The myth of Horatio Alger

Our faithful critic, "Someone in USA", has raised one of the fundamental tenets of libertarian belief and I think it deserves more than just a comment. This is the idea of personal responsibility, especially for how far one goes in life. This is the Horatio Alger myth which was very popular during the high growth period of US history. Basically it is: poor boy works hard, succeeds in life. When this literary theme was popular it happened regularly. The US was a rapidly expanding economy, with an open frontier and many undeveloped natural resources. Things have changed in the past few decades and this type of social mobility is much less common than before. Here's a sample of reporting on the change: As Rich-Poor Gap Widens in the U.S., Class Mobility Stalls
Bhashkar Mazumder, a Federal Reserve Bank of Chicago economist, recently combined the government survey with Social Security records for thousands of men born between 1963 and 1968 to see what they were earning when they reached their late 20s or 30s. Only 14% of the men born to fathers on the bottom 10% of the wage ladder made it to the top 30%. Only 17% of the men born to fathers on the top 10% fell to the bottom 30%.
There is a nice graphic in the article which illustrates the data. Now if there is a widespread social phenomena laying it to failures of personal virtue seems a poor explanation. If the deck is stacked against you it is hard to get ahead. That a few individuals do it does not change the fundamental problem. Those who point out the large social problems behind these trends are accused of coddling the slackers. It is the same mindset that disfavors welfare programs and says "I work hard, let them go out and get a job". The biggest predictor of how well a student will do in school is the economic status of his parents. Are all these under performing children lazy or stupid? Or is there some other factor at work? Blaming the victim may make one feel morally superior, but does nothing towards solving the problem. If you really think that millions of people are morally inferior then you must have a rather poor opinion of the human race. Let's assume that there are some underlying reasons why we have so little upward class mobility in this country, both compared to prior periods and also compared to other advanced societies. What are they? The paper quoted cites the rise in wealth inequality, and this is something that I frequently point to as well. But wealth inequality is a result of other policies, not the cause. The cause is the institutionalization of wealth. Those who have it have gained political power as well and have used this power to restructure the legal framework of the nation. There are several aspects of this. 1. Changes in tax laws to enable the wealthy to keep more of their wealth and to pass it on to future generations. This include the changes estate taxes as well as the preferential treatment given to capital gains and dividend income. These are now taxed at a lower rate that the average income tax rate for middle class workers. These same workers have little or no income from capital gains and dividends so the rich are benefiting at the expense of the poor. 2. Changes in campaign tactics to allow big money to have much more influence on elections. The creation of PAC's, the cost of buying TV ads and the ability of big donors to influence politicians have all biased elections against regular folks. Even when a person comes from a modest background they have to ally themselves with big money interests if they are going to be able to afford to run. 3. Changes in the legislative process. The rise in lobbying and the revolving door between business and government has made legislators more in tune with these interests and less concerned with the issues of importance to the average person. 4. The rise of multi-national firms which are now, in many cases, bigger than whole countries. Changes to international trade and tax rules ("globalization") have allowed these firms unprecedented power to play off one country against another and weakened the control that countries have over their own affairs. 5. Lack of opportunity in the developed world. While there are still the occasional examples of entrepreneurs who have a big success (Google or Facebook) they are much less common in the West than in the developing world. For every Google there are hundreds of new enterprises creating millionaires in China and India. Why this is so could be a topic for an entire article, but a growing middle class and government support for entrepreneurship are important. So is the lack of an existing super wealthy class that is interested in preserving their privilege and keeping newcomers from competing. What I find most surprising is the lack of outrage in this country over the poor hand that many people get dealt. Perhaps the recent highlighting of the excessive compensation in financial firms will awaken people to the underlying issues. The last time people understood the effects of class was 100 years ago.

17 Responses to “The myth of Horatio Alger”

  1. You’ve accused me before of lacking empathy, and maybe that’s correct. However, how is it fair to the people who do work hard to earn their piece of the pie when you just give pieces out to others? I don’t understand that mentality; nor do i understand taking slices from those that have it to give to those who don’t.

  2. Someone:
    What you (and all libertarians miss) is that you are where you are not just because of hard work, perhaps help from your upbringing, but because of good fortune.

    Those who resent those who “don’t work hard” have never been ill or handicapped or lost their job through no fault of their own.

    I’ll give you an example of a story I heard first hand recently. This concerned a physician who developed breast cancer. Because of this she had to stop working which meant that she lost her health insurance. After she used up her funds on medical care she became, essentially, destitute and was forced to turn to Medicaid for paying for health care.

    People like this also are frequently forced to get divorced because if they remain married their spouses assets would be drained as well before Medicaid would start coverage.

    So was this woman lazy, stupid, gaming the system or just plain unlucky?

    This is the social bargain that caring societies make. Everyone chips in so that the unfortunate get covered. After all you never know when you might be next. “There but for the grace of God, go I.”

    This lack of understanding, based upon little personal experience, is why most libertarians are young men of the middle class who are in good health. Experience is a great teacher.

  3. Robert, your example is exactly the kind of person I think needs help. We need to invest in providing opportunities to get ahead and caring for those who legitimately fall on hard times, not just handing a free pass to everyone.

  4. How do you define “free pass”? Who gets to decide?

    Who is responsible for an inner city kid getting a lousy education because of the bad environment he lives in and the poorly endowed school he is forced to attend?

    When he leaves school his lack of education then limits his opportunities. Is this satisfactory? Is it his fault? Should he just be left to get by as best as he can in substandard jobs, including those with poor or no benefits? What if he is ambitious and wants to get ahead but can’t afford to supplement his education?

    Children don’t get to pick they environment they are born in, nor their race or natural abilities. This can also be a misfortune, even if not as obvious as contracting cancer.

    You have dodged the hard issues.

  5. UncleBob says:

    Robert:
    On the reverse of that coin, who gets to define who has to pay for that kid’s “free pass”? It’s not that child’s fault he was born into poor conditions, you’re right. It’s not *my* fault either. Why does 30% of my hard-earned pay have to go to support this child that I didn’t choose to make? That’s 30% of my pay that I could use to make my life better, my wife’s life better, my child’s life better (should I choose to have any), or even my community better. The fact is, I work for my money, I should get to choose how it is spent.

  6. Bob, you are 100% correct. Let’s also note that it is not Wal-Mart’s responsibility, either.

    Robert,

    How dark do you want to take this discussion? You’d shudder to hear my true thoughts on it. That’s why I have declined to share them.

  7. Just for the record guys, your tax resentment is misplaced. The bulk of the federal taxes you pay goes to militarism.

    Here’s a chart for you to study.

    http://www.warresisters.org/pages/piechart.htm

    One of the master strokes of the conservative movement, starting with Reagan and his imaginary Cadillac-driving welfare queen, has been to foment class resentment by exaggerating the amount of money going to social services.

    You don’t find this type of resentment in Scandinavia, even though they pay much higher taxes, because their money gets spent on visible social services: comprehensive medical care, child care, free higher education, extended maternity (and paternity) paid leave, good unemployment and old age benefits, etc.

    What they don’t have is an outsized military budget. The US spends as much on militarism as the rest of the world combined. No one is invading Sweden and they seem to be able to buy whatever they need without invading anyone else either.

    Get your facts straight.

  8. UncleBob says:

    Robert: Have I ever posted anything that says I disagree with you in regards to the amount we spend for the Military?

    In fact, I believe my entire argument is based on the total amount of government spending, regardless of what it’s being spent on.

    Besides, you’re not allowed to complain about government spending, even if it’s on the military – this blog says it’s okay that the government spends so much on the military because “the people voted for it”.

  9. Robert, perhaps if we utilized our military correctly….

    Anyway, Bob and I disagree on some aspects of taxation. I can’t speak for him, of course, but my view is that government does need to play a role through taxation and spending…just not wealth redistribution and trillion-dollar spending.

  10. UncleBob says:

    Someone: No, I think we mostly agree. Obviously the government needs to exist, and, obviously, it needs to be funded. My issue is with the amount of spending our government is doing – period.

    http://www.brillig.com/debt_clock

    Our national debt is increasing $3.48 Billion/Day – and it’s about to get a whole lot bigger. This isn’t an issue of the rich not paying their taxes. This isn’t even as much of an issue of ignorant politicians spending other people’s money… because they’re just spending money that simply does not exist!

    Oh, gee, the economy is going south… who’d thunk it?

  11. Someone:
    All taxation involves wealth redistribution. You take money from some people and then distribute through various programs to other people. You’ll have to rethink what you mean by the term.

    Most people who use the term mean that they don’t want to see higher taxes on the wealthiest. Why they think this group needs protections is one of the mysteries of the age – See Thomas Franks’s “What’s the matter with Kansas”.

    A trillion may sound like a lot, but the US has a 14 trillion GDP, so the “stimulus” package will only add about 7% to the GDP and that will be spread over several years. That’s why liberal economists like Paul Krugman think it is too small.

  12. You’ll have to rethink what you mean by the term.

    Your response indicates that you knew what I meant.

  13. […] many times during his tenure on this blog. Looking around our archives, I’ll just go with this one: If the deck is stacked against you it is hard to get ahead. That a few individuals do it does not […]

    • Valerie Feinman says:

      I miss him all the time – after 44 years! – but I am heartened that so many others miss him too. In his memory you must question everything, look at the other sides of any question or event, and not accept easy answers. We must find solutions, and not wait for others to mangle things. VJF

  14. Valerie:

    I’m so glad you’re still reading what we do (or perhaps Alex is and he gave you the heads up to that last post of mine). Speaking for myself, I was wondering if you’d considering telling us a little more about Robert – the kind of stuff we wouldn’t know just talking to him about politics. You can do it below if that’s easiest or maybe go to our last open thread, which is here:

    http://thewritingonthewal.net/?p=8724

  15. Valerie Feinman says:

    Hi Jonathan

    I read what I want to read, and the new year made me want to reread Rob’s posts…

    Robert was born in 1942, in New York City. His Dad was overseas, and his Nun was office manager for a major publisher/importer of literature. He attended a quirky early school and developed such a dislike for jeans [which everyone wore there] that he never wore them again.
    He also spent much time in a camera shop, with family pal Eddy. such that he use all his bar mitzva money to buy photo equipment.
    When in the school system, he applied to Stuyvesant, and the rest is history – he found physics. Attended Queens College, and the Syracuse University – where I was physics librarian. We clicked – we were both fans of Walt Kelly’s Pogo, the songs of Tom Lehrer, and the antics of Flanders and Swan. Great basis for long-time reationship.
    For many years he worked for the AIP, American Institute of Physics….

    I will write more, but as an attachment – from which you can select items.

    Valerie

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