Sunday, February 17, 2013

The Stiglitz Plan for Engineering Mobility

Joseph E. Stiglitz
In the review section of the Sunday New York Times, the economist and Nobel Laureate Joseph E.Stiglitz remarks that “study after study has exposed the myth that America is a land of opportunity.” We do not have equal opportunity in this country, he argues, because the probabilities for upward mobility vary among individuals starting life in different socioeconomic levels. He points out that only (his word choice) 58 percent of Americans born into the bottom fifth of income earners move out of that category and just 6 percent move from the bottom fifth to the top. This is less mobility than is found in most of Europe (without giving specific examples) and all of Scandinavia. This state of affairs can be reversed by federal intervention. Washington should make sure that all mothers are not exposed to health hazards and that they get prenatal care. The government should put more money into preschool, and provide all children with adequate health care.  On this last, the federal government should not only provide resources to parents, it should “incentivize parents, by coaching or training them, or even rewarding them for being good caregivers.”  It should give more money to poor schools and offer summer and extracurricular programs to poor students.  Finally, the federal government should make higher education more affordable, perhaps by an income-contingent loan program like Australia’s or perhaps by providing the free universal higher education Stiglitz identifies as the European system.
As one considers this argument, the first point to recognize is that the phrase “land of opportunity” can mean at least two different things. Historically, it has meant that there are no laws or official barriers preventing individuals from pursuing their own goals, whatever those goals may be. If one accepts this definition, then it would be entirely reasonable to respond that there is no “myth” at all.  The second meaning would be the one that Stiglitz accepts, apparently with less reflection than one would expect of a Nobel Laureate. This is that opportunity should be measured by statistical outcomes. Even if one accepts this definition, though, one might conclude that Stiglitz is engaging in hyperbole. He says, for example, that only 58 percent of those born in the bottom fifth move up. This means that a clear majority of those born at the bottom of our socioeconomic scale do achieve significant upward mobility. Moreover, by his estimates, one of every sixteen people born in the bottom quintile ends up in the top.  While that is certainly far from complete fluidity, it would seem to me to suggest that there is not just “some” upward mobility, but a pretty fair amount.
Since he doesn’t cite figures for Europe or say whether he is comparing us to Europe as a whole (including Southern Europe) or across specific countries, it is hard to know exactly what his basis of comparison is. It certainly does not make sense to compare a society as large and varied as the United States to the relatively small and still mostly demographically homogenous Scandinavian nations.
I do think it is probably the case that there is less mobility in the United States today than there was in the decades immediately following World War II.  Mobility in the post-war period, though, was a consequence of structural change in our economy driven by worldwide demand for American industrial products and an accompanying expansion of managerial and professional jobs. There were more places at the top for people to move into. Without that kind of massive structural mobility, a lot of people can move up only if a lot of people move down. Given that most families in the top fifth of earners sensibly and justifiably dedicate their efforts to ensuring that their own children do not experience downward mobility, I think it is impressive that one out of every sixteen individual born in the bottom layer is able to move to the top.
Early childhood education may be a good idea. Healthy neighborhoods are definitely good. But we should think very carefully about whether these are matters that citizens should resolve through their local administrations and associations or whether it would be a good idea to let the central government decide these matters for us through regulation.  On the issue of pre-school, we might want to reflect that the benefits of Project Head Start, a federal pre-K program that has now existed for almost fifty years, have been highly dubious and that it does not appear to have had much of an impact on the mobility statistics.
The suggestion that the federal government start “coaching or training” parents is more than a little creepy.  The anthropologist Lionel Tiger (a great name, but a real one) coined the term “bureaugamy” to describe the state of affairs in which government bureaucracy had essentially become the equivalent of a bread-winning spouse in low-income families.  Stiglitz’s suggestion would complete this process by making government a full-fledged and even dominant partner in the rearing of children.  This could make low-income children ultimately even more dependent on the government-parent and actually end up decreasing statistical upward mobility. Regardless of the outcome, though, we should ask ourselves whether we want the nationalization of children.
I certainly agree that higher education should not be as absurdly expensive as it is in the United States today. Arguably, though, demand-side subsidies for higher education have been one of the forces driving tuition costs up.  Stiglitz’s reference to “the near-free higher education system in Europe” struck me as extremely odd. The European Union has achieved uniformity on a few things, but higher education is not one of them. Each European country has its own system. Some of them that do provide near-free tertiary schooling, moreover, don’t do so for everyone who wants to study anything, but have highly tracked designs that direct people into industrial trades or university studies. This approach may have its positive side, but it certainly is not a prescription for social mobility.


  1. It certainly does not make sense to compare a society as large and varied as the United States to the relatively small and still mostly demographically homogenous Scandinavian nations.

    The elephant in the room whenever anyone attempts to compare America to Denmark or Sweden. Import 20 million low-skill immigrants into their countries and we'll see how long their welfare states last.

  2. ***This is less mobility than is found in most of Europe (without giving specific examples) and all of Scandinavia. ***

    Does that hold true for second generation groups from non-European countries? As Tino Sanandaji observes:

    "First the data confirms that both first generation and second generation immigrants in all 3 countries work much less than natives, both for men and women.

    For women, the second generation is slowly assimilating. Whereas the first generation works 35% less than natives, the second generation works 27% less than natives, an improvement of 8 percentage points. (the figures are the non-weighted, arithmetic mean of the 3 countries, below I have put data in each one).

    For men however the trend is the opposite. The second generation non-European immigrants are less likely to work than the previous generation! While the first generation work 10% less than natives, the second generation works 24% less, a deterioration of 14 percentage points.

    So things are getting worse in the 3 largest European countries, not better."

  3. ***it should “incentivize parents, by coaching or training them, or even rewarding them for being good caregivers.” ***

    I would agree that benefits should be linked to taking parenting classes or enrolling children in pre-school. However, the fundamental problem here is genetic stratification from assortive mating. The only way to reduce this inequality in the long run would be to make contraception a condition of welfare entitlements.