
The fading American dream: Trends in absolute income mobility since 1940 - return0
http://science.sciencemag.org/content/early/2017/04/21/science.aal4617.full
======
tabeth
I believe this is the inevitable outcome of the following:

1\. The desire to maximize _personal_ capital and assets.

2\. An individualistic mindset

3\. The compounding effects of (1) and (2).

With all three, you get the current problem as described in the article.
Suppose you removed (3), and somehow you could maximize assets, but upon death
(or some other "big" event) all of your assets were given to the community.
This would result in wealth not being concentrated. Here I'm also including
the creation of foundations and other "charities", which in my view are just
ways to keep your assets concentrated, and you have some tax advantages of
doing so as well.

Say you removed (2). Wealth concentration without the desire to personally
benefit from it would result inevitably in the helping of others, as a
healthy, prosperous world would ultimately benefit you (though, again, its not
the goal). After all, what's the point of money if it doesn't benefit you? You
might as well make the world you live in better.

Without (1), you naturally would not see the problem described in the article.

So, what's the TLDR? Basically,

1\. Create a culture where people don't need to be so prosperous themselves.

2\. Encourage schemes that benefit everyone instead of _someone_.

3\. Prevent the concentration of wealth, and all of its pseudo-forms
(foundations, real estate, etc.)

~~~
pc86
Honestly, this seems grossly un-American at the most basic levels. A 100% tax
on the estate upon one's death? Legal prohibitions against the purchase of
real estate past a certain point?

~~~
yequalsx
Look up usufruct and Jefferson's views on the topic. He believed that when a
person dies their property should become community owned. He didn't think the
next generation ought to be bound by the previous generation's wishes.
Jefferson qualifies as American.

~~~
hvs
How is something "community owned"? Is it owned by the state? So eventually
everything is owned by the state?

~~~
yequalsx
I'll answer by giving some examples. National Parks in the U.S. are owned by
the federal government. State parks by the state government. County parks by
the county government. City parks by the city. Each level of government is
able to sell land from its parks to individuals or corporations. There are
other examples of something being government owned.

I'm assuming you are aware of all this but I've been unable to deduce either
your real question or your point. Can you elaborate?

~~~
hvs
The OP said "when a person dies their property should become community owned"
so your house would become the property of the state?

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mac01021
The authors define "Absolute Income Mobility" as the fraction of people who
earn more than their parents.

They observe that income mobility, under this definition, has been declining
since 1940. They seem to regard this as a problem, which reflects a
diminishing level of opportunity for each subsequent generation.

The data they present are interesting and worth further study, but I do not
think I agree with their subjective assessment (that this is a problem to
solve).

On seeing the data, my first hypothesis is that a major driver here is the
fraction of a birth cohort that is _more educated_ than their parents. People
born in the 1940s and 1950s are much more likely to have more education (and
more income) than their parents, compared to people born in the 70s and 80s.
But if you're born later then it is more likely that your parents are "fully
educated", in which case why should you expect to be able to out-earn them?

~~~
killjoywashere
You are asserting that there is a ceiling on the effect of education on
income. Agreed, but only 2.7% of the population has doctorate level education,
and there is regression-toward-the-mean as well (many high-attainment folks
have kids who are stocking shelves).

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justforFranz
Look. Let's face the fact that there's been a class war since the 70's and the
rich have won. The recent attempt to overturn Obamacare (which would take
healthcare from poor people and give tax breaks to rich people) is only the
most brazen, recent, visible thing that people can understand.

We are losing, they are winning. Infrastructure is losing, offshore tax havens
are winning. People's healthcare is under threat, corporate earnings
(especially after Trump's proposed tax breaks) are rising.

America doesn't miss manufacturing, it misses unions.

~~~
ashark
> America doesn't miss manufacturing, it misses unions.

A friend of mine has the idea that American politics is about what amount to
_kaiju_ fighting on the sides of different factions. Yeah, none of them are
great, and _your_ giant monster might step on someone's house every now and
then, which sucks, but at least it's keeping the other one from burning down
the neighborhood. Traditionally the ultrawealthy were strong enough to
practically be their own monsters, massive corporations had their lobbies,
"trade associations" and various means of wielding significant influence, and
the working class had... unions, and even the nasty old "political machines"
to an extent.

Now the working class has no effective _kaiju_. We've been convinced to give
them up. So it's just the rich and corporate giant monsters running around
smashing everything in sight, with different factions of them more-or-less
running the two viable parties (which is not a "they're both the same"
claim—though I wouldn't say that Democrats have a _monopoly_ on pro-working-
class or pro-poor policies, either, just a majority). Meanwhile we're to
believe everything's fine because we can still vote. But we have no _kaiju_ on
our side, while everyone else retained theirs, and in this system that matters
_a lot_.

------
clavalle
The most interesting graph is the 'Child Income Percentile vs the Parent
Income Percentile' compared between 1980 and 1940 [Graph D].

The rest can be explained away by a general stagnation of real wages. This
graph, however, shows clearly a stratification taking shape.

There are a two ways to explain this:

1: The wealthy are enjoying artificial advantages to income generation that
the less wealthy don't have access to. This would be an erosion of meritocracy
in the US between 1940 and 1980

2: In 1940 the more 'naturally' gifted as far as income generation potential
were somehow mixed more thoroughly with the rest of the population. The 1980
data simply shows that families are finding their ingrained strata in society.
The meritocracy exists but those with more merit are simply rising to the top.

Occam's razor would suggest that explanation 1 is more likely since it doesn't
require a whole population of people who would be naturally more apt to high
income generation to be evenly mixed into almost every other income level than
the one where they would rightly belong like oil being inexplicably emulsified
and evenly distributed in a cup of water.

There is a growing and pervasive trend to believe that explanation 2 is the
case. It may be possible but I don't think we can accept that without
evidence.

The American Dream isn't just a feel good notion. If people are more or less
biologically the same as they were in 1940 and there was no unnatural mixing
occurring at the time and income can be used as a rough proxy for value
creation then the income stratification represents artificial barriers to full
productivity that hurts every single one of us. There are people out there --
a huge majority of people according to that graph -- that are not creating
their full value potential.

That is a picture of a society in decline.

[1]
[https://d2ufo47lrtsv5s.cloudfront.net/content/sci/early/2017...](https://d2ufo47lrtsv5s.cloudfront.net/content/sci/early/2017/04/21/science.aal4617/F2.large.jpg?width=800&height=600&carousel=1)

------
JoeAltmaier
Isn't this a similar effect to lifespan? We say the average lifespan is
increasing, but in fact its the effect of most people reaching their normal
lifespan (instead of dying early).

So as income falls into a more uniform distribution (more folks have access to
most common jobs) we see 'mobility' decrease. The same as 'lifespan mobility'
has decreased (folks no longer living longer than their parents). Its a good
thing.

~~~
jhbadger
But it's _not_ becoming more uniform distribution -- not only is mobility
decreasing, income inequality is rising (the "Great Divergence" as Krugman
calls it). We are returning to a pre-20th century society where the rich are
rich and the poor are poor and not much inbetween.

~~~
VLM
As sort of a general comment on the situation, its informative to consider
that when American foreign policy spends centuries on gunboat diplomacy and
inequality and immobility in the 3rd world, the citizen response is rah rah
USA USA. But when the same policy is applied to the USA itself, suddenly lots
of hand wringing about maybe massive income inequality isn't the most moral
and ethical system or maybe caste based zero mobility isn't the fairest way to
treat people. Well whats good for the goose is good for the gander or whatever
trite saying.

Its also useful to consider that the 3rd world has been kept the way it is for
centuries, so claims that it could never be implemented in the USA or would
never be stable/permanent state of affairs is pretty comical level
unrealistic.

Finally WRT apocalypse claims, you have to realize that over a long term and
from far away, Central and South America look pretty messed up, especially
compared to "us" where "us" is the former western civilization, rapidly
intentionally self destructing. Yet, their people none the less do a lot of
smiling, their reproductive success is higher than ours, their lifespan isn't
that much shorter... Americas future looks a lot more like Venezuela than
Venezuela's future looks like America, and that's not really all that bad. The
future is going to suck, and yes it will be entirely our fault, but its hardly
the end of the world.

Look, you make your national political, economic, trade, immigration, frankly
"all" policies to turn the USA into Brazil, don't act all surprised when USA
starts looking like Brazil with Brazil reduced income, Brazil reduced public
services, Brazil housing affordability, Brazil rape and murder rate, Brazil
economic mobility. Brazil's got problems, but don't forget as USA dies and
turns into Brazil, that Brazil's got plenty of good parts too. The powers that
be want it this way and you're not stopping it but you can try to get ahead of
the curve. So assuming the USA turns into Brazil what do you do today, so your
kids do better in the Brazil-like USA of 2070 than some imaginary dead USA
that will never exist in 2070? A cross cultural lesson is nobody ever got
ahead in the world by endlessly ruminating on how unfair some awful disaster
is unfolding. You can work on thriving in a Brazil-like USA of 2070 or you can
feel really really bad about it, now let me know which is more likely to turn
out well in the long run.

------
mtdewcmu
I would describe this as "fact-based" economics. Paul Krugman had a good
column yesterday[1] pertaining to the other kind of economics, which tends to
exacerbate the problems.

[1] [https://www.nytimes.com/2017/04/24/opinion/zombies-of-
voodoo...](https://www.nytimes.com/2017/04/24/opinion/zombies-of-voodoo-
economics.html)

~~~
icelancer
"Yes, the U.S. economy rebounded quickly from the slump of 1979-82. But was
that the result of the Reagan tax cuts, or was it, as most economists think,
the result of interest rate cuts by the Federal Reserve? Bill Clinton provided
a clear test, by raising taxes on the rich. Republicans predicted disaster,
but instead the economy boomed, creating more jobs than under Reagan."

I don't know why I read Krugman columns. Yeah, Clinton raising taxes caused
the boom. Not the proliferation of the Internet, drawdowns of the military,
and relative global peace (as far as the US is concerned).

Solid single-input machines. Krugman's columns are nothing more than political
hackery, with all due respect to his very good work otherwise.

~~~
mcguire
Ah, the point of that paragraph is that raising taxes didn't _prevent_
economic growth.

~~~
mtdewcmu
Do you find that his writing is very hard to follow? He makes sense to me, but
I've been reading his writing for about 15 years now. He has always seemed to
me to be significantly underappreciated. Maybe it's because people can't
understand him.

The OP column was about how supply-side economics (tax cuts for the rich -> so
much growth that the tax cuts pay for themselves) has been tried many times
and in no case has there ever been convincing evidence that it worked.
Furthermore, when the exact opposite has been implemented (tax increases for
the rich), nothing bad has ever happened. So a rational conclusion would be
that supply-side economics doesn't work and the idea ought to die once and for
all. But in reality, politicians keep bringing it back from the dead.

