Nobel winner Stiglitz: “American Dream is a myth”(cbsnews.com)
cbsnews.com
Nobel winner Stiglitz: “American Dream is a myth”
http://www.cbsnews.com/news/nobel-prize-winner-joseph-stiglitz-american-dream-is-a-myth/
27 comments
Studies have shown that intergenerational social mobility in America since the 80s has been a bit lower than is popularly assumed. Stiglitz's book about this is newsworthy because most people still don't know that, despite the fact that economists and sociologists have known it, and talked about it, and taught it to their students, for decades.
The American dream is like the pony express. It was the product of a great many particular circumstances. It did once exist, for a handful of people in a few chosen places, but disappeared before anyone realized. It's a romantic ideal more important as fiction than practical reality. It is something to be talked about, not something that ever actually happens. So it is no more dead today than ever because it wasn't never really alive in the first place.
Just for perspective for those unfamiliar with what short a period the Pony Express[1] actually operated its 2000 mile long, 184 station mail delivery system: it started in April 3 1860 and ended October 24, 1861.
[1] https://en.wikipedia.org/wiki/Pony_Express
[1] https://en.wikipedia.org/wiki/Pony_Express
I am optimistic that this "American Dream" could still be a reality. The United States absolutely has the resources to put a hard floor on living, health and education standards, thereby helping people to break the rut of family poverty.
That the US people collectively don't have the will to do it is another story. The amount of psychopathy in this country towards the unfortunate is astounding.
That the US people collectively don't have the will to do it is another story. The amount of psychopathy in this country towards the unfortunate is astounding.
Part of the issue is that many people are ready to perceive themselves as correct before perceiving another as correct. So the U.S. divides into numerous positions with everyone casting blame on others and making unsubstantiated generalizations. And progress then becomes elusive.
When was the myth born anyway? II. world war ended the depression and the job market became shortaged of workers - I'm sure those of that generation profited. Before that there was the campaign in the 1800:s to colonize the vacant fertile lands and farmers could get all the land they could farm dirt cheaply. But other than those two episodes - was there actually that much socio-economic mobility compared to other areas? In the mid 1800:s the americans were massively more literate than e.g. english (something like 80% compared to 50%?) so I can belive the comparable opportunities were much better in the US than in the UK but I'm short of statistics...
Post World War II, you had a bunch of other things leading to compression of the income distribution, from very high top marginal tax rates (90% through 1960; 70% through 1980) to low cost education (subsidized for just about everyone through better support than currently for good state schools -- and even more for returning troops in particular, a substantial fraction of all college-age men, through the GI bill). And of course, there were much stronger labor unions, present in most large workplaces.
Anyone who thinks the '50s were a good time because they came before "big government" has managed to forget about the New Deal, the GI Bill, and a National Labor Relations Board that still had teeth. Among other things...
Anyone who thinks the '50s were a good time because they came before "big government" has managed to forget about the New Deal, the GI Bill, and a National Labor Relations Board that still had teeth. Among other things...
> In the mid 1800:s the americans were massively more literate than e.g. english (something like 80% compared to 50%?)
If you compare the US figure for 1870 with the UK figure for 1820, perhaps, but in an era where both nations are noted to have seen significant rises in literacy that seems a tad unfair...
In 1870 the figures were 80% and 76% respectively[1], hardly a "massive" difference and I'm not aware of any evidence or even arguments to the effect that US levels of literacy rose earlier or faster.
The US certainly was exceptional in the mid 1800s in still having opportunities to stake out unclaimed fertile land, perhaps a more attractive route to prosperity than labouring in a British mill but then again until the 1860a it was also unusual in having a significant proportion of its population having no social mobility whatsoever on account of being slaves...
[1]http://ourworldindata.org/data/education-knowledge/literacy/
If you compare the US figure for 1870 with the UK figure for 1820, perhaps, but in an era where both nations are noted to have seen significant rises in literacy that seems a tad unfair...
In 1870 the figures were 80% and 76% respectively[1], hardly a "massive" difference and I'm not aware of any evidence or even arguments to the effect that US levels of literacy rose earlier or faster.
The US certainly was exceptional in the mid 1800s in still having opportunities to stake out unclaimed fertile land, perhaps a more attractive route to prosperity than labouring in a British mill but then again until the 1860a it was also unusual in having a significant proportion of its population having no social mobility whatsoever on account of being slaves...
[1]http://ourworldindata.org/data/education-knowledge/literacy/
1940s is about right:
https://books.google.com/ngrams/graph?content=American+Dream...
Earlier instances would have been Manifest Destiny and the concept of progress, which emerged in the mid 19th century.
https://books.google.com/ngrams/graph?content=American+Dream...
Earlier instances would have been Manifest Destiny and the concept of progress, which emerged in the mid 19th century.
I've always wondered if 'affirmative action,' but conditioned on household wealth instead of racial origin, could create more social or economic mobility. Has anyone else considered this strategy?
The issue is that you can game wealth, you can't game skin color. (or at least, few have tried! [0]) If you can get job or university positions on the basis of household wealth I think we may see increasing abuse of this system.
Beyond that, affirmative action attacks a real issue which is a low level of racism, which is unintentional, not malicious, but exists in the form of bigotry that has real effects.
This has been studied quite a bit. For example, teachers who are told who the top students are in the class at the start of the year and told that they're predicted to do the best, end up being affected by this. Because at the end of the year, these very students have the best outcomes. Makes sense you'd think, until you hear that the choice of the students at the beginning was totally random. Similarly, studies show that students who are told they'll do great, actually do better than those who're told the opposite.
The combination of these facts, with the fact that teachers perceive minorities as being less able (again, not intentionally, a teacher won't say or even think a student is less able because he's e.g. black, but when perceptions are studied it is what, on average, shows up in the numbers), given teachers negatively affect students who they perceive as less able or low-opportunity, and the fact students respond to this, creates issues.
And similar things happen in the workplace, too, when applying for say a job, or indeed across society. I remember a German on hackernews a year ago who wrote a script to apply to housing via mass email with auto-generated profiles. He sent thousands of them. A guy named Hanz got a virtually 100% response rate. A guy with an arab name 1%.
In such cases, affirmative action can help. It doesn't matter how poor or rich you are. Hypothetically, a rich, educated, hard-working arab would face mostly the same issue, and a poor guy with no ambition or work ethic named Hanz would not. Affirmative action attacks the inherent discrimination based on ethnicity in that process, affirmative action based on wealth would not.
Affirmative action based on ethnicity is imperfect in obvious ways, of course. But I think it better targets the issue better and can't be gamed or manipulated as easily.
Of course there are obvious ways to use household wealth to affect policy and they're very common. For example here in the Netherlands you can get free healthcare, full coverage, if you earn little. You get deep subsidies for housing. If you're young and your parents can't afford recreational stuff (whether it's karate or playing violin) the government allocates to your child roughly the entire amount of what these things would cost. Education is de facto free, but if your parents earn little (i.e. can't support you financially), then you get an extra $250 or so per month, and an extra $500 or so if you don't live at home anymore, as a stipend. (after all, if you study full time, you can't work full-time. So this will help cover part of the bills. And again, tuition is already covered. To lower barriers to education and make it accessible to all, equal financing is important). If you're a single parent with children, this amount is drastically increased, specifically for the possibility to study. All of these things mean that kids aren't ostracised based on wealth and class (as much). Kids whose parents aren't rich can actually participate in sports, recreation and culture to a large extent. Kids whose parents are poor can go to top universities. They get full health care coverage and support with housing. All of these things mean that if you're poor, you're not immediately relegated to a social circle of poor people, and you're not forced (financially) into making short-term decisions (like going to work straight out of highschool because bills need to be paid), and room exists to plan for the long-term (like spending years in uni).
This does wonders for social mobility of minorities, which leads to better outcomes, a stronger workforce which is less dependent and generates more tax revenues, which means the generous social welfare system isn't leaned on as much as a meagre one which keeps people locked into it. Not to mention all kinds of social cohesion benefits, between classes as well as ethnicities.
It's far from perfect but it seems like the right approach. Affirmative action alone is no solution, not without a system that helps minorities create similar outcomes like the one described. Without that, disadvantaged minorities (and indeed poor majorities, e.g. white people in the US) can't make transformational gains between ages of 1 and 22, end up actually less capable than the ethnic/socioeconomic majority, and this creates resistance to policies like affirmative action and perpetuates the problem, and importantly also doesn't solve the issue of social mobility issues for the poor people in the majority population either.
[0] http://www.vice.com/read/everything-we-know-so-far-about-the...
Beyond that, affirmative action attacks a real issue which is a low level of racism, which is unintentional, not malicious, but exists in the form of bigotry that has real effects.
This has been studied quite a bit. For example, teachers who are told who the top students are in the class at the start of the year and told that they're predicted to do the best, end up being affected by this. Because at the end of the year, these very students have the best outcomes. Makes sense you'd think, until you hear that the choice of the students at the beginning was totally random. Similarly, studies show that students who are told they'll do great, actually do better than those who're told the opposite.
The combination of these facts, with the fact that teachers perceive minorities as being less able (again, not intentionally, a teacher won't say or even think a student is less able because he's e.g. black, but when perceptions are studied it is what, on average, shows up in the numbers), given teachers negatively affect students who they perceive as less able or low-opportunity, and the fact students respond to this, creates issues.
And similar things happen in the workplace, too, when applying for say a job, or indeed across society. I remember a German on hackernews a year ago who wrote a script to apply to housing via mass email with auto-generated profiles. He sent thousands of them. A guy named Hanz got a virtually 100% response rate. A guy with an arab name 1%.
In such cases, affirmative action can help. It doesn't matter how poor or rich you are. Hypothetically, a rich, educated, hard-working arab would face mostly the same issue, and a poor guy with no ambition or work ethic named Hanz would not. Affirmative action attacks the inherent discrimination based on ethnicity in that process, affirmative action based on wealth would not.
Affirmative action based on ethnicity is imperfect in obvious ways, of course. But I think it better targets the issue better and can't be gamed or manipulated as easily.
Of course there are obvious ways to use household wealth to affect policy and they're very common. For example here in the Netherlands you can get free healthcare, full coverage, if you earn little. You get deep subsidies for housing. If you're young and your parents can't afford recreational stuff (whether it's karate or playing violin) the government allocates to your child roughly the entire amount of what these things would cost. Education is de facto free, but if your parents earn little (i.e. can't support you financially), then you get an extra $250 or so per month, and an extra $500 or so if you don't live at home anymore, as a stipend. (after all, if you study full time, you can't work full-time. So this will help cover part of the bills. And again, tuition is already covered. To lower barriers to education and make it accessible to all, equal financing is important). If you're a single parent with children, this amount is drastically increased, specifically for the possibility to study. All of these things mean that kids aren't ostracised based on wealth and class (as much). Kids whose parents aren't rich can actually participate in sports, recreation and culture to a large extent. Kids whose parents are poor can go to top universities. They get full health care coverage and support with housing. All of these things mean that if you're poor, you're not immediately relegated to a social circle of poor people, and you're not forced (financially) into making short-term decisions (like going to work straight out of highschool because bills need to be paid), and room exists to plan for the long-term (like spending years in uni).
This does wonders for social mobility of minorities, which leads to better outcomes, a stronger workforce which is less dependent and generates more tax revenues, which means the generous social welfare system isn't leaned on as much as a meagre one which keeps people locked into it. Not to mention all kinds of social cohesion benefits, between classes as well as ethnicities.
It's far from perfect but it seems like the right approach. Affirmative action alone is no solution, not without a system that helps minorities create similar outcomes like the one described. Without that, disadvantaged minorities (and indeed poor majorities, e.g. white people in the US) can't make transformational gains between ages of 1 and 22, end up actually less capable than the ethnic/socioeconomic majority, and this creates resistance to policies like affirmative action and perpetuates the problem, and importantly also doesn't solve the issue of social mobility issues for the poor people in the majority population either.
[0] http://www.vice.com/read/everything-we-know-so-far-about-the...
The days if simply being able to work hard and do well are long gone. All the straight forward factory jobs are long gone and never coming back. So that American dream is probably dead.
Maybe for Stiglitz it is, but for hard-working people with real skills, America provides great opportunities.
i think you mean hard-working people with real skills - and copious amounts of luck. America used to be a place where most hardworking people could improve their living standard, now it's a lottery where a small minority do.
Lottery based on what?
Are you willing to send your kids to a non segregated school and live in a non segregated neighborhoods?
Are you willing to send your kids to a non segregated school and live in a non segregated neighborhoods?
Yea look at Indians and Chinese in America.
Hmm ... I disagree. America still seems to be the place with the greatest civil liberties, technological and scientific advancements
That's not what is meant with The American Dream in this context. Stiglitz is talking about social mobility.
It's also not the first tim I hear talk about social mobility not really existing. Gregory Clark gave an interesting lecture about the topic on the RSA youtube channel a year ago:
https://www.youtube.com/watch?v=QyIMwzHuiCU&t=25s
It's also not the first tim I hear talk about social mobility not really existing. Gregory Clark gave an interesting lecture about the topic on the RSA youtube channel a year ago:
https://www.youtube.com/watch?v=QyIMwzHuiCU&t=25s
That's not really disagreeing. You are talking about other things than what he is writing about.
Not to mention the largest incarcerated population in the world. http://news.bbc.co.uk/2/shared/spl/hi/uk/06/prisons/html/nn2...
I'm genuinely surprised that USA has such a high incarceration rate, and even so much higher than China which I consider still a police state.
But in terms of science, technology and programming , civil liberties ... can any other country compete with America ? Google, Apple, Microsoft, FaceBook, Yahoo ... all the most innovative companies are made in America ... . You can express political dissent in America without getting jailed (as far as I know). You can't do that in China or Singapore
But in terms of science, technology and programming , civil liberties ... can any other country compete with America ? Google, Apple, Microsoft, FaceBook, Yahoo ... all the most innovative companies are made in America ... . You can express political dissent in America without getting jailed (as far as I know). You can't do that in China or Singapore
Most of those companies came out of Harvard and Stanford, though, so you're still not really addressing the issue of social mobility.
However you can do it in many other places in the world and won't get shot by police even if your skin happens to be of different colour.
There's a lot USA has going for it, but saying any country has the most civil liberties is a bit naive. Some countries do better in certain regards, some in others. It's even more difficult if you don't ignore cultural difference in their perceived importance (e.g. right to bear arms is just considered a loony idea in my country).
There's a lot USA has going for it, but saying any country has the most civil liberties is a bit naive. Some countries do better in certain regards, some in others. It's even more difficult if you don't ignore cultural difference in their perceived importance (e.g. right to bear arms is just considered a loony idea in my country).
> in terms of science, technology and programming , civil liberties
Well if you look at nobel prize winners (scientific, too), most are from the EU, not the US. Based on population levels they're roughly the same. If you look at top internet companies then yes, Google, Apple etc are in the US. But I think we have to consider that a lot of that is because of network effects.
For example, some of the best football in the world is in Spain right now. But on the pitch at Barcelona the top 3 players (of arguably the most successful team the past decade) you find one player from Argentine, a player from Brazil and a player from Uruguay, playing a style of football introduced by a Dutch player and trainer, and it's not exceptional in this regard. If you look at the world cup however (teams of native players) you find that Spain won only once and very recently, while Brazil won 5 times. Yet all the top players from Brazil come to Europe. The net result is that Spain has terrific football, yet isn't responsible for the majority of the talent or tactics, and other countries like Brazil or the Netherlands are net suppliers of talent to countries like Spain.
I feel the US, Silicon Valley mostly, is very similar, it attracts all the talent, but that's different from saying that it's responsible for it. (just like in the above example with Spain who is a net receiver of talent, and becomes the talent capital of the world within football, without doing anything particularly special outside of network effects).
For example, look at the CEO of Microsoft and Google, both India born, partially India educated. SV attracts them, but isn't necessarily responsible for them. You may use that as an argument that SV somehow is geared towards innovation better. But I think you'll be hard pressed to identify any big forces outside of network effects. In very direct ways we can see it with e.g. Skype being bought by Microsoft (a swedish company), or a guy like Linus Torvalds doing the vast majority of his work from his native Finland and deciding in his 40s only a few years ago to move to the US.
Beyond that I think we fail to sometimes put the achievements in perspective. You mentioned Google and Apple etc, but if you look at the fortune 500 for example you find in 2015 that China had 3 companies in the top 10, the US had 2. In the Fortune 500 all together the US had 128 companies, China 106 and rapidly growing (they had just 10 in 2000 when the US had 180). UK-France-Germany, a combined population of just 210 million people, has almost 100 places in the Fortune 500. Add Japan to get to a population of the US, and you're ahead of the US in spots on the fortune 500.
I mean you mention Apple and it's an absolutely wonderful company on whose hardware I'm typing now, but my machine is loaded with parts from third parties who drive a ton of the innovation, too, like Samsung parts, a company whose revenue is much bigger than that of Apple. And we're seeing genuine innovation from China, too, like WeChat (there was a thread on this recently).
Anyway I'm rambling on with lots of examples and anecdotal evidence. I don't really like it as there's a lot of counter anecdotes to present. But I think there's a case to be made that the US isn't any better or better structured or more competitive, but benefits from tremendous network effects still, and that this is more and more being contested by the rest of the world. We're seeing a wave of new companies that don't feel the need to move to the US to commercialise the product, or to find themselves in a startup hub, or to be able to network with financiers. From startups like Spotify who're comfortable staying in Sweden or like WeChat in China, to the biggest companies in the world, both the traditional (e.g. utilities) to the more innovative (e.g. Samsung). Sure I pick Apple any day, but I can easily pick a load of non-US companies that innovate more than say Yahoo. Not to mention it depends on the industry, too. A ton of innovation in e.g. automotive or renewables is in Europe or Asia. And we're seeing markets being addressed that I don't think the US is geared to address, like Xiaomi in China and India, which are becoming increasingly more important.
As for civil liberties, a loooong road to go for China, but no big deal in e.g. the European Union. The US doesn't lead the world in civil liberties. For example the Economist intelligence unit does an annual ranking, the US came in 19th last year. But better than 2010 it came in last place of all 'full democracies' in place 46.
Well if you look at nobel prize winners (scientific, too), most are from the EU, not the US. Based on population levels they're roughly the same. If you look at top internet companies then yes, Google, Apple etc are in the US. But I think we have to consider that a lot of that is because of network effects.
For example, some of the best football in the world is in Spain right now. But on the pitch at Barcelona the top 3 players (of arguably the most successful team the past decade) you find one player from Argentine, a player from Brazil and a player from Uruguay, playing a style of football introduced by a Dutch player and trainer, and it's not exceptional in this regard. If you look at the world cup however (teams of native players) you find that Spain won only once and very recently, while Brazil won 5 times. Yet all the top players from Brazil come to Europe. The net result is that Spain has terrific football, yet isn't responsible for the majority of the talent or tactics, and other countries like Brazil or the Netherlands are net suppliers of talent to countries like Spain.
I feel the US, Silicon Valley mostly, is very similar, it attracts all the talent, but that's different from saying that it's responsible for it. (just like in the above example with Spain who is a net receiver of talent, and becomes the talent capital of the world within football, without doing anything particularly special outside of network effects).
For example, look at the CEO of Microsoft and Google, both India born, partially India educated. SV attracts them, but isn't necessarily responsible for them. You may use that as an argument that SV somehow is geared towards innovation better. But I think you'll be hard pressed to identify any big forces outside of network effects. In very direct ways we can see it with e.g. Skype being bought by Microsoft (a swedish company), or a guy like Linus Torvalds doing the vast majority of his work from his native Finland and deciding in his 40s only a few years ago to move to the US.
Beyond that I think we fail to sometimes put the achievements in perspective. You mentioned Google and Apple etc, but if you look at the fortune 500 for example you find in 2015 that China had 3 companies in the top 10, the US had 2. In the Fortune 500 all together the US had 128 companies, China 106 and rapidly growing (they had just 10 in 2000 when the US had 180). UK-France-Germany, a combined population of just 210 million people, has almost 100 places in the Fortune 500. Add Japan to get to a population of the US, and you're ahead of the US in spots on the fortune 500.
I mean you mention Apple and it's an absolutely wonderful company on whose hardware I'm typing now, but my machine is loaded with parts from third parties who drive a ton of the innovation, too, like Samsung parts, a company whose revenue is much bigger than that of Apple. And we're seeing genuine innovation from China, too, like WeChat (there was a thread on this recently).
Anyway I'm rambling on with lots of examples and anecdotal evidence. I don't really like it as there's a lot of counter anecdotes to present. But I think there's a case to be made that the US isn't any better or better structured or more competitive, but benefits from tremendous network effects still, and that this is more and more being contested by the rest of the world. We're seeing a wave of new companies that don't feel the need to move to the US to commercialise the product, or to find themselves in a startup hub, or to be able to network with financiers. From startups like Spotify who're comfortable staying in Sweden or like WeChat in China, to the biggest companies in the world, both the traditional (e.g. utilities) to the more innovative (e.g. Samsung). Sure I pick Apple any day, but I can easily pick a load of non-US companies that innovate more than say Yahoo. Not to mention it depends on the industry, too. A ton of innovation in e.g. automotive or renewables is in Europe or Asia. And we're seeing markets being addressed that I don't think the US is geared to address, like Xiaomi in China and India, which are becoming increasingly more important.
As for civil liberties, a loooong road to go for China, but no big deal in e.g. the European Union. The US doesn't lead the world in civil liberties. For example the Economist intelligence unit does an annual ranking, the US came in 19th last year. But better than 2010 it came in last place of all 'full democracies' in place 46.
>or a guy like Linus Torvalds doing the vast majority of his work from his native Finland and deciding in his 40s only a few years ago to move to the US.
Torvalds emigrated to the US in his 20s.
(Wikipedia says that 2 of his daughters were born in the US, which means that the daughter that was born in 1998 was born in the US. Another way of putting an upper bound on when he emigrated is to look at when he started working at Transmeta, which Wikipedia say was in February 1997, which is more than "a few years ago". Torvalds himself was born in late 1969.)
Torvalds emigrated to the US in his 20s.
(Wikipedia says that 2 of his daughters were born in the US, which means that the daughter that was born in 1998 was born in the US. Another way of putting an upper bound on when he emigrated is to look at when he started working at Transmeta, which Wikipedia say was in February 1997, which is more than "a few years ago". Torvalds himself was born in late 1969.)
Ah great point! I was referencing his naturalisation.
Why did I get negative 4 points for making this comment ?