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The GOP's Pocketbook Issue

Author: Michael J. Gerson, Roger Hertog Senior Fellow
November 14, 2007
Washington Post

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Republicans have spent years wondering when Americans will finally wake up and realize they are actually happy about the state of the economy.

A slowdown may now be in the offing, but that does not explain why the credit has never rolled in for six years of uninterrupted economic growth or the creation of more than 8 million jobs since August 2003. Has an exhausting war overwhelmed the upbeat economic news? Has the public just been in a sour mood this decade?

A series of scrupulously bipartisan new studies by the Economic Mobility Project of the Pew Charitable Trusts hints at an answer — and the explanation is not a funk but a fact. Even in a growing economy, only about a third of Americans can be considered upwardly mobile — meaning they will end up with more inflation-adjusted income and a higher relative economic standing than did their parents. The rest are maintaining their standing or falling behind; about one-third slip down the income scale over the course of a generation.

When specific groups are considered, the news is even more unsettling. Men in their 30s have experienced a sustained slide in their inflation-adjusted incomes, which fell by 12 percent between 1974 and 2004.

And most shocking of all: About 45 percent of middle-income African American children end up falling to the bottom of the income scale over a generation, compared with 16 percent of white children — meaning that even solidly middle-class African American families lead fragile economic lives.

According to the Pew studies, America has less upward economic mobility than Denmark, Canada or Finland. “In America, more than other countries,” says project director John Morton, “the circumstances of your birth have more to say about where you end up than how we tend to think of ourselves.”

Over the decades, families have gradually adapted to these economic trends. They often have added a second income — the proportion of married women who are in the workforce has gone from 23 percent in 1950 to 70 percent today. And families have become smaller, spreading their resources among fewer children in need of food, clothing and cellphones.

But in other ways, Americans have not responded very well to the incentives of the new economic world.

A four-year college degree is now necessary just to tread economic water, and only a professional or graduate degree reliably ensures wage growth. But while college enrollment for men is up, graduation rates have recently declined.

And even though African American families “need more than ever to have two incomes,” says Morton, “we are seeing a decline in the number of two-income families.” Low marriage rates contribute to low incomes.

These trends make a certain amount of long-term economic discontent perfectly rational. They also represent a challenge to conservative ideology. Conservatives rightly reject a leveling equality as a social goal, which can only be imposed by coercion at a tremendous cost to human liberty and human flourishing. But in the absence of economic equality, economic mobility becomes an essential moral commitment. When a society has neither equality nor mobility, it is an aristocracy. Conservatism accepts inequality as an economic fact of life — but it cannot accept the existence of a class-ridden society where inequality is hereditary and permanent.

There are large reasons for these economic trends that have little to do with the economic policies of any single administration. Global competition has deprived America of many lower-skill, higher-paying manufacturing jobs. Rising powers such as China and India are preparing industriously to compete with Americans for higher-skill, high-tech jobs as well. No matter who is elected the next president, American workers will need to be highly educated, willing to change jobs often and prepared to move where new jobs emerge.

Republicans will not solve this problem, but they need at least to address it. And this requires a message beyond lower taxes and spending restraint. The candidates will need creative proposals to reform a health-care system that is a drag on entrepreneurship; to make a college education more affordable; to encourage savings, ownership and financial literacy, which make economic gains less tenuous; even to encourage economic mobility in the context of stronger families.

Republican presidential candidates often talk of a return to Reaganism — and, in one sense, it is needed. Ronald Reagan won elections by responding forcefully to the economic challenges of his time — inflation and 70 percent tax rates. Republicans need to show the same capacity to speak to the largest economic challenge of our moment — the recovery of economic mobility.

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