Now, what I want to examine is the idea that
In the old America, if you worked hard, you had a good chance of moving up.
In the old America, the fruits of people’s labors accrued to the whole country, not just the top.
In the old America, there was a strong middle class, and their immense collective purchasing power drove the economy for decades.
OK — never mind his grammatical number problem. Let’s try to look at his assertions, starting with:
In the old America, if you worked hard, you had a good chance of moving up.
I don’t know “old America” he’s talking about, but it certainly wasn’t the 1800’s. Scholarly research shows very little chance of “moving up”:
[In 19th century America, most] people eked out a marginal existence, marked by minimal consumption, low wages, and irregular employment. They had little or nothing to fall back on during hard times. The New York Times in 1869 estimated that fully 75 percent of urban households earned a “meager subsistence wage or less.” In contrast, the top mercantile, landowning, and professional elites lived in material splendor rivaling that of Europe’s most fabled accumulators of wealth. Magnificent mansions, luxurious furnishings, platoons of servants, splendid fetes and balls were familiar features in the lives of the American rich a generation before J. P. Morgan and Commodore Vanderbilt flaunted their millions.
Equality of opportunity was no more prevalent then than equality of man’s material condition. A recent investigation of the backgrounds of the 2,000 wealthiest individuals in the urban Northeast before the Civil War establishes that they had been neither the poor boys nor the self-made men that Tocqueville, Clay, and James Fenimore Cooper claimed they were. With few exceptions, they were born to families that combined great social prestige with wealth, usually dating back to Colonial times. Perhaps 2 percent were born of poor farm and working-class families. A less comprehensive study of rural Michigan in pre-Civil War days discloses similar backgrounds for rich men there.
Actually, social mobility is probably much better now than it was back then. Measures of inter-generational social mobility are notoriously difficult to achieve, but some data is available:
Across a variety of measures, there is strong evidence that intergenerational occupational status correlations have declined during this century among Whites, but that such correlations have increased among Blacks as racial discrimination has declined (Hauser et al. 2000). The available evidence also suggests that intergenerational occupational mobility has increased over a longer time-span, since the mid-nineteenth century (Grusky 1986).
In order to think about occupation as a proxy for economic standing, it is useful to review sociological measures of occupational status. Socioeconomic status is typically used as a shorthand expression for variables that characterize the placement of persons, families, households, census tracts, or other aggregates with respect to the capacity to create or consume goods that are valued in our society. Thus, socioeconomic status may be indicated by educational attainment, by occupational standing, by social class, by income (or poverty), by wealth, by tangible possessions – such as home appliances or libraries, houses, cars, boats, or by degrees from elite colleges and universities. At some times, it has also been taken to include measures of participation in social, cultural, or political life.
Intergenerational Economic Mobility in the United States
Measures, Differentials and Trends
Robert M. Hauser
CDE Working Paper No. 98-12
After WWII, there was arguably more social mobility than before. Much of this mobility can be associated with WWII itself. Boot camp is the great equalizer — of opportunity, that is. Even if your daddy’s rich and your mama’s good-lookin’, in boot camp you’re still a maggot. In the field, what you did on the field was what mattered. After the war, the GI Bill got many people the college education they had never even thought of before.
After the war, wartime factories turned to peacetime products. Just as Singer factories made rifles during the war, tank and plane factories started making cars and refrigerators. Although Hugh Beaumont was a bit old for WWII, his iconic character Ward Cleaver was a veteran of WWII (a surveyor in the Seabees), and it is not hard to imagine that the GI Bill helped him pay for college.
This might be the “old America” that old Henry Blodget misses. (It is funny to see liberals pine for the “Leave It to Beaver” days.) To some extent he is right, but that “great leveling” of the Great Depression (bringing down the rich) and WWII (elevating the masses) was the historic anomaly, not the norm. It is as though a great pile of sand (the people) were all pushed together into a taller pile. As things shook out, some grains moved one way, and others moved the other, and once again we are closer to the historical norm separating rich and poor.
After WWII, we were not poor as we once were, but it was not the Great Leveling that did that. It was industrialization. While there was some industrialization prior to WWII, it was nothing compared to what we had at the end of WWII. Agriculture also became industrialized as part of the war effort. A far smaller percentage of the people could produce the food for the entire nation. More people could work in durable goods production, entertainment, and education. Industrialization was the source of the “immense collective purchasing power” of the middle class.
And thus rose the Middle Class. No longer did people have to spend so much of their time growing food, or earning the money to pay for food. There was more than enough food to go around, and the working class was now middle class, with money for things beyond butter and eggs. They produced goods and sold those goods to each other.
So where are we now? Where are our factories now? Where is our manufacturing? Well, our manufacturing output has been increasing for the last 37 months. ¿Que? That’s right, our manufacturing output has increased every one of the last 37 months. It’s just that manufacturing employment has decreased. Just as with agriculture, greater industrialization has created greater efficiency. We produce more with fewer people. Just as food got cheaper, so have durable goods.
That’s right, things have gotten cheaper over the decades, not dearer. Food, automobile, and home price increases have been right in line with the CPI, as one would expect, but median incomes have increased even faster. Our food has gotten more convenient; our cars safer, faster, and more fuel efficient; and our houses have doubled in size since the 1960’s — and their air conditioned! As we spend less on food — or the same amount but in more convenient form — so too do we spend less on stuff. Refrigerators, furniture, dishwashers (who had one in 1960?), light bulbs — ALL have gotten less expensive in terms of the number of hours the average Joe has to spend to buy them.
Just as we can only eat so much (and God knows we eat too much), we can only have so much stuff. My house is chock full. So now what do we buy with the excess? Services. That is why we are becoming a service economy. Not because we cannot produce stuff here anymore, but because we do, and we produce a lot. So we decide to have the illegal Mexicans cut our lawn for us, or the illegal Norwegian cut our hair. We get others to wash and repair our cars instead of doing it ourselves. We get others to do our plumbing and other home repairs instead of doing it ourselves. This is not a Bad Thing any more than it is a Bad Thing not to be able to grow our own crops, raise our own chickens, cobble our own shoes, or make our own furniture.
There is nothing wrong with a service economy. Just as in a manufacturing economy, there will be some who do very well, and some who will not. The really good cobblers, smiths, jewelers, other craftsmen got a reputation, could hire apprentices to learn the trade, and made out very well. But union workers really couldn’t get above foreman. Ever. Workers were workers and management was management.
In a service economy, a good plumber gets a reputation, and can build a business on it. A good lawyer, doctor, or auto mechanic can do the same. A good friend of mine double-majored in Business and Kayaking at a podunk state college. But he is damned good with kitchens, and has his own business. He makes as much as I do in my Engineering job, and has more freedom. That is the wonder of a service economy.
And is it really so bad a thing to make a living serving others?