Brain Flossing

« Thoughts on America from a foreigner | Main | Mammoth Snow »

January 03, 2004

The Death of Horatio Alger

This article, entitled "The Death of Horatio Alger" in The Nation, which I found on Kasei's Links Blog was very enlightening. That article was written in response to this article entitled: Waking Up From the American Dream (free registration required) in Business Week. The premise of the article is that idea of income mobility in America is less a reality now than it was 30 years ago and furthermore it was believed to be more a reality 30 years ago than it really was. Income mobility is loosely defined as one's ability to go from one socioeconomic class to another (higher or lower). The American Dream has always been one of the lower class American or emigrant pulling themselves up from their bootstraps and, with a bit of pluck and luck, doing better than their father did. Most of Horatio Alger's works were essentially this story, which is why he has always been so closely associated with the American Dream.

Post WWII that dream seemed to be a reality as more and more people experienced just that type of income mobility. At some point, however, this trend reversed and has been on a downward spiral ever since. More disturbing is that this trend continued even during our unprecedented boom in the 90s. The two factors which seem most closely related are the 'wall-martization of the economy', and lack of access to education. The former term refers to the trend over the last couple decades towards fewer 'entry level' jobs which lead to better paying, higher class jobs. Rather, we are seeing more and more dead-end jobs that have little to no room for improvement. Even title changes to manager usually offer little pay incentive at most of these types of dead end jobs. Then there is the lack of access to education. Higher education is getting more and more expensive even as grade schools are getting worse and worse. The difference between the class of education during grade school through high school depending on ones location is equally astounding. State schools are increasing their fees many times faster than inflation. The difficulty in ensuring you can afford to give get children get a good higher education is creeping higher into the middle class as well. Bottom line, your chances of rising above the class of your parents is getting slimmer and slimmer. All of this spells a polarization of the classes. "...between 1973 and 2000 the average real income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the income of the top 1 percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent."

I'll leave you with this excerpt from the article. It's in reference to this hypothetical question. "Suppose that you actually liked a caste society, and you were seeking ways to use your control of the government to further entrench the advantages of the haves against the have-nots. What would you do?" I'll let you draw your own conclusions as to the real possibility of this happening and its impact on our society.

"One thing you would definitely do is get rid of the estate tax, so that large fortunes can be passed on to the next generation. More broadly, you would seek to reduce tax rates both on corporate profits and on unearned income such as dividends and capital gains, so that those with large accumulated or inherited wealth could more easily accumulate even more. You'd also try to create tax shelters mainly useful for the rich. And more broadly still, you'd try to reduce tax rates on people with high incomes, shifting the burden to the payroll tax and other revenue sources that bear most heavily on people with lower incomes.

Meanwhile, on the spending side, you'd cut back on healthcare for the poor, on the quality of public education and on state aid for higher education. This would make it more difficult for people with low incomes to climb out of their difficulties and acquire the education essential to upward mobility in the modern economy."

Posted by wonko at January 3, 2004 02:32 PM

Trackback Pings

TrackBack URL for this entry:
http://www.wayfargone.com/cgi-bin/mt-tb.cgi/194

Comments

Posted by: obigabu at January 3, 2004 10:03 PM

Posted by: LARGESS at January 4, 2004 01:10 PM

Posted by: Wonko at January 4, 2004 02:17 PM

Post a comment