Welcome to the Vitus Capital Blog!
Notes to myself, possibly of interest to others.
-- Bill Northlich

Sunday, September 11, 2011

Jared Bernstein on Inequality in the US

More than half of the families who start out in the bottom and top fifths of the income scale are still there a decade later.  The correlation between parents and their kids’ income is about 0.5—such a correlation would be very low in a highly mobile society.   (What do such numbers mean?  One study, which finds a correlation of 0.6, points out that with that level of “intergeneration mobility,” it would take a poor family of four persons 9-10 generations—about 200 years—to achieve middle-class income.)...

income mobility is actually higher in every other advanced economy with the exception of the UK (see here)...

Many of the budget cuts we’re (pretty blithely) contemplating in what’s called non-defense discretionary (NDD) spending –as obfuscating a label as you’ll hear in DC—have mobility implications.  Much of this spending has been shown to help lower mobility barriers, and in an era where inequality makes those barriers higher, we need more, not less of such investments...

So when you hear people talking about cuts to “non-defense discretionary spending” or even when the White House brags that under their watch NDD will be “the lowest as a share of the economy since the Eisenhower years” ask not for whom the bell tolls.  It tolls for those whose futures depend on pushing back on the ever-rising barriers to income mobility.  Or even more fundamentally, it tolls for the American dream.  [link]