Thursday, November 02, 2006

Ever harder to grow rich - Financial Times

David Seaton's News Links
British understatement is famous. Check this out for a sample, "To the extent that Americans believe rigidities in their society impede success, unhappiness is likely to mount." They'll be blood in the bleedin' streets mate, that's wot they'll be, mate. DS

Abstract: A growing gap between middle and high income earners has for three decades been a pretty consistent feature in the US. But evidence from other advanced countries suggests this is by no means an inevitable outcome. Research by Andrea Brandolini of the Bank of Italy and Timothy Smeeding of Syracuse University and the Luxembourg Income Study shows the US alone has had high and rising inequality consistently from the mid-1970s. While the UK matched the US rise in inequality in the 1980s, the trend stopped in the early 1990s, well before the Labour government came to power. Nordic countries have experienced a modest rise in inequality, while in France and Italy it has been falling. The authors say the US "is an outlier among rich nations, and only Russia and Mexico, two middle-income economies, have higher levels of inequality". That stems not so much from the US labour market, they add, but rather that its government redistributes far less through the tax and social security system than other countries do.(...) High-earning parents in the US, the UK and Nordic countries are all fairly good at ensuring their children also become rich. Rich US parents are particularly skilled in this feat. In the US and to a lesser degree the UK, sons of poor fathers are disproportionately likely to be poor. But in Nordic countries this is not true. The sons of the poor are no less likely to succeed than those of middle-income fathers. So while the poor have a very realistic expectation of becoming middle class in Scandinavia, it is an exception to the rule in the US. Median wage stagnation in the US threatens to expose this truth. If US citizens think this lack of mobility is a fair and meritocratic outcome, reflecting the value of different families, the lack of social mobility is no great problem. But to the extent that Americans believe rigidities in their society impede success, unhappiness is likely to mount. READ MORE

No comments: