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Sometimes There’s Upward Mobility … But Usually, in History, There Isn’t Sometimes There’s Upward Mobility … But Usually, in History, ... Sometimes There’s Upward Mobility … But Usually, in History, There... Sometimes There’s Upwar...

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The Next Economy / THE NEXT ECONOMY

Sometimes There’s Upward Mobility … But Usually, in History, There Isn’t

September 25, 2012

In nearly every time and place, a person’s fate has been set at birth. “The son of an aristocrat becomes an aristocrat,” as economic historian Claudia Goldin of Harvard University says. “The son of an impoverished laborer becomes an impoverished laborer.”

Except in cases of extraordinary individuals, that is. Even in antiquity and the most rigid caste systems, champion athletes, beautiful women, military geniuses, courageous soldiers, and gifted artists have managed to escape the circumstances of their beginnings if they also possessed luck, pluck, and force of character. A pharaoh released a capable Jewish slave—Joseph—and eventually made him the vizier of Egypt. A witty and buxom, though illiterate, young woman, Nell Gwynn, was the mistress of King Charles II of England, and her son became the Duke of St. Albans at age 14. In the Middle Ages, men gained earthly power by rising through the Roman Catholic hierarchy. Alphonso de Borgia, the son of a small landowner in what is now Spain, helped heal the breach between the French and Italian branches of the church during the Great Schism and rose to become Pope Callixtus III in 1455. Then his nephew became pope in 1492.

But upward mobility for the masses is far more recent—and is rarer. A vision of a greater and more broadly based social mobility really emerged in Europe and North America only in the first half of the 19th century, about 400 years after feudalism faded. A number of historical forces merged. The Enlightenment of the 1700s had prepared the ground with ideas about the fundamental equality of man and the notion of progress. The yearnings for national unity in Germany and Italy led to tribal notions in which everyone belonged to a community. The Romantic movement in culture and art focused attention on the individual and on the legitimacy and importance of his (or, occasionally, her) feelings. That, in turn, led to revolutionary movements against political systems dominated by the old aristocracy. In France, the working class killed the king and queen and turned the society upside down.

 

Despite the longing for upward mobility, however, economists can cite only a precious few instances where it has actually happened. Usually, it takes a war, social disruption, or an economic metamorphosis. English businessmen who spotted the potential of steam power and mines in the 1800s built gigantic factories and gained great wealth. A new leisure class emerged—while others suffered. Generations of British workers left pastoral farms for dismal urban tenements, an experience celebrated—and excoriated—during the opening ceremony of the recent London Olympics. Or consider the opportunities provided by the Black Death of the 1300s. The demise of about a quarter of Europe’s population created labor shortages that left survivors the leverage to bargain for better pay.

What has happened in the United States, therefore, is truly extraordinary:  Since its founding, the nation has seen two long periods of measurably significant upward mobility. Joseph P. Ferrie, an associate professor of economics and history at Northwestern University, has scoured census and U.S. Bureau of Labor Statistics records to verify these patterns of economic mobility. He concluded that the first such period lasted from 1850 to 1920, when about two-thirds of all men—notably, those of Northern European ancestry—wound up more prosperous than their fathers had been. The Western frontier opened vast possibilities, most dramatically in a few well-located cities. Chicago quickly became a transportation and meat-packing hub where jobs sprang up to support a bulging population.

“It meant huge opportunities for people starting out their lives without connections, without any kinds of skills or trade,” Ferrie said. “You only needed to get yourself out to Chicago.”

Around 1920, that happy phase of history started coming to an end, economists say, because the closing of the frontier shut off the supply of inexpensive new resources. “Once the frontier was closed, we don’t see a lot of real economic mobility,” said Susan Feiner, an economist at the University of Southern Maine. Then mechanization eliminated whole industries, and families maintained their spending with an orgy of borrowing, until the economy toppled under a heavy burden of debt and speculative investing. We know how that ended—and what that’s like.

Momentum resumed in the 1940s, first in the defense industry’s buildup and then in the aftermath of World War II, which left other countries gravely damaged and the United States well-positioned for economic growth. American workers benefited from a vigorous economy and also governmental actions—the GI Bill, the minimum wage, the mortgage-interest deduction, the Federal Housing Administration (which spurred construction). The network of interstate highways let businesses speedily transport goods, helping to make the United States a hub of world commerce. State and federal laws assured workers the right to organize labor unions, which produced for many millions of workers—white men, mainly—a reliable income and the ability to extract more from employers who prospered.

Hmmm, seems like ancient history, doesn’t it?

Still, the evidence that upward mobility has stalled hasn’t stopped Americans from continuing to assume that Horatio Alger is alive and thriving. Ferrie describes “an underlying, persistent—and incorrect—belief that the nation is still unusually mobile.” He likens it to people playing the lottery who see the winner on television and figure it could be them. “People are just as mistaken as when they believe that they are likely to see their own kids get vastly ahead,” he said.

This doesn’t mean that upward mobility is dead in this day and age. No, it’s just moved to places once mired in abject poverty. Countries such as China, India, and Mexico have used low wages, globalization, and regulatory changes in America and elsewhere to lure millions of jobs. These aren’t yet paragons of upward mobility: India still has its system of castes, and in China, it helps a lot to have a parent who’s in the Communist Party. Even so, as a country becomes richer, if the fruits of prosperity are distributed widely enough, parents can hope to see their children improve their lives.

The region that has fared the best in combining prosperity and upward mobility, economists say, is Northern Europe, particularly Scandinavia, the Netherlands, and—hold onto your bowler hats—Great Britain. Since 1970, Swedish economist Markus Jantti reported in 2006, American men have trailed men in those countries in their capacity to rise from poverty to wealth.

Maybe Horace Greeley got it backward: Go East, young man.

The writer is the managing editor of FTC Watch and the author of The Woman Behind the New Deal: The Life and Legacy of Frances Perkins.

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