Inheritance can be less unequal

By Edward Hadas
April 23, 2014

The children of the poor tend to end up poor. The children of the elite seem pre-ordained to inherit a good part of their parents’ status and income. Is that just?

Things aren’t as bad as they were. In developed economies, social stratification has far less effect on children today than a century ago. The modern gulf is between developed and developing economies. In rich countries most people are middle class and the gap in lifestyle and education between poor and rich has narrowed.

Still, family remains a big part of destiny. That’s especially true in the United States, in spite of its claim to being a land of opportunity. A recent paper by Raj Chetty and other economists found a strong tendency for American children to end up in about the same position as their parents in the hierarchy of income. An international comparison by Jo Blanden of the University of Surrey concluded that the economic weight of inheritance in the United States is currently relatively high among affluent countries.

It is hardly surprising that social positions persist through the generations. Just look at the environment in which children grow up. The more privileged the young, the more they tend to absorb the sophisticated discussions of their more educated parents, the more likely they are to be pushed and supported, and the more potential employers will find their manners and connections pleasing. Hence Chetty’s conclusion that the parents who can afford to live in a certain community are likely to produce children who can afford to live in similar communities. Conversely, the poorer the parents, the less socially propitious the children’s role models, schools and behaviour.

For anyone who believes that all children should have an equal opportunity in life, any tendency for social position to be inherited is simply a bad thing. Yet egalitarians who happen to be well-off do make exceptions for their own offspring. Like almost all parents, they work hard to help the next generation.

From a strictly egalitarian perspective, such efforts are hypocritical. But equality of opportunity is not the only standard of social justice. In a fair society, parents have the freedom to promote their children’s welfare. A parent who is simply supposed to accept fate or to trust the state is not able to live up to the responsibilities which come with the role.

The conflict between children’s equality and parents’ freedom is irreconcilable. In such a situation, it is necessary to call on a much used and often underappreciated rule of social organisation: when sound principles conflict, the best policy answer is usually a muddle. Perfection is not a realistic goal, but it is possible to eliminate the worst excesses.

One way forward is to help the very poor children who are most likely to inherit disadvantages. Give their mothers extra financial support and advice during pregnancy. Spend more on their schools. Find volunteers to tutor them. Support them when they get into trouble. And recognise that broken families amplify the already bitter heritage of deprivation. It is worth promising poor fathers a living wage if they stay with the family.

Another approach is to counteract flagrant individual injustices. On one side, put talented poor children into superior schools. That used to be common practice in British grammar schools, and it still makes sense, even with long journeys from poor neighbourhoods to good schools in better parts of town.

On the other end of the scale, try to reduce the privileges of affluent children. That is harder, since the young rich usually are genuinely more attractive candidates. Still, by downplaying the value of personal connections, an inherited labour aristocracy can be turned into something more like a meritocracy.

Finally, focus more on what happens to adults. After all, if adult incomes are more equal, their children’s fortunes will be less determined. Besides, polices which reduce the inequality of outcomes among grownups can be less oppressive than those which fight against the inequality of opportunity for children.

These days, the greatest injustice in outcomes is found in the ultra-high pay received by the top 1 percent of the population, even after taking into account the higher tax rates on big incomes. An effort to rein in their pretax pay would take some of the worst sting out of the determinism of inheritance.

The children of the elite may always do well, but less unequal salaries would make their advantages less galling. There’s another benefit. Less extreme pay could reduce the isolation of the rich from their compatriots. Then there would be fewer advantages to inherit.

5 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Mr. Hadas, once in a while you fail to think your subject through. This is such a column.

“One way forward is to help the very poor children who are most likely to inherit disadvantages.” Fine, in principle.

“Give their mothers extra financial support and advice during pregnancy.” It is necessary to understand that it is NOT low income parents that support and pay for their children, but society as a whole over many, many years. Whatever amount the government approves for such purpose, the first half spent on two things:

#1: increasing public sex education, including more truth about the fact that the “little high school princess” becomes a faceless slave to her first newborn. #2: making contraceptive choice low cost or free to any applicant WITHOUT parental approval.

“Spend more on their schools.” This isn’t the answer. Teaching the disadvantanged is a different task from teaching normal students.

Bilingual education is one form of remedial instruction. Separate the academically challenged (for whatever reason) and spend more on the extra resources necessary to bring the abilities of such students up to the norm. Students will rise above the “stigma”, but they can’t rise above the inability to understand or function in polite society.

“Find volunteers to tutor them.” Excellent idea. We have “Big Brothers” and “Big Sisters”. “Community tutors” would be an obvious asset.

“Support them when they get into trouble.” See the preceding. It has always been contra-productive for society to “pay to create more poor”.

“And recognise that broken families amplify the already bitter heritage of deprivation.” While entirely true, I fail to see how the federal government can unilaterally turn around a minority “culture of dependency and failure”.

“It is worth promising poor fathers a living wage if they stay with the family.” No it isn’t. A poor father is not better than no father. A poor father (incompetent OR insolvent) is hardly the positive image a poor child needs if they are to become a productive part of society.

Promise “poor fathers” a living wage, and that will become a minority career path…one decidedly adverse to a productive, inclusive society.

Posted by OneOfTheSheep | Report as abusive

A social democracy is the answer. New Zealand used to be such a place, where the working man was well looked after. Then the 1980′s and the neo-liberal policies created a huge gap between rich and poor.
The ethics of consumerism should also be exposed as a con by corporates. More doesn’t mean happiness.
Egalitarian societies work best because of fairness, so free healthcare, education etc paid for by taxation, a good wage for a hard days work, and help for families, so that noone is truly poor.
It used to and can still work.

Posted by kiwisaver | Report as abusive

The driving force for most people is greed. Greed fuels capitalism, it fuels “I got mine” mentality, and it fuels a win-lose culture.

There are no outcomes where everyone will think it is fair, hence a muddle. The basic truth is that anything resembling democracy (not implying the US has other than an oligarchy today) will only sustain itself with a strong middle class and when most of a population see their society as fair. The relatively recent redistribution of wealth mostly to the already wealthy is counter-intuitive to promote and support a strong national culture.

Posted by ArghONaught | Report as abusive

First, I’d like to point out that the poverty rate in 1959 (across all segments of the population) was about 23%. Today, it is about 15%, up from the historic low of 11.3% in 2002, and 12.3% in 2007 when the current job loss cycle began. Poverty moves with the employment rate, improving during times of low unemployment, and worsening in times of high unemployment.

As a country, we should be proud of that improvement, even though there’s more work to do.

The key is jobs, jobs, jobs. There is nothing else that matters. Employed parents can afford to send their kids to school. Employed adults are happier and more effective parents.

We need to get a lot less stupid about sending our jobs overseas, AND we need to invest in education and training to do those jobs.

That fact of relative wealth won’t change. It can’t change. Smarter, better educated, better connceted, and more motivated people will be statistically more successful. Society can’t function without the “elite,” also known as the leaders and innovators.

If we want to see less poverty and a more equal distribution of wealth, it is our employment, immigration, trade, and wage policies that need to be addressed.

Posted by MikeReid | Report as abusive

I think this is the idea with the most social and economic significant idea to flow from your pen. The capitalist world needs to find a way to combat inequality without killing the great power the creative potential of an individual brings in his or her economic activity (as communism does). I also want to say that the motive to combat inequality is not some sort of notion of fairness, but rather one of greater good – good for the rich as well. If all people in society have a strong footing then everyone benefits. Better to be middle class citizen of California than a rich man in (say) Afghanistan.

Posted by BidnisMan | Report as abusive