The Past Speaks

In his State of the Union Address, President Obama vowed to do more to fight the growing gap between rich and poor and falling rates of social mobility. There is, of course, abundant evidence that the gap between rich and poor is widening in the United States, that inequality is more pronounced in that country than in other advanced economies, and that it is harder in the US for someone with poor parents to achieve social mobility that for poor children in other advanced economies. Inequality has been a hot issue ever since the rise of Occupy Wall Street.

With exquisite timing, the economic historian Greg Clark has published a book showing that social mobility is very limited even in the most redistributive welfare states. By searching for rare surnames in historic census and tax data in a variety of countries, Clark has been able to compare the rates of social mobility. He found that even in Sweden, most families have achieved little social mobility over the last few hundred years. People with noble surnames in Sweden still earn significantly more than the people with the most common surname (Andersson) despite economic upheavals such as war, rapid industrialization, and the emergence of a welfare state supported by high inheritance and income taxes.

The really interesting data in Clark’s book relates to China, which has seen a massive change in its social system since the Manchu dynasty was overthrown in 1911. After the Communist takeover of China, people of noble and merchant ancestry were frequently subjected to discrimination and even persecution that sometimes led to execution. There was a form of affirmative action for the children of peasants and workers. Despite this radical social engineering, people in noble and other pre-1911 upper class surnames tend to be wealthier than other Chinese. They have come out on top. There are, as of yet, no clear explanations for why inter-generational inequality persists despite huge changes in the social order and the outright confiscation of property.

It’s nice to see that the most economically and historically literate journalists have sought out Professor Clark. Matt Yglesias reported on Clark’s findings. Dylan Matthews of the Washington Post did a great interview with Greg Clark, which you can read online here. In the course of the interview, Clark said this about Sweden:

And that’s where Sweden’s system does provide advantages over the U.S.’s. They haven’t changed mobility rates, but they’ve changed the consequences, strongly, of ending up at various points in the distribution. It’s a much better place for people who end up at the bottom of the distribution.

P.S. There is some interesting data showing that the rate of social mobility varies considerably between US counties. As you would expect, the old slave states have low social mobility but some of the other findings shown on this map are harder to explain.