What the Great Gatsby Curve illustrates is that where Lazarus and her kids ultimately end up on the income spectrum will be more a reflection of their family background and not of their talents. “The most important thing that the U.S. is leaving behind as it moves up the curve is the vision of itself,” Corak says. “It’s not just poverty of money that matters but also poverty of experience and expectation.”
Alan Krueger, a labor economist who chairs President Barack Obama’s Council of Economic Advisers, used Corak’s data in a January speech to extrapolate that mobility would further diminish for the next generation. “Children of wealthy parents already have much more access to opportunities to succeed than children of poor families,” he said. “This is likely to be increasingly the case in the future unless we take steps to ensure that all children have access to quality education, health care, a safe environment, and other opportunities that are necessary to have a fair shot at economic success.”
…….
If income inequality is a topic of ferocious political disagreement, the issue of mobility provides at least one thing that liberals and conservatives generally agree on: Inching from one end of the economic spectrum to the other is too hard, especially for people born into poverty. According to Pew, roughly 40 percent of children whose parents are in the poorest quintile will remain there until they die, as will 40 percent born to parents in the top quintile—twice as high as would be expected by chance. Children of middle-income families have a roughly equal chance of falling down or climbing up. The numbers are significantly worse for black children: Nearly half born to middle-income parents will fall into the poorest quintile compared with 16 percent of white children.
Corak’s findings about the connection between inequality and mobility are “political dynamite,” says Justin Wolfers, a Princeton University economist. “The right-wing critique of attention to inequality has been that this is the politics of envy and envy is very un-American—we like those and hold up those who succeed,” he says. “The Gatsby graph reframes the conversation about inequality in terms of mobility and opportunity, which everyone is for.”
…..
In his 2011 book The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality, World Bank economist Branko Milanovic likens inequality to cholesterol. Just as good cholesterol helps the body avert fat buildup, “ ‘good’ inequality is needed to create incentives for people to study, work hard, or start risky entrepreneurial projects,” he writes. It also ensures that people aren’t so mobile that they can fall at any time. Too much of the bad and the arteries become blocked, triggering disease: “Rather than providing the motivation to excel, inequality provides the means to preserve acquired positions.” When access to education and the best jobs are limited to those at the top, he writes, society is deprived “of the skills and knowledge of a large segment of its members (the poor).”
The point at which inequality becomes too great is largely dependent on one’s political convictions. For Krueger, the U.S. has already “reached the point that inequality in incomes is causing an unhealthy division in opportunities, and is a threat to our economic growth.” James Q. Wilson, the late Pepperdine University public policy professor, wrote that rather than worrying about inequality and taxing the rich to lessen it, we should instead focus on poverty reduction by doing things like teaching the poor “marketable skills” and encouraging work and marriage.
