Tyler Cowen: U.S. has a lot of upward mobility… for immigrants

The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen discusses the current complaint about the U.S. being a tougher place for upward mobility:

Since a poor Mexican household might only be earning a few thousand dollars of income a year, even a move to a “mediocre” U.S. job paying $22,000 is a lot of upward mobility.

Any country with a lot of immigration will have much more upward mobility than its published numbers indicate. And if you look at the United States today, about 13 percent of the population is foreign-born, the highest level since the 1920s. For the most part, these people came from poorer countries, and thus that is a lot of unmeasured upward mobility. So if you read a comparison between, say, the United States and Denmark claiming that intergenerational mobility is higher in Denmark, that comparison is either wrong or at the very least misleading. Denmark hasn’t elevated nearly as many immigrants, in either absolute or percentage terms, as America. At most Denmark has more income mobility for its ongoing domestic generations who are staying within the country. When it comes to international comparisons of income mobility, the United States gets a bad rap because, whether you like it or not, this country specializes in upward mobility for immigrants.

What about helping the vulnerable? Virtuous Facebookers love to cite Europe as a paradise of welfare handouts.

It’s a common view that the Western European nations have well-developed welfare states while the United States enforces a kind of cutthroat social Darwinism. That caricature is far from the truth. It is true that often the United States deploys social welfare funds wastefully or inefficiently, but the American government still spends plenty relative to Europe on protecting its citizenry against risk, or at least the American government is trying to do so, and that is unlikely to change. Consider a simple comparison: The American government spends more on Americans’ health care (per capita) than the French government spends on their entire health care system (again in per capita terms).

using some very plausible metrics, the American government is more involved in health care than is the French government.

If you just add up direct government expenditures on social programs as a percentage of GDP, the United States comes out toward the lower end of the scale, with France, Finland, Belgium, and Denmark leading the way. That fits in with the traditional picture of America being a social welfare laggard of sorts. But if we look at what are called tax expenditures, the picture shifts radically. Tax expenditures refer to the use of the tax system to induce individuals or corporations to take one set of decisions rather than another, and they include tax-favored private charity, tax-favored pensions, tax-favored health insurance, and a variety of other benefits that the American government has a large indirect hand in encouraging. Here is the bottom line, according to the OECD (again in per capita terms): “In the United States public social spending is relatively low, but total social spending is the second highest in the world.” In other words, American governments go to great lengths to make their citizens feel safe and protected; they are just more likely to use the tax system than direct expenditures. And if you add in defense spending as a kind of broader social protection, against both foreign aggression and terrorism, the American government invests in safety all the more, in this regard more than any other country in the world, including in per capita terms.

OECD says that we’re #2 in welfare state spending. Can we get to the #1 spot once the Trumpenfuhrer is replaced by someone approved by the elites? Cowen says maybe not:

Since 1970, American survey respondents show no greater preference for government redistribution. Furthermore, two notable groups show considerably weaker support for redistributive ideas and policies over time. The elderly decreased their support for redistribution by an amount that is more than half the distance between Democrats and Republicans on this question. Perhaps more surprisingly, African Americans also have decreased their support for redistribution, with almost half of this change coming from decreased support for race-based forms of government aid. This is in spite of the fact that the black-white wealth gap has been widening rather than narrowing. A lot of African Americans think race relations in America have worsened, but economic redistribution does not seem to be at the center of these concerns.

More: read The Complacent Class: The Self-Defeating Quest for the American Dream.

3 Comments

  1. G C

    March 29, 2017 @ 7:00 pm

    1

    I found this assertion – “And if you add in defense spending as a kind of broader social protection, against both foreign aggression and terrorism, the American government invests in safety all the more…” a little hard to swallow.

    The US spends an enormous amount on the military. I hardly consider this social spending, unless you really believe that this amount of spending is necessary to prevent China or Canada from invading (safety argument). For example, the US has 10 aircraft carriers, versus Russia’s one. China has either 1 or none, depending on your definition.

    It also ignores the fact that our excessive military spending eventually leads to more deaths of US military personnel overseas, most of whom are poor. We seem unable to restrain ourselves from using all of this military might, the burden of which falls disproportionally on the poor.

  2. The Practical Conservative

    March 29, 2017 @ 10:10 pm

    2

    Military spending is stealth natalism. They make up a disproportionate share of the households having 5+ children. I was actually really surprised to find this out. Pretty sure it’s totally unintended as a consequence, which makes it really really funny in these kinds of discussions.

  3. philg

    March 29, 2017 @ 10:24 pm

    3

    G C: http://www.heritage.org/defense/report/who-serves-the-us-military-the-demographics-enlisted-troops-and-officers says that U.S. military personnel come from at least slightly richer-than-median Census tracts.

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