
Nobel winner Stiglitz: “American Dream is a myth” - gull
http://www.cbsnews.com/news/nobel-prize-winner-joseph-stiglitz-american-dream-is-a-myth/
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twblalock
Studies have shown that intergenerational social mobility in America since the
80s has been a bit lower than is popularly assumed. Stiglitz's book about this
is newsworthy because most people still don't know that, despite the fact that
economists and sociologists have known it, and talked about it, and taught it
to their students, for decades.

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sandworm101
The American dream is like the pony express. It was the product of a great
many particular circumstances. It did once exist, for a handful of people in a
few chosen places, but disappeared before anyone realized. It's a romantic
ideal more important as fiction than practical reality. It is something to be
talked about, not something that ever actually happens. So it is no more dead
today than ever because it wasn't never really alive in the first place.

~~~
huxley
Just for perspective for those unfamiliar with what short a period the Pony
Express[1] actually operated its 2000 mile long, 184 station mail delivery
system: it started in April 3 1860 and ended October 24, 1861.

[1]
[https://en.wikipedia.org/wiki/Pony_Express](https://en.wikipedia.org/wiki/Pony_Express)

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littletimmy
I am optimistic that this "American Dream" could still be a reality. The
United States absolutely has the resources to put a hard floor on living,
health and education standards, thereby helping people to break the rut of
family poverty.

That the US people collectively don't have the will to do it is another story.
The amount of psychopathy in this country towards the unfortunate is
astounding.

~~~
wkcamp
Part of the issue is that many people are ready to perceive themselves as
correct before perceiving another as correct. So the U.S. divides into
numerous positions with everyone casting blame on others and making
unsubstantiated generalizations. And progress then becomes elusive.

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fsloth
When was the myth born anyway? II. world war ended the depression and the job
market became shortaged of workers - I'm sure those of that generation
profited. Before that there was the campaign in the 1800:s to colonize the
vacant fertile lands and farmers could get all the land they could farm dirt
cheaply. But other than those two episodes - was there actually that much
socio-economic mobility compared to other areas? In the mid 1800:s the
americans were massively more literate than e.g. english (something like 80%
compared to 50%?) so I can belive the comparable opportunities were much
better in the US than in the UK but I'm short of statistics...

~~~
rst
Post World War II, you had a bunch of other things leading to compression of
the income distribution, from very high top marginal tax rates (90% through
1960; 70% through 1980) to low cost education (subsidized for just about
everyone through better support than currently for good state schools -- and
even more for returning troops in particular, a substantial fraction of all
college-age men, through the GI bill). And of course, there were much stronger
labor unions, present in most large workplaces.

Anyone who thinks the '50s were a good time because they came before "big
government" has managed to forget about the New Deal, the GI Bill, and a
National Labor Relations Board that still had teeth. Among other things...

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huac
I've always wondered if 'affirmative action,' but conditioned on household
wealth instead of racial origin, could create more social or economic
mobility. Has anyone else considered this strategy?

~~~
IkmoIkmo
The issue is that you can game wealth, you can't game skin color. (or at
least, few have tried! [0]) If you can get job or university positions on the
basis of household wealth I think we may see increasing abuse of this system.

Beyond that, affirmative action attacks a real issue which is a low level of
racism, which is unintentional, not malicious, but exists in the form of
bigotry that has real effects.

This has been studied quite a bit. For example, teachers who are told who the
top students are in the class at the start of the year and told that they're
predicted to do the best, end up being affected by this. Because at the end of
the year, these very students have the best outcomes. Makes sense you'd think,
until you hear that the choice of the students at the beginning was totally
random. Similarly, studies show that students who are told they'll do great,
actually do better than those who're told the opposite.

The combination of these facts, with the fact that teachers perceive
minorities as being less able (again, not intentionally, a teacher won't say
or even think a student is less able because he's e.g. black, but when
perceptions are studied it is what, on average, shows up in the numbers),
given teachers negatively affect students who they perceive as less able or
low-opportunity, and the fact students respond to this, creates issues.

And similar things happen in the workplace, too, when applying for say a job,
or indeed across society. I remember a German on hackernews a year ago who
wrote a script to apply to housing via mass email with auto-generated
profiles. He sent thousands of them. A guy named Hanz got a virtually 100%
response rate. A guy with an arab name 1%.

In such cases, affirmative action can help. It doesn't matter how poor or rich
you are. Hypothetically, a rich, educated, hard-working arab would face mostly
the same issue, and a poor guy with no ambition or work ethic named Hanz would
not. Affirmative action attacks the inherent discrimination based on ethnicity
in that process, affirmative action based on wealth would not.

Affirmative action based on ethnicity is imperfect in obvious ways, of course.
But I think it better targets the issue better and can't be gamed or
manipulated as easily.

Of course there are obvious ways to use household wealth to affect policy and
they're very common. For example here in the Netherlands you can get free
healthcare, full coverage, if you earn little. You get deep subsidies for
housing. If you're young and your parents can't afford recreational stuff
(whether it's karate or playing violin) the government allocates to your child
roughly the entire amount of what these things would cost. Education is de
facto free, but if your parents earn little (i.e. can't support you
financially), then you get an extra $250 or so per month, and an extra $500 or
so if you don't live at home anymore, as a stipend. (after all, if you study
full time, you can't work full-time. So this will help cover part of the
bills. And again, tuition is already covered. To lower barriers to education
and make it accessible to all, equal financing is important). If you're a
single parent with children, this amount is drastically increased,
specifically for the possibility to study. All of these things mean that kids
aren't ostracised based on wealth and class (as much). Kids whose parents
aren't rich can actually participate in sports, recreation and culture to a
large extent. Kids whose parents are poor can go to top universities. They get
full health care coverage and support with housing. All of these things mean
that if you're poor, you're not immediately relegated to a social circle of
poor people, and you're not forced (financially) into making short-term
decisions (like going to work straight out of highschool because bills need to
be paid), and room exists to plan for the long-term (like spending years in
uni).

This does wonders for social mobility of minorities, which leads to better
outcomes, a stronger workforce which is less dependent and generates more tax
revenues, which means the generous social welfare system isn't leaned on as
much as a meagre one which keeps people locked into it. Not to mention all
kinds of social cohesion benefits, between classes as well as ethnicities.

It's far from perfect but it seems like the right approach. Affirmative action
alone is no solution, not without a system that helps minorities create
similar outcomes like the one described. Without that, disadvantaged
minorities (and indeed poor majorities, e.g. white people in the US) can't
make transformational gains between ages of 1 and 22, end up actually less
capable than the ethnic/socioeconomic majority, and this creates resistance to
policies like affirmative action and perpetuates the problem, and importantly
also doesn't solve the issue of social mobility issues for the poor people in
the majority population either.

[0] [http://www.vice.com/read/everything-we-know-so-far-about-
the...](http://www.vice.com/read/everything-we-know-so-far-about-the-
washington-white-lady-who-pretended-to-be-black-932)

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forrestthewoods
The days if simply being able to work hard and do well are long gone. All the
straight forward factory jobs are long gone and never coming back. So that
American dream is probably dead.

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linkydinkandyou
Maybe for Stiglitz it is, but for hard-working people with real skills,
America provides great opportunities.

~~~
ljw1001
i think you mean hard-working people with real skills - and copious amounts of
luck. America used to be a place where most hardworking people could improve
their living standard, now it's a lottery where a small minority do.

~~~
dominotw
Lottery based on what?

Are you willing to send your kids to a non segregated school and live in a non
segregated neighborhoods?

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CaiGengYang
Hmm ... I disagree. America still seems to be the place with the greatest
civil liberties, technological and scientific advancements

~~~
erkose
Not to mention the largest incarcerated population in the world.
[http://news.bbc.co.uk/2/shared/spl/hi/uk/06/prisons/html/nn2...](http://news.bbc.co.uk/2/shared/spl/hi/uk/06/prisons/html/nn2page1.stm)

~~~
CaiGengYang
I'm genuinely surprised that USA has such a high incarceration rate, and even
so much higher than China which I consider still a police state.

But in terms of science, technology and programming , civil liberties ... can
any other country compete with America ? Google, Apple, Microsoft, FaceBook,
Yahoo ... all the most innovative companies are made in America ... . You can
express political dissent in America without getting jailed (as far as I
know). You can't do that in China or Singapore

~~~
IkmoIkmo
> in terms of science, technology and programming , civil liberties

Well if you look at nobel prize winners (scientific, too), most are from the
EU, not the US. Based on population levels they're roughly the same. If you
look at top internet companies then yes, Google, Apple etc are in the US. But
I think we have to consider that a lot of that is because of network effects.

For example, some of the best football in the world is in Spain right now. But
on the pitch at Barcelona the top 3 players (of arguably the most successful
team the past decade) you find one player from Argentine, a player from Brazil
and a player from Uruguay, playing a style of football introduced by a Dutch
player and trainer, and it's not exceptional in this regard. If you look at
the world cup however (teams of native players) you find that Spain won only
once and very recently, while Brazil won 5 times. Yet all the top players from
Brazil come to Europe. The net result is that Spain has terrific football, yet
isn't responsible for the majority of the talent or tactics, and other
countries like Brazil or the Netherlands are net suppliers of talent to
countries like Spain.

I feel the US, Silicon Valley mostly, is very similar, it attracts all the
talent, but that's different from saying that it's responsible for it. (just
like in the above example with Spain who is a net receiver of talent, and
becomes the talent capital of the world within football, without doing
anything particularly special outside of network effects).

For example, look at the CEO of Microsoft and Google, both India born,
partially India educated. SV attracts them, but isn't necessarily responsible
for them. You may use that as an argument that SV somehow is geared towards
innovation better. But I think you'll be hard pressed to identify any big
forces outside of network effects. In very direct ways we can see it with e.g.
Skype being bought by Microsoft (a swedish company), or a guy like Linus
Torvalds doing the vast majority of his work from his native Finland and
deciding in his 40s only a few years ago to move to the US.

Beyond that I think we fail to sometimes put the achievements in perspective.
You mentioned Google and Apple etc, but if you look at the fortune 500 for
example you find in 2015 that China had 3 companies in the top 10, the US had
2. In the Fortune 500 all together the US had 128 companies, China 106 and
rapidly growing (they had just 10 in 2000 when the US had 180). UK-France-
Germany, a combined population of just 210 million people, has almost 100
places in the Fortune 500. Add Japan to get to a population of the US, and
you're ahead of the US in spots on the fortune 500.

I mean you mention Apple and it's an absolutely wonderful company on whose
hardware I'm typing now, but my machine is loaded with parts from third
parties who drive a ton of the innovation, too, like Samsung parts, a company
whose revenue is much bigger than that of Apple. And we're seeing genuine
innovation from China, too, like WeChat (there was a thread on this recently).

Anyway I'm rambling on with lots of examples and anecdotal evidence. I don't
really like it as there's a lot of counter anecdotes to present. But I think
there's a case to be made that the US isn't any better or better structured or
more competitive, but benefits from tremendous network effects still, and that
this is more and more being contested by the rest of the world. We're seeing a
wave of new companies that don't feel the need to move to the US to
commercialise the product, or to find themselves in a startup hub, or to be
able to network with financiers. From startups like Spotify who're comfortable
staying in Sweden or like WeChat in China, to the biggest companies in the
world, both the traditional (e.g. utilities) to the more innovative (e.g.
Samsung). Sure I pick Apple any day, but I can easily pick a load of non-US
companies that innovate more than say Yahoo. Not to mention it depends on the
industry, too. A ton of innovation in e.g. automotive or renewables is in
Europe or Asia. And we're seeing markets being addressed that I don't think
the US is geared to address, like Xiaomi in China and India, which are
becoming increasingly more important.

As for civil liberties, a loooong road to go for China, but no big deal in
e.g. the European Union. The US doesn't lead the world in civil liberties. For
example the Economist intelligence unit does an annual ranking, the US came in
19th last year. But better than 2010 it came in last place of all 'full
democracies' in place 46.

~~~
hollerith
>or a guy like Linus Torvalds doing the vast majority of his work from his
native Finland and deciding in his 40s only a few years ago to move to the US.

Torvalds emigrated to the US in his 20s.

(Wikipedia says that 2 of his daughters were born in the US, which means that
the daughter that was born in 1998 was born in the US. Another way of putting
an upper bound on when he emigrated is to look at when he started working at
Transmeta, which Wikipedia say was in February 1997, which is more than "a few
years ago". Torvalds himself was born in late 1969.)

~~~
IkmoIkmo
Ah great point! I was referencing his naturalisation.

