The Great Gatsby Curve

There’s nothing like being lectured about work by a “princess.”

Recently, Ivanka Trump responded to the introduction of the Green New Deal’s provision for a government jobs guarantee with a dismissive remark to the effect that Americans prefer to work for what they get, and want to live in a country with the potential for social mobility.

Paul Krugman was on the case.

O.K., this was world-class lack of self-awareness: It doesn’t get much better than being lectured on self-reliance by an heiress whose business strategy involves trading on her father’s name. But let’s go beyond the personal here. We know a lot about upward mobility in different countries, and the facts are not what Republicans want to hear.

The key observation, based on a growing body of research, is that when it comes to upward social mobility, the U.S. is truly exceptional — that is, it performs exceptionally badly. Americans whose parents have low incomes are more likely to have low incomes themselves, and less likely to make it into the middle or upper class, than their counterparts in other advanced countries. And those who are born affluent are, correspondingly, more likely to keep their status.

As Krugman notes, Americans like to believe that we “made it on our own,” that we “pulled ourselves up by our bootstraps” (a phrase that tends to infuriate me, since it entirely ignores the fact that large portions of the American public don’t have anything that could remotely be considered “bootstraps.”)

Then he provides the data.

Among advanced countries, there is a strong negative correlation between inequality and mobility, sometimes referred to as the “Great Gatsby curve.” This makes sense. After all, huge disparities in parents’ income tend to translate into large disparities in children’s opportunities.

And people do, by the way, seem to understand this point. Many Americans don’t realize how unequal our society really is; when given facts about income inequality, they become more likely to believe that coming from a wealthy family plays a big role in personal success.

I had never run across the “Great Gatsby curve,” but it makes sense. Everyone who raises children implicitly understands that those children’s prospects are tied to the quality of the education we provide for them, very much including the enrichment that comes with their extra-curricular experiences. That’s why homes in districts with good schools sell at a premium, why parents shell out eye-popping amounts for summer camps, music lessons and sports equipment.

The “princess” may be unaware that large numbers of Americans simply cannot afford those things–and when they can’t, social mobility suffers accordingly.

Back to the “potential for upward mobility”: Where do people from poor or modest backgrounds have the best chance of getting ahead? The answer is that Scandinavia leads the rankings, although Canada also does well. And here’s the thing: The Nordic countries don’t just have low inequality, they also have much bigger governments, much more extensive social safety nets, than we do. In other words, they have what Republicans denounce as “socialism” (it really isn’t, but never mind).

To put it in terms even a clueless Princess might understand, a generous social safety net provides the bootstraps that allow people to pull themselves up.

 

14 thoughts on “The Great Gatsby Curve

  1. Thanks Prof K. These are the kind of discussions that have real meaning for our future.
    When I was a kid (in the 50’s) in WI, we had very good ,safe, free public education – all the way.
    We could pay for college with our summer jobs at the Gas station or the grocery store
    Tuition, room and board were under 1,000 back then
    The GOVERNMENT covered most of the cost of education as it was thought to be important for the citizens of the USA to get a good education. What a radical concept.
    Free and/or low cost PUBLIC EDUCATION seems to be the key to advancement in life.
    On the other hand, after WWII when Europe and Japan lay in ruins, we had a HUGE advantage.
    the US was booming in an unusual way for the first two decades after the war.
    That part is probably not repeatable but good education for EVERYONE sure is
    … IF we think it is important. I do.

  2. Ivanka Trump not only represents the Trump brand, but the brand of the Republican party as well. It’s all a con job directed at convincing the “base” that they’re in good hands and that all is well. That base continues to lose purchasing power, yet still slavishly follows the siren song sung by the first Medusa, aka daughter of Satan.

    Anything coming from a Trump mouth is a lie and is meant to keep the con going. Nothing more. These people are totally without substance. Well done, voters of the Trump base.

  3. patmcc @ 7:21 am, makes an important point after WW 2, we were the only major country in the world with our industrial and infrastructure base intact.

    The GI Bill after WW 2 was also important in the higher education of returning Vets.

    The highest tax bracket in 1950 was on $400,000. in income was 91%. In 2018 dollars that would be $4,220,245 in income.

    Education whether it is college or trade school is a key to future life success. I am convinced that like countries in Western Europe we need a tuition free college or trade school. Denmark for instance pays their students a stipend per month for out of pocket expenses.

    One other point, Illinois has a great Junior College system. You can get a two year degree at these Junior Colleges. Indiana does not have a Junior College system even remotely as good as Illinois.

  4. Sorry, but good schools make only a minor difference on predicting college/life success. The research has shown for many, many years that it is the parents’ occupation/wealth that is the key factor – classism, racism….

  5. There are various ways of attacking the myth of upward mobility for everyone, which Ivanka would have us ignore. Free higher education would help, and so would a guaranteed annual wage which was once proposed by, of all people, Richard Nixon, but the most successful attack on our continuing ignorance of civic responsibility would be to end wage inequality. Prosperous parents, as Piketty noted, make for successful kids.

    However, Republicans have decided to invest in Wall Street and buyback of stock rather than investing in our people’s health, education and other proven programs that move our country forward (see the recent 1.5 trillion dollar gift of taxpayer money by Trump and Ryan to the already rich, including themselves). Apparently making rich people richer at the expense of the rest of us by Trump and his minions has been determined to be the way to move America forward, except that it has the opposite effect, and not to mention the budgetary and long term debt effects, which act as deterrents to social spending (but not for gifts to the rich).We are now more than 22 trillion dollars in debt and will be soon adding a trillion dollars a year in budgetary deficits to our long term debt (with increasing interest). The CBO tells us that interest alone on the debt per annum will be greater than our military budget in 2024, and while that may be good news for bondholders, most of us are not bondholders but are rather liable as taxpayers to pay both interest and (ultimately) the principal on such debt.

    Meanwhile, as our historically high debt accrues and we refuse to pay for it as we go along, our attention to this cancer on our economy is diverted by tariff and trade games, threats to end important alliances with our NATO partners, Trump’s approval of Putin’s annexation of Crimea, meaningless meetings with Kim etc. etc. etc. We have a problem, Houston.

  6. im a Roads schalla,,, trucking is my road of hard knocks.. obviously, i like working, its a lifestyle, and a job..if the trump nipple suckers feel im taking something for nothing,trade me jobs so i can bask i the whorelite of being rich…

  7. On this subject in his June 22, 2013 opinion piece, Krugman also observed “…it does suggest that we’re much more of a hereditary oligarchy than conservatives have room for in their philosophy.”

    Yesterday’s higher educational system arrests further illustrates this. And as readers here already know that system was already rigged.

  8. NPR last night, seems the opioid epi has been investigated and determined to be a full blown issue of profit,, some recent cases when settled,hid the case,as agrement with the court, after settling. one thing stood out in this conversation. seems big pharma, realized there is a serious issue with the addiction levels,and they still try to deny it. in the same move, they decided to further their buisness model by ,, under a code name tango,,,decided to open addiction treatmant centers… question? doesnt this fall under anti trust? sick….

  9. Nothing illustrates Sheila’s point more clearly than the college admissions scandal that is now unraveling. The confessed grifter who ran the operation claims 800 successes in getting rich parents’ kids into prestigious universities. This unique skill of his, by the way, netted him $25 million in profits and presumably displaced 800 more deserving but less wealthy college applicants. Now, of course, he is deeply sorry for his misdeeds and prays that he gets Paul Manafort’s judge to preside over his sentencing hearing.

    Upward mobility, a tangible phenomenon when today’s seniors hit the job market, now resembles lateral mobility – your chances of making it correspond quite closely to how successful your parents were. If you are young, talented and poor, take Paul Krugman’s advice and move to Scandinavia.

    I carry around a great burden of guilt for having lived in my country’s best decades, which are now seen only in the national rear view mirror. How did we manage to muck it all up so quickly and so thoroughly without knowing that that is what we were doing? My hope for restitution lies in the remarkable class of freshmen congressmen and women who seem determined not to let it slip away permanently. If we show enough temperance to select a winning candidate in 2020, perhaps not all is lost. I’m sure, however, that most climate scientists would disagree that hypothesis.

  10. “Great Gatsby curve” is in action and an FBI Investigation has blown it open. There is an excellent article in the Guardian concerning a pay to play scheme among the 1 % to insure their children are first in line to attend top colleges and universities.

    From the article:
    Shock horror! Wealthy Americans are using their money to buy their children places at elite colleges. An FBI investigation, appropriately named Operation Varsity Blues, has exposed a $25m cash-for-admissions scandal. Coaches were allegedly bribed to declare candidates as athletic recruits; test administrators to change their scores, or allow someone else to take the test for them.

    At the center of the cheating scheme was William “Rick” Singer, the founder of a for-profit college preparation business based in Newport Beach, California. Among the 33 parents caught in the FBI sting were Hollywood stars Lori Loughlin and Felicity Huffman. https://www.theguardian.com/commentisfree/2019/mar/12/us-college-admissions-scandal-corruption-rigged
    ===========================================================
    The McMega-Media has focused their attention on the Hollywood types. This is typical of our McMega-Media paying attention to the glittering object – ignoring the other part of the story of how the 1% rig the system in their favor.

  11. Whenever I think of the Trumps…..Don the Con and his kids, or Jared….this quote comes to mind “He was born on third base and thinks he hit a triple.”

  12. Terry,

    The answer to your tragic question lies inside the many books cited on this blog over the last couple years, mine included. It started with Lewis Powell’s memo to the U.S. Chamber of Commerce in 1971, and it birthed modern Republicanism. It’s been all downhill from there. Please buy and read my books. You’ll find all the references you need therein.

  13. A major factor in economic success lies in the social networks that one has access to. In other words, a person with wealthier friends and neighbors has a better chance at becoming wealthy themselves. The fact that in the US neighborhoods are extremely segregated economically contributes to the overall economic stratification.

  14. A wonderful commentary, understandable even to those who wear blinders – the privileged who buy their way through it all!

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