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To the Editor:

Bruce Bartlett has written a useful and mostly accurate assessment of the evidence concerning intergenerational income mobility in America [“Class Struggle in America?,” July-August]. But there remain several issues that he treats inaccurately or does not discuss.

Contrary to what he writes, the research documented in the book Unequal Chances: Family Background and Economic Success (which I co-edited) does not support either of two points he attributes to the New York Times’s recent series on class in America. First, the idea that “although individuals may appear to demonstrate income mobility over the course of their lives, eventually they end up in the same . . . income class as their parents” is quite far from the truth, and I do not know of any competent researcher who would assert it. In fact, children of families in the middle of the national income distribution are almost equally likely to end up in any income decile; for them, there is virtually no inheritance of economic position.

Second, Unequal Chances makes no claim that “whatever the degree of mobility in American society, it is no greater now than it has been in the past.” Rather, it presents strong evidence that the degree of mobility has been severely underestimated in past studies, which did not have the benefit of detailed data that have become available in the past decade.

To give a flavor of the actual numbers (taken from the Panel Study of Income Dynamics, consisting of a representative sample of 6,273 white and black families observed over 32 years and in two generations), the correlation between parents’ and children’s income is a modest .42, but the child of a family in the top decile has a 22.9 percent chance of remaining there while the child of a family in the bottom decile has only a 1.3 percent chance of moving to the top. Similarly, the child of a family in the bottom decile has a 31.2 percent chance of remaining there while the child of a family in the top decile has only a 2.4 percent chance of moving to the bottom.

My point is simply this: even a fairly high degree of mobility on average is compatible with extreme inequality between the relatively poor and the relatively well-off. This is a serious social problem. It is not fair that the accident of one’s birth family entails a fifteen-fold difference in one’s probability of attaining success. In a decent society, individuals are not so severely handicapped by the vagaries of birth.

Mr. Bartlett disagrees. “What is truly important for a society,” he writes, “is how people in general perceive their circumstances”—as opposed, presumably, to what those circumstances really are. But the way middle- and upper-class people feel about their circumstances cannot be averaged in with the objective circumstances of the poor.

It is time that conservatives took the plight of the poor seriously, and proposed effective measures to reduce our society’s extreme disparity in rates of success. The assertion by conservatives that poverty is caused by welfare is in part true, but only in part. Appropriate redistributive policies can promote self-reliance and can isolate the minority of families that are truly incapable of caring for themselves. The absence of a dialogue on the Right focused on this problem only reinforces the stereotype that conservatives are hard-hearted and uncaring.

Herbert Gintis

Santa Fe Institute

Santa Fe, New Mexico

 

To the Editor:

Bruce Bartlett rejects the idea that the rich have gotten richer while the poor have gotten poorer, using income and polling data to validate his argument. He points out that due to widespread home ownership and the vast run-up in real- estate assets, “aggregate wealth has become much more evenly distributed” in America. This is correct, but therein lies the problem.

The wealth effect from the current boom/bubble in real estate is what keeps our spend-without-saving economy muddling along. We are spending 80 percent of the world’s savings and borrowing $2 billion every day from savers outside the U.S. to keep our standard of living at the top of the heap.

Incredibly, Mr. Bartlett comments that if we “base our calculations” about living standards “on expenditures rather than savings,” then “living standards are much more equal among rich and poor.” I always thought that what made someone rich was the size of his bank account, not the number of cars or cell phones in his possession. Is someone who has a million dollars in the bank but lives in a modest home worse off than his counterpart living in a four-carport mansion with a million dollars in credit-card debt? With over $37 trillion in total debt and rising, we are heading for a serious economic decline, with the poor likely to bear the brunt of the fallout.

Consumers are taking out home-equity loans, sometimes with interest-only payments, and using the proceeds to purchase more consumables. If we get to a point where the housing bubble bursts, the middle class and the poor, many of whom have borrowed to the hilt, will find themselves in a deep financial crater. The gap between the rich who are not leveraged and all others will become enormous, and the disequilibrium could lead to social unrest and dissatisfaction among a great majority of the population.

I am as much opposed to high tax rates as is Mr. Bartlett, but if we are going to lower taxes across the board, fiscal policy-makers should encourage a diminution of government spending and foster a policy that encourages the less well off to pay down their debt loads rather than the opposite.

Fred Ehrman

New York City

 

To the Editor:

Bruce Bartlett claims that “it is clear that Americans continue to believe in the Horatio Alger model, according to which everyone, no matter how humble his beginnings, has a chance to make it big.” But this model for upward mobility in today’s America is flawed. Vast advances in technology have not translated into wealth for every individual. The cost of living in many of our metropolitan areas has soared, making it difficult for the middle class and for new immigrants to climb the economic and social ladder. From New York to San Diego, real-estate prices continually reach new highs, making it hard for first-time buyers to purchase a home.

Mr. Bartlett’s assertion that the wealthy will provide “the capital that will eventually raise productivity and wages across the economy” is largely untrue. The new phenomenon of outsourcing, and the flight of our manufacturing industry to Asia and Latin America, has had negative consequences for American workers. Wages in this country have remained stagnant for the past five years, and the minimum wage still hovers at an embarrassing $5.15 an hour. Gallup tells us that only 3 percent of Americans describe the economy as “excellent,” and only 33 percent describe it as “good.” The wealthy invest in globalization, not in America. Upward mobility seems like an unreachable dream for many people.

Nick Gatsoulis

Astoria, New York

 

To the Editor:

Bruce Bartlett presents impressive data to refute the New York Times’s assertions in its “Class Matters” series. If I have any criticism of his article, it is that he does not sufficiently focus on the illogic inherent in the Times’s reporting in order to expose the fallacy of its reporters’ conclusions.

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