more money than they will EVER deserve to earn on their own is totally corrupt. And will probably remain so long after the American Dream of upward mobility has completely disappeared.
posted by wendell at 11:49 AM on January 3, 2005

Why, when talking about income inequality, does it seem the default argument is "if the poor would just be more frugal . . . "? Yes, of course, if we all lived on a can of beans a day and woke up at 6 am to hopefully catch the 2 hour long bus to work in our shitty towns with underfunded (rich people shouldn't have to pay soo many taxes) public transportation, then yes, we could all rise into the upper classes.

The point, I think, is that the people who are driven to do this (and actually succeed) are probably people who are naturally driven to do almost anything, but think of how much more they could have achieved if they didn't have to initially worry about such basic necessities like food and healthcare. Also, think of how much an average everyday shlub could achieve if these basics were covered for him. We would be a much stronger nation for it. (I know, I know, you conservatives don't believe in We, except when you are rallying for war)

Also, its morally reprehensible for the wealthy to chide the poor for their irrational and irresponsible spending habits, when the system that made the wealthy wealthy is a system that basically depends on encouraging people to buy stupid shit with their money. Of course, this doesn't negate personal responsibility on the part of the poor, but the beneficiaries of capitalism are hardly virtuous either.
posted by Boydrop at 11:52 AM on January 3, 2005

One teensy little thing.

>The United States risks calcifying into a European-style class-based society.

I thought it was already like that. With a pluto- aristocracy based upon birth and privilege, one could argue it has regressed to a pre-WWII European elite.

And what j-rub said, especially in that last paragraph.
posted by gsb at 12:00 PM on January 3, 2005

I don't know what J-Urb is using for sources.

Professional school is COMPLETELY financeable to anyone with no or good credit (via a combination of government-supported and private loans), and mostly financeable to those with bad credit. Good professional schools are generally CHEAPER upfront than less-highly-ranked schools in the same discipline, in part because public schools generally outrank private schools (yes, it's true) and in part because higher ranked schools discount more with grant-based fiancial aid.

Second, school loans are an extraordinarily good investment. Whenever I read about someone who says, "I wanted to go to law school but I'm just too poor to be willing to borrow $150k," I know that's someone too dumb to be a good lawyer.

Professional school loans are the best investments imaginable. The rate of return is exceptional -- a $150k loan at 5% which enables one to generate $40k a year in higher income is a 20% rate of return investment. When you consider that plenty of people yield $100k or better improvements income the rate of return grows absurdly high. Using high undergraduate debt as an excuse not to go to professional school demonstrates a terribly bad logic -- one doesn't turn down a great investment because one's portfolio already has a not-so-good investment in it, one seeks it with all the greater zeal.
posted by MattD at 12:01 PM on January 3, 2005

oops, I meant to say:

And what j-urb said, especially in that last paragraph.

That'll teach me!
posted by gsb at 12:04 PM on January 3, 2005

Unless one believes that "merit" is randomly distributed with every generation, one would expect that social mobility would slow down at a certain point.

At the beginning, broadly egalitarian means of advancement are distributed in a stratified society, which enable most of those with the gifts and values to achieve to move up in social class. After a few generations, most of those still in the lower classes are there not because of lack of opportunity but because of a multi-generational deficit in the intellectual aptitude or social virtues necessary to sieze upon opportunities presented.

This theory would explain the actual observations -- social mobility slowing down in the late 20th century among non-immigrant Americans, while it continues at a break-neck pace among immigrant- and recent-immigrant-descended families.
posted by MattD at 12:07 PM on January 3, 2005

Whenever I read about someone who says, "I wanted to go to law school but I'm just too poor to be willing to borrow $150k," I know that's someone too dumb to be a good lawyer.

Or someone with a family/cultural background that discourages pursuing anything but merit-based aid, and therefore doesn't know enough about the aid system to use it wisely to their advantage.

I speak from some experience here. Knowing what I know now about how aid works, I would likely have ditched BYU after my sophmore year and transfered to a better school. But I knew that most of the schools I had in mind charged tuition and had living expenses up to 5 times what I was paying at BYU, and really couldn't fathom how to make that work. I know now that there are financial aid counselors you can talk to and figure that stuff out, but I didn't even know those people existed at the time.

This isn't to say all my options are closed and I couldn't do it now at 32, but just to point out: sometimes knowing how the system works is the trouble.

Though I suppose knowing how the system works is one mark of a good lawyer.
posted by weston at 12:22 PM on January 3, 2005

j-urb -- Nice post. I'm a recent Nebraskee, and have to say, your position is a rare one in this part of the country.
posted by Civil_Disobedient at 12:28 PM on January 3, 2005

Down with meritocracy
posted by mr.marx at 1:02 PM on January 3, 2005

Professional school loans are the best investments imaginable. The rate of return is exceptional -- a $150k loan at 5% which enables one to generate $40k a year in higher income is a 20% rate of return investment.

I'm not a financial adviser or economist, but I would think it depends on what kind of profession you're going into. Law school, maybe (if you're willing to funnel yourself into the only legal career that will enable you to pay back the loans without being in debt for 20 years, which generally means no public service career unless you're already comfortable financially).

Business school, okay, I can see that.

Other professions, e.g. librarianship, social work, teaching, I'm not so sure about those (although I'm willing to be proven wrong).
posted by blucevalo at 1:05 PM on January 3, 2005

trharlan:

Your studies really don't factor out the influence that longevity in the work market has on income. In essence, the studies seem to be comparing the income of an individual as they move through their financial life. The studies cited by The Economist look at changes from generation to generation in determining whether class stratification is becoming a problem.

Without doubt, if one looks at a young worker at an entry level position and then one jumps ahead 20 years one is likely to see movement to a higher income quintile. The real test is to look this from a generational perspective: Is the offspring at the same level as the parent. The research cited does not properly analyze the inter-generational movement (or lack thereof).

The trend seems to confirm the adage about the rich getting richer....

Also, this is not the proper issue to cite the isolated example. The guy who scrapes up the cash for the IPO or the Nebraskan looking at law school are but drops of water in the vast sea of data needed to study this topic.

Also, it is not a trivial point. The fabric of the nation is woven with threads of populism that weaken when class mobility is eliminated or reduced to the point where the lottery is the best chance to break into the upper middle class.
posted by mygoditsbob at 1:23 PM on January 3, 2005

How many of us need 1000 shares of yaddayadda.com to watch go through the roof upon IPO, then through the floor two years later, due to the mismanagement of those you are working for?

My point wasn't so much wether the IPO purchase had merit or not, it was that people that wanted to could not get togther the money. Every circumstance is different, people that got in on southwest airlines early offerings are doing well, pets.com investors, not so much so.

In any event, it was perhaps a bad illustration of a good point. The point being that people waste money that could go toward their future on inane goods, and blame their lack of finacial progress on others.
posted by jester69 at 1:25 PM on January 3, 2005

The poorly paid professions, or the public service subsets of the well-paid professions, are not (generally speaking) a route to upward mobility, so I excluded their professional schools from this particular analysis.

However, if one is committed to a career in (say) social work, the return on investment logic may nevertheless apply, so long as one borrows an appropriate amount.

An MSW can add $10k or $15k to one's social work salarly potential, so you can find out the appropriate investment pretty easily. $50k borrowed at 5% generates to get a $10k raise is a pre-tax net yield of $7,500 a year, or a healthy 15% return on the $50k principal investment.
posted by MattD at 1:26 PM on January 3, 2005

We can all stroke our ideological egos all day long on this one, but the only thing that counts at the end of the day is this:

It is a demonstrable fact that societies with really concentrated wealth are shit-holes. Take a look at the GINI index.

Over the last 60 years, America's wealth has been moving into fewer and fewer hands. Nothing shows this trend reversing, and the people currently in charge want to pretend wealth concentration is good for America, because it just so happens that they are the ones who have the wealth. They have also managed to convince a lot of Americans to believe that they themselves are rich (50% of us are in the top 1% of income earners!) and convince people to believe in the lottery system of capitalism: you may not have much, but you should vote against your interest and protect those that do, because, hey, one day you might be one of us (hah, sucker born every minute).

But take a look at where our trend on the GINI index is taking us: look at some of our company. Unless you want to believe, quite naively, that somehow America will be the only country to be a swell place to live that has a high GINI, we are headed down the path of great social instability here. If nothing reverses the trend, stagnation and social upheaval are almost guaranteed.

All in all, yet another factor in the long, slow decline of a superpower.
posted by teece at 1:56 PM on January 3, 2005

one of the protections in place was the original 13th article . it disappeared after the civil war.
posted by hortense at 2:04 PM on January 3, 2005

MattD: At the beginning, broadly egalitarian means of advancement are distributed in a stratified society, which enable most of those with the gifts and values to achieve to move up in social class. After a few generations, most of those still in the lower classes are there not because of lack of opportunity but because of a multi-generational deficit in the intellectual aptitude or social virtues necessary to sieze upon opportunities presented.

Wow, not often you hear turn- of- the- century, eugenics-tainted gibberish these days. Why yes, class stratification is because those people are just intellectually inferior- and that's why they're poor! The new-immigrant stereotype of "hard working, proves the American dream" is also a self-selecting class, is it not?

Poor people stay poor because becoming not-poor in America is by definition an anomaly; some people do it, but most will find it too difficult- and the routes out of poverty are limited enough they just end up fighting other poor people for those few desperate escape routes. People born into wealth often cannot screw up enough to stop being wealthy- and therefore, to have their basic or even luxury needs threatened.

Haven't studies shown that any existing differentiation of aptitude- intellectual, physical, or otherwise- gets muddied after only a few generations? Plenty of ferociously intelligent and talented people do not come from wealthy homes- and plenty of ferociously intelligent and talented people do not become especially wealthy themselves to pass on any particular benefit to their children. Not all smart people have smart children, and plenty of not-so-smart people have pretty damn smart children.

One last thing: I completely agree with your "school loan as a good investment" theory. Thing is, many people don't think that way- it's sort of a privilege of education to work the math like that. It also doesn't mean someone like J-Urb can get such a loan from any lender, at least at less than loan shark rates, just because of the long-term merit of the investment on a personal level.

It will be a great shame if J-Urb doesn't get to pursue his dreams because he can't afford school, and avenues to afford it are terrifically unavailable to him.
posted by hincandenza at 2:06 PM on January 3, 2005

Class mobility is not about taking down another 10k or even 50k.

The median family income in Minnesota is around 75k. Adding even 50k to this makes for a comfortable upper middle class lifestyle. It would not make one part of the upper 5% or even the upper 10%.

THe point is that real movement from the lower class to the upper class is about as rare as the welfare queens that St. Ronald Reagan kept referring to in round one of the great class war of the last 25 years.

It used to be that it was a given that a child, with proper application, could do better than the parent. The foundations of this upward mobility were well funded public education, affordable health care, and a strong union movement that gave workers an opportunity to negotiate fairly with employers. The legacy of the conservative revolution has been to undermine all three of these foundational bases to the extent that the lower and middle classes are losing the ability to fully realize the dream of a better life for their children.
posted by mygoditsbob at 2:09 PM on January 3, 2005

In the last 10-20 years the US has seen the very rapid growth of the Latino population. A significant chunk of that population comes from very poor parts of Latin America. The decline in the social mobility statistics may be evidence that some Latinos are not as socio-economically mobile as others. It would be interesting to see a racial breakdown of these statistics.

The problem may be racial integration rather than evidence of economic change.

But I have no stats to back this up so I'm talking through my hat ( which peculiarly has a nice peppermint taste )
posted by sien at 2:24 PM on January 3, 2005

Hicandenza -- there's certainly plenty of inter-generational variance in intelligence, but there's still a modest correllation between parent and child IQs. There's a high correllation in terms of the social requisites of advancement, like cultural esteem for education, work ethic, resistance to instant gratification, law-abiding, pre-marital chastity (or its contemporary successor, consistent pre-marital use of birth control).

Indeed a non eugenic argument actually strengthens my point -- if we assume that at least one generation would get the random high IQ, it is the lack of non-genetic virtues which keeps the high IQ generation (statistically) from making the upward move. (Obviously, smart individuals will transcend bad family values in some instances, and smart individuals with good values will fall prey to bad luck in others.)

On the other point, supplemental private loans are a standardized part of the professional school financial aid package. They are available to students at low rates (barely higher than those of federal loans, and uniformly under 10%) without any discretion on the part of the lender, unless the borrower has a bad proven history of defaults. A borrower qualifies with no FICO, and with non-default driven low FICOs, however, which is very different from other credit situations, in which no history is almost as unfavorable as a bad history.

MyGodItsBob -- a marginal $50k in gross income is more than enough to effect a complete shift in social class. At a 25% marginal total tax rate and allowing $8k a year in increased non-investment spending, it would permit the accumulation of $30k per year in wealth.

$30k a year in 2004 dollars over a 35 year career at a 2% post-tax real rate of return is $1.5 million in 2004 dollars after a 2004 35 year career. That's real wealth. Raise the real post-tax rate of return to 4% and you get to $2.2 million.
posted by MattD at 2:52 PM on January 3, 2005

Sien -- that's a good point (poverty origins of recent Latino immigrants).

Another useful thought in the entire (not just Latino) immigrant sector is the "false positive" poverty reading which comes from measuring the legitimate economy only. Cash-under-the-table is absolutely HUGE among immigrant communities, and can capture an entire cycle of the money supply (salaries earned under the table due to work status or employee preference, that cash spent on cash rent for income tax avoidance by landlords, and on cash purchases of goods and services by sales tax evading merchants, and then recylcled back into the cash economy by the landlords and merchants.) Outside of the work economy, free school lunches, EITC, and other programs create a systematic incentive for understating income as well.

Certainly, whenever somebody talks about the outer boroughs of New York being poorer than they were in 1990 or 1980, I immediately know that the cash economy is being disregarded.
posted by MattD at 2:58 PM on January 3, 2005

Talking about their social mobility and the "American Dream" is one of America's more irritating traits.
posted by salmacis at 3:01 PM on January 3, 2005

" "A growing body of evidence suggests that the meritocratic ideal is in trouble in America. Income inequality is growing to levels not seen since the Gilded Age, around the 1880s. "

Wait a minute. The above statement is illogical, possible by 180 degrees. In a society where advancement is based on merit, there would be little or NO income equality: the achievers would make more money. So, you could just as well be saying that the US is too meritocratic, n'est-ce pas?
posted by ParisParamus at 3:05 PM on January 3, 2005

I'm sorry, this is the same left-wing bullshit that has driven me, and many Americans away from the Democratic Party.
posted by ParisParamus at 3:15 PM on January 3, 2005

Are you deliberately trying to be stupid, PP?
posted by salmacis at 3:15 PM on January 3, 2005

What is so horrible about smarter, more clever people making more money? Even lots more money, particularly when they pay such a disproportionally large part of the nation's taxes?
posted by ParisParamus at 3:28 PM on January 3, 2005

No. salmacis, nor do I live in a nation wherein the poor and working class largely remain so, and there are no rich people to pay for the advancement of medicine.
posted by ParisParamus at 3:33 PM on January 3, 2005

Are you deliberately trying to be stupid, PP?

I doubt he has to try.

But seriously, one can quibble about upward mobility. But there is no disagreement about wealth concentration, and that's the real problem. It is an established fact that ever year, the rich control an even larger share of the country.

Nothing is stopping that trend. Look around the world, and you'll see quite readily how caustic wealth concentration is to a healthy society. At a certain point, things just fall apart.

It is good to see folks just continuing to play the ostrich game, though. That way I won't have to change my general views on humanity.

The only sad thing is that everybody will be in the soup lines, begging for a hand-out from the elite, rather than just those that deserve it. (Yeah, that's hyperbole).
posted by teece at 3:34 PM on January 3, 2005

Socialism is dead. If you want to redistribute wealth, don't have the government steal it from the rich. Make the education system better. You can tinker a bit with the progressivity of income taxes, but transferring $ to the poor won't make them richer.

Alternatively, move to Western Europe. Oh, I forgot, they won't take you because their economies are to damn sclerotic.
posted by ParisParamus at 3:38 PM on January 3, 2005

Paris, glad to have you back in the fray. Did you finally get them damn kids off your lawn?
posted by Civil_Disobedient at 3:46 PM on January 3, 2005

Must have missed this:

Socialism is dead.

Oh really, smartass?
posted by Civil_Disobedient at 3:47 PM on January 3, 2005

Paris: Read the article. The point is that income is not being distributed based on merit, but on other factors leading to economic class calcification. Eliminating the Estate Tax is one example of a policy that favors the decline of the meritocracy.

MattD: 30k per year to a family making 75k per year is great. However, its not going to move them out of the middle class. If they saved it all, they would be able to retire in great comfort and pass that wealth to their children. Human nature being what it is, it would be unreasonable to assume a saving rate of 33% of income.

The point here is that there is a tendency toward permanent class stratification that does not fit well with the way things have been for the last half century. In the 1950's, a strong middle class was the bulwark that won the Cold War. I'm not sure that the favored managerial/professional class of the current time has the belly to fight the battles that lie ahead for the Republic...and I know that the upper class has always found a way to avoid the harsh duties of a democratic republic. (Gosh, I'm starting to sound like William Jennings Bryan or... more like Huey Long)

Given the nature of our democracy, it will self-correct in time. Of course, the last time things got too far out of whack, we had the Great Depression and the Red Scare.
posted by mygoditsbob at 3:49 PM on January 3, 2005

Yes. Fluctuations in your shitty Euro don't prove much--actually, if it makes you feel worse, it's our revenge for overall European stupidity at the UN and towards Iraq: we bury you with our exports. Or, we force you to stimulate your sclerotic economy, risking destruction of the EU's myopic monetary policy.
posted by ParisParamus at 3:51 PM on January 3, 2005

I would argue that America has never been a meritocracy, and if it weren't for Teddy Roosevelt and labor unions, we wouldn't have a sizeable middle class today.

Teddy Roosevelt was a visionary, in that he saw the corporations and robber barons of the day for the feudal overlords they were:

"The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows."

"We must have complete and effective publicity of corporate affairs, so that people may know beyond peradventure whether the corporations obey the law and whether their management entitles them to the confidence of the public. It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public-service corporations, have supplied one of the principal sources of corruption in our political affairs."

His "bully pulpit" leadership led directly to anti-monopoly legislation, greater worker and union rights and protections , and the idea of graduated income taxes.

Even with what he accomplished, if the American worker had not unionized and demanded their fair share, corporations wouldn't have come off a single dime. Anybody who denies this is a fool.

The American worker has been duped over the past thirty years into believing that unions are "bad" (the antipathy I hear from most people these days against unions I would characterize as rabid). I firmly believe a case can be made that the stagnation in the economic upward mobility of the lower and middle classes, as well as the meteoric rise of the upper class, correlates quite well with the fading power and significance of labor unions.

(And, no, I'm not a communist. FWIW, I have two Management degrees, and I believe that capitalism has a lot of things to offer. Compassion just isn't one of them.)
posted by Benny Andajetz at 3:51 PM on January 3, 2005

wfrgms: you think cutting taxes leads to totalitarianism? That's some whacked out stuff you got.
posted by esquire at 3:55 PM on January 3, 2005

There will always be prejudices and classes. We can work to minimize them, but not eliminate them. PLEASE don't tell me that in 2004, prejudices are stronger here than in other parts of the developed (or developing) world--that's absurd. Yes, there is racism, yes, there are segregated neighborhood, but show me where it's better, on a large scale.
posted by ParisParamus at 3:57 PM on January 3, 2005

Eliminating estate taxes is/was morally sound. It's offensive to make death a taxable event. Even if other tax rates were raised to compensate, that's still good public policy.
posted by ParisParamus at 4:01 PM on January 3, 2005

J-urb: when you send your law school applications, be sure to whine about how America does not offer the poor, beknighted children of Nebraska land-owners the exact same degree of opportunity as the children of wealthy, powerful officeholders, 'k?d
posted by esquire at 4:06 PM on January 3, 2005

"Compassion just isn't one of them."

Well, you could argue that any number of capitalists have done more for the world's poor and developing nations than Mother Theresa.
posted by ParisParamus at 4:07 PM on January 3, 2005

Whenever I read about someone who says, "I wanted to go to law school but I'm just too poor to be willing to borrow $150k," I know that's someone too dumb to be a good lawyer.

Student Loans are for Suckers.

Also, I'm interested in social mobility. How much of America's DOWNWARD mobility comes from the nouveau riche? I have this sneaking suspicion that Lotto winners who waste their fortunes and investors without old money make up the majority of those who lose their wealth.
posted by Critical_Beatdown at 4:10 PM on January 3, 2005

Teece: you are confusing symptoms with the disease. Countries with concentrated wealth are shitholes because poor countries tend to have concentrated wealth. The distinguishing features in my country are that the wealth is not so concentrated, and the hands that hold it are not so static.
posted by esquire at 4:11 PM on January 3, 2005

"Compassion just isn't one of them."

Well, you could argue that any number of capitalists have done more for the world's poor and developing nations than Mother Theresa.

Good try PP, but you are saying capitalist, and I said capitalism. As usual, the exception proves the rule.
posted by Benny Andajetz at 4:23 PM on January 3, 2005

PeePee, tell us again how the war in Iraq was going to pay for itself, like you explained to us the night Bush attacked. that was a good Economics lecture
posted by matteo at 5:13 PM on January 3, 2005

The United States risks calcifying into a European-style class-based society.

Jeebus. We already ARE a European class-based society. I'm MORE worried we will end up being a society more akin to Indo-asian CASTE-based culture.

The best scenario we can hope for at this rate is being like Argentina. And that is frigg'n scary enough.

Oh well. We had a good run and it couldn't last forever. It SHOULDN'T last forever.
posted by tkchrist at 5:21 PM on January 3, 2005

Teece: you are confusing symptoms with the disease.

Not really, esquire. It is impossible to know precisely which one is antecedent, but in all likelihood the two reinforce each other.

Countries with concentrated wealth are shitholes because poor countries tend to have concentrated wealth.

Exactly. Concentrating wealth makes a country poor, and a country that is poor will tend towards a greater concentration of wealth.

I don't know what your country is. But wealth concentration, the greater it gets, the more inefficient the economy becomes. The great wealth of America is almost completely possible because of large, well-to-do middle class.

The trends in America are toward destroying that middle class. The wealth concentration happening now will inevitably foul up our economy, and turn America into to a shit hole if it is not reversed.

It is not an accident that high GINI index countries are generally not nice places to live. As America moves into wealth concentrations comparable to those of Third-Word kleptocracies, it is inevitable that America will become a shitty place to live, too.

Unfortunately, PP and his more intelligent ilk have been so successfully duped by the current American ruling class, it is going to take human suffering on the order of the Great Depression to turn things around (and as nasty a time as the Great Depression was, America really got off easy. We might not be so lucky the next time around -- some countries just rip themselves apart in those situations.).

But no, I would say I am not confusing cause and effect.
posted by teece at 5:36 PM on January 3, 2005

Yes. Fluctuations in your shitty Euro don't prove much--actually, if it makes you feel worse, it's our revenge for overall European stupidity at the UN and towards Iraq: we bury you with our exports. Or, we force you to stimulate your sclerotic economy, risking destruction of the EU's myopic monetary policy.

Do you really honestly believe that, or are you just trolling?

a) The US Dollar is down against all currencies, not just the Euro.
b) The US has a massive trade deficit. You're not burying anyone with your exports (that's the Chinese).
c) Revenge for Iraq? Kinda unfair on the Italians and Spaniards who are part of the EMU, but supported you in Iraq, isn't it?
d) Bush has said (e.g. at the last APEC meeting) that a high dollar is the goal, not a low one. Guess the current low dollar is another example of his brilliant leadership.
posted by Infinite Jest at 5:41 PM on January 3, 2005

Anyone with a decent job and some degree of self restraint can be upwardly mobile.

Uh. Decent job I suppose being the key phrase. And they are not that easy to find anymore. At least not in the traditional career sense - get a 9-5 20 year long job with ACME Corporation type thing. Those days are gone. Plus the cost of living is much higher now. You get in a bad car wreck or get cancer (and 40% - 50% of WILL) - if you have insurance or not - there goes your savings.

I suppose we have to get over this mind set that we (Americans) are entitled to this absurd standard of living.

We are not.

I mean WHY are we special? Because our parents fucked here? Look if a Mexican or Indian can do what you do for 1/3 the cost... gee. Guess what?

And to you globalists: just because the Mexicans, Chinese and Indians ain't doing what YOU do today aint ANY protection against tomorrow.

And the Europeans shouldn't be so smug about our down fall.

Though the standard of living in the EU is not as material driven as here (the US), these cushy little social states will also crash without the ravenous American consumer/tax payer to help drive them (anybody recall those massive US post-war loans that essentially funded the Euro social state that never were paid back).

Not to mention the effect of the end of a dependable cheap energy growth (ie Oil - so far nothing has come close for growth potential) to fuel the necessary European economic expansion.

No matter what us progressives might want to believe about the world economy - it is driven by GROWTH. Energy growth. Market growth. Labor growth. until we come up with another better system, and nobody has... it's down hill for everybody.
posted by tkchrist at 5:45 PM on January 3, 2005

To answer, yes, that was a silly comment on my part--intentional so, to sink to the level of the ambient socialism. Yes, the US has a huge deficit? Actually it has one smaller than it had from about 1982 to about 1992 as a % of GDP. And obviously, that one put us into the Third World.

We'll get out debt down slowly, grow the economy disproportionately, and, this meme will disappear like all the other Leftist candards.
posted by ParisParamus at 5:58 PM on January 3, 2005

We'll get out debt down slowly, grow the economy disproportionately

Wow, you have a plan to get the Republicans out of office? Do share ... no wait, on second thought, don't.
posted by teece at 6:05 PM on January 3, 2005

"Whenever I read about someone who says, 'I wanted to go to law school but I'm just too poor to be willing to borrow $150k,' I know that's someone too dumb to be a good lawyer."

I like how someone can completely understand everything about my education level on the basis of one comment. A comment which seems to be debatable at that. Fair enough, I certainly won't be making any judgements on anyone because of one comment.

"J-urb: when you send your law school applications, be sure to whine about how America does not offer the poor, beknighted children of Nebraska land-owners the exact same degree of opportunity as the children of wealthy, powerful officeholders, 'k?d"

I will not whine about it. If I am asked about it, I will tell them that is the way it is. Maybe we can have a good discussion. People often get very offended by income redistribution, even if it is for a good cause such as educating the population. Even discussing such a concept makes them upset.

Lets be honest a child from rural Nebraska does not have the same opportunity as what a child who has parents making $500k has. Even if that child has equal or better ability. This isn't about robbing the rich and giving the poor, but rather maintaining the competitive nature of our society.

Did I mention that there are other people worse than me and who can't even afford to attend a 4 year school? Shocking...

Student loans are generally good investments, however, to obtain a loan one needs a co-signer. This is perfectly a natural procedure in the event that the student is not able to meet his or her financial obligations. The problem is that parents can't afford or aren't willing to aid their children. Afterall who is to say the student will actually compete school. Richer parents can afford to take such a chance.

A single mother who earns $20,000 a year would find it difficult to take on such a loan. My parents took out a PLUS loan for $1,500 per semester when I began school several years back. My parents paid $100 per month to pay back the loan so in some circumstances the loans are immediately paid back. This year I did not take out such a loan and my parents were able to pay the costs directly. Parents are having to foot the bill much of the time and some parents aren't able to handle it, especially single mothers.

Now I could have went to a private bank and paid a higher interest rate. Again to do so I would need a someone to co-sign. If my parents were not able to handle another debt then I wouldn't be in college. In a poorer family they can't handle it. Add multiple children and this is a bigger problem.

A person who lives in a wealthy family doesn't have to worry about paying back anything. The student's parents get them a new SUV for their 18th birthday. The biggest worry for some of these kids is what to wear on a Friday night.

This is much different then what I face as I have to maintain a job to stay in school. Working while in school just to make payments for food and housing take away time that I could actually be studying. This could harm my grades, something a person in a rich family doesn't have to worry about. These are the same people who are able to send their children to the best high schools and best colleges. The education system doesn't have anything to do with merit.
posted by j-urb at 6:06 PM on January 3, 2005

j-urb, I wouldn't worry about the loans. Once you graduate from your third or fourth tier law school/business school/whatever, you're absolutely, positively guaranteed a job that will allow you to pay back your substantial grad school loans. Right?
posted by Jim Jones at 6:34 PM on January 3, 2005

At the beginning, broadly egalitarian means of advancement are distributed in a stratified society, which enable most of those with the gifts and values to achieve to move up in social class. After a few generations, most of those still in the lower classes are there not because of lack of opportunity but because of a multi-generational deficit in the intellectual aptitude or social virtues necessary to sieze upon opportunities presented.

I believe that is what is known as an aristocracy. "aristo" is greek for "best", and the idea that the best would rule was considered fair and just.

The idea of meritocracy differs only in the provision that members of each generation must prove their own merit in order to maintain positions of power. This is sensible for two primary reasons: one, there are common differences between the capacities of parents and children, especially when keeping in mind that children have two parents and to inherit money, only one of them needs to have been successful; and two, times change, and what was useful or even legal in one age will not necessarily be so in the next, so even clones of the same individuals might be far less successful in different periods of history.

In any event, even if the same families would continue to rise to the top, the point is that they should have to actually do the work, raise themselves - not just inherit their family fortune. A true meritocracy would essentially cut out inheritance and split the wealth of the dead evenly among those who come of age each year, or something like that. Obviously that will never happen, but estate taxes and limitations on silver spoon privileges are generally a good thing. All citizens should feel like they have a fighting chance, and none should feel like they never have to even think about working...
posted by mdn at 6:34 PM on January 3, 2005

NewsFlash: Estate taxes don't impact wealth if assets are transferred before someone dies!
posted by ParisParamus at 6:55 PM on January 3, 2005

Newsflash: the estate tax doesn't affect inter vivos transfers of wealth.
posted by ParisParamus at 7:12 PM on January 3, 2005

oops. Sorry for saying the same thing 2x.
posted by ParisParamus at 7:13 PM on January 3, 2005

we bury you with our exports

HA! China will bury them in exports, because they're cheaper, remember? Aren't you glad we moved all our industry overseas? Oh wait, I know, we can bury them in McDonalds.

Once you graduate from your third or fourth tier law school/business school/whatever, you're absolutely, positively guaranteed a job that will allow you to pay back your substantial grad school loans. Right?

I just wanted to make sure that you're kidding. You were kidding, right?

NewsFlash: Estate taxes don't impact wealth if assets are transferred before someone dies!

NewsFlash: The Gift Tax only allows you to give up to $11,000 tax-free.
posted by Civil_Disobedient at 7:33 PM on January 3, 2005

Civil, that depends the form of the gift. There are plenty of legal ways to defeat the supposed premise of the estate/death tax.

Hey, look, raise income taxes in exchange. I just think taxing wealth at death is an outdated concept.
posted by ParisParamus at 7:47 PM on January 3, 2005

Agreed mdn.

BTW I'm not worried about myself, i just think it sucks that George W. Bush can go to Harvard and Yale when he is a complete jackass while I actually have to earn my way there. I should have done more to make my point clearer, my mistake.

Like I said before there are people who are not even able to afford a 4 year. Those are the people who really have life difficult.
posted by j-urb at 8:43 PM on January 3, 2005

The article only touched on the reasons for this happening when they talked about the lean corporations and the demise of middle managers. But it goes a lot farther.

Entrepreneurship is supposed to be the cornerstone of the US Economy. Take a look at the business world. Although a trend comes along every so often that makes it easier for the average guy to start a business (PC's, or the internet for example), the corporate forces work to either get laws passed that make it a lot harder to do this, or apply ultra-brutal "competition" to your market until you bleed.

Do you want to start a business selling things? Sure, you might be able to start a niche shop, but you'll bump up against the ceiling the minute you step on the toes of the big boys. You would need massive amounts of capital to even begin to compete with Wal-Mart -- that is, if their suppliers will even sell to you, out of fear of having themselves cut off at the knees by Sam & Co.

Maybe you want to build PCs for a living. Well, you certainly can't do it as cheap as Michael Dell and his legion of Chinese workers. So no making a buck there. Even gas stations are becoming "corporatized", with major players such as Costco entering the market, driving margins down.

All of business is dominated by major players. Yes, there are niches that can be filled, but as soon as you start making some money you attract the rutting corporate pigs, who quickly use their might to put you out of business, in the name of "efficiency" of course.

Who used to found new businesses and new technology? Underappreciated people trained in other companies. Whoops. We now have this silly thing called "Intellectual Property" that pretty much quashes that from happening. And the other side of that sword is that a lot of technical work is being moved offshore. Will someone in the US use skills learned making radios to invent something new? No chance, radios aren't made in the US anymore.

Our economy is rapidly becoming one of "credentials", and if you don't have them, you can't play. Period. As things like credit checks become entrenched in that list of credentials to get a job, look for the few remaining doors open to the underclass to be shut.
posted by RalphSlate at 8:48 PM on January 3, 2005

I just think taxing wealth at death is an outdated concept.

A good idea is never outdated. The reasons for taxing wealth at death is to prevent it from concentrating into the hands of a few families, in effect creating a nobility of wealth, and the plutocratic tendencies that would likely result.

I'm surprised that someone who seems such a vocal advocate of meritocracy wouldn't find the idea of a person, by no effort or ability of their own, being able to have such power by no reason other then the their last name.
posted by Civil_Disobedient at 8:59 PM on January 3, 2005

:) I think Double J was giving me a hint...

"j-urb, I wouldn't worry about the loans. Once you graduate from your third or fourth tier law school/business school/whatever, you're absolutely, positively guaranteed a job that will allow you to pay back your substantial grad school loans. Right?"

No! A law degree doesn't assure one that they will be financially secure, especially when there are thousands of other graduates which have a more impressive resume than you.

There I said, although I'm not worried about myself...
posted by j-urb at 9:11 PM on January 3, 2005

businessweek had an article on this way back when! so did the onion :D

drezner btw likes to point out the benefits of trade, globalization and outsourcing, and while acknowledging some of the human costs, thinks in the end we're all better off, (citing papers by mann & bhagwati et al :) namely that even as manufacturing declines in the US and low-end service jobs may be offshored, more higher quality jobs will take their place. all it requires is education, retraining and a minimal safety net :D

but, what if we're losing our intellectual edge in innovation and maybe even being leapfrogged!?

interestingly businessweek also had an article that references results from mann & bhagwati that drezner never addresses (or conveniently ignores! /sinister intent :)

Leamer and other trade experts say the resulting price competition from rising stars such as China and India could overpower any economywide gains companies get from global sourcing. They point to a famous 1968 paper by, of all people, Bhagwati, who argued that a country can be made worse off if trade lowers the price of products in which it has a comparative advantage. Bhagwati called it the "immiserating" effects of trade...

Indeed, it's possible that the U.S. already has suffered immiseration. Mann's study found that the offshore exodus of U.S. chip factories accounted for 10% to 30% of the decline in the prices of personal computers and memory chips in the early 1990s. These savings boosted U.S. multinationals' net exports of these products, and by 2000 the companies saw a $10 billion trade surplus in them.

But did the U.S. as a whole come out ahead? Mann's study also shows that the country's overall trade deficit in these products plunged into negative territory in 1992 and has remained there ever since. So while large U.S. companies gained from moving chip factories abroad, the overall U.S. economy may have lost. "This looks like immiseration to me," says Leamer.

um, so what does this have to do with income mobility and the like? i think to the extent that we've become one world, where capital and "labor" are free to move across borders, we see increased competition and lateral stratification, such that nations equilbrate along a global gini coefficient such as there is. it will be wrenching for some but it could also raise millions (billions?) out of poverty and (the hope is!) create entirely new markets... now this doesn't preclude meritocracy nor ossification; that's a political choice. but what i think is important, what's (or would be!) different about this state of affairs, is that it rather much less depends on nationhood or where you are domiciled!

and that (comrades :) is the beginning of a multitude or int'l proletariat that may (or may not :) collectively bargain their way, if not race, to the top and, as marx might have it, reinvent capitalism :D

a road to serfdom? nay! that way lies (a worker's) paradise :D

Friedrich Hayek’s combative monograph The Road to Serfdom had a profound impact on political, economic and social thinking in the decades that followed its publication 60 years ago, serving as an intellectual manifesto against socialist planning and state intervention. But are Hayek’s ideas and arguments of any interest today, after the downfall of communism and the emergence of neo-liberalism as the dominant ideology of contemporary capitalism? I would argue that they remain extremely important.

Consider Hayek’s insistence that any institution, including the market, be judged by the extent to which it promotes human liberty and freedom. This is different from the more common praise of the market as a promoter of economic prosperity. A huge part of economic theory is concerned with the prosperity argument, going back to Adam Smith and David Ricardo. That connection is indeed important, and it is not surprising that so much attention has been devoted to seeing the market mechanism from this perspective - defending its achievements as well as disputing particular claims and proposing qualified endorsements. Yet Hayek was surely right to insist on clarity regarding the purpose of seeking prosperity. Markets have to be judged, he argued, by their role in advancing freedoms, not just in generating more income (as Hayek once said: making money can be of interest only to the miser). This integrative perspective demands that we be concerned both with the outcome of market processes (including the economic prosperity it may generate and the extent to which that would advance human freedom) and with the processes through which these results are brought about (including the liberty of action that people have in an institutional system).

whereas the chicago school never seemed to rightfully acknowledge public goods, altho friedman granted "neighborbood effects" and a "negative income tax" for the alleviation of poverty, the austrian school conceded (well at least hayek!) a "guaranteed minimum income" and other rather non-libertarian ideas (owing alas to practicality?) so replace 'human liberty' with 'general welfare' and and 'freedom' with 'utility' or 'capability' and i would suspect that people are not so much in disagreement as they think they are :D

cheers!
posted by kliuless at 10:10 PM on January 3, 2005

Best. Title. Ever.
posted by blasdelf at 1:53 AM on January 4, 2005

America is not a meritocracy, nor has it ever really been. A glance at current occupant of the white house should be enough to give the lie to this conceit.

Interestingly the guy who coined the word "meritocracy" (Graydon Carter basher, Toby Young's, dad) did not do so with the positive connotations it has today. Rather he worried that a meritocracy would be a sort of dystopia which allowed those born with huge advantages - principally pots of money - to believe that they had achieved their station in life based on their own ability and hard work and despise the poor and unsuccessful for the same reasons. Which isn't a bad summary of how some of US society works today.

I've seen a few studies that suggest that the US actually has pretty low social mobility (less, in most cases than major European countries), though just enough, of course, to keep the dream alive for those who clean up the garbage and do the gardening.

This social deceit is one of the most irritating things about the US, particularly when successful (often just like their parents) Americans start carping in about their social superiority to "class ridden Europe." I suspect by this they mean the UK. Please, get a clue, no matter what Hollywood tells you, being a British toff really isn't that big a deal these days. Or at least nothing like being a squillionaire's child. Plus, they probably treat the hired help better.

Most Europeans are pragmatic enough to recognise that your birth affects where you go in life while many Americans, usually rich ones, continue to delude themselves that the poor and the rich have equal opportunities.
posted by rhymer at 10:46 AM on January 4, 2005

Oh really, smartass?

USD vs Euro exchange is proof that Socialism hasn't failed?
posted by Steve_at_Linnwood at 2:56 PM on January 4, 2005

The Triumph of Hope Over Self-Interest (mirror)
posted by mr.marx at 4:38 PM on January 5, 2005

Not quite sure what you're getting at Steve. For one thing, the jump from meritocracy to exchange rates is something of a non sequitur. And for another, the plummeting US dollar (while it may be good for US exporters in the short term) is a symptom of real, long term worries about the US economy.

I might also add that not all Europeans are socialists despite what the likes of Rush Limbaugh would have you believe. Plus of course, you have a government which spends like socialists and taxes like conservatives.

The current exchange rate is surely evidence that the free market considers this to be an untenable long term position.
posted by rhymer at 5:20 AM on January 6, 2005

Add in corporate welfare. For conservatives it is horrible to offer education benefits to people who need them, but it is okay to increase CEO pay 100 fold. What a wonderful society we live in.
posted by j-urb at 11:11 AM on January 6, 2005

Exchange rates mean pretty much zilch (at least the ranges we're talking about). Rooting for one is pretty much like rooting for a baseball team that wins the World Series, gets into the playoffs the next year, and then sinks into the Flushing....er, I mean toilet. And then gets into the playoffs a few years later.
posted by ParisParamus at 11:19 AM on January 6, 2005

j-urb. If it's so shitty, feel free to leave.
posted by ParisParamus at 11:28 AM on January 6, 2005