Economic Double Talk From The NY Times

Today in this editorial the New York Times tells us that America is no longer the Land of Opportunity. What they don't tell you is how to find this 114 pages of mostly liberal-socialist academic tripe from the Paris-based OECD upon which their short editorial is based. And the real issue is that the research is far from clear, except for the Times' fondness for wealth transfer and public programs another portion of the analysis suggests don't even work. To be fair, the OECD is actually far more forthright than is the NY Times.

Recent research surveyed by the Organization for Economic Cooperation and Development, a governmental think tank for the rich nations, found that mobility in the United States is lower than in other industrial countries. One study found that mobility between generations — people doing better or worse than their parents — is weaker in America than in Denmark, Austria, Norway, Finland, Canada, Sweden, Germany, Spain and France.

Exhibit 1 from the abstract, which appears to be about all the NY Times read before pronouncing the American Dream dead:

Early and sustained investment in children and families can help. A key role is played by early childhood education, care and health. Financial transfers and in-kind services to parents are also important as they provide them with the resources to better rear and care for their children.

Overall, a strategy based on a greater investment in children holds the promise of breaking the cycle of intergenerational disadvantages because of its effects in reducing child poverty and contributing to child development.

Low intergenerational mobility has important policy implications as it implies that the life chances of individuals will partly reflect characteristics for which they are not responsible. However, it should be emphasized that, while it is often possible to quantify the extent of intergenerational mobility with a single number (e.g. in the case of income), this quantification does not imply a judgement about what mobility should be.

M'kay, so let's fast-forward to pg 21:

Haveman and Wolfe (1994) and McLanahan (1985) report that welfare dependency of parents reduces the children's chances of graduating from high school; Corcoran (1995), Corcoran and Adams (1993) and Hill and Ponza (1983) find that welfare dependency of parents reduces sons’ earnings and hours of work; Haveman and Wolfe (1994) report that it also increases the chances of idleness among youth.

and then move right along to pg. 35. My point isn't to malign welfare recipients, but to point out that the New York Times is so intent on seeing wealth re-distribution as the cure for all of our alleged ills, they simply ignore studies in the same report which suggest such wealth transfer programs simply don't work.

In the United States, most of the literature has focused on welfare transmission between mothers and daughters – either in the AFDC, Aid to Families with Dependent Children or in the subsequent TANF, Temporary Assistance for Needy Families programmes. These studies generally conclude that daughters of welfare recipients are more likely to receive welfare than daughters of non-recipients.44 Page (2004) reports an intergenerational correlation coefficient in welfare participation of 0.32 (implying that women who experienced a spell of welfare receipt during childhood are almost three times as likely to become welfare participants when they are adults, compared with women that did not receive welfare, much higher than that reported by the majority of previous studies.45 Studies have also looked at differences between ethnic groups or environments. Borjas and Seyoshi (1997) suggest that growing up in environments characterized by welfare dependency strengthens the effect of both duration and incidence of welfare; and that children raised in households living on welfare are more likely to be dependent on welfare for longer. Gottschalk (1996) concludes that unobserved variables explain a large portion of the intergenerational correlation in welfare participation for blacks but not for non-blacks. The correlation across generations is significant for both blacks and whites even after taking account of those effects.

It'll take a far more serious and sophisticated economics nut than I am to make complete sense of this circuitous report. So have at it. But the study itself suggests it's results are far from simple and they even acknowledge that the variable income status the Times so covets for the US works both ways. In short, a nation in a depression would suddenly have high mobility, but would that be a good thing? And given globalization, stability in US income levels isn't necessarily a bad thing, either, particularly with so many nations only now coming on line and starting to catch up. Have a ball, it's all yours. (pdf) And it's really only 71 pages, the last forty are footnotes and, as regards the NY Times, I doubt they're really counting on you ever reading them any more than they helped you find the analysis in the first place. I guess some of this news just isn't fit to print.

Comments

[David M]

Trackbacked by The Thunder Run - Web Reconnaissance for 07/14/2007
A short recon of what’s out there that might draw your attention updated throughout the day…so check back often. This is a weekend edition so updates are as time and family permits.

[Phoenix]

" A key role is played by early childhood education, care and health. "

Nice passive voice. Too bad it gives away the action these fools want to take. What hogwash.