I have severely conflicted feelings about Nicholas Kristof’s most recent column, a lament for a classmate who, according to Mr. Kristof, did not realize his own potential:
Alan Krueger, a Princeton economist, has noted that in the United States, parents’ incomes correlate to their adult children’s incomes roughly as heights do. “The chance of a person who was born to a family in the bottom 10 percent of the income distribution rising to the top 10 percent as an adult is about the same as the chance that a dad who is 5 feet 6 inches tall having a son who grows up to be over 6 feet 1 inch tall,†Krueger observed in a speech. “It happens, but not often.â€
I’ve been reflecting on this because of a friend in my hometown, Yamhill, Ore. Rick Goff was smart, talented and hard working, but he faced an uphill struggle from birth; I wrote about him last year as an example of the aphorism that “talent is universal, but opportunity is not.â€
I want the United States to be a “land of opportunity”. What policies would accomplish that? Does it even mean the same thing as it did in 1850? In 1950? Are the metrics Mr. Kristof cites even relevant? For example, the countries that have considerable “intergenerational income elasticity” are (in order of more elasticity) Japan, Germany, New Zealand, Sweden, Australia, Canada, Finland, Norway, and Denmark. The countries with very little elasticity (in increasing order) Switzerland, the United States, Argentina, Italy, United Kingdom, Chile, Brazil, China, and Peru. Are we more like Finland, a small country in which 90%+ of the people are ethnic Finns, cultural Lutherans, and speak Finnish, an obscure language spoken by only a handful of people outside of Finland, or are we more like the United Kingdom, a country with whom we share a language, historic, cultural, and economic ties? Should we be more like Finland? Can we be more like Finland? In Canada what are your prospects if you are Francophone rather than being Anglophone?
I also note that all of the countries being held up as paragons of intergenerational income elasticity have much more exacting immigration laws than we do and they enforce their laws. Does that make a difference. Has the intergenerational income elasticity in the United States increased or decreased since 1965?
I’m also suspicious of this passage in Mr. Kristof’s column:
Rick, who thought he was one-eighth American Indian, pretty much raised himself, along with his brother and two sisters. His mom died when he was 5, and his dad — “a professional drunk,†Rick once told me — abandoned the family. A grandmother presided, and the kids hunted and fished to put food on the table.
Does it matter what he thought? If Mr. Kristof is trying to blame Mr. Goff’s problems on racial animus? That seems far-fetched to me. The conclusion I draw is that opportunities can be limited in rural areas and Mr. Kristof is the exception there rather than the rule.
Just for the record both of my paternal grandparents were alcoholics, my paternal grandfather died at 46 and my paternal grandmother at 61. By all accounts she was extremely difficult to live with. I met her twice when I was very young. My maternal grandparents were both in vaudeville and practically destitute. My family income in real terms is orders of magnitude above theirs and so are the family incomes of all of my siblings. There’s something more than chance going on here.
In closing I’d like to ask Mr. Kristof a question. Judging by what you’ve written in your columns over the years the policies that you favor have been the dominant policy strain in the U. S. for the last 70 years. Is there more or less opportunity in the United States today than when you were a kid?
Kristof asked the question “Is a Hard Life Inherited?” in the earlier column, declined to address it, and here compares parent’s height with offspring and proclaims:
“Remember that disadvantage is less about income than environment. The best metrics of child poverty aren’t monetary, but rather how often a child is read to or hugged. Or, conversely, how often a child is beaten, how often the home descends into alcohol-fueled fistfights, whether there is lead poisoning, whether ear infections go untreated.”
His friend was a drug-and-alcohol abuser, like his father and like his children. Alcoholism, IQ and many personality traits have been measured at around 0.5 heritability, some of the IQ studies are much higher. I suspect Kristof doesn’t want to reflect on potential genetic contributions because he doesn’t want to diminish his own self-empowered success once favorable environmental factors cleared the way for his personal achievement.
“I suspect he could have been a lawyer, artist or university professor if his life had gotten off to a different start.” Maybe he didn’t want to be any of those damn things.
I think Kristof takes from the Krueger piece that the primary source of inequality are changes in technology that provide much greater returns to analytical skills, and there is an insufficient supply of these, which thus increases price.
This is why I do not like the 1% obsession. Kristof presumably takes this to mean that greater economic opportunities would be available for people like his friend if a better education had allowed him to work in the area of intellectual occupations. But how many? And how much of the impact is simply to redistribute returns within one subgroup of the economy, by lowering incomes of let’s say journalists, and increasing incomes of people who would rather be hunting and fishing by making them an associate professor.
A more diverse economy please.
If I understand correctly, poor people are poor because they lack the resources that the middle income people have, and it is those resources allow people to move up the ladder.
Then, why are more middle income people not moving up the ladder?
I think there are some thorny questions being raised. The consequences of bad decisions vary according to your heredity, experience, family background, and even your preferences. It’s not fair. Should the society at large indemnify you against the consequences of your own bad decisions?
Based on his parents’ example, my dad suspected that he might have a predisposition towards alcoholism. He made the choice to severely regulate his intake of alcohol. Not only am I cautious about my intake of alcohol (or anything else that might promote addictive behavior) I believe I have a predisposition towards anger. I chose to devote a considerable portion of my energies and time to cultivating iron self-discipline.
Should society have stepped in to indemnify my dad against the risk that he would become an alcoholic or me against the risk that I’d beat someone to death with my fists? Wouldn’t that choice have costs, too?
Well, playing along with the game, presumably because they don’t have the resources to climb that next rung.
BTW, I don’t think that Bill Gates and Warren Buffett are multi-billionaires because they’re smarter than me, harder working, or even have skills that society values more than they do mine. I also don’t think that I’m not a multi-billionaire because Bill Gates and Warren Buffett are preventing me from being one.
I think there are various factors. One of them is that they’ve been lucky but more important is that they just want money and power more than I do.
In the abstract, a more diverse agreement sounds good, but how do we get there? With all of our income and wealth (the latter is also) important and gets short shrift) concentrated in the hands of very few people how do we achieve that? As has been noted before, the funding for most initial start ups comes from friends and family. That means we are cutting large segments of our population out of participation. The same thing is true with education where the kids of the well off have huge advantages in getting into the top schools.
Steve
I assume you mean “economy’ rather than “agreement” in that sentence. I know my answer: stop picking winners and losers. If we must pick winners and losers, prop up the industries but tax the individuals at the level of the value of the subsidies they’re receiving.
@Dave Schuler
… me against the risk that I’d beat someone to death with my fists? …
To the degree that you are law abiding, society does this by making it a crime and providing criminal punishments. It does not work for criminals, and it will not work if the law is not enforced.
For social misbehaviors or taboos, there were social punishments, but those have been banished.
I think what is often overlooked is that it is difficult to move out of one’s environment. Each level of society has certain unwritten rules and behaviors that you are expected to follow, and for most people, it can be too overwhelming.
The crime resolution rate is so low that’s barely relevant. Rather than only stupid people being criminals which is what should be only stupid people are caught. I restrain my anger because not doing so would be wrong, because of my sense of honor, and because of compassion not because I’m afraid of being caught (unlikely) or punished (even less likely).
@Dave Schuler
Well, playing along with the game, presumably because they don’t have the resources to climb that next rung.
I am not proposing a game. If the one is a problem, why is the other not, or what is the mechanism that separates the two?
What is the usual MO for Mr. Kristof and most experts is to throw anything at the wall and see what sticks or to keep it stuck as long as possible. If his theory is correct, why is it only correct when we can first identify the individual it is applied to.
In physics, the same calculation is used for all individuals to determine the gravitational force. There are no income, race, education, or other social considerations.
In social sciences, poor people are considered a sub-species, and poor black people are considered a sub-sub-species. With the same number of chromosomes, I have a difficult time understanding this logic.
steve, take a look at the figures at the end of the Saez-Zucman paper that’s usually cited as the source for wealth and income distribution in the U. S. First, look at the figures that show the decomposition among the 1%. The top .01% are the Bill Gateses, Warren Buffetts, and Michael Jordans. A very large proportion of the top 1% to .5% are rent-seekers. The people you’re complaining about are those between .5% and .01%. Message: if you exclude the top .01% and the top 1% to .5% you’re not really talking about that high a percentage of total wealth.
Now scroll down. I think it’s obvious that changes in the tax laws have nothing to do with the trend towards concentration.
My tentative conclusion is that a lot of what you’re complaining about has been caused by a) our immigration policies, b) our trade policies, and c) our monetary policies. Change the policies to reduce the problem.
Bad link, but i have used the one on my link before.
http://gabriel-zucman.eu/files/SaezZucman2014.pdf
1) Note that the share of wealth in the 1%-.5% group has actually dropped since 1960, from 8% to 7%. If you use 1980 as your starting point, it has gone from 6% to 7%. This is not where you find the big bucks.
2) Our immigration policies encourage illegal immigration, which makes for cheap labor for business, and for Texans. (Almost everyone we knew there had illegals doing something for them.) I am not sure why that would necessarily keep those in the middle from being able to move up.
3) Trade policy- The average tariff in 1970 was 6%. Today it is 1.2%. AFAICT, trade was far more regulated in the past. Are you saying that freer trade is hurting the middle?
4) Monetary policies- I think I agree with you.
What I really worry about is that this may be the natural outcome of a mature capitalist society. As we move away from industry to services, as we move away from local to national to international production of goods and services is it inevitable that income and wealth become concentrated into the hands of a small group?
Steve
Most immigrants are not in the middle. Most are at the bottom. If you increase the number of people who have very little wealth you necessarily increase inequality. In addition increasing the number of those at the bottom makes it harder for those who had been at the bottom before to get off the bottom.
I’m saying two things. Freer trade hurts those at the bottom and in the middle and helps those at the top. Quantitatively, it helps those at the top more than it hurts those at the bottom thereby satisfying Ricardo’s findings. It increases GDP and most of the benefits of trade accrue to those at the top so, consequently, it lessens equality.
At this point I don’t think so. I think it’s the natural outcome of fascism (state capitalism) masquerading as a free market economy.
We don’t and my family never has. I can’t speak for my wife’s family. I mow my own lawn and if the time comes when I can’t mow my own lawn I’ll move into a condo. The craftsmen I hire (like my roof guys) tend to be firefighters working on their off days. My family has always paid in to Social Security for our hired help.
Illegal immigration is unspoken part of the Kristoff story. This is from a memoir of a wealthy Yamhill County farmer:
“There was always an abundance of Mexican farmworkers in our area, and we were lucky to have them. It was generally known that most of the workers entered the country illegally, though they always had papers to show when asked. The black market must have been huge. The whole situation existed under the table. Everyone knew about it; nobody talked about it.”
Link
His friend seems like a hard worker, as children they held jobs in farming, and hunted and fished for food for the table. As an adult, he worked in the lumber mills, machine shops, and custom auto painting shops. But Kristoff seems shocked (and oblivious) to changes in his small farming community:
“A neighbor here just died of a heroin overdose; a friend was beaten up last night by her boyfriend; another friend got into a fistfight with his dad; a few more young men have disappeared into the maw of prison.”
If Kristof thinks that unions would have protected his friend’s economic security, he should consider that unions only work by restricting which workers can get jobs.
I didn’t mean to come across as judgmental on the alcohol thing; it’s just that his friend appears to have violated several longstanding rules for avoiding poverty: (1) graduate from high school; (2) avoid alcohol/drug addiction; (3) don’t marry until after you’ve dated X years; and (4) don’t don’t have children until after you’ve been married Y years. I’ve heard various iterations of X and Y, and I probably don’t meet some of them, but having two children with your girlfriend isn’t close.
Anyway, Mormanism.