Social mobility isn't important, improving the condition of the poor is

The Atlantic in its August 2019 issue had an article about Raj Chetty, a brilliant economist who has achieved a vastly better understanding of social inequality using fine-grained data that was not available to earlier researchers. One result of his work is identifying opportunity zones, noting that when people from poor zones move to those places, then their children will have higher lifetime earnings. If promising initiatives like this were implemented, social mobility would increase.

So the key question he is addressing is social mobility. He notes that someone in the bottom fifth of family income making it to the fifth has a 10% chance in Salt Lake City but only a 5% chance in Milwaukee, a disparity he would like to fix . He is far from alone in focusing on this -- the feeling that a good society is one where more poor people have a chance to make it.

I was following along without complaint, but suddenly I stopped to ask this question: Why is this an important goal? It assumes a zero-sum game, and associated with the upward mobility of someone in the bottom 20% is the downward mobility of some other person or persons.

Perhaps the assumption is that this poor person is deserving of higher income on account of merit -- they are smarter and harder-working than those people whom they will leap over. More on that later.

Or perhaps the idea is that the bottom 20% is a class, and this class deserves to have some of its members move upwards. This strikes me as an illusion. A family of the bottom 20% that makes it to the top will merge into it -- the children will be indistinguishable from the rest of the 20%. I could see the argument if the category was race. Black people and their children are still black in the top 20%, so they are visible and an example to others of what African-Americans can do. But the class of poor people in general is defined by nothing but poverty. It's a fair guess that most people in the top 20% today had ancestors 100 years ago who were poor.

Far more important than social mobility is to restructure society to improve the circumstances of the bottom 20%. One simple way to do this is redistributive taxation. I have suggested wage magnification as one way to do it (the government turning a $12/hour job into an $18/hour job), though a guaranteed minimum income is another way. Strengthening those parts of the social safety net that benefits the poor (such as Medicaid or food stamps) would also help.

There is no doubt that wealth has its privileges and the children of the wealthy have much better chances than the children of the poor. It would be great to dismantle discrimination (which is very real), but I'm not so sure about extraordinary measures to allow a few more poor people to make it to the top.

Suppose we allocated income in a totally random fashion. When each child is assigned a social security number, they also get their lifetime income. A few will enjoy the riches of being in the 1%, most will be in the middle and some will be poor. The child of a rich family would be as likely as the child of a poor family to end up in the bottom 20%. That doesn't sound like any kind of improvement to me. An improvement is improving the lot of the bottom 20%, however they got there.

There are other factors that make social mobility complicated. One is that "merit" is somewhat heritable. If you're a hard worker, the chances are that your children will be too, based on what you teach them and the example you set -- and possibly to some extent on genetic endowment. If over the course of decades many of those with merit in the bottom 20% rise, there will be fewer left who deserve to rise based on merit. I have read that today class is more important than race in determining future earnings. The children of the black middle class do pretty well, and the children of the white lower class do much less well.

I like the idea of a society where hard workers who create useful things earn more money. I don't mind a society where if they create something of enormous value, they can get enormously rich. As long as there is a disparity in wealth, there is the question of what can be done with it. We seem to all agree that they can buy a fancier house and car and consumer goods. In contrast, many people share with me the view that good health care should be available regardless of income. Rich people should not be higher on the waiting list for organ transplants. But another thing people like to do with their money is to spend it on their children or leave it to their children when they die. If we really want a society where children of rich and poor start out on an equal footing, one implication would be an inheritance tax of 100%. To me that's too extreme and doesn't solve the fundamental problem.

The children of the rich are not inherently more deserving of good things than other children. Here's a radical idea (for a leftist): they are not less deserving either. As long as the choice is where to put people on a zero-sum ladder of family income, I see no real benefit to shaking things up. In fact, studies have shown that ordinary people feel that to take from a rich person to make them poor is unjust, though they feel less that way if they only recently became rich.

Some of what I'm suggesting may sound like a conservative argument -- things are fine the way they are, the children of the rich can go right on getting benefits the children of the poor do not have. But I am instead endorsing a more radical left-wing view -- the idea that we should raise the condition of the bottom 20% -- which necessarily requires lowering the condition of the top 1%, as no one else has the money.

The dream of mobility is that "anyone can make it". But even in a society with good mobility where anyone can make it, not EVERYONE can make it. I'm more concerned about the large majority of those born in the bottom 20% who will remain in the bottom 20% even if social mobility is increased.