“Americans enjoy less economic mobility than their peers in
Canada and much of Western Europe.” That’s how
The New York Times began a page-one news story
yesterday.

It is a thoughtful story that offer a variety of
explanations—some of them mitigating—for the so-called mobility
gap. This subject merits attention because we should aspire to live
in a society in which someone born in (relative) poverty can work
his or her way up to better material circumstances, even if
lower-income people are richer than their earlier counterparts.

Those who advocate the freeing of markets have no reason to
receive the news of the gap defensively. If we are right about the
breadth and depth of bureaucratic interference with the peaceful,
creative activities of individuals, as well as the extent of
government privileges for the well-connected—and we
are—then drags on mobility are at least partly the consequence
of that interference. In other words, the mobility gap can’t be the
result of the free market because there isn’t one. The
economy is systematically misshapen by intervention. (The
Times cites concern about the gap among some
conservatives.)

The Minimum Wage and Public Schools

When I think “limits to mobility,” two phrases immediately occur
to me: minimum wage and public schooling. If you wanted to
impede upward mobility, there could hardly be better ways than to
scuttle job creation for the unskilled and to give poor people a
bureaucratically produced “education.” Those are not features of
the free market.

Nor are these the only ways government throws sand in the eyes
of the those who start out with little. In the current issue of
The Freeman, Gary Chartier discusses this matter at
length: “Government
Is No Friend of the Poor.” (For more, see Charles Johnson’s

“Scratching By: How Government Creates Poverty as We Know
It.”)

This will be readily conceded by free-market
advocates, but some harbor a belief that the U.S. economy is much
freer than Europe’s and Canada’s socialistic welfare states and so
to make negative comparisons with those countries is to cast
aspersions at freedom. Not so. The economies of America, Canada,
and Europe are all variations of corporatism in which government
power primarily benefits the well-connected and well-to-do, with

secondary interventions intended in part to ameliorate some of
the harsher consequences of the primary interventions. As
I wrote on another occasion:

In reality the debate [between America and Europe] is not
between socialism and free enterprise.  Rather it’s between
two forms of corporatism, America-style and European-style.  I
don’t want either, but it’s not obvious to me a priori that the
American variant is superior in every respect to
the European variant. . . . One variant may indeed cushion the
victims of political privilege-granting better than others.
Considering who writes the rules over here, I see no grounds for
thinking that we necessarily have it better than the Germans do in
every possible way.

The Gap

Here are some particulars in the Times story:

At least five large studies in recent years have found the
United States to be less mobile than comparable nations.
A project led by Markus Jantti, an economist at a Swedish
university, found that 42 percent of American men raised in the
bottom fifth of incomes stay there as adults. That shows a level of
persistent disadvantage much higher than in Denmark (25 percent)
and Britain (30 percent) — a country famous for its class
constraints.

Meanwhile, just 8 percent of American men at the bottom rose to
the top fifth. That compares with 12 percent of the British and 14
percent of the Danes. [The study, in PDF format, is here.]

Despite frequent references to the United States as a classless
society, about 62 percent of Americans (male and female) raised in
the top fifth of incomes stay in the top two-fifths, according
to research by the Economic Mobility Project of the Pew
Charitable Trusts. Similarly, 65 percent born in the bottom fifth
stay in the bottom two-fifths. [See PDF
here.]…

While Europe differs from the United States in culture and
demographics, a more telling comparison may be with Canada, a
neighbor with significant ethnic diversity. Miles Corak, an
economist at the University of Ottawa, found that just 16 percent
of Canadian men raised in the bottom tenth of incomes stayed there
as adults, compared with 22 percent of Americans. Similarly, 26
percent of American men raised at the top tenth stayed there, but
just 18 percent of Canadians.

Not the Whole Story