The Brutal Truth About How Childhood Determines Your Economic Destiny
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The wealthy participants in 56 Up are hardly fazed by the global recession. They live in a world where life is stable and protected from the vicissitudes that can instantly turn a working-class mom who is making it into a pauper who can barely keep the roof over her head. Something is clearly rotten in the Britain. But what of America?
The American Nightmare
The American Dream is woven with promises of mobility: if you roll up your sleeves and work hard, you can succeed against any odds. A 2009 poll found that even after the body blow of the Great Recession, nearly two-thirds of Americans continued to believe that you can start out poor and still achieve wealth through individual effort. As Americans, we look at figures like Oprah Winfrey, a child of poverty in the rural South, as evidence that anyone can reach the top of the class pyramid with enough hard work and persistence. If she had children, Winfrey could send them to most any posh boarding school in the country. We look at the hierarchies and snobberies that still exist in the UK and consider our system superior.
We feel this way partly because of our history. Our founders made much of having left behind the rigid hierarchies of Europe. Property is certainly a decisive factor in determining class, and in America, a land-based aristocracy only really existed in the South -- and that was pretty well smashed during and after the Civil War. But money is also a form of property, and having access to cash is what determines the hierarchical structure in capitalist systems like the one we find ourselves in today. If you can collect enough money, you can belong to the upper class in America.
But who has a chance to get the cash? Americans are aware of class, but they overestimate mobility, which, according to numerous studies, is going the way of the wooly mammoth. In fact, mobility in America is among the lowest in developed countries – just about on par with the UK. In the "land of opportunity," children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution. Children born in France, Germany, Canada, and the Scandinavian countries have a better chance of moving upward.
America’s children are facing a system that’s hardening with every budget cut and tax exemption for the rich. Forty-two percent of children born to parents in the bottom fifth of the economic distribution are stuck there as adults, while 39 percent of children born at the top remain there. The U.S. Census Bureau found in 2010 that 22 percent of American children were living in poverty, a number that has been steadily rising since the 1980s. The growth of the financial sector and the destruction of New Deal programs pushed by conservatives and now embraced even by many liberals has increased economic equality dramatically. More poor children means more poor adults.
Americans have long believed that economic inequality is OK as long as everybody has a chance to move from one rung of the ladder to the next. But the accelerating rise in inequality hasn’t meant more mobility, but less. What Americans are just beginning to grok is that we are pioneering a system that may be just as inflexible as the old system of landed classes. Our new system is based on access to mobile money, and it is spawning dynasties, creating closed social circles and birthing more devices for social exclusions that separate the well to do from the rest.