No surprise. The more the future economy looks like rich-or-poor, with less of a comfortable middle class, the more middle class parents feel that they must push their kids to avoid downward mobility for them.
Indeed, increasing inequality with more of the gains from economic growth going to the richest 0.1% could mean a negative sum competitive future, where most will be downward mobile compared to their parents.
Of course, in the forum “middle class” (richest 5% or so, excluding the richest 0.5%), that threat of downward mobility is greater, since, even without increasing inequality or a negative sum future, there is much more room for downward mobility than upward mobility.
We are likely just returning to the natural state of man. A large and robust middle class is pretty much a historical anomaly, only existing in a small subset of countries during a relatively short period of time post-WWII.
The US in my opinion will increasingly resemble Latin America in terms of economics, specifically inequality. Demographics is destiny.
@SatchelSF, what’s “the natural state of man”?
Most of human history, people were in little bands hunting and foraging and there was not a lot of inequality. Yes, there were leaders, but the gap between the richest and poorest in, for instance, Amazonian tribes who were untouched by Western civilization was not very great.
Later on, you had chieftains of bigger polities, then kings and emperors of even bigger polities and then the industrial revolution and now, but even as a fraction of our relatively short human history, the latter phases are a short blip in time.
In any case, in US history, the pendulum has swung back and forth. The country wasn’t very unequal from the Revolution through the Era of Good Feelings when the majority of (white) men were yeomen farmers.
It became very unequal during the Gilded Age. Then swung back to less inequality during the New Deal-Great Society era.
Now it has swung back to being very unequal again in this current Second Gilded Age but I expect the pendulum to start swinging back in the other direction soon.
@PurpleTitan
I should more properly have said that the natural state of man during recorded history has been one of great inequality as the norm. For sure, hunter-gatherer bands are characterized by much more egalitarianism. It would almost have to be because by definition there is not much accumulated wealth; but there are other tradeoffs of course.
Since the agricultural revolution, though, starting ~10,000 years ago in present-day Near East and later quickly spreading to present day Europe, and the subcontinent, the archaeological (and later historical) records show tremendous inequality. You can think of Nebuchadnezzar or the Pharoahs for the intuition. For only brief times did the Classical Greeks and Roman Republic enjoy any rough equality (and it was very “rough” equality, with huge proportions of slaves)… I could go on of course., but you get the idea.
Greg Clark does a nice job in his Farewell to Alms book, which I recommend, on the average economic state of man from prehistory though the Industrial Revolution; he has some interesting musings on the source of the explosion in wealth and income since the 1820s in most of the world, which might even be true.
As for US history, of course, there were instances of greater equality at various times and in various places, usually on the frontiers (as they moved with time) and in the North. We can pick and choose to find instances, but just as easily find glaring inequality, as for instance black slaves and poor white farmers in the Antebellum South compared with the southern aristocracy. Of course, throughout the 19th century, Europe was remarkably unequal, really wherever you looked, and had been since the rise of the feudal and serf systems a millenium prior, so we can’t really look there for any support that the natural state of recent man is equality. Ditto for the Islamic world, basically at all times and in all places.
(Africa is an interesting case that illustrates the trend. As technology was introduced, by Westerners, inequality exploded alongside population. Few people realize that the entire continent of Africa by the late 19th century had fewer people in it than the Roman Empire at its peak roughly 200 A.D.)
China has shown similar trends, from what I understand, although I do not frankly know much about Chinese history, other than it has progressed over the past 5000 years from a hierarchical, very unequal agrarian society to a less hierarchical, but still very unequal technological society today, with a few regrettable period in the 20th century of enforced “equal poverty” for vast swaths of the population.
About the pendulum swinging back, of course, in the fullness of time conditions change. But I wouldn’t count on it as a trend. My reading of history suggests to me that inequality follows from centralization of power in the state. The Gilded Age showed up where we were going (actually to what we were returning :-S ), but equality increased not because of the New Deal, but rather because the elite could not stop the Crash of '29, which actually wiped out a tremendous amount of accumulated wealth at the top. If you are sensitive to recent economic history, you can appreciate that the elites - in concert of course with the Federal government - have learned their lessons well, so 2008, for instance, was just a blip. I think the gini coefficient didn’t even miss a beat (but I haven’t checked specifically - why bother, we can all see with our own eyes what is happening).
Anyway, getting back to the original topic, I took a brief look at what I could from the brand new Doepke and Zillibotti book on the nexus between parenting style and economic structure, profiled in the article. (The WaPo article is just a marketing piece, coinciding with the book’s release on Amazon.)
It looks like an interesting read, but from what I could get on Amazon previews the authors seem to ignore whole swaths of the world in cherry-picking the evidence for their conclusions. (In particular, they seem to wholly ignore Latin America, which has tremendous economic inequality but also what he might term “permissive” parenting styles, for the most part.) Also, their understanding of parental influence and home environment is about where the literature was 30-50 years ago, but that is a different issue entirely from their economic arguments.
I’d be curious to hear from anyone out there who has any impressions of the book.
Not going to site any specifics here, just one man’s opinion:
The post war middle class (and shift to the suburbs) was essentially created by the government (New Deal) and rightfully so. We’re a benevolent country. There needs to be a vibrant middle class (if for no other reason to consume the products and services of the upper class) for a sustainable economy. Everlasting deep divides without a middle class leads to revolution and the ending of eras. The better the middle 60% do, the longer this “experiment” lasts (even though the Facebook’s of the world would prefer no countries, governments, boundaries - correction they would prefer FB to be the controlling government - different conversation).
That certainly wasn’t my experience growing up with a Latin American mother. She certainly was not permissive and was a great proponent of hard work, especially with regards to education.
Probably World War 2 more so than the New Deal. The war mobilized the entire society, both labor (into both the military and civilian industries supporting the military, basically eliminating unemployment) and capital (through much higher taxes and contracting requirements), and created more of a “we are all in this together” feeling (at least among white people, as opposed to non-white people who were still heavily limited in what they could do). Post-war measures like the GI Bill and continuation of high tax rates on the richest helped economic growth reach all SES levels (again with the caveat that it mainly applied to the ~90% of the population that was white) for the next few decades.
Of course, compound interest increases inequality over a lifetime, parents with money confer starting advantages to their kids, and inheritance of assets continues the inequality increase beyond a lifetime. And concentrations of wealth purchase political power to change policy that can accelerate inherited inequality.
@SatchelSF, yes, but recorded history is but a tiny blip of all of human history, as I noted above. And humans have evolved strong tendencies towards egalitarianism/fairness (note the significant percentage of the folks who when presented a deal to split an extra $10 between 2 people $9 to the presenter and $1 for self, would rather reject the deal so that neither side gets any). The vast majority of humans are not homo economicus.
As for the post-war period, yes, there was a crash in 1929, but the reason why inequality didn’t resume increasing unabated right afterwards (while it did after the Panic of 1893, which few people now know of but actually was almost as terrible an economic disaster as the Great Depression) was because of government policies and laws and changes in thinking in the general population and among elites due to the New Deal, WWII, Cold War, Great Society.
For instance, here is a chart of the percentage of national income goes to the top 1%:
https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#/media/File:U.S._Income_Shares_of_Top_1%25_and_0.1%25_1913-2013.png
Yes, the 1929 Crash and Great Depression and WWII had an effect, but it still steadily kept decreasing after all that was over until 1980.
There is nothing inevitable about increasing inequality.
And increasing inequality also isn’t because of globalization/technology/whatever. Here are trends in how much accrues to the top 1% in different countries:
https://en.wikipedia.org/wiki/Economic_inequality#/media/File:Income_inequality_-_share_of_income_earned_by_top_1%25_1975_to_2015.png
There’s been some change in that number for Japan, Italy, and France, but not the massive shift that we’ve seen in the US. And I don’t think you can make a reasonable argument that the IT revolution has passed over Japan, Italy, and France or that they are not part of the global economy.
@PurpleTitan, OK, I guess if you want to take the narrow two decades after WWII, which you posit resulted from “changes in thinking,” as indicative of what homo egalitarianus naturally tends towards when operating in the context of a society, I just don’t know how to argue with that! Again, I am more convinced by the massive inequality that we have observed in practically all societies since the dawn of agriculture (so, for roughly 20% of the time span of humans, but comprising no doubt well over 80% of the individual human beings who have ever lived).
I thought everyone knew about the Panic of 1893; shows how out of touch I am! Fun fact, although the period from the Panic of 1873 (yes, there was one then too) through 1896 or so is often thought of as a depression (especially the 1870s) because of the massive deflation in the price index - combined with popular histrionics like, “you shall not crucify mankind on this cross of gold” (Bryan) - I believe that the period 1870 through 1900 showed the greatest rate of growth in real GDP in US history, before or since.
Perhaps no one remembers the Panics of the late 19th century because, as early noted by economists like Rothbard, there were no New Deals implemented to prolong the suffering 
@SatchelSF – I agree with your post #2 with the caveat that IT DOESN’T HAVE TO BE THIS WAY. Greed and shortsightedness is what’s pushing us backwards, not forwards. We’re certainly wealthy enough to create a nation of greater equity. We just don’t want to do it.
I don’t buy the argument at all on helicopter parenting. Parents not wanting their kids to walk alone to the park has vastly more to do with fear of overzealous child protective services taking away their kids, a hyper-awareness of every child kidnapping due to the 24 hour news cycle, a greater awareness of childhood sexual abuse: Catholic abuse scandals, Sandusky, and registered sex offender maps, and shows like Criminal Minds brainwashing people to think there’s a serial killer lurking on every street, and zilch to do with the Gini coefficient.
@PurpleTitan - Those charts of rising inequality as regards the 1% in the US versus other countries are no mystery. Sure, if we want to downshift our growth rates to the level of a France or Italy or (gasp) Japan, we would have less inequality. It’s all a tradeoff that’s for sure.
It’s not about tech. It is about governmental capture by an elite. There is no way I know to prevent this. At least history offers us no guide.
BTW, I prefer this little presentation of charts on US inequality. http://apps.urban.org/features/wealth-inequality-charts/
Fun to play around with the first chart.
One thing impacting the middle class and therefore inequality is the massive increase in taxation over the years. Despite what many have been led to believe, the tax burden in the United States has grown enormously since WWII.
Here is a nice graphical presentation. Unfortunately, it only goes to 2016, and the very rapid growth since the last presidential election will mean that the total tax burden is even higher today than the ~42% of GDP shown. Local property taxes hit the middle class especially hard.
Of course, if the increased economic growth all goes to the richest few percent (or more so, such that almost everyone else gets poorer), that may not be all that desirable for most people. Indeed, that may very well be the case in the US, since a FRB paper indicates that millennials are poorer than their boomer parents were at the same age, controlling for demographic factors like education: https://www.federalreserve.gov/econres/feds/files/2018080pap.pdf
Indeed, a society where the economy is a negative sum game for most and downward mobility is the norm is likely to be a generally nastier one. Even the wealth elites may not escape, since historical examples include societies where the some elites backstab others to force them out and take their wealth – not to mention that wealth elites may be obvious targets of criminals or communist-type insurgents.
@SatchelSF:
“It is about governmental capture by an elite. There is no way I know to prevent this. At least history offers us no guide.”
I don’t see how you could support your argument when the chart I linked clearly showed that there was a half-century where the income share of the top 1% steadily and consistently decreased. And note that most of that time period (roughly 1930-1980) was a boomtime for the US.
BTW, you mentioned Japan. Japan has had bad growth rates because their society is rapidly aging, but it’s a fact that roughly half of American households have around zero net assets (subtracting liabilities from assets) while Japan has (by far) the greatest percentage of it’s households in that (first world) middle class range of $100K-$1M net assets among the countries of the world. Something like 80%-90% of it’s households.
The average Japanese household is in far better shape financially than the average American household.
That study shows income increasing among married couples. Low net-worth per household can be a result of changing household composition, increased college costs, and lower home-ownership, mostly due to lifestyle changes and delayed marriage and child bearing.
I guess, @PurpleTitan, we all see what we want to see. I see the income share of the 1% roughly flat between 1953 and 1980. No doubt the go-go 60s and the 73-74 Nifty Fifty debacle played roles in pushing the share a little either side of the start and end points for that period, against an overall backdrop of strong growth fueled by the rebuilding of both domestic and foreign demand after the decimation of the Depression and then WWII.
If we would allow another Depression event that wipes out the accumulated capital (and influence) of the current 0.1% then I am with you that we would see less of a share going to the top for some years. But capture of the Federal Reserve is much more complete now, than in the 1930s, and now that there is no limit on creation of credit money, I doubt it would take very long at all to get back on the rising inequality train.
If you want to paint an “increasing equality” sheen on homo economicus based on two or three decades in a small subset of countries, fine. Again, my reading of economic history tells me that the default case has always been yawning and gaping inequality between the haves and have-nots, at least since the beginnings of agricultural civilization, with very little room for any “middle class.”
BTW, your median household net worth for the bottom 50% of US households is out of date; it’s about $11K per household, with the upper bound (median for the entire distribution) around $100K. See the 2016 data linked in my Post 14 above.