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If you grow up in poverty, or in a wealthy family, chances are good you’ll remain at that economic level. But research from the Pew Economic Mobility Project indicates that successive generations are not necessarily locked into their parent’s economic strata. We discuss the movement of wealth between generations.

Guests:
Erin Currier, project manager for the Pew's Economic Mobility Project.
Andrea Levere, president, The Corporation for Enterprise Development (CFED)

  • Ayn Marx

    As someone who has inherited—too much, because I wish the relatives had stayed alive, and not enough, as I still seem to have a boss—I want to speak up for the inheritance tax.  It is not, as Frank Lutz advised the silly and the vicious to limn it, a ‘death’ tax, it is a tax on the safe and orderly transfer of an estate from no-one to a living person or persons or institutions.  This is a process not very likely to be the norm in the state of Nature, during the war of all against all.  As such, it is only fitting and proper that the Leviathan get a chance to “wet his beak”, seeing as how in his absence it would not be likely.

    (Where right-libertarians fall down is in their insistence that ‘men with guns’ from the Evil Gummint not interfere with property rights, most of which would not exist without the Evil Gummint’s men with guns’ enforcing them.)

    • Mholman

      You are right, I would have had my relative be alive than to have inherited a penny.  It is the greedy men today that interfere with the inheritance taxes and to me that is strictly what we call a FAMILY MATTER.  LEAVE IT ALONE!  

  • Rufus

    I wish we could all get over the money thing. People who are very rich or very poor seem to have no inner balance and cause society so much trouble. And yet, many middle class people seem to be always full of envy for others. Money is the root of much evil and should be abolished, like you see in Star Trek.

    • Ayn Marx

      We can’t do this yet…sorry, I’d like to, but the only way to make people not care about things is to assure them the supplies of the things they need*, and the only way to do that is to improve technology.  The steam engine created the middle class, improved transport and communications extended that to the majority of people in the “advanced” (in this way, at least) nations…I think it will take nanofacture and screaming biotech to bring us to the point we both want.

      In the absence of everyone’s dependably having what they need—that is to “scarcity”, a condition that has downpressed most of us from agriculture’s adoption onward (and probably a little before—people stopped hunting/gathering for a reason, and that was resource depletion), but which does not have to last.  For one thing, as more and more of the “things” about which we care were virtual, the more cheaply they were available, especially once intellectual “property” goes the way of the quit-rent and droit de signeur.

      Take freely available information, add widely-distributed 3-D printers and the like, and things soon become, if not free, cheap.  (Think it’s impossible?  the greatest wealth of most colonial homes was in its cloth, which was _insanely_ expensive…machinery, and slaves (at first), changed that.)
      *I remember the experience of a teacher at an expensive prep school:  he and the other teachers garbage-picked the dumpsters every June for TVs, skis, stereos, and the like which students tossed aside because they knew they could get new ones easily.  I want all of us to feel that way about every good, from a batard loaf to a TV to a kidney.

      • USA = Phoney Meritocracy

        As philosopher Alain de Botton has pointed out, in a meritocracy, people are very concerned about how much they earn and the wealth that others display … envy is the dominant thing. But also in a meritocracy, people just assume that the poor *merit* their failure and that the rich *merit* their wealth. However as we know, in the USA, the poor often do not merit their poverty and the wealth often seem to cheat and swindle to gain theirs.

    • RegularListener

      This is not mainly about envy: it’s about survival!.. I have no problem with some having exorbitant wealth as long as there are not also people who cannot even afford to keep a roof over their head because they don’t earn enough working at their low-wage jobs.
      I had this experience myself, after very hard work obtaining a PhD & 2 MA’s I sill had to depend on welfare to pay the rent since the only jobs I could get (part time low-wage jobs) could not possibly cover basic rent..And since welfare is now capped at 5 years, I could not depend on this supplement to my jobs forever. 
      It is revealing that I only got out of that extreme poverty by accientally having a child, at age 37, by a man with a high, measurable salary who then had to pay me more in child support than I earned at my various part time low-wage jobs.  The only thing completely under my own control: my education, was economically worthless. Sadly, for some Americans college even leads to negative income (debt exceeds returns from  employment).. The researchers really dropped the ball by not separating out types of college education that do pay off (presumably engineering, which not all of us are equally good at) and those in fields like humanities where the record is much worse..The fact that so many of those who work hard in school and at low-wage jobs (at least a third) still end up at the bottom sends the message to people already near or at the bottom (and to my one’s own kids) that effort in school or low-level jobs only rarely pays off. 

  • Doug F

    p, li { white-space: pre-wrap; }
    I haven’t heard the details of the Pew study yet. But a similar large long-term study by the London School of Economics

    http://www2.lse.ac.uk/newsAndMedia/news/archives/2005/LSE_SuttonTrust_report.aspx

    determined that social mobility in the US is just as bad as in the UK. In both, there was about HALF as much as in developed countries with equal access to good education: Germany, Sweden, Norway, Denmark, Finland, and…Canada.

    The British know and admit this about their country and culture. Americans are in deep denial about theirs. You see propaganda stories in the media every day about how open social mobility is, how any poor kid can become a professional or entrepeneur, and almost no media pundit challenges this. In fact it’s very hard for a poor kid to get a good K-12 education and advanced degree. In Europe, all they have to do is be smart enough and study hard–not only is college through a PhD, JD or MD free (or almost), they get a small stipend to live on.

    At one level, Americans know this–parents buy more house than they can afford or fake their address, just to get their kids into a better K-12 school. But they don’t generalize from this to the wider situation.
     

  • Sam

    The question should be the other way around. How can the estate tax of wealthy people help to finance social services for the working class/middle classes. The best way to keep social mobility strong is to stop the wealthier families from accumulating too much wealth from generation to generation. Social mobility comes from education, health security and financial security, and these must all be financed somehow.

  • PrintDeutschmarks

    What is it they teach in Cultural Anthropology? There are 2 paths to affluence:
    1. Earn much, spend much
    2. Earn little, spend little
    All else is merely psychological.

  • RegularListener

    Biggest problem is those who spent enormous amount getting college degrees–often multiple college degrees–at a exorbitant expense to themselves and their family and still fall into the bottom. Erin Currier”s cavalier attitude that one third falling from middle to bottom is not a big problem,is part of the problem.  As long as it’s that easy (33%) to  end up at the bottom despite enormous amounts of money and time (whidh eats into job experience) on college,( the variable most under people’s control) people will be put off from making such an expensive investment.

  • Mood_Indigo

    This study is very reassuring about confirming the existence of solid economic mobility in the U.S.

    About a third of the highest economic class move downwards and about a third of the lowest class moves up. About a third of the middle class move downwards. These are exactly the results you expect in a random sample.

    There is absolutely noting new or unexpected in the study as expressed in this program. Erin Currier made some remarks regarding the interpretation of her data that made me flinch. And Michael sounded aghast that a third of the middle class move downwards. Garrison Keillor probably had him in mind that all children at Lake Woebegone are “above average”.

  • Leslie

    The comment that cars are out of reach of most people is really bogus. I seen thousands of people of the freeways and roads everyday. Where did they get their cars? Cars are also safer than they were 50 years ago.

    • Elisabeth Ward

      His argument about housing was just as faulty. See my comments above. But I guess for someone like him, who started his own business and is now a multimillionaire, it must be baffling that his kids and grandkids can’t just snap their fingers and do the same thing. The system is radically different than it was in the 1950s. I bet that caller did not even use a real estate agent to sell his first home! 

  • Mood_Indigo

    Erin Currier notes a correlation between college degree and economic mobility upwards. This is a typical mistake of confusing correlation with causality. Getting a college degree gives a better chance to acquire employable skills.  Folks get jobs because of skills, not a piece of paper. Folks moved into the middle class following WW2 not because of the GI Bill, but because the entire world was a market for U.S. business, and the economy swallowed up all the college grads that were churned out in the 50s.

  • USA = Phoney Meritocracy

    Whoever the woman is who says “slavery makes labor cheaper” is terribly misinformed. Slaves were VERY expensive.

    Today’s migrants (and today’s trafficked slaves) however are dirt cheap.

    • Chr3

      This is an example of how one fact, taken by itself, can be misleading.

      Yes, purchasing a slave was expensive.  But purchased slaves produced more slaves, at no cost to the slave owners.  And their labor–a lifetime’s worth–cost nothing to the slave owners beyond the most minimal room and board.

      Why do you imagine the Southern upper classes wanted slavery so much that they were willing to fight the Civil War to keep it?  It wasn’t because they loved to lose money!  Thomas Jefferson knew very well that he could never afford to keep his beautiful estate at Monticello if he freed his slaves.  Slavery made possible the vast fortunes of the American South, and sharecropping after the Civil War made the system only slightly less profitable for the following century.

      Slavery is an unreconstructed capitalist’s dream.  No wonder that ever since its demise capitalists have been busy trying to recreate it!

      • Rufus

        The Civil War wasn’t fought over slavery. It was fought to keep the union intact. However it was fomented by European bankers who wanted to divide an conquer the USA.

    • Elisabeth Ward

      Yes, but she was replying to the caller who said that everything is now more expensive in the U.S. because of government regulations, and grabbed hold of an extreme example of “government regulation” that we all would endorse, the end of slavery. She only had a few seconds to make her point. 

      I wish however that she had made the point that at least in terms of housing costs, it is not government regulations that are making homes considerably more expensive, but rather the legions of real estate agents who conspire to drive up the cost of homes by telling everyone their home is “worth” 100 times more than what they paid for it. Government regulations may have driven up the cost of housing, but it is nothing compared to what real estate agents have pushed. 

      • RegularListener

        True, real estate agents play a role, but this is more a sympton of the fact that housing prices reflect the growth and density of population. Out of control population growth in certain regions causes prices to rise, which real estate agents exploit. The cost of housing is mainly the value of the LAND, not the house itself! Land is much more expensive in metropolitan regions because population is much higher.And a much bigger, better built house in rural areas, the Midwest and parts of the South are a fraction the cost of a small, poorly-built house in many West and East Coast,urban/suburban areas.So it cannot be mainly demands for insulation etc. (which has to be better in the cold Midwest than California), or the cost of building, whether  labor or materials, that has made housing unaffordable.   Also, class and regional economic inquality contribute : the wealthy push up prices for those at the lower income rung. Job declines in the Rust Belt and elsewhere (and poverty outside the US) push people into the few thriving regions of the US in search of a livelihood, and they bid up the rental market in those areas..

  • Debtpocalypse

    The greatest inter-generational rip off has occurred. Baby Boomers spent everything they earned, failed to put enough away for their own retirement, and indebted themselves and the nation, thereby spending the future income of younger Americans.  It is abhorrent what they have done – it defines “moral bankruptcy”.

  • Daniel

    Why is it that we talk so much about the “death tax” on inheritance, but so little about the birth tax?  Right now the national debt stands at $48298.75 per person. Every time a baby is born, we are in effect handing them a bill for this amount, which will balloon to enormous proportions with penalties and interest by the time they are in their earning years and trying to pay it off. Seems to me taxing inheritance is far preferable to taxing the future. Why don’t we add the phrase “birth tax” to the national conversation, and ask those who rant and rave about the “death tax” to please explain, on camera, to a newborn baby why he or she should begin life in deep debt so that the richest in our society can pass on 100% of their wealth instead of some lower percentage. 

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