Important New Papers on Immobility, Inequality, and the Fast Fade of the American Dream


The phrase The American Dream has long been complementary shorthand for an economic system free of the rigid class boundaries of the Old World, one in which anybody, not matter how modest their station, can, by hard work, application of intelligence, and perhaps a little luck, become financially successful. It goes hand-in-hand with the myth of Rugged Individualism, the Hooverian notion that we rise or fall alone on our own strengths and personal merit. This is nonsense, of course, but it is deeply embedded in our psyche. It allows us, if we choose, to blame those who are poor and struggling for their lot. If they weren’t so weak, lazy, and stupid, they wouldn’t be where they are.

However, the disappearance of our middle class–a creation, after all, of government intervention in the economy (the GI Bill is probably the most familiar example) and the growth of unions, which gave workers a measure of power to negotiate wages, hours and benefits–has become so plain that perhaps that psychic hold might be loosened just a little.

I ran across two new economic studies earlier today that help describe how our supposedly individualist, meritocratic society is actually steered, at least in part, by some familiar forces.

The first of these, reported by David Leonhardt of the NY Times in a terrific story that led the paper today is technically a study of the impact of the Earned Income Tax Credit and other tax expenditures on helping children get out of poverty. What the authors find, more broadly, is that where you live in this country has an impact on how well you’re likely to rise in the economy. Economic segregation, for example, can be a serious obstacle to your finding any measure of financial security.

The other paper was recently published by University of Ottawa economics professor Miles Corak, who also authored this commentary in the New York Times this past weekend, part of their series, The Great Divide. Business Insider has a very good story (with a link) about Prof. Corak’s new paper in the Journal of Economic Perspectives looking at the interconnectedness of privilege and opportunity.

What’s more, as Prof. Corack describes, those who have made a success of it in America tend to be more interested in protecting their privileged position than in helping others join them:

A similar dynamic seems unlikely to unfold in the United States. While the imagined prospect of upward mobility for those in the lower part of the income distribution shares little in common with the generational dynamics of the top 1 percent, the latter may well continue to be an important touchstone for those in, say, the top fifth of the US income distribution. After all, this group too has experienced significant growth in its relative standing, which partly reflects an increasing return to the graduate and other higher degrees for which they exerted
considerable effort, but is also linked to a background of nurturing families and select colleges. This group has both the resources and incentives to turn more intensely to promoting the capacities of their children. With effort and a bit of luck, it is not unreasonable for them to believe they may yet cross the threshold into the top 1 percent, and they can certainly imagine that their children stand
just as good a chance, if not better. For them the “American Dream” lives on, and as a result they are likely not predisposed, with their considerable political and cultural influence, to support the recasting of American public policy to meet its most pressing need, the upward mobility of those at the bottom.

This is not to say that hard work, intelligence, and creativity (and some luck) no longer matter. But alone, they are not the obvious keys to success we’ve been brought up to think they are.



One Response to Important New Papers on Immobility, Inequality, and the Fast Fade of the American Dream

  1. […] Important New Papers on Immobility, Inequality, and the Fast Fade of the American Dream ( […]

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