The American Dream is Dead

Well, no it’s not. It’s challenged, but not dead, not by a long shot. Let’s discuss why. In depth.

But, more broadly, this article is an excellent example of putting the cart before the horse. You’ve started with a conclusion that you prefer, and then gone out and gathered data that makes your case. Let’s rearrange the data with some other data, and some logic, and see where that actually takes us…… which is how analysis is supposed to work, after all.

The top 0.1% owns as many assets as the bottom 90%. And it’s getting worse.

Yes. You state this as if it’s a massive problem (it’s a problem, for sure; how massive it is is subject to analysis) without offering any proof that it is. We’ll get to that, too.

One of America’s founding myth is that of the “self-made man”: the idea that, with enough work & dedication, anybody can climb the social ladder and become wealthy. Or at least better off than his or her parents.

Well, that’s complete bullshit.

Actually, it’s provably true. But let’s start out by discussing the actual issue at hand.

America was originally imagined as a meritocracy, where anyone can achieve whatever one is willing to work for. It was never a perfect meritocracy (a perfect meritocracy where there is no correlation between parental standard of living and child is not possible), so it should be looked at as an ideal, rather than reality; and we don’t let the perfect become the enemy of the practical. Because although what you write here is indeed true…

Data shows that the most important drivers of one’s living standard are determined at birth: most of the people who are poor are so because they made the mistake of being born to the wrong parents.

…..the correlation between your birth living standards and where you “end up” is, according to the left leaning EPI, around R=.47.

Ergo, it remains, to a significant extent, under the control of the individual, although not as high as one would like.

And research backs up the contention that education is the primary variable in determining whether or not children maintain their birth standard of living or not. This report….

found this:

  • Eighty-four percent of Americans have higher family incomes than their parents did.
  • Those born at the top and bottom of the income ladder are likely to stay there as adults. More than 40 percent of Americans raised in the bottom quintile of the family income ladder remain stuck there as adults, and 70 percent remain below the middle.
  • African Americans are more likely to be stuck at the bottom and fall from the middle of the economic ladder across a generation.
  • A four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and the top.

Those last three findings make important points which can be easily expanded on. Since the upper earners are able to send their kids to great schools, and the crappy condition of the schools in lower income areas is well documented, it becomes pretty clear that the reason why our income mobility is not lower is not due to income inequality per se, but educational preparation for college, as mentioned in the fourth bullet point.

So, simple logic dictates that the American Dream is not “dead”; it’s under stress, but the patient is a long way from dying. So, although this quote is absolutely correct….

“No matter what your educational background is, where you start has become increasingly important for where you end”

- Michael D. Carr, economist at the University of Massachusetts

…… we are a long way before we reach the Death of the Meritocracy. Because schools can be fixed. (Although we’ve been saying that for a long time, and they still suck in low income neighborhoods, granted.)

Acknowledging the luck you have is the starting point towards greater generosity and happiness.

Don’t go there. It’s perfectly reasonable for everyone to “acknowledge” that the standard of living of their parents put them at different starting points at the beginning of the Race of Life, and provides some inertia for staying at that starting point. But how you run the race is up to you. If you decide to drop out of school, you’re going to be running backwards; if you decide to get a STEM degree, you’re likely running forwards.

Your pride in your accomplishments should be reasonable, of course; a person raised poor who becomes a nurse or a teacher has a lot more to be proud about than someone raised by lawyers who decides to become a lawyer.

Let’s dig into the facts.

Lets. :-)

We live in a profoundly unfair society

… and it’s getting worse every year.

Most of the nation’s economic growth over the past 30 years has gone to the top 0.1%. Inequality is now approaching the extreme level that prevailed prior to the Great Depression.

Again, we have a break in logic above. Economic disparity does not automatically mean that the society is unfair. The number of families in the US who have the wealth to actually make their kids wealthy is no more than a couple of percent, depending on how you define “wealthy”.

the US is — by far — the most unequal society in the developed world. And things are getting worse every year.

Very true. However, income inequality does not (see above) to any substantive extent, detract from income mobility. You’re putting two very different things together and hoping all your readers assume there’s a correlation, without providing any evidence that that correlation exists.

The question is: what are the chances?

According to the Pew research cited. close to 100%, if you have access to decent educational opportunities that don’t leave you reading at an 8th grade level when you graduate from high school.

But what does the 1% think about that? Do they feel empathy and gratitude?
Do they recognise their position being — for a great part — the result of luck and unfair advantages?

I…. really don’t care how they see it. It’s entirely irrelevant.

Gates and Buffett have agreed to give away 95% of their wealth. The Koch’s are well known large donors to public television and the arts, all over the country. Ken Langone has the NYU Medical Center named after him, although I’m surprised that hasn’t freaked people in NYC out, because Langone is such a pro-Trump guy.

OTOH, Larry Ellison seems to want to hoard it. BFD. It’s his money. He’s the one who noticed that IBM had a practical monopoly on the mainframe database market, coded up an alternative, and turned it into a corporate powerhouse.

<snips a load of prose that exists for no good reason but to foster jealousy and envy against the wealthy>

That’s troubling, because we saw earlier that socio-economic background is the main predictor of an adult’s income and that social mobility is the exception, not the norm.

No, we didn’t. R=.47 does not indicate a norm. You’re exaggerating.

A successful career is a subtle combination of multiple factors such as talent, capacity of concentration, amount of work, random encounters, family background, mental resilience, living environment, etc.

How remarkably telling that you omitted education.

But do you perceive how lucky you are not to have been born in Mozambique? How privileged you are to have a college degree? How improbable was your encounter with your business partner? How blessed you are to be healthy and without handicap?

Yes, on occasion. But I don’t obsess over it, and it should never make one feel guilty.

If a tiny minority has all the wealth, if income is stagnating for 9 citizens out of 10, if chances of climbing are minuscule, isn’t rebellion justified?

No, for several reasons:

  1. The fact that wealth is aggregating at the top is systemic; it’s not because of a “rigged system” or any sort of “lack of empathy”. I am not in the mood to digress into that right now, but I will if somebody wants it explained.
  2. Income inequality is not the primary cause of the lack of income mobility.
  3. In a developed, post industrial, post technological-revolution nation, a “rebellion” would result in economic conditions that are far worse (think the depths of 2008) persisting for a generation or more. There is no scenario where a rebellion makes the rebels more affluent or results in their own living standards rising.

Hope that helps.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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