Many older Americans were raised on Horatio Alger novels, the
stories of poor boys using their wits and pluck to rise from rags to
Success stories still happen, of course. Nowadays girls also rise
from poverty to prosperity.
But for most of the poor, the United States is no longer the land
of opportunity. Economic research in the past decade has found that
upward mobility has faded; most of the children of rich parents stay
rich and the children of the poor remain poor. "Economists in the
past have underestimated the barriers to the children of the poor
getting ahead," says Samuel Bowles, an economist at the Santa Fe
Actually, it is about two or three times as difficult for
children of poor families to rise above their economic circumstances
as economists reckoned in the 1970s and 1980s, he adds. "There was a
bit of wishful thinking about equality of opportunity."
Further, the children of rich parents very seldom slide into the
bottom half of the income ladder. Most retain at least a major chunk
of their inherited wealth.
In general, Americans still believe their economic/social system
is fair. Surveys show that both rich and poor think that economic
success in life depends on hard work and willingness to take risks.
Certainly such attitudes can't hurt an individual's life
prospects. But "there is a very substantial amount of blocked
opportunity for people at the bottom," says Mr. Bowles. Often the
poor are too fatalistic, lacking confidence in their ability to rise
out of poverty..
The playing field is especially uneven for blacks, who face
racial prejudice at work as well as educational and social
difficulties. on top of that, Bowles finds that well-to-do blacks
are less likely to transmit their wealth-building skills to their
offspring than rich whites.
Bhash Mazumder, a Federal Reserve Bank of Chicago economist,
calculates that on average fully 60 percent of the income gap
between any two people in one generation persists into the next
In the 1980s, studies found that only 20 percent of the income
gap persisted. But improvements in econometrics show a gloomier
picture - that poverty may well endure over several generations.
"For people to say we are a very mobile society, people will have
to confront this evidence," says Mr. Mazumder.
All this is relevant to President Bush's economic program. …