Actually, the majority of millionaires in the US are self-made, first-generation wealth. We have very high economic mobility here, which seems to invalidate your theory.
But if you actually take a look at the Wikipedia article, you'll see this: "France, Germany, Sweden, Canada, Finland, Norway, and Denmark all have more relative mobility than the US, while only the United Kingdom is shown to have less mobility [1]" [1] http://www.economicmobility.org/assets/pdfs/EMP%20American%2...
It's still possible that the majority of millionaires in the US be self-made (although I'd argue that a middle-class born Web entrepreneur cashing out is far from self-made - see other comments about the importance of a middle-class upbringing).
But that doesn't necessarily give the US a very high economic mobility: here, like often, it's easy to only look at a few extreme cases and forget the averages.
The way I see it, the American dream is but a myth perpetuated by the wealthiest: if I believe I'll strike it rich someday, I won't want more high-income taxation or estate taxes... even though there's actually very little chance it'll happen.
That report again! All I see is: some professor came up with his own definition of economic mobility (some unitless score, what the hell is it?) and now we are supposed to take these conclusions as a gospel.
UPDATE: Apparently I can't reply to the comment below, so I have to do it here. The comment only confirms what I wrote and does not answer the question: what is that score? How is it computed?
This is from note 13 in the report. Also, the authors didn't come up with this themselves. The data comes from here: http://www.iza.org/en/webcontent/publications/papers/viewAbs...
This explains nicely where the use of elasticity comes from.
Do you have other data that contradicts these conclusions?
People should be perfectly free from government interfering with their ability to pursue success, but one would expect the children of successful people to be more successful simply because of inherited traits alone. Moreover, even aside from money, to the extent that a child's environment is his relationship with his parents, you'd expect children of successful parents to be more successful.
There's also something to be said for parents being able to give their children an advantage in life.
A society that maximized economic mobility would not be a fair one. It would mean arbitrary wealth transfers from the richer to the poorer.
Personally, I'm in favor of a 100% inheritance/estate tax, with every citizen's child given an equal share of society's inherited wealth on his 18th birthday. It would be sad to give up parents' rights in this way, but I think it would be well worth it on a public policy level.
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Personally, I'm in favor of a 100% inheritance/estate tax, with every citizen's child given an equal share of society's inherited wealth on his 18th birthday.
How ironic.
Loose ideas for counterarguments follow.
This policy is as arbitrary as the voting and drinking age. I think the age restrictions are utterly stupid (it completely ignores the huge variance of physical and mental development speed), and it is likely that the basis of this 18 stems from the same reasoning. Sure, there may be good reasons to pick 18 out of all other ages, but it is still based on scant information and remains mostly the arbitrary opinion of a few people. One who promotes Free Choice (which I suppose you are, because it is more friendly to ideas that are meant to promote social mobility) is not so likely to agree with this sort of mostly baseless policy.
Next, this system is very easily gamed. Suppose it really comes into effect. One way to go around is to start a business and transfer assets with it. Suppose you erect a barrier against that. Easy: immigrate out, immigrate back. Your society will want that immigrant money. Suppose you further erect barriers. Still easy: if the parents know that at age 18, the child will have total loss of control over the assets, all they will do is set up all the pieces before that birthday. Whatever safety net that was supposed to last 18+N years now is compressed into 18 years, with every penny spent the most expensive schools, equipment, teachers, social parties, and connection building. Other parents in the same situation would do the same, and you just constructed, in one generation, the noble class.
Third, some parents or potential parents will completely change their life strategy. For example, it becomes far less in their interest to have children to begin with.
Personally...
personally, I don't believe a fair system is possible. Blame gene recombination. You can only make it easier for the longs of one group to complement the shorts of other, hopefully balancing overall group happiness and overall group advancement.
The key is the word relative. It's extraordinarily difficult to move out of the middle class, in both directions (up: tax, down: welfare). The difference between lower and upper middle class is maybe $75-125k income/yr, and completely reasonable to navigate.
In the very page you link to: "While there is some economic mobility between generations in the United States, it is still difficult to move up one or more quintiles in regard to one’s income."
But again, I am not one to make conclusions about this topic; I merely express skepticism and disagree with those who hold strong opinions one way or another, because either borders on irrational conviction.
The second point, which you don't address, is the effect of generational wealth on offspring. The effect is subtle and easy to overlook, but is as important as wealth itself. Why do the rich stay rich, and the poor stay poor? It's not as simple as saying the system is or isn't in favor of mobility. You must also consider the possibility that rich offspring have become inherently stronger, smarter, and prettier than the poor -- and they are. There has been research on this topic, but it is intuitively obvious: a desperate person is not attractive, is brash, and is weaker against temptation.
The symptom is one: wealth disparity is increasing; but the disease is manyfold. That's my "theory". The problem here, is that somebody will write an article illuminating one facet of the problem, just like somebody takes a magnifying glass to examine a rash. Then somebody reads it and says, "let's apply Cortisone!" But it's actually an allergic reaction to an ingested substance.
The skin-deep understanding of society helps perpetuate this "credit hog" mentality. And that in my opinion is among the foremost barriers to equity.
http://www.economicmobility.org/assets/pdfs/EMP_American_Dre...