tag:blogger.com,1999:blog-13522238.post729729229334324418..comments2024-03-28T17:53:43.541-04:00Comments on DarwinCatholic: Inequality, Heritability and the American DreamDarwinhttp://www.blogger.com/profile/08572976822786862149noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-13522238.post-71801391749955479952011-03-10T16:06:52.696-05:002011-03-10T16:06:52.696-05:00Anyway, the main reason that, say, Sweden has grea...<i>Anyway, the main reason that, say, Sweden has greater social mobility than the US isn't because Sweden does a better job of preventing their rich from keeping it in the family forever, though that may be part of it.</i><br /><br />Okay, agreed then. We may assign different eights to this factor (with you putting it at "small" and me at "practically nil") but it sounds like we're on the same page.<br /><br />As for the actual sources of greater social mobility in the countries that did much better than the US, I'd suggest it probably has multiple sources:<br /><br />- Most of those countries were moderately socialist (though certainly never communist) until a couple decades ago, and now have many more free market high tech and finance jobs than before. Given that they're still on their first generation or two of that kind of economy, it's probably reasonable to expect more "sorting" to be going on now, while the US may already be more sorted, having had a fast moving free market economy for a long time.<br /><br />- All of those countries have much better public educations systems (in the primary and high school levels) than the US and an overall more educated citizenry. Finland is listed as one of the most economically mobile countries, and it is reputed to have one of the best education systems in the world.<br /><br />- The US has had a racial underclass ever since it was founded, while those countries generally do not. African Americans in the study showed significantly less inter-generational mobility than other minorities or whites. That is probably the result of some sort of mix of culture, lack of opportunity, and discrimination -- but it's clearly a contributing factor the to national data.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-13522238.post-51590192231259936272011-03-10T14:14:12.535-05:002011-03-10T14:14:12.535-05:00"Only 0.5% of estates are valued over $2mil&q..."Only 0.5% of estates are valued over $2mil" - because money placed in a trust fund for Junior is no longer part of the estate. There are many, many ways to structure financial instruments to leave wealth to the next generation without, technically, leaving an inheritance. A smart millionaire will distribute his assets in various funds and trusts long before he dies.<br /><br />Anyway, the main reason that, say, Sweden has greater social mobility than the US isn't because Sweden does a better job of preventing their rich from keeping it in the family forever, though that may be part of it. The main reason is more likely the fact that Sweden's poor get better services than America's poor, particularly education and health care, things that make a big difference in future job prospects for the children of the poor.<br /><br />JoelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13522238.post-18259461666648231382011-03-09T21:05:04.913-05:002011-03-09T21:05:04.913-05:00Not explicitly, no, but it's unlikely that muc...Not explicitly, no, but it's unlikely that much at all of the effect the study is looking at is the result of "trust fund kids". To make it into the top quintile of household income based on investment income, one would need to be earning 5% on investments of $2mil or more, and there aren't a whole lot of people whose parents leave them that kind of money. <br /><br />Only 0.5% of estates are valued over $2mil -- so it's unlikely that a significant amount of the income heritability effect that's being looked at here is the result of large estates. Given that the highest income group the study talks about is households with total income (usually from two incomes) over $166k (the top 5%) and that the vast majority of households making $166k/yr are working professionals, it's probably safe to assume that any amount of inheritance going on here is coming out in the wash.<br /><br />The levels of heritable income that might well be making a difference are probably more along the lines of people in the top 20% being better able to afford to go to top colleges as a result of parents or grandparents helping to foot the bills. That's certainly going to be one fact leading to 50% of those born in the top quintile ending up in the top quintile themselves, but it's not something that a stricter approach to large fortune estates would make a difference on. (I mean, we don't really want to ban people from helping to pay for their kids' college, do we?)Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-13522238.post-22330107818625217842011-03-09T18:32:44.728-05:002011-03-09T18:32:44.728-05:00The study does not separate earned income from inv...The study does not separate earned income from investment income.<br /><br />JoelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13522238.post-84463540175310084512011-03-09T14:12:55.327-05:002011-03-09T14:12:55.327-05:00The study linked to, and the post, are talking abo...The study linked to, and the post, are talking about the "heritability" of income -- that is, the degree to which parental household incomes correlate to child household incomes 30 years down the road -- not the question of whether or not people should be allowed to leave money they have left over to their children when they die.<br /><br />They're separate and unrelated issues.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-13522238.post-11676599092852432412011-03-09T13:46:21.141-05:002011-03-09T13:46:21.141-05:00Warren Buffet believes that it would be detrimenta...Warren Buffet believes that it would be detrimental to his children if he left them a huge amount of money. This is his primary motivation for giving 99% of his wealth* to charity. The fact that this charity will do socially beneficial work is good but is only secondarily important to him. He mainly just doesn't want to ruin his kids. Bill Gates has said similar things. And of course Andrew Carnegie was the one who said "the man who dies rich is a disgrace."<br /><br />I would like to see a society in which people are encouraged to make money and live well - indeed, to live irresponsibly and hedonistically if they so choose - but in which it is impossible to leave much wealth to one's own kids. Dynasties are bad for society, in every conceivable way. They are bad for the people in the dynasty (see ref: Hilton, Paris); they are bad for people outside the dynasty, who see useless twits enjoying wealth and luxury that they didn't earn while the rest of us work hard for the basics; and they are bad for social stability, since persistent inequality, if it becomes stark enough, leads to social upheaval.<br /><br />The children of the rich don't need to start out in life with trust funds. They already have enough advantages over the rest of us: elite education, and a rolodex full of names of people in high places. If that kind of head start is not enough for them to make it to the top then they don't belong there anyway.<br /><br />Joel<br /><br />* Of course, getting only 1% of Dad's wealth means that the Buffet children will somehow have to make ends meet on only $400 million.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13522238.post-56181807088857757352011-03-09T08:55:18.169-05:002011-03-09T08:55:18.169-05:00Joel,
While pithy, I'm not sure what you'...Joel,<br /><br />While pithy, I'm not sure what you're getting at with that. <br /><br />"the poor are poor because they deserve it, and that the rich are rich because they deserve it" seems like it's a highly judgmental version of saying "one's income is to a great extent determined by one's efforts and abilities". The key word would seem to be "deserve". The word "deserve" suggests that one it talking about some sort of judgment which <i>ought</i> to be the case, rather than something which is simply a result of a given condition.<br /><br />To be concrete -- I have a brother who is, I am quite sure, by any straight up measure of intelligence at least as smart as I am if not significantly smarter. He is also, due to various personality and mental issues, unable to function well in a job environment. (His problems don't relate to intelligence -- rather, he has some psychiatric issues which make him very, very bad at following deadlines and instructions, working with others, dealing with the unexpected, etc.) As a result, he's never had a full time job and relies heavily on family for support.<br /><br />Now, I certainly wouldn't say that he "deserves" to not make much money -- but it's pretty clearly a result of characteristics that he has. There's no big conspiracy out there to deny him a high income.<br /><br />On a side note, maybe this is part of why I find the claim that we have a pretty fluid and effort/ability-based economy pretty persuasive: In my direct and extended family there's a fairly wide range of incomes, all the way from bottom quartile to top quartile, and generally speaking those outcomes seem to line up pretty well with abilities (typically something one has no choice in) and effort/personal choices. It doesn't look to me like this is all the result of impersonal societal forces that allow some people or classes to succeed while excluding others.<br /><br />That doesn't mean people "deserve" to be low income in the sense of "oh well, it's his fault, he could do differently if he wanted to, so we might as well leave him to it and not worry about it" but it does seem to me that there do tend to be reasons for where a lot of people end up on the income ladder other than "it was random chance" or "society did it to him".Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.comtag:blogger.com,1999:blog-13522238.post-62372312364607402422011-03-09T00:44:24.769-05:002011-03-09T00:44:24.769-05:00If one begins with the assumption that the poor ar...If one begins with the assumption that the poor are poor because they deserve it, and that the rich are rich because they deserve it, then social mobility is an obvious detriment.<br /><br />JoelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-13522238.post-57122173886964729542011-03-08T15:02:04.663-05:002011-03-08T15:02:04.663-05:00Interesting commentary.
One point jumped out of i...Interesting commentary.<br /><br />One point jumped out of its parentheses at me: "The numbers are higher despite inflation adjustment because the group as a whole was better off in the late 90s than in the late 60s."<br /><br />If most people at most economic levels achieved absolute gains in wealth compared to previous generations, we would see this kind of chart. <br /><br />This doesn't disprove that by working hard you can get ahead in America; "getting ahead" doesn't mean "ahead of other people" (i.e. a shift from one quartile to another) but "ahead of where I was." One's success doesn't require another's failure.Andyhttps://www.blogger.com/profile/05179125932315215997noreply@blogger.com