U.S. falls behind Europe in Economic Mobility between Classes
by bruh3, Sat Sep 26, 2009 at 12:47:38 PM EDT
In discussing health care, I do not often explain why the issue matters so much. The core issue is that of economic mobility. That is the ability of individual actors in the economy to move up the ladder to the middle and wealthier classes. Health care cost is one big factor in that picture along with other risk factors like education and housing. The core issue is whether we are building a plutocracy or an economy like you may find in Latin America, Russia or China. For this article, I will focus on economic mobility.
The link below includes a video of Paul Krugman and Eliot Spitzer on Bill Maher's show saying something quite surprising- that the U.S. has less economic mobility than Europe. To me, this is a stunner. I suspected it, but I had always put in the back of my mind. Here's the link:
But is this true? I decided to do a quick search of the issue on Google, and, the answer is "Yes, we seem to have less economic mobility than Europe."
I begin with an article from a great site called Naked Capitalism. They cover economic myths retained about the American dream that politicians promote to the American people:
"...a recent study found that the US ranks low among advanced economies in the proportion of people employed by smal businesses. The likely culprit? Lack of universal health care."
The article continues:
"A second element of the entrepreneurship myth is that the US is a land of economic mobility, that if you work hard and apply yourself, you can improve your economic standing considerable. Again, the US scores poorly in by international standards in economic mobility. The have-nots tend to remain have-nots."
The article goes on to quote liberally from the Guardian article on the subject:
"The idea that the US is more "internationally competitive" has been without economic foundation for decades, as measured by the most obvious indicator: our trade deficit, which peaked at 6% of GDP in 2006. (It has fallen sharply from its peak during this recession but will rebound strongly when the economy recovers).
And of course the idea that our less regulated, more "market-friendly" financial system was more innovative and efficient - widely held by our leading experts and policy-makers such as Alan Greenspan, until recently - collapsed along with our $8tn housing bubble.
On the other hand, most Americans pay a high price for the institutional arrangements that bring us these mythical successes. We have the dubious honour of being the only "no-vacation nation", ie no legally required paid time off and of course some weeks fewer actual days off per year than our European counterparts enjoy. We have a broken healthcare system that costs about twice as much per capita as that of our peer nations and delivers worse outcomes, as measured by life expectancy and infant mortality. We are near the top in terms of inequality among high-income countries and at the bottom for parental leave policies and paid sick days. The list is a long one...
There is another area where the comparison between the American and European model has serious implications for the future of the planet: climate change. "Old Europe" uses about half as much energy per capita as the US does. A big part of this difference is because Europeans, in recent decades, have taken much more of their productivity gains in the form of increased leisure time, rather than working the same (or longer) hours in order to consume more.
We estimated that the US would consume about 20% less energy if it had the work hours of the EU-15. This would have a significant impact on world carbon emissions. Furthermore, when the world economy recovers, there are a number of middle-income countries that will approach high-income status in the not-too-distant future (South Korea and Taiwan are already there). Whether they choose the American or the European model will have an even bigger impact on global climate change.
The major media in both Europe and the United States have played an important role, for decades, in helping politicians capitalise on economic mythology to push policy in economic and socially destructive directions on both sides of the Atlantic. It remains to be seen how much the Great Recession will influence the thinking and reporting of these influential institutions."
If you want to see more on income disparity, and how that relates to economic mobility, you should read this excellent article:
The core take away is that there is less economic mobility in the U.S. That our idea that we are more economically mobile is a myth. This myth making seems to mirror the myths that Americans have about the quality of our health care system. When I recently told a friend that the U.S. ranks 37th world wide in health care delivery, she seemed stunned. She said that she had thought we were first. I pointed out the infant mortality rates amongst other statistical data to illustrate the reality is far from being the best.
Here is pre-Washington Post Ezra Klein discussing the matter of economic mobility in the U.S. versus Europe:
"The data, in other words, shows something superficially weird: The United States believes itself to be uncommonly meritocratic. But compared to European countries who don't believe themselves very meritocratic, it actually exhibits less income mobility."
Indeed, implicit in the increase naked plutocratic impulse we find in the U.S. right now is that merit takes on less weight. Many of you may not know this, but from what I understand "Ugly Betty" is actually a remake of a Latin American show. The core concept is that no matter what educational background you have, no matter how good you are- you can not move up the ladder. Whereas the American version presents the myth that moving up the ladder is still possible.
Part of the reason they remain unable to move forward domestically despite the myth is that hidden costs are being shifted to the individual such as health care. If a large percentage of your salary is going into covering the cost of health care premiums, you are going to make less money. You may not know that, of course, because you believe the employer is paying for it. But in actuality, they pass that cost on to you in the form of reduced wages.
Let me leave you with this regarding our society right now:
"More Than 7 in 10 Americans Who Start at the Bottom of the Income Ladder Remain Below Middle Income Status 10 Years Later... Despite notable changes in the U.S. economy over the past two decades, such as the ongoing shift from manufacturing to service sector jobs, women's increasing participation in the workforce and rising immigrant populations, the ability of Americans to move up in the income distribution has changed little since the 1980s, according to a new report released by the Economic Mobility Project, an initiative of The Pew Charitable Trusts. Further, more than 50 percent of individuals ages 25 to 44 who start in the bottom of the income distribution remain there 10 years later."
There is a lot more information out there. I urge you to read it, and place this information into the context of understanding the too-big-to-fail banking system and the oligarchic health insurance industry.