What Creates Opportunity?

Returning to a subject I touched on earlier today, Harold Meyerson’s column in today’s Washington Post challenges our own self-image as “the land of opportunity”:

The best way to measure a nation’s merit-based status is to look at its intergenerational economic mobility: Do children move up and down the economic ladder based on their own abilities, or does their economic standing simply replicate their parents’? Sadly, as the American middle class has thinned out over recent decades, the idea of America as the land of opportunity has become a farce. As a paper by Julia Isaacs of the Brookings Institution has shown, sons’ earnings approximate those of their fathers about three times more frequently in the United States than they do in Denmark, Norway and Finland, and about 11 / 2 times more frequently than they do in Germany. The European social democracies — where taxes, entitlements and the rate of unionization greatly exceed America’s — are demonstrably more merit-based than the United States.

I’m not so sure about his premise. Imagine a country that was completely homogeneous and in which the people were completely genetically, culturally, and environmentally uniform. In such a country you would expect “intergenerational economic mobility” to be based completely on chance and I strongly suspect there would be more of it than in a country that was very diverse genetically, culturally, and environmentally. Assortative mating, inheritance, and family culture would actually ensure differences in outcomes.

I think that people sadly underestimate the influence of things you learn at the kitchen table. Take my own case. I have started businesses nearly from infancy. I sold greeting cards door-to-door when I was seven or eight years old. I began operating “carnivals” for the other kids in the neighborhood at just about the same time. I started mowing lawns when I was twelve and within a few years was mowing five or six acres a week. In college after working a few “real” summer jobs I organized my own business doing odd jobs and earned half as much in a summer as the average attorney earned in a year. During the school year in college I ran a money-making theater group. I also taught martial arts (and sold uniforms), translated scientific articles for various departments, and sang at weddings, baptisms, funerals, and parties (as well as occasionally tending bar at them).

Since leaving school I’ve started half a dozen businesses. Where did this propensity come from? Well, as it turns out my great-grandfather and my dad both did much the same thing. My dad raised and sold hydroponic tomatoes. He also organized a sponge importing business. These in addition to a full-time practice as an attorney and being a landlord. At the time of his death my great-grandfather owned and operated a dairy and a saloon that had the catering franchise for the St. Louis City jail, courts, and municipal offices as well as being a justice of the peace who, according to his obiturary, officiated at the weddings of more than 10,000 people.

I don’t know whether it’s something in my genes or just hearing the stories at the kitchen table. Not everyone does all of this but something lead me to do it.

As it turns out I both agree and disagree with Mr. Meyerson. I don’t know what produces greater intergenerational economic mobility or even whether that translates into greater opportunity. I do think that here in the U. S. there are a large number of factors that reduce the level of opportunity including

• Certifications
• Accreditations
• Inheritance
• Intellectual property law
• Unchecked monopolies using their power illegally to expand their monopolies
• Government subsidies and bailouts of connected businesses
• Hundreds of thousands or even millions of pages of regulations at the federal, state, and local level

just to name a few. Mr. Meyerson doesn’t mention any of these in his column so I don’t know whether he’s for them or against them. I think that some regulations produce more opportunity while others constrain opportunity. For example, prohibiting the use of lead in paint certainly produces greater opportunities for the kids that won’t eat the sweet-tasting lead paint in babyhood and unknowing limit their own future prospects. Better healthcare for children of parents in the lowest income quintiles would probably increase opportunity.

I am all but certain that requiring taxi medallions and limiting the number issued (just to give a single example out of a legion) reduces opportunity.

I’m not so sure about education, particularly higher education. I note that all of the justices of the Supreme Court graduated from just three law schools and those law schools have limited enrollment. That suggests to me that the opportunity to become a Supreme Court justice is, in fact, limited. Is that a good or a bad thing?