Wednesday, June 01, 2016

There is still good social and economic upward mobility in America

Jeff Jacoby's argument below is both a cheery one and mostly right. He seems unaware, however, that the Italian study he mentions has a large predecessor in the work of Gregory Clark, who also finds that wealth is to a significant extent dynastic.

Clark's findings that SOME lineages stay wealthy is an interesting one.  And he explains it well.  He says (to simplify a little) that what is inherited is not wealth but IQ.  As Charles Murray showed some years back, smarter people tend to be richer and tend to marry other smart people.  So their descendants stay smart and smart people are mostly smart about money too.

But Clark's findings do not in fact diminish any of the points Jacoby makes.  Dynasties of wealth do exist but most people's wealth or poverty is not dynastic

TWO RESEARCHERS AT the Bank of Italy have documented something remarkable about Florence, the gorgeous Tuscan capital where the Medicis ruled and the Renaissance was born: The city’s wealthiest residents today are descended from its wealthiest families six centuries ago.

As The Wall Street Journal reported this month, economists Guglielmo Barone and Sauro Mocetti looked at tax records compiled in Florence in 1427 alongside municipal tax data from 2011. “Because Italian surnames are highly regional and distinctive,” the Journal explained, “they could compare the income of families with a certain surname today, to those with the same surname in 1427.” What they found was that the wealthiest names in 21st-century Florence belong to families that were near the top of the socioeconomic hierarchy in 15th-century Florence — those who were lawyers, or who belonged to the wool, silk, and shoemaker guilds.

Barone and Mocetti did not identify the actual families listed in the Florentine tax rolls, but they note that about 900 of the surnames are still used in Florence by some 52,000 taxpayers. Not all of them are descended from those who bore those names in 1427, of course. And the new study appears to focus primarily on correlations among the very highest and lowest income-earners, not on the majority in between. Over the course of six centuries, the authors note, Florence has undergone “huge political, demographic, and economic upheavals,” and they acknowledge that intergenerational mobility is higher in Italy today than was the case before the 20th century.

Yet even with all those caveats, the persistence of economic and social status across 600 years of Florentine history is eye-opening. And it helps explain what impelled myriads of Italians to uproot their lives and relocate to new homes — especially the 5 million people who immigrated to the United States between 1876 and 1930.

Critics have been lamenting the death of the American Dream for decades, but the US remains what it has always been: a land of opportunity where neither poverty nor wealth is immutable, and no one’s station in life is fixed at birth. Politicians whip up economic envy; activists stoke resentment at a “rigged” system. And yet economic mobility is alive and well in America, which is why so many foreigners still stream to our shores.

Ample evidence bears this out, much of it gathered in long-term studies that track the earnings of large blocs of Americans over many years.

In 2012, the Pew Charitable Trusts published one such study, appropriately titled “Pursuing the American Dream.” Drawing on longitudinal data spanning four decades, Pew was able to show that the vast majority of Americans have higher family incomes than their parents did. Among US citizens who were born into families at the lowest rung of the economic ladder — the bottom one-fifth of income-earners — a hefty 57 percent had moved into a higher quintile by adulthood. In fact, 4 percent had risen all the way to the highest quintile. Over the same period, 8 percent of those born into the highest income category had dropped all the way to the bottom.

For a different examination into economic mobility, analysts at the Treasury Department studied 84 million federal returns of taxpayers who had taxable income in both 1996 and 2005. They, too, found that “roughly half of taxpayers who began in the bottom income quintile moved up to a higher income group.” For two-thirds of all taxpayers, real incomes had increased. And — repudiating the frequent lament that upward mobility is vanishing from American life — the Treasury study concluded that the “degree of mobility among income groups [was] unchanged from the prior decade.”

The 25th great-grandsons of medieval Florentine shoemakers may still be riding high, but things don’t work that way in America. Here, riches-to-rags stories are not uncommon. When Bhashkar Mazumder, an economist at the Federal Reserve Bank of Chicago, examined the earnings of thousands of men born between 1963 and 1968, he discovered that 17 percent of those whose fathers were in the top 10th of the income scale had dropped to the bottom third by the time they were in their late 20s or early 30s. Movement between income groups over the course of a lifetime is the norm for most Americans. The rich often get richer, but plenty of them get poorer, too. Though the top 1 percent makes a popular target, it’s actually a group no one stays in for very long. On the other hand, it’s a group that 11 percent of Americans will reach at some point during their working lives.

Affluence in America is dynamic, and our economic system is biased toward success. But bias isn’t a guarantee. Mobility — up and down — depends to a great degree on the choices that people make for themselves. Individuals who finish high school, marry before having children, don’t engage in criminal activity, and work diligently have a very high likelihood of achieving success. Those who don’t, don’t.

Of course, there are impediments to mobility that are beyond the control of any individual, and that are most likely to hurt those who start out in America’s poorest precincts. Broken public schools, for example. The normalization of single-parent households. Too-easy access to welfare benefits. Counterproductive mandates, like minimum-wage laws and stifling licensing rules. Would that our political demagogues and professional populists put as much effort into dismantling those barriers as they do into demonizing the rich and yapping about inequality.

Yappers notwithstanding, the American Dream is far from dead. This isn’t Florence. No one is locked out of economic success today because of their ancestors’ status long ago. America remains the land of opportunity. Make the most of it.



Obama’s Hiroshima Speech Reflects His Blinkered View of History

In his remarks, the president did not explicitly apologize for the U.S. decision to use atomic weapons to end World War II as some had advocated. But he implicitly criticizes the “terrible force unleashed” at Hiroshima and laments “how often does material advancement or social innovation blind us to this truth? How easily we learn to justify violence in the name of some higher cause.”

His comments reflect an aloof view disdainful of all violence, lumping aggressors and defenders together. Hiroshima was a tragedy but so were all the lives lost in the preceding years of conflict.

Visiting the National World War II Memorial in Washington, D.C., is a sobering experience. The cascade of gold stars adorning the walls are a heart-rending depiction of the 400,000 American service members who died in both the Pacific and European theaters of war.

Each of the 4,048 stars represents 100 American deaths—sons, fathers, and brothers who never came home. Imagine the human tragedy if the number of gold stars were doubled, which would result from a full-scale Allied invasion of Japan.

Nor does Obama mention the millions of Japanese lives spared by the events at Hiroshima and Nagasaki. In his memoir, President Harry Truman wrote that after Japan rejected another plea for surrender, he had no qualms about his decision to drop the bombs “if millions of lives could be saved … I meant both American and Japanese lives.”

Emperor Hirohito announced to his subjects that he based his decision to end the war on the “new and most cruel bomb … Should we continue to fight, it would … result in an ultimate collapse and obliteration of the Japanese nation.” In addition, there are estimates that 100,000 to 250,000 non-combatants in occupied Asia would have died for every month that the war was extended.

Hiroshima reflects the tragedy not just of a weapon of war, but of aggressive regimes and the wars they impose. Rather than a utopian quest to eliminate nuclear arms, he should have called on nations to band together against the despots who still threaten to impose their will over weaker neighbors.

As Americans prepare to enjoy the Memorial Day holiday, we should reflect on the meaning of the day.

We honor the brave men and women of the U.S. military who for centuries have fought and made the ultimate sacrifice for freedom for ourselves and others overseas subjugated to despots. Many of those did so during the four years brought on by the attack on Pearl Harbor.

Rather than describing an idealistic vision of the future, perhaps Obama should have pondered George Orwell’s comment that “People sleep peacefully in their beds at night only because rough men stand ready to do violence on their behalf.”

As President Ronald Reagan declared in his inauguration speech, “The price for this freedom at times has been high, but we have never been unwilling to pay that price.”



Forget NATO. Trump Should Defund the UN

The courage to go after sacred cows is one of Donald Trump's more appealing, if controversial, traits.   He raised the issue of NATO, contending the USA pays far too much of the freight in the mutual defense pact.

Such proposals, the candidate has made clear, are not so much policies as "suggestions" or what one might call, from his business perspective, negotiating positions.

Regarding the NATO suggestion, frankly, I am of two minds.  While it's clearly arguable the American contribution is excessive, the investment might be necessary for the preservation of the alliance (weak as it is) and to maintain the necessary U.S. leadership position.  "Leading from behind" has been one of the obvious fiascoes of the 21st century.

But I have another, somewhat similar, suggestion for Donald about which I have no ambivalence.  It's time for the U.S. seriously to curtail, if not end, its mammoth annual contribution to the United Nations that dwarfs those made by all the other 192 member-states

Here's how CNS News reported the situation in 2012:

"In one of its last actions of the year, the United Nations General Assembly on Christmas Eve agreed to extend for another three years the formula that has U.S. taxpayers contributing more than one-fifth of the world body’s regular budget.
No member-state called for a recorded vote, and the resolution confirming the contributions that each country will make for the 2013-2015 period was summarily adopted. The assembly also approved a two-year U.N. budget of $5.4 billion.

The U.S. has accounted for 22 percent of the total regular budget every year since 2000, and will now continue to do so for the next three years"

That's 22 percent for virtually nothing.

While the UN many have been formed in an outburst of post-World War II idealism, it has descended into an international society for Third World kleptocrats of mind-boggling proportions—the Iraq War  oil-for-food scandal being only one nauseating example--who engage in non-stop Israel-bashing to distract their populaces from their own thievery. What in the Sam Hill do we get out of that?

Everybody knows this, of course. When critical negotiations take place (i.e., the Iran nuclear talks, speaking of fiascoes, and the Syrian peace talks, not that they have much chance of success), they are removed from the UN and conducted between the serious players. No one is curious about what Zimbabwe's Mugabe has to say, at least one hopes not.

Now it's certain this suggestion—defunding the UN—would be treated with (feigned) uncomprehending derision by Hillary and even more contempt by Bernie, who would most probably like to cede US hegemony to the United Nations anyway, assuming some good socialist, like Venezuela's Maduro or Brazil's Rousseff (well, maybe not her), was secretary-general.

But the American voter, I would imagine, when informed of even a smattering of the facts, would support Trump in defunding or, more likely, greatly curtailing America's financial support of the United Nations.  It's a negotiation, after all.

Maybe the UN can be reduced to a few divisions of more practical use like the World Health Organization. UNESCO has, sadly, already gone the way of political insanity. Whatever the case, a smaller UN footprint in NYC would be a big step in the right direction. Think what a positive it would be for the traffic and parking situation on the East side of Manhattan.



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