The primary problem with this type of comparison is that it completely ignores economic mobility. Someone simply isn't born into a given income bracket and stays there for life. Most people's earning potential goes up over time. Speaking for myself, I think I've been in all five quintiles.
You are introducing an additional variable that doesn't make any sense to include. Even if mobility is greater now than it was (something of which I am skeptical), the fact remains that the top quintile is still only ever 20% of the population. If one new person moves into the top quintile, that means someone else has moved out.
"Most people's earning potential goes up over time." This is generally true, but it goes up like compound interest. If you start high, it tends to get massively high by the time you retire. If you start in the middle range, the results are much less impressive. If you stay poor for very long after being done with school, your gains tend to be miniscule.
It's hard to move out of the bottom quintile when the bottom quintile is generally doing so poorly, though of course it's possible, in some cases, to still do so.
The other issue is the that level of consumption of everyone in every household income quintile in the United States has steadily been going up (in a way not fully reflected in the consumer price index or other gauges of consumer behavior), so almost everyone has more stuff, more space, and more comfort and health than people in the "same" income quintile did in my childhood. There may indeed be some structural, societal problems caused by uneven income distribution (what I have liked about the United States and Taiwan, the two countries I have lived in the longest, is that they have tended to have better Gini coefficients
than some other countries around the world), but there will ALWAYS be some people who make more money than some other people living in the same country, and the main issue is to help each country and all the people living in each country gain prosperity over time, which has been the general worldwide trend.
So the working class has been taken to the slaughterhouse?
No. Americans of all income levels still enjoy unparalleled prosperity compared to most people around the world, and the high rates of voluntary immigration into the United States even from countries that are themselves prosperous show that something about the overall mix of living conditions here isn't "slaughtering" people but rather meeting many people's aspirations on balance, in some way that makes moving far away from home an appealing idea.
Every time this study or one like it is trotted out, it drives me nuts. What a society should be looking for is freedom of mobility, not arbitrary mobility.
According to an article on NPR that was linked but then deleted here a minute ago, 80% of Americans think that one can still pull oneself up by their bootstraps. In the article, the subtext was that this mobility study proved that Americans were morons and don't realize how stuck they are.
What hogwash. If we think about what Americans and immigrants are actually seeing that makes them feel so hopeful, it's the opportunity of mobility through one's own efforts.
What opportunity of mobility does not imply is the greatest statistical father-son mobility. That would only be the case if each person born were randomly allotted IQ or EQ or whatever your favored intellectual attribute is for being more likely to succeed. But that's not how genetics work.
Not only that, but each person would have to be born into families with precisely the same quality of upbringing. But neither is that the case. In fact, on average, successful parents have successful habits that they pass on to their children.
The upshot is, the method of this study is absurd. The correlation between your dad's income and your income does not represent freedom of mobility, it's just a lot easier to measure.
One can easily imagine societies arranged with more arbitrary success paths that lead to greater father-son mobility than a meritocratic society organized by families of natural born children.
No money needs to be involved for the preceding to be case.
Now, I actually favor an even greater level of meritocracy. I would be interested in something like a 90% death tax, to be put in a pool and distributed proportionally to children upon a certain birthday. I can see all sorts of problems with the naive version of that idea, but something in that spirit would be fantastic. Let's get rid of family money dynasties.
Your observation is a known flaw with this line of thinking. In fact, it's such a powerful rejoinder I'm really surprised the NYT didn't address it.
If I remember correctly, movement among quintiles in the US is such that the average person moves through many. Yes, there are the permanently wealthy, and the permanently poor, but they are the exceptions rather than the rule. So when people say "the rich get richer" what they really mean is that the income segment defined by that qunintile, over all, got richer. Individual people, however, move around a lot, as anybody who has participated in the economy in the last couple of decades can attest.
I know I'm not sourcing my statement. Apologies. I'm simply relying on several rebuttals to this type of graph I've read over the years. Hopefully somebody else will be able to provide some more substance and move the discussion along.
These studies of relative mobility have produced remarkably consistent results, with regard to both the degree of mobility and the extent of changes in mobility over time.[5] Mobility in the United States is substantial according to this evidence. Large proportions of the population move into a new income quintile, with estimates ranging from about 25 to 40 percent in a single year. As one would expect, the mobility rate is even higher over longer periods—about 45 percent over a 5-year period and about 60 percent over both 9-year and 17-year periods.
Those statistics aren't actually that encouraging, though they aren't bad per se. If 60% move a quintile over 17 years, that means 40% stay put long-term. And that isn't even a measurement of large income mobility, like jumping more than one quintile. Iirc from data elsewhere, the most common quintile moves by far are churn between the 2nd/3rd/4th quintiles, with 2-or-more-quintile jumps and movement in or out of the top and bottom quintiles being less common than 2nd<->3rd or 3rd<->4th drifting.
I'd like to see more data about this, as I find it interesting.
I don't know. I feel pretty assured, however, that if 40% move every year, that the graph as drawn leaves out some very important details. As you noted, the interesting question (from a political viewpoint) is how much mobility is in and out of the top quintile as opposed to the bottom one.
And, reasoning a bit further, if people only move among the bottom three quintiles, to them it's probably evidence that one day they might be in the top quintile, whether or not that's actually likely. This might give them a much more favorable view of lenient tax rates on the wealthy. Don't know.
And from a purely political standpoint, if people feel that they are moving among the quintiles such that anybody has a chance at being in the top bunch, does it matter what the actual data is? In other words, is there a perception problem or are we trying to create one? Once again, I think you could argue this either way from the data I've seen so far.
I call b.s. In economics, the extremes are strongly self-reinforcing. I would be really surprised if in a given year more people left the top 0.05% (in net worth) than stayed there. I'd even be surprised if the ratio were less than 5 to 1.
The relevant question isn't whether most people's earning potential goes up over time. That's pretty well baked into most jobs (older people manage younger people and get paid more than their charges, for example). So yes, you should make more at retirement than at 18.
The relevant question is around mobility between quintiles. Put another way: how likely is a person to retire in a higher quintile than the one in which he/she was born? The data pretty conclusively show that the US is calcifying in this regard. In other words, it's more difficult to move up to a higher bracket now than it was 30 years ago, etc. I don't have a citation handy, but I believe Elizabeth Warren has done some research into this area (as have others).
You're arguing that an aristocracy is OK as long as they didn't get there through heredity.
First of all, I would disagree that social mobility is increasing. Rich kids are doing better than ever.
Secondly, I believe history indicates that hereditary aristocracies are actually less brutal and dangerous than "merit"-based ones. It is the revolutionary forces that destroy societies and kill tremendous amounts of people. People born into poverty who work their way to the top through a sociopathic drive for power and look down on everyone else with a blame-the-victim mentality.
These people are dangerous. And Hacker News is full of them.
