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What Obama Got Right and What He Got Wrong on Economic Mobility

Posted By Mary Clare Reim On December 6, 2013 @ 12:03 pm In Capitol Hill,Culture,Economics,Front Page | Comments Disabled

When it comes to economic mobility, the President often starts out by making some statements that Republicans and Democrats have always agreed on, such as:

While we don’t promise equal outcomes, we have strived to deliver equal opportunity—the idea that success doesn’t depend on being born into wealth or privilege, it depends on effort and merit.

The idea that a child may never be able to escape that poverty because she lacks a decent education or health care, or a community that views her future as their own, that should offend all of us and it should compel us to action.

But then he spoils it. The President’s speech at the Center for American Progress on Wednesday linked policy prescriptions for increasing economic mobility to reducing income differences in America—as though the opportunity problems facing inner-city kids are somehow because Warren Buffett has a lot of money. But not only do the facts show [1] no link between income inequality and a lack of mobility; focusing on inequality actually distracts from the true causes of low economic mobility.

The President identified several social factors that are essential to upward mobility. “Disparities in education, mental health, obesity, absent fathers, isolation from church, isolation from community groups—these gaps are now as much about growing up rich or poor as they are about anything else.” He’s right about these things. But income redistribution will not fix these.

Social capital [2]—the assets one gains from interactions with one’s community—is the most important tool for economic mobility. A child brought up in a stable, working family and surrounded by a neighborhood with schools and churches that reflect the values of hard work and success, will have a much better chance in life than those who are brought up in an environment that lacks that social infrastructure. According to the Pew Economic Mobility Project [3], “The wider community and society exercises considerable influence on economic opportunity and the ability of children to take advantage of it. This influence grows along with age, becoming influential as children enter school and considerably more important in adulthood.”

While the President joins conservatives in their concern for the decline in social institutions that help foster an environment of opportunity, his policy proposals centered on larger government programs and wealth distribution neglect the true barriers to economic mobility that can be removed at the local level.

Poor public schools, single-parent families, violence, drug use, and the lack of a culture of expectations are all factors that inhibit a child’s chances at a better life. Addressing the public school problem needs a strong dose of school choice and other reforms. The other problems mainly need effective grassroots and civil society strategies. But instead of focusing policy proposals on increasing the social capital needed to rebuild community institutions, the President suggests programs such as a job-killing higher minimum wage [4] or universal preschool [5]—both policies we know to be economically ineffective.

We should, as the President said, all be concerned and offended that growing up in a low-income neighborhood may mean that the American Dream is not an option for you. The President even quoted Lincoln to prove this point: “While we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.”

However, that line comes from a much broader claim about the relationship between income inequality and economic mobility:

I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everyone else. When one starts poor, as most do in the race of life, free society is such that he knows he can better his condition; he knows that there is no fixed condition of labor, for his whole life.

The fact that some Americans start out ahead in the race of life, thanks to nurturing parents and supportive communities, should not become the most decisive issue of our time. Instead, we should focus all of our efforts on making sure that children can, as Lincoln said, better their condition regardless of where they come from, through hard work and a constant striving for self-betterment within communities and families that encourage them. The best way to address that issue starts with the institutions of civil society and the creation of social capital [2] necessary for economic mobility.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/12/06/obama-got-right-got-wrong-economic-mobility/

URLs in this post:

[1] facts show: http://nationalaffairs.com/publications/detail/overstating-the-costs-of-inequality

[2] Social capital: http://www.heritage.org/research/reports/2013/12/rebuilding-social-capital-through-community-institutions

[3] Pew Economic Mobility Project: http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Economic_Mobility/PEW_EMP_Chartbook_12.pdf

[4] job-killing higher minimum wage: http://www.heritage.org/research/commentary/2013/7/raising-the-minimum-wage-bad-ideas-have-consequences

[5] preschool: http://www.heritage.org/research/commentary/2013/11/dont-look-to-the-feds-for-pre-school

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