"It is a sad and little-known reality that poverty tends to persist between generations".
Is it? To me it's intuitively obvious and I can't think of any real person who would disagree?
I can't even conceive of a different way this could work. Reducing the correlation to zero would require basically removing money's functional utility.
Being able to work to increase your own wealth isn't really controversial. In fact most Americans over-estimate the amount of economic mobility that we have, which is probably what the article is referring to. And rich families tend to have their wealth eroded in just 2-3 generations. https://www.nasdaq.com/articles/generational-wealth%3A-why-d...
> In fact most Americans over-estimate the amount of economic mobility that we have
Your link seems to say otherwise. If economic mobility were low then most rich families would not see their wealth meaningfully eroded for generations. This was the case in feudal Europe and many ancient empires like Rome. The fact that most families lose wealth in 3 generations due to mismanagement implies someone else is gaining that lost wealth - ergo economic mobility should be high.
Personally I feel the economic mobility afforded by high paying jobs and widespread capital in the US is unmatched. I started making more money than my parents by my junior year in college and genuinely feel like I have a non-zero chance at hitting 25 million USD net worth during my life. I have friends who have gotten millions of dollars in startup funding and have 10+ paid employees. You can't say the same if you live in Europe.
How does the fact that 70% of wealthy families lose their wealth within 3 generations gel with wealth being lost to other rich people? That doesn't logically make sense. If that was the case then there would slowly be ever fewer rich people who become ever richer. But if you look at the richest people in the world that isn't the case.
In another discussion, someone tried to make the argument that Buffet was a real-life rags to riches story. Like, my guy, his father worked as a stock broker, and he used to hang out at his dad's office when he was a kid, and his dad eventually became a Congressman. I don't know why people think that's "rags to riches".
I might be misinterpreting the facts but Gates got the deal to sell DOS to IBM because his Mom knew someone or was on the board. Bezos went from a successful career in finance to start Amazon. Zuckerberg started Facebook at -Harvard- and partly, the success of Facebook was predicated on Harvard's social prestige.
I just don't understand where people come up with these weird bootstrap narratives from.
The ways one can use to multiply millions by a thousand aren't open to people that only owns thousands. And you really don't want to multiply your possessions by a thousand if they are negative.
I don't think that's true at all really, there are like 500,000 millionaires in my town alone.
A billion is actually just a lot of money, there's a much more finite amount of room at the top.
All you need to do to make a million quid in the UK is get a 75th percentile job and save half of it. After a few decades you are now a millionaire. I mean, everyone can't do it, but it's not some unfathomable task.
In the US I imagine it's even easier. Your median income is lower but the top end is insane.
>> All you need to do to make a million quid in the UK is get a 75th percentile job and save half of it. After a few decades you are now a millionaire. I mean, everyone can't do it, but it's not some unfathomable task.
I agree that it is possible, but it is sadly an impossible task for most. That's my point above: for those who have wealth it is easy to grow it. It takes money to make money.
My other point was that those who have a billion started with millions.
Until dynasties with extremely large Southh Dakota in-perputuity Trusts make it almost impossible for wealth to erode in 2-3 generations or even longer. There's a good reason why trusts were restricted to ~100 years but now the world has lost that legal fight. In 100, 150 years, just how much power will the trust holders of these perpetual trusts have over the rest of society?
Impossible is a bit of a joke there considering the instability this country has has had on those timescales. 3 generations ago South Dakota being a state was a novelty.
Let's use the less emotionally charged example of the gym rat.
An individual who sets out with the goal and drive to become substantially physically stronger can be successful with high probability.
But not everyone will do that. Most will give up or just not even bother in the first place. Lots of people don't even care, despite it being almost strictly superior.
It would be logically incorrect to use that fact in order to argue that muscle mass is likely to be unchangeable. It is changeable, it's just not the path of least resistance.
edit: or, to put it succinctly - prevalence is not probability
It's true, the nordic countries do well on Social Mobility [1] (measure of intergenerational economic mobility). However, I think we can all agree that they're fairly homogenous ethnically & culturally (e.g. as measured by Fearon's measure [2]), and that these factors play a huge role in social mobility in places like the United States.
In fact, if you jointly score social mobility & ethnic diversity, the United States looks to come out very close to the top (if not the top). It's probably not a "one size fits all" solution, though social safety nets are obviously a critical part of the equation.
I think it's not the tax rate; most despotic regimes grab as much or even more from their subjects.
It's the legal framework, the laws being actually enforced (low corruption), and just the culture of the lay people who learned to trust each other after centuries of that. Formally Sweden is a kingdom while Nigeria is a democratic republic, but it does not change much.
It's a lot more than the US median salary though (31 kUSD). And 309 kSEK is roughly the arithmetic mean income in Sweden so most people are paying less than that marginal tax rate.
Yes agree, but would disagree that most of the tax revenue comes from most of the people. Ie the top earners (1% or 10% or whatever) pay a significant portion of the tax take, well beyond their percentage of the population. I’m not making any judgment on if that’s right or wrong morally, just making the point that 35% isn’t the top tax rate for many but not most people.
It's obvious but acknowledging it too loudly can be seen as denying people's agency, both in the abstract(It can be interpreted as devaluing the experiences of people who escaped generational poverty) and in particular(A poor person hearing you say it may interpret it as you saying that their efforts to escape poverty are for naught). I don't agree with these interpretations, but there certainly are people that will deploy them, for one reason or another.
Most people, particularly in the west, believe that merit can be acquired, "just do it", "self made man", free will etc.
Liberal economics are surrounded with those kinds of ideals that always explain that the poor deserve their status, that they only have themselves to blame.
Is money really the issue? In many places, everybody gets a free education, and even university is free. So everybody could simply become a doctor or a lawyer and expect an income above the poverty line - at least if money was the only issue.
Having money buys your kid diagnosis and treatment for their learning disability, and later on private tutoring at university. Even if they're reasonably bright the spoilt brat with middling intelligence will have significant advantages.
That would assume the free education people get is equivalent across income levels, which is a hard thing to do in the best of circumstances.
Even independent of educational quality, there is a world of difference between a school's ability to teach a well fed, comfortable child and a child whose only meal of the day is the free school lunch. Similarly, a rich child can afford to do unpaid internships on summer break, whereas a poor one may be working minimum wage jobs to generate an income instead.
This is before you get into the weeds of things like teachers preferring to be placed into good schools because it makes their jobs easier, that well-connected schools can raise money outside of the public system, etc. People say they want educational equality, but this is almost never at the perceived cost to their own children.
In my country the differences beteren universities (and schools) are not very big. It seems very unlikely that more money could buy a significantly better education. Nobody is starving, either.
The idea that education (in terms of knowledge and skill acquisition) is zero sum is wrong. Educational equality starts with parents giving a shit about their kids' education. Why do you think Asians overachieve on every benchmark we have? Could it possibly be because there are cultural factors that motivate parents to care very strongly about their childrens' education?
America spends the most in the world per capita on our schools and has terrible results. It's clear that tossing more money into a black hole won't fix the problem.
Anecdotally, in high school I never heard any white/Latino/black friend joke about getting yelled at if they got a B.
> unpaid internships
You might want to take a look at levels.fyi. Internship salaries are higher than a lot of full time jobs nowadays.
...in technology. Unless we're seriously going to force everyone into tech jobs, we need an economic model that works for broadly most industries.
As an example, nearly all starting first-year internships in law are unpaid. People who don't take those will be competing with those that did do them the next year.
Tech jobs are about capturing externally-created value with network structures... if everyone had a tech job then where's the external value come from?
We don't need more art historians and event coordinators and other roles for which internships are unpaid. For every degree that actually results in positive return on investment (so, not most liberal arts degrees), internships are paid. Economics, biology, chemistry, business, statistics, law, these are all degrees that mostly have paid internships.
About the only place where you can reasonably say "we need more of these people" but is unpaid is legislative offices. And I agree, government should hire fewer but more highly paid and higher performing staff.
Incorrect. If you take a look at the 2018 PISA rankings [1] the top is dominated by Asian and East European countries. Is it a coincidence that ex-Soviet countries which had a strong state focus on STEM are top ranked? Or that the top 10 contains basically every 1st world Asian country (Japan, South Korea, and the Asian city states)?
Education hasn't been free for a long time. You have to spend money on private tutors, books and laptops if you want your children to compete in the rat race.
Is it? To me it's intuitively obvious and I can't think of any real person who would disagree?
I can't even conceive of a different way this could work. Reducing the correlation to zero would require basically removing money's functional utility.