Another Thought on Economic Mobility

Gerald Auten and Geoffrey Gee wrote about “Income Mobility in the United States: New Evidence from Income Tax Data.”  It’s an extensive paper; I’m abstracting a couple of points in this post [emphasis added].

  • More than half of taxpayers…moved to a different income quintile over this period [1996-2005]. About half…of those in the bottom income quintile in 1996 moved to a higher income group by 2005.
  • Median incomes of taxpayers in the sample increased by 24% after adjusting for inflation. The real incomes of two–thirds of all taxpayers increased over this period.  Furthermore, the median incomes of those initially in the lowest income groups increased more in per centage terms than the median incomes of those in the higher income groups.  In contrast, the real median incomes of taxpayers who were in the highest income groups in 1996 declined by 2005.
  • The composition of the very top income groups changed dramatically over time.  Less than half…of those in the top 1% in 1996 were still in the top 1% in 2005.  Less than one–fourth of the individuals in the top 1/100th% in 1996 remained in that group in 2005.

Those evil 1%-ers not only had trouble staying in the 1%, a significant fraction of them were erstwhile bottom%-ers.

Taking economic mobility—income changes—relative to all taxpayers, Auten and Gee found this:

  • About 56% of taxpayers…in the lowest income quintile in 1996 had moved to a higher quintile by 2005.  While 29% moved up to the second quintile, nearly as many (27.4%) moved up two or more quintiles and 4.5% moved all the way to the top quintile.
  • More than twice as many middle–income taxpayers moved up to a higher income quintile…as dropped to a lower one[.]

Thomas Sowell had this comment on the matter three years ago:

Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a “problem” for which a “solution” is necessary.  They have created a powerful vision of “classes” with “disparities” and “inequities” in income, caused by “barriers” created by “society.”  But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by many, if not most, of the intelligentsia.

And now comes President Barack Obama and his Democratic Party colleagues decrying exactly that static income inequality folderol in the middle of their failed economic recovery and the outcomes of their failed social control policies.  Truly, they are desperate to change the subject in this election year.

Filibusters and the Senate

Senate Majority Leader Harry Reid (D, NV) blew up the Senate filibuster with his manufactured claim of Republican obstructionism and with his Senate rules-breaking move to eliminate it (for now only regarding Presidential nominees) with a (Democrat only) majority vote.

Yet Republican-led (note that: not the Republican satrapy, as Reid views his Senate to be for Democrats) House passed 200 jobs- and economy-related bills in 2013 and some dozen that were passed with 250 or more votes—i.e., with considerable Democrat (that would be bipartisan, for those Progressives following along at home) voting support.

The Democrat-ruled Senate?  An immigration bill and a farm bill.  A budget, but only under the embarrassment of having Senators’ pay withheld if they didn’t pass one.  Under real pressure, a sequester bill (that originated with President Barack Obama) and a natural disaster relief bill.

Indeed, of the 70-ish bills Obama signed last year, 56 originated in the House, and all of 16 came from Reid’s fiefdom.

The rest of those 200 House-passed bills?  Reid wouldn’t even let them come to a vote.  There are, for instance, 40 explicitly jobs-related bills that Reid refuses to allow the Senate even to discuss.  Of the Senate-originated bills, Reid wouldn’t let the minority party even offer amendments.  Under Senate rules, there are only so many amendments allowed to be proposed for a bill.  Reid routinely, and universally, “filled the tree” with his own or those of his trusted lieutenants, Senator Chuck Schumer (D, NY) and Senator Dick Durbin (D, IL).

There is the filibuster.

What He Said

Senate Majority Leader Harry Reid (D, NV), during his Democrats’ attempt to ram through, unilaterally, another enormous extension of Federal unemployment insurance payments (in the middle of a quickening, according to those same Democrats, economic recovery) had this to say about one political party or another:

[They are] continually denigrating our economy…and frankly, I believe, our country.

I wonder: was he talking about his fellow Democrats?

A New Phase

…in the Obama administration’s war on education.

The DoJ and the Department of Education have sent out another of their Dear Colleague letters, this time concerning the disparate impact of punishing minority students in our public schools.  Investor’s Business Daily summarized the letter,

Attorney General Eric Holder and Education Secretary Arne Duncan Wednesday issued “recommendations” urging schools to find ways to avoid suspending or expelling students who act out.  …

The two Cabinet members argued that suspensions deny minority students time in the classroom….

And suspensions of “majority” students don’t have the same effect?  No, that’s not Eric Holder’s and Arne Duncan’s argument.  They argued in their 32 pg letter that “minority” students get the treatment disproportionately—disparately.  Never mind that these students misbehave…disparately.

The danger of applying this pernicious and racist disparate impact meme is clearly identified by Commissioner Gail Heriot of the United States Commission on Civil Rights in her remarks on the Commission’s School Discipline and Disparate Impact report:

There are two sides to the “disparate impact” coin.  Secretary Duncan focuses only upon the fact that, as a group, African-American students are suspended and expelled more often than other students.  By failing to consider the other side of the coin—that African-American students may be disproportionately victimized by disorderly classrooms—his policy could easily end up doing more harm than good to the very group he is attempting to help.

Indeed.  This disparate impact policy on school discipline will have a disparate impact on minority students’ ability to get an education in a classroom full of disparate impact-protected misbehavers.  All while carefully ignoring the underlying causes of one group having a higher misbehavior rate than another group.

More, a footnote in Heriot’s remarks also hints at the fundamental lawlessness of the Obama administration [emphasis added]:

4 [page 98 of the report, the same page as the portion of Heriot’s remarks quoted above] I agree with Commissioner Gaziano that Title VI simply does not permit the Department of Education to proceed against schools on a disparate impact theory and that the Department’s regulation nonetheless adopting that theory, 34 CFR sec. 100.3, is therefore unauthorized by law.  It requires actual discrimination.  See Section 601 (Title VI) of the Civil Rights Act of 1964, 42 USC sec. 2000d (No person shall “on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance”).  See also Alexander v Sandoval, 532 US 275 (2001). I also agree with Commissioner Gaziano that the problem with disparate impact analysis is not simply that it goes beyond what Congress authorized in Title VI; it actually contradicts Title VI.  If one group receives more school discipline than another because (for whatever reason) its members violated more school rules than the other, race-conscious efforts to alter the “disparate impact” are usually themselves discriminatory.

Sadly, this phase, in addition to denying minority students access to their education, is also another example of the unconscious racism of the Left.

A Thought on Income Inequality

Inequality in incomes and in accumulated material prosperity are the inevitable outcomes of our inalienable right to equality of opportunity, as exercised through our differing endowments of talents, skills, work ethic, and luck.

The well off—including those best off—use their gains from those inequalities in a variety of ways.  Some of these ways are purely personal: luxuries and luxuries for their families.  Some of those ways also include support for what are often termed, loosely, “the arts,” and other cultural supports and advancements.  It is from these, and not from government, for instance, that support for museums of all sorts come, support for many artists originates, support for invention ideation and development begins.

These well off, also, serve as an example and a goad: I can do that.  I want that stuff, too.  And the efforts to emulate and/or to make oneself able to obtain those material symbols of “I’ve arrived” feed into the ideation/development/support cycle.

Of course this generates a steady supply of those less well off, a steady generation of poor.  These folks see the prosperity—they’re not as stupid or as dead-end as Progressives make them out to be with the latters’ drumbeat of offers of welfare and dependency—and they do what they can to go where the success stories are, and then they do their best to achieve those same successes or something like them.  In the absence of interference by governments [sic], they almost always succeed, almost always by their children’s generation if not of themselves directly.  The Statue of Liberty stands as the quintessential beacon, inviting everyone, but especially inviting those seeking personal and familial betterment.

Our greatness, our exceptionalism, our status as a magnet for the world, though, is jeopardized when government gets in the way of our poor.  Reread the preceding paragraphs.  The thick cord that runs through them is the idea that our poor want to—and most importantly can—make themselves better off than they were.  Our poor are fully capable of moving themselves up the economic ladder, fully capable of stopping being poor and becoming middle class, of leaving the middle class and entering upper classes, ultimately of reaching the top.  If they cannot do that for themselves (although some do), they can create the conditions within which their children can (and most do), and those children can—and most do—create the conditions that enable their own children, the grandchildren of our first generation in these paragraphs, to move up still further.

But to do that, government must stay out of their way, or, today, get out of their way.

And so we’re back to income inequality.  That inequality is what provides the motivation.  And—hated concept of the Left—it trickles down from the top, too.  As I alluded above, it’s the rich that provide the market for new things, for luxuries.  These become desired by the middle class and poor and so while increased demand props up prices, increased production—and growing competition to produce in order to get some of that new market—outstrips demand, and prices fall—and the middle class and poor ultimately can afford what was exclusively the goodies of the rich.  See air conditioning in houses, power steering and brakes in cars, televisions, telephones, and pocket computers that also run phone apps, and so on.

If, however, being successful is punished through government-mandated wealth redistribution, rather than that “redistribution” being the outcome of individual choices in a free market (where wealth is redistributed, simultaneously, in both directions, by every voluntary exchange leaving each participant in possession of things he wanted but did not have before the exchange) and individual choices in the means and objects of satisfying individual Judeo-Christian duties to help those less well off, then two things occur: the heretofore successful cease working so hard to be successful, and so the high end of wealth steadily lowers, except for those few who can find adequate favor from government.  And the poor cease striving to better their own and their family’s lots, satisfying themselves with government handouts from other’s wealth; and so, from that dependence on those handouts, the low end of wealth also steadily lowers, and each one’s absolute “share” also steadily dwindles in size as the wealth from which those “shares” are confiscated steadily shrinks.

And that destroys both the capacity and the impetus for upward mobility.

The final outcome is a more subtle and general impoverishment, both materially and morally—the latter is especially insidious, as it is the moral that gives strength to the capacity for increasing the prosperity of all.  The well-off lose their moral sense of helping others, both from malaise, as government confiscates their output, and from a surrender of their moral responsibility to that government, expecting instead that it will satisfy the imperative instead of them.  The poor lose their capacity for responsibility for their own betterment, and so the drive to better themselves and their families in ways that best suit them, through their acceptance of their status as dependents of government.