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Middle of the class Jul 14th 2005 From The Economist print edition
Equality of opportunity is under threat
FOR the past three years, the most successful shows on American television have been “American Idol” and “The Apprentice”. This spring, millions tuned in to watch Carrie Underwood, a 21-year-old country-and- western singer from small-town Oklahoma, win the entertainment contest and to see Bill Rancic, who put himself through university by cleaning boats, land a six-figure salary as Donald Trump's chosen sidekick. The success of these shows in America testifies to the endurance and popularity of the American Dream—the idea that anything is possible if you work at it hard enough.
America's founding document declares all men to be created equal. From Benjamin Franklin, the 15th child of a candlemaker, to Bill Clinton, whose mother was widowed before he was born, the American creed proclaims that the ladder of success can be climbed by all. A decline in social mobility would run counter to Americans' deepest beliefs about their country. Unfortunately, that is what seems to be happening. Class is reappearing in a new form.
For the quarter-century after the second world war, income growth in America was fairly evenly spread. According to a study by the Economic Policy Institute (EPI), the poorest fifth of the population saw its income increase by as much as the next-poorest fifth, and so on in equal steps to the top. But in the past quarter-century, the rich have been doing dramatically better than the less well off. Since 1979, median family incomes have risen by 18% but the incomes of the top 1% have gone up by 200%. In 1970, according to the Census Bureau, the bottom fifth received 5.4% of America's total national income and the richest fifth got 40.9%. Twenty-five years later, the share of the bottom fifth had fallen to 4.4% but that of the top fifth had risen to 46.5%.
A harder climb
This makes America unusual. Thomas Piketty and Emmanuel Saez examined the incomes of the top 0.1% of people in America, France and Britain from 1913 to 1998. The fortunes of the three countries' super-rich kept fairly closely in step for most of the 20th century, until America began to diverge in the late 1970s. Now the top 0.1% of Americans earn two or three times as much as their peers in Britain and France (see chart 6). If America is a ladder, the rungs have been moved further apart.
Perhaps Americans think the rich deserve their success. They certainly work more than they used to. In the 1970s, the top 10% worked fewer hours than the bottom 10%; now the reverse is true. Back in 1929, 70% of the income of the extremely rich (the top 0.01%) came from capital (dividends, rent and interest). Now, 80% comes from wages and stock options, which is earned income of a sort.
Or perhaps what really matters is how the poor are doing in absolute terms rather than in relation to the wealthy. Americans' average salaries have risen over the past 30 years, though admittedly not by much. A far smaller share of the population lives in poverty now than in the supposedly golden age of equality in the 1950s (12% compared with 22%). Moreover, a surge of immigrants on minimum wages tends to bring down the average: home-grown Americans are probably better off than the figures suggest. The rich have not got richer at the expense of the poor. The rising tide has lifted dinghies as well as yachts.
Anyway, what Americans seem to mind about most is equality of opportunity—and people do not feel there is any less of it now than there used to be. Some 80% (a higher proportion than in the 1980s) think it is
possible to start out poor, work hard and become rich. A poll for the New York Times found that twice as many Americans reckon that their chances of moving up a notch have improved over the past 30 years than think their chances have gone down. Most Americans say their standard of living is higher than that of their parents, and that their children will do better than they are doing.
So, on the face of it, rising inequality is not affecting the optimism and ambition of average Americans, and these are what matter to the country's entrepreneurial spirit and social cohesion. But there are three big problems with this rosy view. The first is that America has never been as socially mobile as Americans like to believe. According to a long-term research project carried out at the University of Michigan, led by Gary Solon, America's score on social mobility is not particularly high or low, but middling.
That does not sound too bad. But it means that, if you are among the poorest 5% of the population, your chances of achieving an average income are only one in six. If you are among the poorest 1%, they become very dim indeed. Moreover—and this was the most surprising thing about the study—despite America's more flexible labour markets, social mobility there is no longer greater than in supposedly class-ridden Europe, and if anything it seems to be declining.
A study by Katharine Bradbury and Jane Katz for the Federal Reserve Bank of Boston found that in the 1970s, 65% of people changed their social position (that is, moved out of the income bracket in which they had started the decade). In the 1990s, only 60% did. Not a huge change, but consistent with Mr Solon's study showing that the correlation between parents' and children's income is even closer now than it was in the 1980s. The authors also found decreasing amounts of social mobility at the top and the bottom. This is squeezing the middle class. Americans may be sorting themselves into two more stable groups, haves and have- nots. This is the same trend that geographical mobility has been encouraging. Decreasing mobility may one day come to erode Americans' faith in the fairness of their economy.
The second reason for pessimism is that mobility may continue to decline because it is rooted in fundamental changes to the economy. These explain both the big rise in income inequality and the smaller shift in social mobility. Over the past 25 years, globalisation has increased rewards for intellectual skills, pushing up the value of a degree. The income gap between college graduates and those without university degrees doubled between 1979 and 1997.
This has gone hand in hand with changes in the nature of work. It used to be possible to start at the bottom of a big firm and work your way up. But America's corporate giants have got rid of their old hierarchies. Lifetime
employment is at an end, and managers hop from job to job. That makes a degree essential. In the 1930s and 1940s, only half of all American chief executives had a college degree. Now almost all of them do, and 70% also have a higher degree, such as an MBA. People with a university degree are now more likely to move up an income bracket than those without. This is a big change since the 1970s, when income rises were distributed equally across all educational levels. America is becoming a stratified society based on education: a meritocracy.
But what if education itself becomes stratified? Historically, America's education system has been the main avenue for upward mobility. Mass secondary education supplied the workforce of the world's most successful industrial economy in the late 19th century; mass university education did the same for the period of American economic dominance after the second world war. But now, worries Lawrence Summers, the president of Harvard University, what had been engines of social mobility risk becoming brakes.
At secondary-school level, American education is financed largely by local property taxes. Naturally, places with big houses paying larger property taxes have schools with more resources. At university level, the rise in the cost of education has taken Ivy League universities out of the reach of most middle-class and poor families. The median income of families with children at Harvard is $150,000. The wealthy have always dominated elite schools, but their representation is rising. Between 1976 and 1995, according to one study, students from the richest quarter of the population increased their share of places at America's elite universities from 39% to 50%.
Even outside elite schools, students from poor backgrounds are becoming rarer. The budget squeeze on states in 2001-04 forced them to increase fees at state colleges, traditionally the places where the children of less wealthy parents went. Those children also face increasing competition from richer kids squeezed out of the Ivy League. As a result, a student from the top income quarter is six times more likely to get a BA than someone from the bottom quarter. American schools seem to be reinforcing educational differences rather than reducing them.
The third reason for gloom is perhaps the most worrying. It is the possibility that, as Isabel Sawhill of the Brookings Institution argues, your chances of a good education, good job and good prospects—in other words, of moving upwards—are partly determined by family behaviour. On this view, the rich really are different, and not just because they have more money; moreover, these differences are becoming embedded in the structure of the family itself. Class stratification, in other words, is more than a matter of income or inherited wealth.
College graduates tend to marry college graduates. Both go out to work, so in the households of the most educated the returns to a university education are doubled. College-educated women are also postponing children for the sake of their careers. On average, they have their first child at 30, five years later than in the 1970s and eight years later than their contemporaries who have not been to college.
The trouble with being poor At the bottom of the heap, you see the opposite: women have children younger, often out of wedlock and without a job. True, out-of-wedlock births are falling and welfare reform has increased the chances of mothers holding down jobs, but the gap is still vast. If, as Ms Sawhill argues, the key to upward mobility is finishing your education, having a job and getting and staying married, then the rich start with advantages beyond money.
This does not mean that America's meritocracy is a fake, or that nothing can be done. The country faced a similar rise in inequality in the early 20th century and rallied against it. President Roosevelt sought to save American capitalism from its own excesses so that “malefactors of great wealth” would not become a hereditary aristocracy.
Today, policy changes, such as reforming the way schools are financed, or giving federal help to poorer college students, would lessen social inequality. But for that to happen, American politicians and the public must first acknowledge that there is a problem. At the moment, they do not.
The glue of society Jul 14th 2005 From The Economist print edition
Americans are joining clubs again
ON CHRISTMAS DAY 2004, Rick Warren, the pastor of Saddleback church in southern California, got a telephone call from Thailand. The caller, a pastor whom Mr Warren had trained, said a tsunami had just been reported and many people would need help. Before the tsunami had even struck Sri Lanka, Mr Warren was calling a vast network of churches in South-East Asia who got parishioners to safety, and e-mailing an even vaster network of clubs in southern California. Thousands of volunteers went into action overnight. Within a day, food and medicine worth millions of dollars were winging their way from a single church to the disaster-hit regions. This was American civic volunteerism in action, updated for the 21st century.
Voluntary associations have been the secret ingredient of American social dynamism since the country's foundation. “Americans of all ages”, wrote Alexis de Tocqueville, “are forever forming associations.” By connecting people to their neighbours and to the wider world, argued de Tocqueville, civic associations made Americans better informed, safer, richer and better able to govern themselves and create a just and stable society. They developed to provide something for everyone: fraternal bodies such as the Kiwanis and Elks for men, cross-class federations such as the League of Women Voters for women, scouts and girl guides for boys and girls. There were farmers' groups, industrial unions and associations of Elvis impersonators. If the great sorting-out is pulling social bonds apart, then Americans' love of clubs seems the most likely glue to put them back together again.
But will it? In 2000, Robert Putnam, a professor at Harvard, wrote a celebrated book, “Bowling Alone”, which claimed that America's civil society was in crisis. Mr Putnam pointed out that in the two decades to the
mid-1990s, the number of Americans who said they had attended a public meeting on local or school affairs had fallen by a third. The proportion who said they attended club meetings fell from nearly two-thirds of the population in the mid-1970s to a little over one-third in the late 1990s.
It was not solely the decline in volunteerism that was the problem. The composition of civic associations was also changing. As many of Mr Putnam's critics pointed out, the absolute number of voluntary associations rocketed during that period, from around 8,000 in the 1950s to just over 20,000 in 2000. Optimists said this showed that, far from falling apart, civil society in America was actually flourishing. Americans were finding new ways of linking up and influencing public life.
However, it turned out that the new associations belonged to a different species. Whereas the old clubs had many functions, social, recreational and professional, most of the new organisations—bodies such as the Sierra Club or NARAL, a reproductive-rights group—were professionally led advocacy groups. Whereas the old clubs had networks of local chapters that met frequently, the new bodies often had no such networks, or their chapters met only rarely. And whereas the old clubs depended on annual membership dues, the advocacy groups got their money from foundation grants or direct-mail appeals.
The result, argues Theda Skocpol of Harvard University, was that mass participatory civic life in America declined, despite the proliferation of new bodies. The old associations reinforced ideals of good citizenship. Local and national leaders had to take some note of their members' views. And surprisingly large numbers learned the workings of democracy at first hand. National federations could have thousands of local chapters, each with a number of officers elected each year. Mrs Skocpol calculates that in 1955, the 20 largest voluntary associations alone had 5% of the adult population serving in some capacity or other. All these local officers had to run meetings, handle membership dues, keep records and so on.
AP America needs him
By contrast, people typically become members of one of the new bodies by replying to a direct-mail shot. There are no local officials. National leaders spend their time fund-raising or lobbying politicians in Washington to change the law. These are not primary schools of democracy.
At first sight, the shift from one kind of organisation to another seems inevitable: it is a product of mobility. “People are like plants,” says Mr Putnam. “When you re-pot us, it takes a while to put down new roots.” Clubs tend to be products of stability. But Americans were moving around a lot, so they started joining long-distance organisations instead of face- to-face clubs.
Yet that cannot be the whole story. There were more face-to-face clubs in the 1950s, when geographical mobility was even higher than it is now. Part of the explanation is that civic volunteerism is also being eroded by things that have little to do with mobility per se: television and computers; hours spent stuck in traffic jams; even the decline of family meals because both parents are at work.
In need of friends But the bigger part of the explanation has to do with the paradoxical impact of mobility itself on people's clubbiness. Its direct effect is to disrupt community ties. You see this, for example, among Hispanic immigrants, who have lower rates of joining voluntary associations than do native-born Americans. But the indirect effect of mobility is to stimulate the appetite for social bonds, so when they arrive, immigrants strive to rebuild networks—for example, by organising huge celebrations for Cinco de Mayo (Mexico's national day).
Hence the decline of community ties may well be connected to continued geographic mobility. But that does not mean, as pessimists fear, that mobility will continue to eat away at them until America becomes totally atomised. Because mobility stimulates demand for clubs, you would expect to find new forms of civil volunteerism starting to crop up. And you do: after years of decline, civil society is staging a comeback.
This is showing up in three areas. First, after the terrorist attacks of September 11th 2001, civic and public engagement spiked. Church-going and other sorts of voluntary activity increased. Trust in government rose sharply, to a level not seen since the 1960s. Most of these things dropped again soon afterwards, but not all of them.
The 2004 election saw the biggest turnout for almost 40 years. George Bush's vote was 23% higher than it had been in 2000, and John Kerry's was 16% higher than Al Gore's had been, though the smaller parties did less well. The campaign also produced volunteers in droves. There were
specific explanations for this: the election was close, and America was at war. Still, September 11th may also have re-engaged Americans with public life.
Moreover, there are now four years of indicators showing that the terrorist attacks had an enduring impact on one specific group: those who were in their late teens or early 20s at the time. A project at the University of Maryland under Bill Galston is looking at the attitudes of this dotcom generation. In the year after September 11th, volunteering by 15-25- year-olds leapt, with 40% saying they had volunteered over the previous 12 months, compared with a third for all age groups. That surge has endured. The University of California at Los Angeles is tracking civic engagement at universities, and has found that college freshmen are much more likely to keep up to date with and discuss politics than they were in 2000.
After the second world war, the shared experience of combat created a “greatest generation” that consistently voted more, joined more clubs and volunteered more hours than either their parents or their children. It is too early to tell whether the terrorist attacks will have anything like that impact. But the evidence is growing that they have created a “9/11 generation”.
Second, the internet is at last beginning to have an effect on voluntary associations. When Mr Putnam published “Bowling Alone”, one of the most common objections to his thesis was that he had underestimated the role of technology (which was then caught up in the dotcom bubble). Yes, the techno-optimists said, people may not be joining traditional clubs, but they are joining “virtual communities” online. Five years later, they are being proved right.
The electronic welcome mat At first, it seemed as though Mr Putnam's scepticism was justified. The anonymity of virtual communities appeared to be fatal to the creation of trust and of real civic bonds. When half the members of a teenage girls' online chatroom turned out to be middle-aged men, it was hardly a Tocquevillean moment. But over the past few years, online groups have started to use “convening technology” to create face-to-face social bonds. For example, if you go to meetup.com, you can type in where you live and what your interests are—say Young Republicans, Chihuahuas or Brazilian reggae—and the site will tell you where and when Young Republicans, Chihuahua fanciers or Brazilian reggae enthusiasts are meeting up within 15 miles of your home over the next two weeks.
One of the founders of Meetup, in New York in the aftermath of the September 11th attacks, was Scott Heiferman, who had been reading
“Bowling Alone”. “In those first few days after 9/11”, he says, “New York felt more like a city of neighbours than of strangers. The question I started with was: how do you start an association today? Do you need a building in Washington? No, you go online.”
Since 2002, Meetup has been the forum for over 100,000 clubs with 2m members. This spring there were 2,400 Meetup meetings a week, about 50% more than a year earlier. It is true that these are often meetings of the like-minded, of people with particular tastes in common, rather than universal gatherings of the old national federations that tied disparate groups together. It is also too early to say whether a single website will reverse decades of civic decline: meetup.com is only three years old and has just started charging, with unpredictable consequences.
Still, the growth is impressive. And Meetup is not the only example. One of the most interesting sideshows of the 2004 election was Howard Dean's successful use of the internet to mobilise supporters and raise money. Politically, his campaign was a disaster, but party managers everywhere took notice.
Moreover, these internet-generated meetings are the traditional face-to- face kind that Mr Heiferman calls “the old Tocquevillean stuff”. To cite one small example, the New York Chihuahua club organised a protest by city dog owners against attempts to close dog parks. “The 300 Chihuahua groups around the world think of themselves as a chapter-based organisation,” says Mr Heiferman. In the past, when you moved house, you could lose touch with your local chapter. Now you go online and plug into a network.
The third force helping to revive old-fashioned civic life is religion, and one sort of religious organisation in particular, the megachurch. In many ways, religion itself is an exception to the rule that chapter-based voluntary associations are in decline. Churches are the archetypical civic clubs. Congregations meet regularly face to face. They give money every week. Parish committees are the equivalents of local chapters. Churches have long played a hidden (and sometimes not so hidden) part in political life, from the black churches' role in the civil-rights era to Evangelical Protestant churches in Mr Bush's re-election.
Reliable figures on recent church attendance are hard to come by, but both Gallup polls and church records suggest it was flat between about 1980 and 1998. Some studies, and a mass of anecdotal evidence, suggest that in the past few years attendance may well have been rising. It is pretty safe to say that church attendance has not fallen—and that alone makes churches stand out from the general civic decline.
But over the past few years, one particular part of the American religious line-up has done far more than merely avoid decline. This is the megachurch, usually defined as a church with an average congregation of more than 2,000 each weekend. In 1960, there were fewer than ten of these. Now the number has risen to at least 1,200, according to the Hartford Institute for Religion Research. Twenty of these churches have weekly congregations of 10,000; three have over 20,000. They are Willow Creek outside Chicago, Lakewood in Houston and California's Saddleback. Nearly all their growth has taken place in the past 20 years. Saddleback, which has 82,000 people on its church rolls, held its first service 25 years ago.
Mr Putnam points to two aspects of the success of megachurches that matter to civic organisation in America. Neither has anything to do with doctrine. The first is that founders of megachurches made them attractive to people who were mildly religious but not committed in advance. Mr Warren of Saddleback and Bill Hybels of Willow Creek both went round asking neighbours who did not go to church what they disliked about it and what would persuade them to go.
They redesigned their churches on the basis of this consumer research. Out went 200-year-old hymns, pulpits and even church-like buildings. In came information booths, food courts, churches that look like schools, reggae services and sermons with Powerpoint presentations. As one Californian pastor told the Hartford Institute, “We're trying to create an environment here so the unchurched person can come in and say, ‘This is a church like I have never known.’ ” If megachurches can win millions of new supporters by lowering barriers to entry, there is no reason why secular civic organisations cannot do the same.
The second and more important feature of the megachurches is that they have created huge numbers of small groups. Saddleback has 2,600 small groups, co-ordinated by 9,200 ministers, for its congregation to join—for
computer nerds, cyclists, knitters, you name it. This is a close approximation to the thousands of chapters of the old-fashioned voluntary associations, and makes it possible to engage in social activism on a grand scale. Last year, Saddleback decided to feed all 42,000 homeless people in Orange County for 40 days, and did it.
According to Peter Drucker, a veteran management writer, “The most significant phenomenon in the first half of the 20th century was the company. The most significant phenomenon in the second half of the 20th century was the large pastoral church.” Just as small churches civilised the Wild West because they were the first real community organisations in frontier towns, so megachurches—which are most prevalent in new suburbs and in the sunbelt—are providing community bonds on the new frontier of America's middle-class migrants.