By Alister Bull
 WASHINGTON (Reuters) - America may still think of itself as the land of opportunity, but the chances of living a rags-to-riches life are a lot lower than elsewhere in the world, according to a new study published on Wednesday. The likelihood that a child born into a poor family will make it into the top five percent is just one percent, according to "Understanding Mobility in America," a study by economist Tom Hertz from American University. By contrast, a child born rich had a 22 percent chance of being rich as an adult, he said.
| The problem here is that the authors are expecting equality of results, not of opportunity. You can file this one under the same category as Mom the Bitch, the alar danger from apple pie, and the corporate greed of baseball. And you could rephrase that last sentence as stating that the dull child of rich parents has a 78 percent chance of not being a rich adult. |
"In other words, the chances of getting rich are about 20 times higher if you are born rich than if you are born in a low-income family," he told an audience at the Center for American Progress, a liberal think-tank sponsoring the work.
| What an amazing surprise. Who'd have ever guessed that? |
He also found the United States had one of the lowest levels of inter-generational mobility in the wealthy world, on a par with Britain but way behind most of Europe. "Consider a rich and poor family in the United States and a similar pair of families in Denmark, and ask how much of the difference in the parents' incomes would be transmitted, on average, to their grandchildren," Hertz said. "In the United States this would be 22 percent; in Denmark it would be two percent," he said.
| I think that's an apples and oranges argument, comparing a free enterprise society against a welfare state. The Eurokiddies' incomes would be subsidized when dropping, taxed away when growing, confiscated when growing dramatically. |
The research was based on a panel of over 4,000 children, whose parents' income were observed in 1968, and whose income as adults was reviewed again in 1995, 1996, 1997 and 1999. The survey did not include immigrants, who were not captured in the original data pool. Millions of immigrants work in the U.S, many illegally, earnings much higher salaries than they could get back home. Several other experts invited to review his work endorsed the general findings, although they were reticent about accompanying policy recommendations.
| I'm guessing the policy recommendations had to do with bringing the U.S. approach into line with Europe's... |
"This debunks the myth of America as the land of opportunity, but it doesn't tell us what to do to fix it," said Bhashkar Mazumder, a senior economist at the Federal Reserve Bank of Cleveland who has researched this field.
I don't think it does, if only because of the wealth of empirical evidence to the contrary. We have a competitive society. Rich kids start out with advantages that's one of the reasons grown ups work so hard, to give those advantages to their kids. But a child from a poor family has the opportunity to educate himself or herself, to learn a skill, and to move from one income stratum to the next. Sometimes plans don't work and people don't achieve what they want. They might not work hard enough at it, they might work hard on the wrong aspect of it, the market might drop, or they might get trampled by the competition. Opportunities for success are also opportunities for failure, and you're mostly on your own in both, whether rich or poor.
I'm not nearly as concerned (or as covetous) about the upper five percent as I am pleased that it's possible to go from the bottom 10 percent to around the comfortable middle of the upper 50 percent. You can do that simply by hard work and keeping your nose clean. My ambition another factor in building that social movement matrix doesn't extend to rarified corporate levels. I don't want to spend my entire life going to meetings and watching sales figures. Nor do I want to be an international financier, a politician, or an habitual Gulf Stream traveler. At the same time, I don't have any tatoos on my neck, I don't take drugs, I dress for the job, show up on time, and I try to be personable at work, so I'm what's known in the business world as "employable." I'm not part of a cultural stratum that dismisses those qualities.
When I was a child my family was not only poor, but at times very poor tar paper shack poor. I can remember literal rags and my parents' embarrassment at sometimes living on charity. The one thing they hammered into me was to get an education. There were times as a teenager and as a young adult that I was too lazy or too self-absorbed to give that goal the attention it deserved. It wasn't until I did that I started moving up in the world. That wasn't a matter of social organization, but a matter of social culture — as a young fellow beer and babes had at least equal importance to education and work. |
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