Sunday, May 27, 2007

American Feudalism

This post isn't about housing per se, but given Marin's penchant for elitism, snobbery, deference towards classism, and the more and more feudalistic consequences of housing and debt, this article in The Atlantic (was The Atlantic Monthly) by Clive Crook is spot-on. You need to have a subscription to read the full article. Below I quote substantial pieces for those of you who do not have a subscription or who cannot otherwise find it on the Internet:
Opportunity is the crux of the American idea. Opportunity is what the New World has always represented: struggle, risk, self-determination, and the hope of spiritual and material progress. Even now, to new immigrants, that or something like it is the pull—and for them at least, it is no false promise. If you move to America, you move up, and this is true whether you are rafting across the Rio Grande or negotiating the hazards of the H1B visa program.

The American model has been regarded as proposing a kind of bargain. This is not Europe: Here, idleness and incompetence are sternly punished—but merit gets rewarded. Much more than elsewhere, your class background will neither prop you up nor hold you back. If you deserve to succeed, you will.

It is an inspiring, energizing offer—and still a profoundly influential one. It colors the national debate about taxes, health care, and other aspects of economic policy.

But is America any longer a land of opportunity for the people born here? The evidence, such as it is, points to a surprising and dispiriting answer: no, not especially.

The idea that America is exceptional in its material opportunities is deeply lodged in the culture. For as long as the country had a western frontier with territory beyond, internal migration was just as bold a venture as crossing the ocean had been for the first settlers, and just as promising for the ambitious and self-reliant. The late-19th and early-20th centuries brought extraordinarily rapid industrial development, which nourished the American idea in a new way. Rising incomes made each succeeding generation more prosperous—and they rose so fast that people even felt more prosperous. But that phase, too, has ended. Incomes are now rising more slowly from generation to generation (and for a variety of reasons, the flattening feels worse than it is). Fewer adults today, it seems, expect their children to do better than they did. Pessimism vies with vitality for command of the national consciousness. accumulating body of research suggests that the stiffening of America’s socioeconomic sinews is more advanced than the culture, even now, seems willing to admit; worse than the scholars who monitor it had hitherto understood; and—how shaming is this?—worse than in many older, wearier countries.

Most researchers now give America much lower marks than they used to for intergenerational economic mobility—the ease with which successive generations move up or down relative to their parents.

Before the 1990s, researchers tended to put the correlation between parents’ incomes and their children’s at around 20 percent, implying a high degree of mobility between generations. (Zero would imply no connection at all; a correlation of 100 percent would imply that parents’ incomes entirely determined the incomes of their children.) In the 1990s, using better data and techniques, experts tended to put that figure at about 40 percent. Recent estimates run as high as 60 percent. The finding is not that mobility has fallen since World War II—the studies point to no clear trend. It is that as methods of measuring mobility have improved, the result, across a span of recent decades, has gotten worse. The earlier view that postwar America was an economically mobile society is less and less borne out. Perhaps it was once (before data became available to track such things accurately); but it isn’t now.

More telling, maybe, is the international comparison. America stands lower in the ranking of income mobility than most of the countries whose data allow the comparison, scoring worse than Canada, all of the Scandinavian countries, and possibly even Germany and Britain...

Strikingly, the research suggests that mobility within America’s middle-income bands is similar to that in many other countries. The stickiness is at the top and the bottom.

The findings are still tentative, and the causes complicated—hardly a firm basis for prescription. Still, if the government needed another reason to retain the estate tax (aside from the fact that it is one of the most economically efficient taxes), this might serve. In general, a little less tolerance of inherited privilege would not seem amiss. Would it hurt, for instance, if the admissions preferences granted by America’s most prestigious universities to the children of benefactors and alumni aroused more disgust, or maybe just some mild disapproval?

America has no roots in feudalism, no notion of inherited orders of society, no instinct for deference or regard for nobility. And yet the economic mobility that is thought to follow from such freedom, and indeed ought to follow from it, appears to be a myth. Myths that defy the common experience can persist for only so long. Perhaps in the future the country will try harder to foster the opportunity it thinks it already provides. Or perhaps the culture will simply come to accept this un-American reality: a society of rigid economic orders, maintained by inheritance, blessed by its elites, and impotently endured by its underclass.


Blogger J at IHB and HFF said...

Hello. It sounds like he is repeating the Pew report that is spreading through the MSM like a rash. Reading the report’s fine print tells me that the report should be ignored because there are too many strange decisions in the methodology.

May 27, 2007, 4:15:00 PM  
Blogger repoman said...

Good blog.

One line from that article made me laugh:
"This is not Europe: Here, idleness and incompetence are sternly punished—but merit gets rewarded."
I know it's part of the national myth - but how inflated is America's sense of self worth? Maybe that explains why you're in a permanent bubble bath.

Here's a pretty smart essay on why Americans are good at some things, crap at others:
If you want to get your hands on euros, you're going to have to start with some hard-headed thinking about the value of quality and the cost of self-delusion.

May 28, 2007, 8:50:00 AM  
Blogger bob said...

I saw something interesting on the news show "Sunday Morning".It was a story about several people who lived on the East Coast who commuted 3 and 4 hours EACH WAY to their jobs in NYC. One lady lived in PA, but commuted to NYC. One guy was in VA and commuted 2 hours each way to Washington DC. The culprit blamed for this was the high cost of housing and the necessity of people to live further and further out. The result is that yes, they have a house, but their lives suck.

I've repeated this numerous times here, but while everyone wails about how awful it is in CA/NY/WA, etc etc, there is a pattern here that is far from new: opportunity and internal domestic migration. In the 30's and 40's, poor farmers from the South moved to places like Detroit MI for the jobs in the factories. They did quite well there. In fact, just like the Bay Area, there was actually a shortage of housing as a result.

In the 60's and 70's, people moved here to take part in the tech industry that was just starting. CA had a very healthy middle class then that was enviable to the rest of the country.

As we see what happened with Detroit, things changed and the economics of the region went down hill. I won't go as far as to say that SF will suffer the same fate as Detroit, but from an individual perspective, this area has the same negative economic situation that makes living here difficult and less sensible for the average educated person.

The migration patterns both economically and socioeconomically are shifting once more to another region, primarily the Southeast where those same qualities we see as opportunities are now setting up shop.

I said it, and I'll say it again: The Bay Area is DONE.

May 29, 2007, 10:18:00 AM  
Blogger marinite2 said...

And housing prices in MI, Detroid dropped like a rock.

May 29, 2007, 11:48:00 AM  
Blogger Unknown said...

and at this time, the price of the proferty is going down because of crisis

Real Estate Professional

Oct 2, 2009, 12:08:00 AM  

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