New data from the Boston Federal Reserve Bank show that social mobility is slowly decreasing. The rich are more likely to stay rich and the poor are more likely to stay poor than 40 years ago. Jared Bernstein makes the obvious connection to the rise in income inequality over the same time:
There are various links to this chain—and this is just a hypothesis at this point (but I’ll bet I’m right). The relationship between income concentration and political power is one important link. The austerity measures we are now contemplating, the regressive changes to the tax code, the sharp cuts in discretionary spending (a part of the budget that pays for, among other things, various investments in human capital targeted at less advantaged populations)—the general and pervasive view that we a) can’t afford the investments and social insurance we need, and b) can’t raise taxes to pay for them—is not an objective fact based on analysis. It’s a political call based on power.
Or, as Kevin Drum explains the dynamic:
- Income inequality is increasing: the rich are much, much richer today than they used to be.
- To deal with this, tax rates on the rich have gone down.
- Income mobility is decreasing. If you start out poor or middle class, you’re more likely to stay there than in the past.
- To deal with this, government assistance to the poor has gone down.
Or, to put it as simply as possible: “The government is controlled by, and acts solely in the interest of, the rich.”