(I had a hard time thinking of a title, but this made sense.)
Ezra Klein presents interesting comparative data re: father-son earning elasticities, and it seems to be broadly in tune with evidence concerning sibling correlation in income — the United States is not that mobile, certainly not more so than most of our European counterparts. But I do wonder about what we’re supposed to take away from the data. We all have our favored interpretations. Why is Sweden strikingly “worse” than Denmark: it is almost half as mobile. And why are slightly more mobile than Britain, and so close to France, which is far less mobile than Canada? I won’t say the pattern is random, exactly, but the stylized tiers that we generally use to mark the size and extent of the welfare state — Anglo-Saxon economies, Nordic economies, Continental economies, etc. — don’t seem to fit the distribution very well. Honestly, it looks a little random, which I’m sure it’s not.
Here is a crude, off-the-cuff interpretation:
Finland, Norway, and Denmark are tiny and homogeneous, and they are the most mobile. Canada is not homogeneous — but they have an immigration policy based n cherry-picking the high-skilled and/or capital-rich. As you move from Sweden to France to the United Kingdom to the United States, you steadily get more open to a wider mix of migrants, and you have a larger populations that have suffered from serious and sustained historical discrimination that has presumably had an effect on human capital accumulation and what you might call bad-news agglomerations — what Silicon Valley is to technology, Bradford and East St. Louis and other impoverished cities are to poverty — that will tend to make poverty stickier. Germany fits into this framework too, potentially: the new states in the East bear some passing resemblance to burned-out inner cities.
I do not think this interpretation is right! I have no clue. It is damn crude. But it could be. So it is very hard to tell what the policy upshot should be.
I am totally obsessed with Amar Bhidé‘s brilliant new book The Venturesome Economy, and I’d like to quote it at length:
There appears to be a consensus among policymakers of many stripes that, except possibly in recessions, saving is always virtuous and consumption always undermines long-term growth — a mind-set exemplified by Prestowitz’s alarm that the United States “is building its economy into a giant consumption machine.” Mechanisms to mobilize savings, such as the stock market and retirement plans, are regarded with favor, while mechanisms that facilitate consumption — such as credit cards — are regarded with suspicion. But as I have argued, Max Weber’s thesis that capitalism is synonymous with capital accumulation ignores the role of venturesome consumption of innovative goods in a modern economy. Moreover, the young and the impecunious are more likely to have the recklessness of spirit necessary to perform this role. At least up to a point, their spendthrift ways and the credit cards that sustain them are a boon to economic growth; and because there is noknowing what that point might be, there is no justification for promoting or discouraging their behavior.
I am all for interventions in the economy. I just think we should be really, really humble about what we can realistically achieve. Bhidé has a very shrewd take on when and where to draw distinctions between interventions that make sense and those that don’t — distinctions that apply far behind innovation policy, the focus of the book.
Broadly speaking, I think there is a great deal we can learn from the poverty-fighting measures pursued by Britain. Yet it’s not obvious that pursuing these measures will improve our performance on mobility. In fact, it is damn hard to imagine the interlocking policies and policy reversals and institutions and cultural reforms we’d need to put in place move us in the direction of Denmark but not Britain. My sense is that we should absolutely invest in human capital, particularly among people from poor backgrounds — not because it will help solve the mobility problem (what will?) but because early childhood interventions seem to pretty reliably improve lives.
I don’t think Ezra would really disagree with me here. I just think it’s worth keeping our eyes on the ball of what is susceptible to large-scale interventions and what is less so. One could then argue that, well, we can at least keep in mind a more Danish rather a more British society as a social goal. I’m not even sure about that! There could be pretty grim unintended consequences: we want poverty to be less sticky, but one would hope that we don’t mind middle-classness being sticky. Right now, middle-class African American children are far more likely to be downwardly mobile than their white counterparts, which hardly strikes me as a good thing. Anyway, food for thought.
Ezra was bouncing off of David Leonhardt’s review of Outliers, which ends with:
For all these similarities, though, “Outliers” represents a new kind of book for Gladwell. “The Tipping Point” and “Blink,” his second book, were a mixture of social psychology, marketing and even a bit of self-help. “Outliers” is far more political. It is almost a manifesto. “We look at the young Bill Gates and marvel that our world allowed that 13-year-old to become a fabulously successful entrepreneur,” he writes at the end. “But that’s the wrong lesson. Our world only allowed one 13-year-old unlimited access to a time-sharing terminal in 1968. If a million teenagers had been given the same opportunity, how many more Microsofts would we have today?”
Well, yes — but surely there is some kind of trade-off? The much-lamented digital divide is an inescapable artifact of technology diffusion and Bhidé‘s venturesome consumption. As Gladwell understands, surely getting from one teenager with access to one million is a process that takes time. Marveling actually seems like a pretty sound response. I worry more about the low-hanging fruit, e.g., cheap micronutrients that could dramatically improve life chances for poor kids around the world, or summer learning loss. We can do something about both at low cost, and we have a decent sense of what we’d get for the money.