Humankind, as we know it, is strongly entrenched in social hierarchy. There is deep innate human need to climb up the social ladder. Social ladder is a function of the economic ladder and social standing. It is a very important factor in the creation of a vibrant society as it dilutes all barriers to social stratification. An individual’s opportunities in life remain restrained by their socio-economic status at birth, which is usually deeply rooted in gross historical inequalities. This becomes a major blow to the collective growth of human capital by and large. It is a no-brainer that breaking these shackles would be directly correlated to a greater economic growth. Before we move onto studying the social mobility in the US, let us first define social mobility and walk you through The Global Social Mobility Index that equips policy makers with data to identify areas for promoting equally shared opportunities in their economies.
What is Social Mobility?
Social mobility is very simply the movement of a person, either upwards or downwards, his social scale. It is an index where the social movement of his (or her) parents is taken as the base. It is usually measured against a number of outcomes. Ranging from health to educational achievement to income to social standing to access to opportunities.
Why Do We Need The Global Social Mobility Index?
This index considers what a country can do comprehensively to nurture relative social mobility for all citizens. It focuses on the flag bearers of relative social mobility instead of its outcomes. It looks at policies, practices, institutions with equal weightage. This opens up the idea of comparing social movement across regions and generations. There are five strong determinants: health, education, democratization of technology, access to jobs, fair wage policy and social protection.
Where Does the United States of America Stand Here?
If we consider the intergenerational mobility for native-born citizens using population data from 1850 to 2015, we find major declines in social mobility over the past 165 years. Counter intuitively, most of the fall happened to native Americans born before the 1900s and not off late. It was, in fact, surprisingly activated by the movement of people from farmlands to the manufacturing units during industrialization. Radical industrialization seems like the best idea unless you realize that it worsens social and economic inequity. So will automation today.
So while the Nordic countries are happiest countries according to the scale (Denmark tops the indices followed by Finland, Norway, Sweden and Iceland). These countries fare well on both social and economic fronts. No wonder the citizens are hoary paying 60% of their income as taxes! You’d probably believe that the social mobility in the United States would feature next. And would you be wrong! USA ranks a measly 27.
So is the Great American Dream Really a Lie?
America has always promised great economic and social fluidity. Many a starred eye immigrants have arrived at this seemingly level playing field with hopes and dreams of making it huge. But clearly that is just a farce. How?
First, the amount of economic head start passed down through inter generations is much higher in the US. Almost 50% of the family head’s wealth is inherited by the son or daughter. To put this into perspective, the amount in the Nordic countries or Canada is less than 20%. So there really is no wealth creation in the USA as much as movement of wealth between generations.
Second, in the US of A, a very measly 8% of children brought up in the 20% of the lowest tier of the income scale are able to make their way to the top 20% in their entire lives. Denmark, which has topped the index ranking, is almost double at 15%.
It is now quite evident that the social mobility in the United, coupled with the glaring equality of opportunity, is far more worrisome than in European Union or any other OECD country.
Equal access to opportunity is also a big contributor to very low social mobility in the US. The usual American life expectancy varies by a whopping 20 years depending on the zip code of the where the person resides. Quality of education also is strictly dependent on the neighbourhood a person grows up in. So is proximity to crime and access to healthcare. The social divide is that stark. It makes any sort of upward movement almost impossible. Way more than the OECD countries.
The social ladder is a lot harder to climb: primarily because the rungs of the ladder grows further apart by the hour.
The actual result: glaring inequalities. In both income and wealth. As we write this, the top 20% of the income distribution bracket earn almost nine times more than the lowest 20%. Europe is a whole lot better in this aspect. Wealth inequality is even worse. In the United States of America, the lucky 5% of the population own more than three fourths of the entire fiscal wealth of the country, while 60% of the bottom most barrel is in possession of less than 1%.
Yes, we understand if you need to pause and process this.
How Has its UK Counterpart Handled the Inequalities More Efficiently? What Have the Nordic Countries Done that the USA Hasn’t?
The United States has always viewed fiscal success through the skewed lens of harsh capitalism. Hence, it depends solely on the individual according to the US State. Forced individualism and self-independence have been defining qualities of the American charter. European Union and the Nordic countries view it from a more socialist lens. Hence, they are willing to take the onus of it all. And active measures are taken to fix this.
The other big issue is racism. Poverty is mostly seen as an innate ‘black’ issue and not as an American issue.
The only way of tackling this is shackling the whole belief structure. Studies have shown that the more racially heterogeneous societies are, the more they tend to be altruistic in their economic redressal public policies. The social safety nets need to be broken. And that is probably why The Global Social Mobility Index is far more important than most others.