Two leading economists disagree about the flagging American Dream
economist.com
economist.com
Was life in the US ever as great and shiny as depicted in the US TV series like Magnum P.I., A-Team or the 6-Million Dollar Man that those of us with access to Western TV gobbled up with awe and wonder, or was it always a naive myth but the propaganda weapon worked so well that it still even now affects the US population, when both old and young talk about how much better the 70's have been compared to today?
(I guess the truth is - as always - somewhere in the middle)
If you have not had the chance, go visit the rest of the country outside the coasts (where people suffer under self-inflicted policy choices). Places where college graduates struggle to afford a one bedroom apartment in a city where human feces covers the streets isn’t a good proxy for what life in America is really like. Try Kansas City, Des Moines, Houston, etc. The widespread material prosperity is evident..
She was shocked that, in most of the US, the median home price is at or under $300K.
Very few shows portrayed middle class families, and those that did often made the struggles of being blue collar into plot device.
The concept, in some approximation of it's modern form, was written about quite a bit in the 19th Century, and particularly heavily (both positively and negatively) in the 1920s-1940s.
I mean, once identified it was certainly seized on as capitalist propaganda, but directed at the US working class more than any outside target, and long before there was a Cold War.
I believe that raising the next generation is our most solemn obligation as parents. It seems overwhelmingly likely that this would confer some benefit to the more well-to-do that cannot be entirely eliminated short of universal boarding schools and even that might not be enough.
Why do children of professors grow up to be professors, doctors to doctors, plumbers to plumbers, etc? I’m sure there’s some genetic component, but I suspect the overwhelming influence is what they experienced and how they were raised. When I was growing up, both my parents were teachers and at some young age, I just assumed that literally every adult was a teacher. It was the only job I knew and saw daily.
I believe that having and even encouraging parents to strive, scrimp, save, and sacrifice for their children is an overall positive force for society. My parents benefited greatly from it, as did I, as will my kids. If you took the actions required to make outcomes totally uncorrelated, I think you’d remove a lot of this sacrifice and effort that society benefits from when parents raise their kids to be “better off” than they were.
It's always been the idea and should be that those who do right,act honest and work hard even if they don't work smart, should have upward mobility, as in regardless of birth you can enter the lower mid-class tier. Obviously your talent and skill should and would determine your mobility to upper and upper-middle class.
Society benefits when the best scientists are working on science, the best mathematicians at math, the best musicians are performing, and even when the best athletes are playing pro sports. I’d like these talented people to be able to develop, showcase, and benefit from their talents without regard to who their parents are.
Thomas More, Utopia
That kind of work is still valued, just less so than before. It makes sense to supplement low incomes with UBI or negative income tax, so that no one is denied a tolerably comfortable life. Our social safety nets are totally unfit for the present world, they're still built for the assumption that high-paying manual work is everywhere.
I hope those of us that didn't go to MIT like you have a place in this society.
Well, I suppose you could perform random shuffling. 50% of people will still end up with a below average outcome, though.
His point is that true social mobility would be literally hitting the random button repeatedly. It's obviously not a workable idea.
Someone has to lose, even if you perform a magical full reset once per year, in any given year half of the people will be below average.
The goal of course is that we make sure that everyone has a decent life even if they're not at the top.
I think you've jumped on his comment and assumed that he doesn't care at all about anyone who's not in the top N% which isn't a charitable reading.
Holding a 4-year bachelors degree puts you in about the top 1/3rd in academic outcomes (meaning you personally are 50/50 to be in the top 1/6th).
It's not for me nor anyone else to define your ceiling, but I would expect based on the limited data presented and, to the extent that academics is a predictor of outcome, that your outcome would be quite likely to be above the average. That you're engaged on news.yc is another generally positively correlated term I would think.
Doesn't sound like a desirable society.
I see every increment of improvement a parent (or other guiding figure) helps a child to achieve as being like a small hammer tap improving the future for that child and the society in which they will go on to live.
The fact that, regardless of anything anyone does, many will lead an average life is just straightforward application of the Intermediate Value Theorem. To be clear, I said “average” not “unenjoyable”; in fact, I tried to quite explicitly/literally say the opposite, but perhaps my words were chosen poorly or otherwise misled the reader.
A large number of these small hammer taps though can improve that average greatly over time, as we’ve experienced over the generations since humans have lived in societies. In about 14 generations we went from first proving the Earth revolved around the sun to landing humans on the moon. Fourteen! Four generations from the patent of the telephone to the release of NCSA Mosaic. Four! One more generation and most of us are carrying around Star Trek communicators that we can use to argue with each other about how to best shape educational processes for societal benefit.
The pace and inexorability of academic and technical progress blows my mind. I think we should be very cautious about disrupting that in the pursuit of perfect equality of outcome.
Of course parents should invest in their kids and try to give them every opportunity. But, there's a big difference between parents investing in their kids and advocating a status quo that every parent "scrimp, save, and sacrifice" to give their kids a fighting chance. It's a poor design.
One, it will invariably leave some kids behind, especially given our current wealth disparities. And, yes, even some "gifted" kids will be left behind.
Two, giving kids opportunities shouldn't bury parents and push them to the brink. Education is too high. Housing is too high, etc. In many cities, housing costs are driven by a desire for areas with better public schools, pushing them so high that they are out of reach for many.
So, no amount of scrimping, sacrificing, etc. will allow people of certain income levels to provide their kids certain opportunities. They're doing these things just to survive.
Three, there is an opportunity threshold that provides for a minimum reasonable expectation for a good quality life. Beyond that, it's largely incremental. For too many, that minimum threshold is uncrossable, irrespective of their best efforts.
And, this doesn't even speak to the fact that stressed out parents working multiple jobs to provide these opportunities spend less time with their kids--that being a proven marker of outcomes.
The result: what you advocate is unhealthy and unworkable. This "scrimp & sacrifice" scheme is sub-optimal for both personal fulfillment and maximizing social contributions. Both things are necessary for a happy, thriving society.
Elsewhere you said you'd like to "ensure people of all conditions can develop their potential". Advocating that each parent scrimp & sacrifice is in direct opposition to this.
>To be clear, I said “average” not “unenjoyable”
You also said:
>If you’re the average person, I think it’s reasonable to expect an average outcome. In the modern world that should still be quite an enjoyable life
If average people have average outcomes, leading to an enjoyable life, then it stands to reason that "below-average" people will have below average outcomes, leading to...what exactly?
I think you want to sweep that under the rug b/c it doesn't comport with your "hey, if all parents just scrimp & sacrifice everything will be OK" proposition.
In all, your theories about how things should work necessarily omit the existence of a large portion of the population: everyone is somehow "average" and above, providing an "enjoyable" life for all, and parents investing in their kids means foregoing one extra Starbucks run per-week.
On the average life point, I think you're reading something into the text that isn't there. I think 95% of people or more have enjoyable lives. Everyone enjoys eating and socializing with their family and friends. Absent terrible health issues, most everyone can have an enjoyable life and those who don't probably are limited by medical, psychological, or other factors which are typically not primarily educational/financial.
Stating that the average life is quite enjoyable doesn't imply to me that the 25th percentile or 10th percentile life is dire. Both of my grandfathers had relatively tough lives, certainly much more difficult than my parents or my own. Both of them also seemed to relish every month and every year and enjoy it, even if they didn't enjoy every single hour (neither do I).
It would be as if saying "the average RGB pixel color of your screen is #aaaaaa, which is still quite bright" led to the conclusion that a great many pixels on the screen were #000000 and that's unfair.
Society doesn't benefit from this. Low-status jobs still have to be filled, at least until technology eliminates them. Making sure that your kids aren't the ones that do them isn't a benefit to anyone but you and your kids.
> I believe that having and even encouraging parents to strive, scrimp, save, and sacrifice for their children is an overall positive force for society.
This is less a thing that doctors have to do than a thing that plumbers have to do.
Its purely additive. Being well off doesn't mean you can't do these jobs, just that better options are available. Market forces will make the pay desirable if they are needed more than they currently are.
>This is less a thing that doctors have to do than a thing that plumbers have to do.
Sure, but it doesn't change the fact it's a good idea. I'd even argue that most blue collar jobs, in having less obligations and a more clock-in-clock-out mentality, frees up parents to spend more time with their children.
The alternative is that you end up with nonsense like hungry grads working at FAANG to fuck the world.
Channeling people into useful pursuits pays dividends.
It is not about society’s accommodation/assistance of specifically the gifted but rather about ensuring that people of all conditions can develop their potential. Society should care about this because it’s the long-term flywheel that improves the human condition.
The pie can get bigger, too. It’s not just about dividing a fixed pie most evenly.
The practical world is full of interesting problems. Gifted humans need to really feel useful (to put their gift at use) more than they need the matching income.
furthermore, there may be a lot of overlap between useful/important and interesting work, but I doubt they map perfectly. there probably needs to be some material reward for important work so that it gets done even if it's boring.
I certainly don't think we have a great state of affairs today. some people get paid huge amounts of money to do work that I feel is harmful. imo the goal should be to take care of everyone's basic needs, but also to reward people proportionately for their contribution to society.
Compared to what?
Doesn't society most benefit from members who are fulfilled via actualization of their potential? Wouldn't that mean more content people and more contributions to society?
Is requiring parents to "scrimp, save, and sacrifice" really the optimal design for achieving this?
I think it's likely that society will probably work better with high mobility vs the random draw that "perfect" mobility requires, but that's a fuzzy feeling based on human groups being complex, not the distilled moralization that you are using.
I suppose the less complicated discussion is about raising the baseline outcome being better than working to make outcomes the same. Raising the baseline is about absolute outcomes rather than relative outcomes, so the latter aren't as big a piece of the discussion.
Worse: you are punishing poor children who don't draw parents who sacrifice everything until they rest in an early grave, while rich children who have parents who don't remember how many kids they have after a few drinks get every opportunity in the world.
This is a specifically middle-class moralization that defines merit as the product of the ability to suffer and "giftedness," and measures merit by looking at outcomes.
There’s a huge distance between the majority of parents who “care” in that way and those who truly care about their children.
The flip side is that parents who could not ordinarily build for their kids' futures might feel better. I wonder if that's enough to compensate.
But I'm saying that I think that because humans and groups of humans are complicated, not just because I think it's important to reward parents that value and plan for their children's future.
He came to the US and worked in the forges for Falk in Milwaukee. He didn't speak English, but he worked hard, lived responsibly, and paid for the education of his two children. My dad became an electrical engineer, and my uncle got a doctorate in veterinary medicine and owned a clinic. Going a generation further, me and all my siblings have college degrees from great schools. This whole story plays out from 1940 to the present day.
I'm just trying to understand where it is that my family got lucky, and why I should feel sour about this country and the opportunities it gave us. Where else on Earth is this possible? How did we get so lucky, and why is everyone so sure that it wasn't just that we worked hard and had the right priorities?
“The ~Christian Ideal~ American Dream has not been tried and found wanting. It has been found difficult; and left untried.”
Really? Did you read the article? Raj Chetty's work on inter-generational mobility should make it obvious where your family got lucky. Your grandfather's story resembles many others from that time period. If he was even able to immigrate to the US today, as a contemporary version of his 1940's self, he wouldn't find nearly the same level of opportunity.
> Where else on Earth is this possible?
I would agree that there are economic benefits to being a global hegemon. Today, however, at least based on measures of social mobility, your family's rise would be more possible in Western Europe than the US.
If you compare the US to for example Denmark, you can see that the lack of opportunity is concentrated in the bottom 20%. That is to say, income mobility is similar between the countries for people in the lower middle class, but not at the very bottom: https://thesocietypages.org/socimages/2012/01/05/economic-mo...
The various data taken together strongly suggests something else is at work rather than the economic system itself. Poor Asians, poor Hispanics, and poor blacks face the same economic system. For them to have vastly different outcomes in terms of economic mobility, the explanation is likely to be something apart from the economic system. What is billed as a matter of economic mobility may well turn out to be more of a story about the criminal justice system, systemic racism, the lasting effects of segregation, etc.
And why should you feel sour? There is nothing wrong with being lucky.
However, the problem is that too many lucky people assume that their result is due to work rather than luck and then attribute a lack of result to a lack of work instead of a lack of luck.
This is akin to winning the lottery jackpot and then blaming other people not hitting the lottery because they just didn't buy enough tickets rather than the odds being explicitly stacked against them.
The argument reminds me of the old religious debates about 'free will' vs 'destiny'...if some god already knows every decision we will make, and we make 'evil' decisions, were we destined to be 'evil' ? If a 'god' with perfect knowledge already knows we will make these 'evil' decisions, did we really have a choice (eg if we choose to be good, the 'gods' knowledge is no longer perfect..)
Just seems like a great way to remove personal responsibility from the conversation. Yes, we all have been lucky (and have all had bad luck..) but yes, you have to make the most of it as well.
Having the awesome luck to win the lotto doesn't really matter, if you never take the personal responsibility to cash in the ticket.
No, but what we, as a society, need to do is cut down on how much luck you need in order to move up.
There was a very nice article at one point that showed that the absolute best students who come from the lowest 20% of the socioeconomic strata barely do as well as the absolute worst students of the highest 20% of the socioeconomic strata. It's basically a proof of "Einstein may exist in <insert poor country>, but we will never know."
That is a hideous loss of human potential. We, as a society, need brilliant people to achieve their maximum potential without luck. And we need people less than absolutely brilliant to not have to fight so stupidly hard to move up.
We had an article (I believe in the LA Times) talking about the problems of the disincentives of being a student from an underprivileged background. The biggest thing that struck me was that STEM fields were simply not in scope--the students coming from these backgrounds simply were blocked. Social worker, lawyer, nurse, etc. were achievable but engineer, scientist, or doctor were absolutely not--through no fault of their own other than the area in which they were born.
You can only fix this by putting a very significant amount of more resource into your education system.
Perhaps a good place to start would be by talking about 'opportunities' and not 'luck'. Luck is a passive thing that happens to you (for better or worse) whereas opportunities require effort (aka personal responsibility) to make the most of.
for instance, I would agree wholeheartedly that a society should try to maximize the opportunities available to all its citizens.
>You can only fix this by putting a very significant amount of more resource into your education system.
I would disagree here. Education is not the only opportunity available to people. More access to small business loans, for instance, would be desirable IMHO. And of course, access to medical care is on everyone's mind atm...Although, I do think we need better education across the board.
>we need people less than absolutely brilliant to not have to fight so stupidly hard to move up.
Thinking about this a lil more - I'm not really sure 'moving up' should be the end goal? Perhaps, "not have to fight so stupidly hard to have a fulfilling life"? As people keep telling me, there is more to life then work.
Perhaps our fixation with 'moving up' is half the problem? It seems to be a fairly American concept - other cultures don't seem to share our fixation/fascination with the 'almighty dollar'.
Eh...time for coffee...
Similarly, you grandfather got lucky that he didn't die when his village was burned, that he didn't die in a work camp, that he could immigrate to the US, that someone gave him a job and wasn't in a community that hated Polish people for no reason. Your parents and you were lucky to be born to the families you were. There's less context about you/your father/your uncle, but I imagine there was a lot of luck of someone else giving you a chance involved.
As other posters have said - don't be upset that you got lucky! There's nothing wrong with being lucky. Success is a mix of luck and being able to take advantage of that luck - your preparation and hard work. Hopefully you use the luck that you got to help provide a bit of luck to someone else.
https://time.com/4779796/arnold-schwarzenegger-university-of...
Thanks for this. You're right. You've made me realize that I'm probably falling victim to intergenerational information loss or just a lack of appreciation.
A couple years ago I sat down with my grandfather with a voice recorder and asked him a bunch of questions about what it was like when he was in Germany, when he immigrated, what he did once he got here.
He was lucky to be able to immigrate to the US. After the war, he worked for a while in an office for the German government (he actually still gets a pension check from the German government) doing paperwork for displaced citizens and helping them get visas to Australia and the US. He had all his paperwork worked out to go to Australia instead of the US and at the last minute he was able to get sponsorship in Chicago and was able to come here instead. I think the only reason that connection came through was because it was someone he helped immigrate earlier.
He was lucky that someone gave him a job. In fact, that's the exact expression he used when I asked him. If I asked him, the guy with the hardest cross to bear, he'd definitely attribute a lot of his life to getting lucky.
But my dad and uncle weren't lucky to get to a community that didn't hate Polish people. I've heard a story that my uncle and dad were beat up as they were walking home from school one day and my uncle had his head put through a window, just for being Polish.
I think it's all about context. My grandfather looks at what life would have been like if he was still in Poland and thinks, "Of course I'm lucky!" My dad looks at the kids he grew up around and thinks, "I didn't speak any English until the first grade. I'm lucky, but things could have been easier for me." And I think, "I'm just a normal American guy, things are as easy for me as they would be for anyone."
Between the inputs and the outputs. For example:
> He came to the US and worked in the forges for Falk in Milwaukee. He didn't speak English, but he worked hard, lived responsibly, and paid for the education of his two children
Plenty of people at the same time put the same inputs of hard work and responsible living in, and got different outcomes due to forces they didn't control. The success of American elites (this is true of capitalism generally, and the greater prosperity of American capitalists compared to much of the rest of the developed West is due specifically to failing tomitigate this aspect of capitalism as much) is built on the precarious position of the working class.
That said, if enough people achieve this dream, the dram is fulfilled and there are no more dreamers because they’re all fat cats now.
Arrived in this country with some $3000 to my name, now here we are 5 years later I am little different than any other spoiled coastal US person.
https://www.valuepenguin.com/banking/average-savings-account...
what social mobility? you were middle class and you're still middle class
my family actually immigrated as poor people (refugees) 30 years ago from a shit country (moldova) and we're all doing very well in tech now but that doesn't mean i'm blind to the inequalities faced by systematically marginalized people.
-- as a society we should strive for what Warren buffet calls "lottery of birth" [1]. Egalitarian society will better maximize utility of it's gifted population.
-- as individuals we try to game the system in order to give our children & filmy, friends a lag up. So we want meritocracy and egalitarianism from everyone while practicing nepotism for our close ones.
[1] https://www.getrichslowly.org/warren-buffett-on-the-lottery-...
And/or having a Nobel memorial prize as one of the two economists already does.
I would say the criteria are no different from those of other fields.
Social Mobility, aka "The American Dream" has been flat since the decoupling of productivity and Labor in 1971. [1] [2]
[1]https://www.pewtrusts.org/~/media/legacy/uploadedfiles/wwwpe...
[2]https://www.bostonfed.org/publications/research-department-w...
■ Eighty-four percent of Americans have higher family incomes than their parents had at the same age, and across all levels of the income distribution, this generation is doing better than the one that came before it.
■ Ninety-three percent of Americans whose parents were in the bottom fifth of the income ladder and 88 percent of those whose parents were in the middle quintile exceed their parents’ family income as adults.
Not only are the vast majority of people doing better than their parents, this effect is even stronger at the bottom of the distribution. That seems pretty damn good to me.
End notes in the study confirm sensible treatment of the comparisons: Measures of family income are adjusted for family size and inflation. Measures of earnings are adjusted for inflation. Measures of wealth are adjusted for inflation and age.
I'd hope the average income is higher.
Also, how many years of the average family income does it take to buy a small family home these days? How many years of income did it take a generation ago?
The median US family income in 2019 was $75,500. The median US single-family home price in 2019 was $327,000. [1]
The median US family income in 1990 was ~30,000. The median single-family home price in 1990 was $79,100. [2]
Somehow, I look at these numbers, and can't interpret them as being 'good news'.
[1] https://fred.stlouisfed.org/release/tables?eid=206085&rid=97
[2] https://www.census.gov/hhes/www/housing/census/historic/valu...
I'm pretty sure that the average household has fewer workers than a generation ago.
The number of single-parent households has risen from 12% in 1960 to 31% in 2016,[0] so more families are capped at one income-earning adult.
Meanwhile in two-adult households, stay-at-home moms/dads are as common now as they were 30 years ago[1].
And with housing prices, we're not really comparing apples to apples, are we? The size (in sqft) of the median house has increased by ~40% since 1990 [2], even as the size of the average household falls.
[0] https://www.census.gov/newsroom/press-releases/2016/cb16-192... [1] https://www.pewsocialtrends.org/2014/04/08/after-decades-of-... [2] https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...
If all cars doubled in price tomorrow, but also started getting sold with three steering wheels, would you consider that to be great news - because cars are getting cheaper? The price per steering wheel went down by 33%...
Houses got bigger because the cost of land grew faster than the cost of construction. It doesn't matter that you're getting more square footage - because you can't buy a 40% smaller home for 40% fewer dollars. If you don't need, don't want, or can't afford that square footage, housing has become less affordable.
Likewise, colleges now provide all sorts of student services, that they didn't, back in the 90s. Also, tuition is now 5x-10x what it used to be, back in the 90s. Would you argue that college is now more affordable then ever, pointing at all the amazing services that are now provided by them?
[0]: https://www.supermoney.com/inflation-adjusted-home-prices/
A modern house in much of middle America is going to be at least 2,000 sq ft, but 3,500 is certainly common, as the average size currently stands at around 2,800.
The problem, of course, is that in any given neighbourhood, the price of a smaller home is nearly the same as that of a larger one.
If my family works twice as many hours as my parents did, but makes $1 more, they come out on the good side of this measurement.
When a couple moves in together, their finances generally improve a small amount (due to reduced overheads), but by less than the doubling that a simplistic spreadsheet might show, hence economic papers considering household income should make some account for household size.
https://www.newamerica.org/millennials/reports/emerging-mill...
Millennials typically are worth twenty percent less than their parents at the same point in life. My parents owned a house, two cars, and had two babies at my age. My dad was a public water maintenance worker with no college degree and my mom was in nursing school. The only people I know right now with a house, two cars and two kids are both accountants.
I don't feel that this situation is uncommon around here. I make more than the majority of my friends individually, but we're probably on the lower side of the spectrum when it comes to household income, at least among my friend group.
That said, I completely agree that it used to be much easier to get a good paying job with a high school diploma or less.
I went to university. My dad graduated high school. His dad went to school through 8th grade.
There has been a significant trend towards delaying adulthood. Part of that seems to also mean delaying the ability to earn a living wage and support a family.