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The Great Inequality Debate
What We're Talking About When We Talk About Inequality

A team of researches lead by Harvard economist Raj Chetty have just released two paradigm shifting studies on social mobility. One study found that, contrary to anxious worries haunting the inequality debate, social mobility hasn’t changed at all in the last 50 years. But there’s a catch: just because our mobility hasn’t declined, doesn’t mean it is high. For the last fifty years social mobility in the land of the American dream has been consistently lower than in other countries. The second study finds that those pockets of communities in America that do foster mobility are characterized by five attributes: less segregation, less income inequality, better schools, more social capital, and stable two-parent families.

These studies have set the pundit tongues a-wagging. One of the best reactions to the second study came from W. Bradford Wilcox in SlateAfter working though each of the five attributes, Wilcox writes:

Throughout his presidency, Barack Obama has stressed his commitment to data-driven decision-making, not ideology. Similarly, progressives like Krugman have stressed their scientific bona fides, as against the “anti-science” right. If progressives like the president and the Nobel laureate are serious about reviving the fortunes of the American Dream in the 21st century in light of the data, this new study suggests they will need to take pages from both left and right playbooks on matters ranging from zoning to education reform. More fundamentally, these new data indicate that any effort to revive opportunity in America must run through two arenas where government has only limited power—civil society and the American family.

Inequality and social mobility are vexed and complicated issues, but one thing that comes out from these studies is the conceptual distinction between two kinds of poverty. Poverty A is material poverty, and is the kind the left is most worried about when it talks about income inequality. People who suffer from Poverty A may not be able to pay the grocery bill, the rent, or get school clothes for the kids. Poverty B is social poverty, of the kind Wilcox highlights: broken families, poor education, and disappearing social capital. The right tends to talk more about this kind of poverty, and sees Poverty B as the cause of Poverty A. The left is more likely to believe that Poverty B is the consequence and Poverty A the cause; when people struggle to feed themselves and keep a roof over their heads, it is harder to form stable families and strong communities.

In the real world, poverty is complicated. There are some cases where it is simple; many Cuban American refugees, for example, fled the island with nothing, and were desperately poor on arrival, but over time many rebuilt their lives and became even better off than they were at home. These people were temporarily afflicted by Poverty A, but because they were well-to-do in terms of social capital, they were able to change their circumstances.

Clearly, the hardest kind of poverty to help is the kind that involves both types of poverty. Someone who reaches the age of 18 having bounced from one foster home to another, has attended only failing skills and who reaches adulthood with no parents, no skills, and perhaps a history of drug abuse and petty trouble is profoundly disadvantaged. Such people need the kind of care and community that government cannot easily provide and even then the future will likely be hard. The child of an unmarried and uneducated woman without strong family and community ties is going to face an uphill road, especially if, as is likely, this child grows up in a neighborhood with bad schools and where many other children come from similar backgrounds.

It’s easy to become too pessimistic about poverty. When it comes to material things, the lot of the poor has steadily improved over the last fifty years. Technological progress may not narrow the gap between rich and poor, but in a country like the United States it does raise the floor. In material terms at least, poor people today are often better off than even the rich were in the 18th century. Their kids don’t die of preventable and treatable diseases, they have better heating in winter and cooling in summer than George Washington ever knew, and they have cell phones and color TV. Walk into a dentist office today with Medicare and you will get incomparably better treatment than anything King Louis XIV could have commanded in the Palace of Versailles. A particular individual may not be improving her position in society in relative terms, but it is a lot better to be in the bottom quintile of 2014 America than to be in the bottom quintile back in 1950 or 1910.

We desperately need a smart national conversation about poverty, inequality, and mobility; much of this is going to involve demolishing simplistic shibboleths on both sides of the political divide. And finally there’s something else to consider: in the American context it is impossible to talk about poverty and inequality without also talking about race. That’s always a hard conversation for this society; it involves painful and thorny questions that historically have divided us. The Democrats hope that the issue of inequality will work for them in what looks to be a difficult 2014 electoral season; let’s hope that at least some of the time the conversation goes beyond posturing and name-calling.

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  • Anthony

    A smart national conversation may begin here: despite notions to contrary, Americans are not egalitarian enough (another view, “Even if we could agree that inequality in real standards of living – in the subjective experience of our material circumstance – is rising…” Surely WRM, equally essential to improving both social and economic resources (A and B) is an “activated and organized” public (shorn of shibboleths hopefully).

  • Andrew Allison

    “A new study has found that US social mobility isn’t declining.” End of discussion.

  • Boritz

    When it comes to material things, the lot of the poor has steadily improved over the last fifty years. -TAI

    Hence the need on the Left to pivot from concern for “the needy” who now have homes, cars, and smart phones to talk of income inequality.

    • TommyTwo

      Poverty -> Inequality,
      Global Warming -> Climate Change,

  • Arkeygeezer

    Politicians adopt the Left’s approach to social situations with one thought in mind; HOW CAN WE TAX THIS?

    Global warming to climate change = TAXES! Income equality = TAXES! Poverty = TAXES! Homelessness = TAXES! Not taxes for everybody, but only the rich, i.e. the people who drive our productive society.

    When it comes to income inequality, climate change, homelessness or poverty, we have examples of the freedom of people to choose. In the United States of America, most people choose their social situation. Very few are forced into it.

  • TommyTwo

    “let’s hope that at least some of the time the conversation goes beyond posturing and name-calling.”

    Hope springs eternal.

    The ongoing hyperventilating and patently disingenuous reactions to a href=”,,9781594205460,00.html”>The Triple Package does not inspire confidence, though.

    (The above is not an endorsement of the book.)

  • Anthony

    An additional observation: issue strikes me as “creedal” (unity of Ideals and diversity of culture) and not left or right inclinations; that is, is the American story realistic in 21st century societal terms (not whether one’s political leanings are to right or left of center, whatever that means). Better yet, is creed of America satisfactorily effectuated in 21st century America (if it ever was for the majority of her citizens). The study mentioned in Feed (where is the land of opportunity) may be discomfiting for some but it brings fresh data to inequality discussion (though not necessarily new) confirming commonsense – while researchers acknowledge study does not prove causation.

  • Jim__L

    Social Mobility, as currently measured, is a zero-sum game.

    If someone leaves the bottom quintile, someone in the second-to-bottom quintile drops into the bottom quintile. If they go from the bottom quintile to the top quintile, someone from four quintiles slips down the ladder one step. What is good for one is bad for another. There’s no net gain.

    Looking at poverty in absolute terms — not in relative terms — is the only thing that makes sense. And for decades, poverty has been declining.

    Generosity and attention to “the poor” still make sense, and are virtues. But we shouldn’t pretend that things somehow are not far better than they were in past generations, and we shouldn’t pretend that churning who’s rich from one generation to another absent any attention to what they actually bring to society is desirable in the least.

    • TommyTwo

      You are neglecting the self-evident fact that it is highly just for those evil rich bastiches to be brought down a peg or ten, and replaced by the deserving (per se) poor, who will now become the new rich… Hrm. I need to give this some more thought.

    • JeffWeimer

      A zero-sum game because it’s graded on a curve. At no time will there be fewer than 20% of people not in the lowest or any quintile.

      • Jim__L

        (You got it. Check for triple negatives in your second sentence, though.)

        • JeffWeimer

          D’oh! It just didn’t seem right but
          I couldn’t put my finger on it.

  • NoNewt

    This post conveniently leaves out the biggest driver of income inequality today: immigration.

    Much more so than 100 years ago, immigrants to the US today are markedly less educated and skilled than native-born Americans. This is due to the fact that US immigration policy (i.e., not only the law on the books but the reality of not enforcing that law) is geared 90% toward low-skilled, uneducated immigrants, usually from Central America. A Canada or Australia, on the other hand, has seen income inequality driven downward – and education and income levels improve – due to a focus on skilled immigrants from all around the world, who are often outperforming the native-born in education and income achievement.

    If the US continues down the path of overwhelmingly low-skilled immigration – as both the Group of Eight bill as well as recent GOP immigration plans released by Paul Ryan (and heavily influenced by Big Business in the form of the US Chamber of Commerce) would do – then we will see increasing income inequality marked by both what this post calls Poverty A and Poverty B.

    I.e., large numbers of migrant workers doing menial jobs (agriculture, light manufacturing, construction, much of what people used to do themselves – Home Depot-centric house repairs, landscaping – and much of what young Americans used to do including restaurant and custodial work) will clearly increase Poverty A if we assume the Americans who used to do those jobs aren’t all moving toward higher-skill, higher-paid work (judging by skyrocketing welfare-collection numbers, many of them merely go on the dole). And if those people are not from cultures that prize education, literacy, upward mobility, and assimilation, then we will see more of Poverty B, and more communities where as Bob Putnam would note, civil society breaks down and even existing residents retreat into shells, feeling they’ve lost their community.

    The skilled immigrants to Canada and Australia (and what of them there are to the US) may have Poverty A but typically have great social capital (i.e., no Poverty B). The unskilled immigrants comprising the vast majority of inflows to the US today – and, if the political and business elites from Barack Obama and Chuck Schumer to Paul Ryan and Marriott have their way, who will be comprising our inflows tomorrow – are marked by Poverty A and B. Get ready for an ugly next few decades of declining incomes and social capital, America.

    • free_agent

      That’s an important consideration, but it seems to me that it is more complex than it appears. Yes, there are a lot of low-skilled immigrants, but the mindset of such immigrants is very ambitious, and that mindset is itself a very valuable element of social capital.

      A good test would be if you could find 50 years or so ago a group of immigrants who were tightly filtered but largely unskilled, and see how their grandchildren turn out. But that probably doesn’t exist.

      I have noticed that the groups that immigrated to the US with the least “filtering” have done the worse. E.g., American blacks are descendent from people who weren’t selected at all based on their willingness to emigrate. The Irish-Americans fled from starvation, rather than being ambitious lower-middle-class types, and fared particularly poorly in the US. Native Americans “immigrated” by being engulfed. But groups that went through significant filtering seem to have done much better on the average. E.g., the Vietnamese boat people were strongly selected for willing to endure hardship to obtain opportunity, they arrived in the US with nothing, and did quite well.

      I think a better example is what I’ve read of American blacks who are descended from Caribbean immigrants. They’ve suffered as much at the hands of white America as other blacks, but they do much better than “native” blacks, and are disproportionately represented among blacks who reach positions of power.

      • Jim__L

        You’re generally spot-on — Jews and Asians in particular have done a whole lot better in American society than Evil White Male Theory would predict.

        Identity politics are taking their toll on Caribbean immigrants… their kids are not doing as well as their parents, as they assimilate to the more toxic aspects of American black culture.

        • Anthony

          What do you know about not only identity politics but also “toxic aspects of American black culture” (it all echoes well with a certain crowd)? Please don’t cite litany of shibboleths…

          • Jim__L

            Well, that’s an interesting link anyway.

            A theory that at first glance might seem to fit the facts — between efficiencies in retail (think Wal-Mart, Amazon), efficiencies in information technology (including advertising — think Google) and the explosion of debt and financing charges (banks), you have a lot of newly “redundant” jobs closing down, and a large share of the money that would have gone to those workers going to the top 0.0X% instead…

          • Anthony


  • LizardLizard

    Poor with gumption v.s. poor and feckless. The role of policy (and, dare I say it, CULTURE?) should be to smooth the way for the first one and light some metaphorical fires under the second.

  • victoria wilson – mn

    WRM does something very interesting in framing the
    conversation around Poverty A and Poverty B.
    He identifies two separate systems that play into the resources of
    people In poverty. If we continue to
    frame each socio-economic discussion in these terms we may find some
    clarification on system B or the economic implications of our families,
    networks and communities. Over the past
    100 years academics have sliced and diced System A but tossed system B to the
    realm of the irrational. Yet study after study can predict success outcomes for
    individuals based on their social circumstances. Finding commonality with how
    system B plays out in say the minimum wage discussion or the immigrant
    experience would help identify the its mechanisms.

    • Jim__L

      See Thomas Sowell’s discussions of Cultural Capital.

      • victoria wilson – mn

        Thomas Sowell documents the capital in cultural groups, as
        Putnam does in civic group as James Q Wilson does in families. I guess I was hoping to see the conversation evolve in an effort to explain all the unintended consequences Sowell refers to in Economic Facts and Fallacies. He explains how rent control helps a small subset of renters but then hurts the entire renter population by discouraging any further development of housing. Rent control ends up helping a few individuals but hurts the greater group of renters. We don’t really have a conceptual grasp on system B and government’s attempts at a planned system B economy is as unsuccessful as any state controlled economy.

  • Anthony

    It is also impossible to talk about poverty and inequality without talking about IQ, a taboo subject in America. According to Charles Murray and Richard Hernstein, intelligence is at least 60 percent heritable, and some good studies say that it is 80 percent heritable. The remaining 20 to 40 percent that is controlled by activities falling under the title “nurture” have more to do with things like prenatal nutrition than by activities that can be controlled by the behavior of school aged children or adults, such as studying hard in school. There has be no study showing that school programs or other interventions can produce long term improvements in IQ.

    This is pretty depressing. The really good jobs of the future are in the STEM fields, finance or in healthcare, and jobs in these categories tend to require a high IQ. The skilled trades also tend to attract above average people. The fifty percent of the population that is below average is going to have a hard time obtaining a job that will allow them to live a modestly comfortable life without some kind of government assistance. This is why a Scandinavian style welfare state is the best option. In Scandinavia, industrious people are still free to work hard and prosper. Furthermore, those countries have a long tradition of respecting private contracts and private property. Unlike in America, however, the average person has more economic security. In terms of evaluating the success or failure of this model, the proof is in the pudding. Google Stockholm, and you will see a thriving and clean place, not a ramshackle city throttled by the state.

    And far from holding back capitalism – as many readers of this blog will no doubt assert – I would argue that a strong welfare state supports capitalism in that the security that it provides makes the population less likely to becomes Luddites or embrace protectionism.

    • Anthony

      Not an IQ issue except for those looking to rationalize and reinforce their own predilections (by the way, Via Meadia had this discussion about 5 years ago – check archives).

    • Jim__L

      Note to the rest of America… This is the best that philosopher-kings will ever be able to offer you. Their philosophy can’t imagine any system where they, and people like them, are on top, with the rest of us surviving on whatever scraps fall from their high table.

      Liberty — freedom from being dictated to by these types — is the only defense against this dystopia.

      As for Sweden… it’s self-destructing. Their policies neglect the next generation. It’s inevitable that any centrally-planned wealth-redistributing system will miss critical aspects of human life like this – letting people see to their own business and their own families is the only real way for a society to sustain itself.

  • free_agent

    You write, “failing skills”.

    That should be “failing schools”.

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