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Reach for the stars, but only if you're rich...

Low upward social mobility compromises our ability to live in a fair and meritocratic society


Jack Halliday was born in 1976 to a working-class family based in Texas. Growing up as one of five children, the son of a store clerk, Jack didn't have much. Being a good boy he helped out, working a part-time job as a trolley boy to help the family make ends meet. Jack worked hard at school and was the pride of the Halliday name when he made it into college. Fast-forward 4 years, Jack left college with a law degree and began work as a big-city lawyer based out of Houston. Jack continued working hard, sometimes putting in 60, 70, even 80 hour weeks. Jack's efforts were noticed by his employers, and he quickly progressed through the ranks making partner before his 30th birthday.


That story is totally made up. I invented it to demonstrate a point. Many conversations about upward social mobility start with a "rags to riches" story. The fantasy hides reality. Statistically, the chances of Jack going anywhere are low, regardless of how hard he worked. Today they are lower than they were when our made-up story began in 1976. Stories like Jacks are best saved for inspirational speeches. Let's not pretend it bears any resemblance to reality and is a basis for government policy.



Social mobility is bad and getting worse


Social mobility is defined by the ability of people to climb the social ladder, particularly in terms of wealth and income. In an equitable society, people born to the bottom fifth have a 20% chance to reach the top fifth. The reality is very different. The son of a high-income father is expected to earn about 50% more than a low-income father in the United States, United Kingdom, Vietnam and Italy - available data is skewed towards men which is problematic. Low mobility is an issue globally but especially in developing economies. Social mobility is important because so much of what we consider equitable relates to the idea that anyone can make it.


High upward/vertical mobility is central to what constitutes a fair and meritocratic society. We like to think that people who work hard and demonstrate their talents will be successful. Low social mobility challenges this notion in the strongest terms. If wealth just passes from one generation to the next, and the best jobs are passed around a narrow network, then society is not operating fairly. Even if two people have equal talents, it can be more difficult for one to climb the ladder than the other. Status acts as a driver of success regardless of ability, which is unmeritocratic.


Low mobility is insidious in that it may not be apparent from a choice directly in front of you (e.g. between two job candidates). This acts as a barrier to change. It is usually much more visible when looking at statistics and the big picture.


Social mobility gets worse over time as widening inequality further reduces mobility. There is a clear explanation. Children born into poverty have less investment in their development and education compared to the children of wealthier parents, leading to poorer outcomes that flow on to their children. So low mobility persists over time. The Gatsby Curve (see below) demonstrates this relationship between mobility and inequality. Progressive nations seek to ensure that parental income is not a big factor leading to economic success and invest in equitable services to level the playing field.



Equality of opportunity is essential for social mobility


Society can improve mobility through policies that create equality of opportunity. Equality of opportunity refers to leveling the playing field so factors such as status and background don't play an important role. It is about giving everyone a fair shot. There are numerous practical ways to achieve this. Having a well-resourced public education system regardless of geographic area. Inheritance taxes to reduce the benefits of parental success on future generations. Businesses recruitment policies that require the firm to go to market rather than recruit the CEO's friend. There are plenty of options. Trickle-down economics isn't really one of them.


Equality of outcome is a different matter. Equality of outcomes refers to people achieving broadly similar economic success. Even if people do have the same opportunities, we should not expect that they will have completely the same outcomes.


The existence of disparity does not automatically imply that the system is stacked. Chance and an individual's talent also play an integral role. We can't see everything that has influenced individual success and judge if that is fair. At best we can understand and control for the big factors. Pushing for equality of outcomes compromises meritocracy in that those who demonstrate excellence in a position could be passed over. Individual's talents should be recognised. A fair share is not the same as an equal share.


That being said, economic systems have tipped too far in favour of rewarding "merit" - but not even societal merit. Merit is often defined in skewed market-based terms depending on the business. Meritocracy defined in market terms is problematic in that even destructive activities earn an economic reward - think cigarettes, fraud or environmental degradation. Creating a medicine that saves the human race has limited value if a company doesn't patent it. We need to be careful what we wish for when we argue for meritocratic systems and ensure there is also a focus on creating a level playing field.


It is reasonable to seek a balance between people's economic outcomes to achieve greater equality of opportunity. Which is to say, equality of outcomes should be prioritised for a system to be meritocratic in the first place. People deserve a fair go and luck of birth should not play an important role in individual success.



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A New Zealand based politics and economics blog

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