The Future of Children, a Princeton-Brookings publication that "translate[s] high-level research into information that is useful to policymakers, practitioners, and the media", published an entire issue in the fall of 2006 on "Opportunity in America." Isabel Sawhill and Sara McLanahan's "Introducing the Issue", 16 Future of Children 3 (Fall 2006), provides an important overview of the concerns facing women, children, and minorities in a United States that is more and more divided along class lines in a culture that transmits poverty across generations.
We pride ourselves in being "a place where with hard work most people can succeed, whatever their family background," a place that "is often presumed to be a less class-based society" than the older European democracies, where "the dominant ideology ... has been a deep-seated belief in equality of opportunity" in spite of the aberrations of slavery and racial and gender discrimination. Id at 3.
This pride, and belief in individuals' ability to pull themselves up by their bootstraps, has made Americans less willing to redistribute income and more willing, apparently, to live with large income disparities between the top and bottom of the income distribution. This journal issue asks whether those beliefs comport with reality--is America really a classless society, and if not, what should be done to help the country meet its ideals. The authors note that the articles "examine opportunity in the United States today, how opportunity has changed over time, and how it varies by race, gender and national origin. They also explore how education, health and culture affect social mobility for children born in different circumstances and what government might do in each of these domains to make opportunity in the United States more equal." Id. at 3.
Here's an example of the kinds of specific topics addressed in the papers-- a study of the "poverty-prevention paradox" by Jens Ludwig and Susan Mayer.
"Ensuring that all children are healthy and well educated is a goal that most people would support, although they might disagree agbout how much the public should invest and how best to use the money. Much more controversial are programs that aim to change family behaviors. Nonetheless, much of today's political rhetoric and many of today's policy initiatives are aimed at encouraging parents to marry, work, and participate in faith-based programs. ....Ludwig and Mayer argue that the effect is unlikely to be large, for two reasons. First, the evidence for a causal link between these parental behaviors and children's chances of growing up poor is relatively weak.... Second, most children who become poor as adults do not grow up in a single-parent family, a family with no full-time worker, or a family that does not attend religious services. Therefore, even if the effects of family behavior on intergenerational poverty were causal, getting all parents to marry, work, and attend church would have only a minor effect on the poverty rate in the next generation." Id. at 12-13.
These questions about opportunity and appropriate government policy are particularly important now, the authors assert, because "income and wealth are more unequally distributed in the United States than at any time in the past half century." One statistic, among the many that can be gathered in support of this statement, is the Congressional Budget Office (CBO) data showing that the average after-tax income of the top 1% rose by 129% in the period from 1979 to 2003, while that of the bottom 20% rose a measly 4% during the same period. Similarly, although economic "growth can go a long way toward neutralizing any negative effect of low mobility," "family income growth has slowed in recent decades. From 1953 to 1973, median family income rose swiftly, an at annual rate of 2.8 percent. Since 1973, however, median family income has grown an anemic 0.6 percent a year."
Once we acknowledge that income and wealth disparity are limiting opportunities for many, the question is what can be done. Children of higher-income parents may have some advantages becuase their parents had good genes or because their parents simply worked very hard to give them advantages. How can children born without that edge be helped to succeed? The authors note that "public policies can ... do quite a lot to compensate children for what their parents cannot provide [and].... government should be doing more."
It's worth quoting a few paragraphs from the conclusion to the article which bring home the connection between tax policies and the kinds of opportunities our society will provide.
"Growing income inequality in the United States would be less troublesome if all U.S. residents had the same chance to get ahead. But the fact is that family background matters. Americans need to pick their parents well. Moreover, the United States does not have a higher degree of mobility than other industrialized countries. Increases in income inequality and wealth inequality in recent decades are likely to persist from one generation to the next. Some observers believe the appropriate policy response is to adopt more progressive income or benefit programs. Others argue for redressing the balance by improving opportunities for all citizens to get ahead. This volume focuses on the latter... [b]ut we believe that both approaches are needed."
"The persistence of wealth across generations is high, and children who grow up in affluent families are greatly helped by the advantages associated with wealth. The current estate tax curbs at least some of this persistence and enables each generation to start on a slightly more even playing field than would otherwise be the case. ...The current (2006) exemption of $2 million per person (or $4 million per couple) provides more than adequate motivation for parents to save and a rich legacy for their children."
"As important as the estate tax is, it is small relative to the effects of education on opportunity. Education, after all, is considered the great leveler, the most important opportunity-enhancing vehicle available to any society. But the three relevant articles in this volume all conclude that education in the United States tends to reinforce rather than reduce divisions based on class. This conclusion is supported by three facts. First, the U.S. education system is not as strong as that in some other countries. Thus it does less to ameliorate the effects of family background than it might. Second, much education at the preschool and postsecondary levels is still privately financed, effectively making it unavailable to children from less wealthy families. Third, poor children tend to go to poor schools. In short, providing more equality of opportunity requires that schooling at all levels be of higher quality and that children from less advantaged backgrounds have the same educational opportunities as those whose parents can afford to enroll them in nursery school at an early age, live in a high-priced neighborhood with good schools, and send their children to college."
So what should we be doing? If we heed the research presented in this volume, we should spend a lot less time (and no tax subsidies) on trying to push all Americans into a one-size-fits-all mold of traditional, church-going family. We should instead spend a good bit of effort trying to ensure that our tax system is sufficiently progressive to tilt the balance, at least at the margins, in favor of redistribution towards equality rather than away from it. That means, among other things, retaining the estate tax with a sufficiently high rate and a sufficiently low exemption level that it can realistically serve to level the playing field against the enormous estates that wealth permits wealth to accumulate. Instead of creating more socially wasteful tax subsidies for businesses like restaurants and banks (including a new set of S-corporation expansions just to make it easier for banks to operate in S-Corporation form and pay no corporate taxes), as the business lobby has pushed the Senate for in connection with the necessary passage of a long-delayed increase in the minimum wage, we should create tax subsidies that create opportunities--such as larger education subsidies for postsecondary education for lower-income taxpayers, but phased out rapidly above a reasonable ceiling.
When Congress gets this message, we will be on the way to a better society. It is important to communicate to them about the need to pay attention to the problems of inequality and the promise of opportunity. Maybe they'll finally stop throwing tax subsidies to the owners of most of America's assets and start thinking about using the taxing and spending powers to create opportunities for the workers who produce those assets.
Revised Feb. 2, 2007