Follow on TwitterMeasuring Meritocracy: Upward Mobility In U.S. Is Lower Than In Canada & In Most Of Europe
To measure meritocracy within a nation’s economic system, economists tend to compare the relative incomes across generations.
An economic system that truly emphasizes meritocracy ensures that the income of a person’s parents have no bearing on his or her ability to succeed.
In a piece in The Economist, entitled “Like Father, Not Like Son,” it is revealed that an individual’s success in the U.S. is more dependent upon his/her “parents’ position on the income ladder” than in Canada and in most all of Europe:
Individual families’ fortunes over time can now be tracked by statistical surveys. This allows economists to measure how much parents’ position has influenced their adult children’s relative income or education. The resulting coefficient, the inelegantly named “inter-generational elasticity of income”, is today’s main measure of social mobility. The higher the coefficient, the less mobility there has been.
This technique shows Scandinavian societies to be very mobile. Only around 20% of parents’ relative wealth (or poverty) is passed on to their kids. China, in contrast, is fairly immobile: 60% of income differences persist between generations. The big surprise is the United States, where parental income explains around half of the differences in adult children’s income, much more than in Canada, and more than in any European country except Italy and Britain. According to this measure, social mobility in America now is lower than in most of Europe.
So, those in pursuit of the “American Dream” might want to relocate to our northern American neighbor, Canada, where that dream apparently still exists.
The Unemployment Rate Drops From 8.2% To 8.1%, Helping To Obscure The Jobless Recovery
The Labor Department released its employment numbers today, and in keeping with the recent trend, the results appear positive, down slightly from the previous month’s results.
With a net gain of 115,000 jobs, the unemployment rate dropped from 8.2% to 8.1%.
But behind those numbers lurks a far gloomier picture. That 115,000 net gain is due, in part, to the government no longer counting as “unemployed” 103,000 people who became reclassified as “discouraged,” and yet remain unable to find work. Because in America, if there are no employment opportunities, and your plight goes on for too long, the government is permitted to ignore you completely (so that they can clean up their economic numbers for political purposes).
This helps to give Americans the impression that the economy is slowly, but surely, chugging along.
As reported in the New York Times:
The unemployment rate ticked down to 8.1 percent in April, from 8.2 percent, but that was not because more unemployed workers found jobs; it was because workers dropped out of the labor force.
The share of working-age Americans who are in the labor force, meaning they are either working or actively looking for a job, is now at its lowest level since 1981 — when far fewer women were doing paid work. The share of men taking part in the labor force fell to 70 percent, the lowest number since the Labor Department began collecting these data in 1948.
And yet, despite these five long years of economic misery, austerity measures continue unabated, as 15,000 government employees were laid off in April.
“Job Creators” & “Investors”: The Disconnect Between Republican Policies & Economic Stimulus
The Republican Party’s latest economic policy proposals are nothing short of pure unadulterated neo-liberalism — the radical merciless ideology foisted upon the world by economist Milton Freedman. Recent events throughout the country have been playing out like a chapter straight out of Naomi Klein’s hugely important bestseller, The Shock Doctrine.
First the tax cuts for the wealthiest 2%, then the calls for deregulation, union-busting, and privatization; followed by — surprise! — severe austerity measures. These policies, if fully enacted, will accomplish little more than transferring trillions of dollars to the wealthiest individuals and corporations, and in doing so crushing the lives of average Americans.
Any ‘trickle down’ effects yielded from extending Bush tax cuts for the wealthy — which added nearly a trillion dollars to our national debt — would have been negligible at best. But they will literally be jack-hammered to oblivion if followed by the Republican-proposed Draconian measures.
Their calls for deep spending cuts in the public sector (both at Federal and State levels) will translate into whittling away all safety nets for America’s elderly and most vulnerable, while issuing pink slips for teachers, cops, firemen, postal employees, librarians, etc.
Instead of paying teachers to educate our children, and cops to fight crime, taxpayers will instead be writing their unemployment checks. That is, until Republicans can finally figure out a way to terminate unemployment insurance as well. Meanwhile, our national infrastructure continues to crumble beneath our feet.
And their proposals do absolutely nothing to stimulate the economy. Unless you believe that sacking public workers will magically reduce unemployment, and somehow stimulate consumer demand (the driver for economic expansion).
Rather than subjecting lower and middle-income Americans to severe austerity measures, our economy would be best served by doing the very opposite. Policies that help to improve the financial bottom-line for struggling Americans guarantees an economic spark, if only because these Americans have little choice, but to spend every last dollar they make on necessities (i.e. they put ALL of it right back into the economy).
Unlike lower and middle-income Americans, the wealthy have the luxury to hoard each and every penny netted from their tax cuts. And few of them will be enticed to invest in a recessionary environment where risks are abnormally high.
How many millionaires are out stimulating the economy right now by purchasing third or fourth homes here in the U.S., when economists are now forecasting a double dip in home prices? How many are considering starting up new businesses, dependent upon consumer spending, when consumer bankruptcies just hit a 5-year high?
For wealthy individuals who do choose to invest, many will wisely target foreign companies, foreign mutual funds, foreign real estate, and multinationals who do business where economies are still growing. In other words, the ‘trickle-down’ part of Republican economic policies will actually occur in China, India, and elsewhere.
The supply-side ideology is based upon a faulty and outdated model that conveniently ignores competition for investment dollars overseas, and is largely dependent upon exaggerating the discretionary spending behavior of the wealthy.
As for corporate tax laws, two-thirds of all U.S. corporations dodged paying a single penny in taxes between 1998 and 2005. And how did these corporations repay the favor? By shifting their labor investments overseas, to countries where the cost of labor is extremely low, and where few if any environmental protection laws exist.
Cisco just released their international salary report showing that the average annual salary of their technical professionals in India ($14,508) is just 1/4 of what their American counterparts make ($62,993). And yet their Indian employees work 56 hours per week, on average — that’s 25% more hours than their American counterparts (45 hrs).
To rub some serious salt into the wounds, the Wall Street Journal recently reported that U.S. corporations (not even including Wall Street Banks) were sitting on close to $2 trillion in cash — the highest corporate cash reserves in over 50 years! — and still refuse to hire in the United States:
Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies’ total assets—the largest share since 1959.
The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers’ ability to spend.
Yet, Republicans contend we must deregulate our industries further to help corporations cut their costs — at the expense of the environment and consumer protections — and desist from demanding they pay their fair share in taxes — all so that they will have the money they need to “create jobs”.
NO informed American — outside of wealthy individuals and corporate profiteers — could possibly support the Republican Party’s economic policies.
Which begs the question: how does a political party, which serves only the interests of its wealthiest contributors, continue to successfully legislate policies that work against the very interests of the American people?
Since their ideology is unsupported by the facts, they hire “word doctors” who coin misleading phrases to be repeated over and over again. Phrases that are both simplistic and somehow ‘intuitive’ to a non-discerning public.
This has remained their tried and true method for selling destructive economic policies to the American people. Take Frank Luntz, probably the most famous of all conservative “word doctors”. He coined the phrase “government takeover of healthcare”, which became the talking point for the Republican Party during the health care reform debate. It helped spur the Tea Party into storming Democratic town hall meetings during that period — terrified that “Marxists” were coming after their Medicare.
Their current economic play-script is inundated with two phrases: “job creators” and “investors” — to be used in place of “corporations” and “wealthy individuals”. These phrases — more or less the equivalents of “fair and balanced” being used to describe Fox News ‘reporting’ — are now the cornerstone of the entire Republican economic policy narrative.
Take Rep. Darrell Issa (R-CA), the Chairman of the House Committee on Oversight and Government Reform. Virtually every sentence that comes out of his mouth includes the phrase “job creators”. Check out his Twitter account and count the tweets where he reiterates the phrase “job creators”. In fact, he created a website called AmericanJobCreators.com where he asks “job creators” to tell him what kinds of consumer protection regulations he should dismantle on their behalf.
The guy is a corporate lobbyist’s wet dream.
And our obsequious President — instead of showing leadership on this issue and dismantling this fictitious narrative — first capitulated on extending Bush tax cuts for the wealthiest 2%, then capitulated to Issa back in January on the argument that deregulation helps create jobs. In doing so, he legitimized what he knows to be untrue, making it next to impossible for his party to now push for MORE regulation and RAISE taxes on wealthy corporations and individuals without immediately being branded as hostile to “job creators”.
The Conservative Party in Canada, having noticed the success their Republican counterparts across the border were having with this “job creators” phrase, quickly employed it as their own anti-tax slogan.
But make no mistake about it. Our current economic plight was created by:
- Bush’s deregulatory policies leading to a financial meltdown, and the ensuing AIG and TARP bailouts.
- Bush’s misleading us into unnecessary & expensive wars.
- Bush’s granting the wealthiest 2% nearly $3 trillion in tax cuts over the last decade.
- Two-thirds of all corporations having evaded paying a single penny in taxes from their trillions in profits over the last decade.
- Corporations having moved our higher paying jobs overseas to low-cost labor countries.
It is not due to a lack of investing capital by cash-hoarding, tax-evading corporations and the wealthiest 2% (the so called “job creators”) — which remains the Republican rationale for cutting taxes and deregulation.
Yet, somehow the lives of the rich and powerful keep getting easier — more comfortable — while the burden for the reckless calamity they unleashed on this country slowly, but surely — thanks to a combination of an emboldened right-wing and a compliant, timid President — gets shifted onto the backs of the American people in the form of harsh austerity measures.
Milton Friedman’s legacy continues to haunt us.
NY Times’ Paul Krugman: Supply Side Economics Creates Deficits
Nobel Prize winning economist, Paul Krugman, attempts to educate a largely ignorant Republican/Tea Party constituency on the documented failures of Supply Side economics. He focuses on the Carter and Reagan years (since Republican politicians tend to cite Reaganomics as their model for economic success), and he demonstrates that revenues actually dropped decisively with Reagan’s tax […]
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