Thursday, May 12, 2011

Land of Opportunity?

It's not the US. There has been quite a bit of research in this area and I repeatedly read about the US college graduation rates dropping, income disparities rising, medical bankruptcies rising, and so on. But when economic opportunity is measured as "how well you can escape poverty if you're born poor", The Brookings Institute has a pretty disturbing report surveying recent research in this area (pdf). For example, they site one study by Markus J√§ntti which found that in a comparison of six countries, the US had the lowest upward mobility rate for those raised in poverty (read the report: there's a lot more than this one example). So in a comparison of Denmark, Finland, Norway, Sweden, the United Kingdom, and the United States, Denmark came out on top, with only 25% of those born in the bottom fifth of income remaining there, but with the United States retaining a whopping 42% of poor people staying poor. The UK came in second from the bottom, but it's interesting to note that while correlation isn't causation, the countries with stronger safety nets show that taking care of your citizens doesn't preclude upward mobility. This is interesting because it also gives the lie to the widely held US belief that government helping poor people is always a bad economic idea.

Another thing I find fascinating is that the International Monetary Fund, long the stalwart champion of free markets, admits that total market deregulation isn't the solution to every problem. Just as countries rapidly abandoned "Communism" after the collapse of the USSR, it seems that more and more countries are looking for alternatives to the US-style free market economics. Though there's a lot of value in many of the US's economic practices, there's so much rhetoric and dogma in economics that it's hard to separate the good from the bad.

If stuff like this interests you, you might want to read about religionomics, a post I wrote a long time ago explaining the tendency of people to adhere to economic fantasies while ignoring the real world.
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