What could policymakers do to apply the results of The Son Also Rises: Surnames and the History of Social Mobility? (see my previous posting regarding this book for context)
Countries that accept immigrants could adjust their criteria, including “point systems”, to include factors that the author, Professor Gregory Clark, says are likely to make people and their descendants successful. Instead of simply asking about the education of the potential immigrant, for example, priority for immigration might include the education of the potential immigrant’s parents, grandparents, and other relatives (especially important here in the U.S. because those members of the extended family are often entitled to immigrate here as well).
Countries anxious to have a lot of future high-bracket taxpayers could encourage “high status” and “socially competent” parents to have more children. What would that look like? In terms of financial incentives, pretty much the opposite of the current U.S. system. For example, the IRS reduces your taxable income by $3,950 for each child. But under the “Phaseout of exemptions,” this benefit begins to disappear when a single person’s income is $254,200. Why not have the child exemption be a percentage of income so that it is significant even for high-income parents? As a starting point, since in theory each state has already calculated the cost of rearing children for its child support guidelines (federal law requires that “economic data” be used to create these and they’re supposed to reflect actual spending by parents on children), a married couple with two children could deduct the child support amount that the children would generate if one parent were to sue the other in their state of residence.
A lot of “high status” and “socially competent” women have important jobs these days and don’t want to take time off work to be pregnant, give birth, care for children, etc. The government could clean up some of the laws and regulations around surrogacy so that it was easier and cheaper to hire a surrogate (see this posting for how the woman who carries the baby gets paid less than the paper shufflers). The government could also expand the number of agencies that can bring in au pairs so that au pairs were cheaper (right now just a handful of agencies are selected by the U.S. government and they earn monopoly-style profits). If the expanded tax exemption system above is not implemented, the government could make payments to a nanny or au pair fully tax-deductible, thereby taxing working parents only on the profit that they make from work rather than the revenue.
A lot of “high status” and “socially competent” people are abandoning the suburbs due to traffic congestion (previous posting). Even if they have a high income to go with their high status, the cost of rearing multiple children in the city may be unaffordable due to the cost per square foot of real estate and the need for private school. These people might have more children if either (a) congestion pricing were implemented so that it was possible to live in the suburbs and commute, or (b) schools in the city were improved to the point where high-status parents wanted to send their kids there. (I put forward some ideas for improving schools in my Economic Recovery Plan document.)
What do readers who’ve read Clark’s book think? What other policies would change if we were to put these results to use?
Related:
If “social competence” is essentially genetic, family inherited, and unbending, it seems to me that the moral case for income redistribution is greatly strengthened.
If the poor can’t get ahead, no matter hard how they try, then it’s silly to blame them for being poor.
And if the wealthy essentially inherited their “social competence,” then we can dispense with much of “I-earned-it” platitudes of the rich. No, you won a genetic lottery.
Ironically, perhaps Clark’s work will bolster the case for Thomas Piketty’s wealth tax?
Easy: The idea that there needs to be a “moral case for income redistribution” is a straw man, I think. We already have income redistribution in virtually every country on the planet. Piketty’s is arguing for more income redistribution because he claims that super wealthy people, e.g., get a higher return on their investments (hedge funds, for example) than the moderately well off (S&P 500 index fund investors). Clark’s book certainly does not supply support for tearing down our various welfare systems (e.g., free housing, free/subsidized medical care via Medicaid or Obamacare, free food via food stamps, free cash from TANF and SSDI, free mobile phones, free college education through Pell Grants, etc.), all of which were in place decades before PIketty’s book came out. Clark’s book does supply evidence that Piketty is wrong to claim that “the sky is falling” because some successful people have successful offspring. Clark shows that this is not a new phenomenon and people have managed to live with it since, perhaps, the dawn of humanity. Piketty might still be correct, of course, that society would be better off with a world government, a smaller per-capita GDP (shrunken by the new taxes), and a more even distribution of wealth. But Clark’s data suggest that Piketty is wrong about the world being in some sort of crisis of success inheritance.
Interesting — here is Clark himself on this question:
So you’re not saying that there’s nothing that policymakers can do to mitigate the effects of that on the losers in the lottery of inheritance?
“You really do need to protect people because they don’t choose their lineage. When you can see that events a hundred years before a person was born are predictive of what their outcomes are going to be, you see that people are caught in this web of connections, that they arrive with certain possibilities. Any good society has to take that into account in deciding how to allocate rewards. As I said, I started off as a libertarian economist but, in a sense, I’ve come full circle.”
Greg Clark’s “The Son Also Rises: Surnames and the History of Social Mobility” is published by Princeton University Press (£19.95)
Easy is saying that Clark is making a moral case for redistribution. He doesn’t appear to be claiming that there is a need for such an argument. However, there is a significant portion of the American population who think that redistribution is essentially just theft. So a case could be made that Clark is making a new and useful argument in favor of redistribution.
Also, it’s interesting that, when you list the various free stuff that Americans get, you include free college education, but not free K-12 education. But even beyond that, we could include the free national defense that we all get from the armed forces.
Vince: “there is a significant portion of the American population who think that redistribution is essentially just theft” and you also mention free K-12 education. I haven’t met too many Americans who are opposed to free K-12 education. The most extreme positions that I have heard are (a) ban all private schools so that every child is forced to attend public school, and (b) give all parents vouchers that they can use at private schools if they so choose. So I wouldn’t say that there is a large or politically powerful group of Americans opposed to all wealth redistribution. With government at 40 percent of GDP, however, there are debates about whether it should grow slowly to 50 percent as entitlements grow or whether it should grow quickly to 60 or 70 percent so that we can have everything that anyone has ever asked the government for.
I was making two separate points. One was about attitudes towards redistribution and the other had to do with your list of benefit programs. You mentioned Pell grants but not K-12 education. I thought that that was worth pointing out. I wasn’t claiming that there is much popular support for eliminating public K-12.
While we’re on the subject of education, we should mention again another government program – state colleges and universities. The amount of tax that the typical taxpayer pays to fund state universities in his state is probably much larger than the amount of tax that he pays that goes to Pell grants.
Interesting. I remember reading about a policy in China that allowed wealthy couples to buy a right to have more than one child, but cannot confirm whether this is reliable information (http://www.psmag.com/navigation/health-and-behavior/geoffrey-miller-fat-shaming-tweet-chinese-eugenics-59327/).