Reader Alex C sent a link to an article in the Guardian by Mark Weisbrot in which he surveys some recent findings aht disproved cherished myths about the US economy. Two are related to the widely-held fantasy that America is a land of dynamic entrepreneurship. In fact, a recent study found that the US ranks low among advanced economies in the proportion of people employed by smal businesses. The likely culprit? Lack of universal health care. But you won’t see that on the agenda of organizations like the right-leaning Kauffman foundation, whose mission is to promote entrepreneurship and innovation. And I must say from my own sample that most of the self-employed people I know did not have a career goal of starting a business, but out of necessity, due to job loss or being badly stymied at their employer and unable to land comparable new work.
A second element of the entrepreneurship myth is that the US is a land of economic mobility, that if you work hard and apply yourself, you can improve your economic standing considerable. Again, the US scores poorly in by international standards in economic mobility. The have-nots tend to remain have-nots.
In addition. the high level of US carbon production is due to a surprisingly significant degree to our lifestyle, working long hours to consume, rather than “consuming” more vacation as Europeans do.
From the Guardian:
The Great Recession is allowing some widely held beliefs about the US economy – which were the source of much evangelism over the last few decades – to run up against a reality check….
This month my CEPR colleagues John Schmitt and Nathan Lane showed that the United States is not the nation of small businesses that it is regularly dressed up to be for electoral campaign speeches and editorials. If we look at what percentage of our overall labour force is self-employed, or what percentage of manufacturing workers or high-tech workers are employed in small businesses – well, the US ranks at or near the bottom among high-income countries….
And as both the authors of the paper and Krugman note, there is a plausible explanation for the US’s low score in the small business contest: our lack of national health insurance. There are enough risks associated with choosing to start a business over being an employee, but the Europeans don’t have to worry that they will go bankrupt for lack of health insurance.
A number of other alleged advantages of America’s “economic dynamism” are also mythical. Most people think that there is more economic mobility in America than in Europe. Guess again. We’re also near the bottom of rich countries in this category, for example as measured by the percentage of low-income households that escape from this status each year.
The idea that the US is more “internationally competitive” has been without economic foundation for decades, as measured by the most obvious indicator: our trade deficit, which peaked at 6% of GDP in 2006. (It has fallen sharply from its peak during this recession but will rebound strongly when the economy recovers).
And of course the idea that our less regulated, more “market-friendly” financial system was more innovative and efficient – widely held by our leading experts and policy-makers such as Alan Greenspan, until recently – collapsed along with our $8tn housing bubble.
On the other hand, most Americans pay a high price for the institutional arrangements that bring us these mythical successes. We have the dubious honour of being the only “no-vacation nation”, ie no legally required paid time off and of course some weeks fewer actual days off per year than our European counterparts enjoy. We have a broken healthcare system that costs about twice as much per capita as that of our peer nations and delivers worse outcomes, as measured by life expectancy and infant mortality. We are near the top in terms of inequality among high-income countries and at the bottom for parental leave policies and paid sick days. The list is a long one…
There is another area where the comparison between the American and European model has serious implications for the future of the planet: climate change. “Old Europe” uses about half as much energy per capita as the US does. A big part of this difference is because Europeans, in recent decades, have taken much more of their productivity gains in the form of increased leisure time, rather than working the same (or longer) hours in order to consume more.
We estimated that the US would consume about 20% less energy if it had the work hours of the EU-15. This would have a significant impact on world carbon emissions. Furthermore, when the world economy recovers, there are a number of middle-income countries that will approach high-income status in the not-too-distant future (South Korea and Taiwan are already there). Whether they choose the American or the European model will have an even bigger impact on global climate change.
The major media in both Europe and the United States have played an important role, for decades, in helping politicians capitalise on economic mythology to push policy in economic and socially destructive directions on both sides of the Atlantic. It remains to be seen how much the Great Recession will influence the thinking and reporting of these influential institutions.
53 comments
Comments are closed.
could this be the beginning of the end of the American keep em dreaming machine -I don't think so, but hope springs eternal.
Where's Canada on the CEPR report? It's listed early on, and then mysteriously disappears on all the subsequent graphs that highlight the US atrophy with regards to self-employment.
When making comparisons with other countries to make the connection between diminished self-employment in an advanced economy and lack of universal health-care….
Wouldn't it make sense to include our closest neighbor that just happens to be an advanced economy and which just happens to provide universal health-care?
Or are we to get more information comparing ourselves to Greece…that shining example of entrepreneurship with the world-renowned health-care?
I would start my own business in a heartbeat if we had universal healthcare in the US. As it is, though, being in my late 40s (as is my wife) I don't want to risk losing my health insurance for whatever reason (Ins Cos can basically cancel on a whim if you get some disease that would actually require them to pay for something ). And the premiums can get pretty ugly once you get into your 50's.
Yes, America was indeed a land of entrepreneurs back when it had universal health care. But those damn Republicans took it away.
What a load of garbage. Is your book going to be this full of crap, too?
Seems like the article is being a bit selective in how it packages the data and its conclusions, particularly in connection with levels of entrepreneurship and economic mobility. To reduce lower levels of entrepreneurship to lack of public health insurance is quite a stretch. What about labor-market inflexibility in the EU? What about the fact that the American consumer basically subsidizes the cost of drugs in the EU and elsewhere? There are a ton of factors that have to be analyzed before you can say with any degree of accuracy how health insurance impacts levels of entrepreneurship. Also, it is never clear in the 'economic mobility' argument whether researchers are counting the same households. Thanks to consistently high rates of immigration and a large, non-farm underclass, the USA is also always going to have significant numbers of low-income households, but I get no sense — whether anecdotally or data-driven — that these are the same households over time. People do cycle into and out of poverty in the US, probably on a far greater scale than in Europe.
Ultimately, I don't find this article convincing in the least…seems more like choir-preaching to me.
I'm down with Dan.
But, I'd also like to question the whole mobility argument here based purely on anecdotal evidence.
Why do we have scores of illegal immigrants flooding our shores if there isn't any mobility?
I don't know if you live south of the mason dixon, Yves, but down here, they certainly are doing much better than cherished, entrenched minorities. And, the countries they come from all have universal healthcare.
This is pure liberal propaganda. The reason we have fewer small businesses is because the ones we had grew big. There is no way you can link carbon footprint to vacation time. That is pure sillyness.
ha-ha-ha-ha-ha…mmmmphhhh……..
ah, what the heck….
ha-ha-ha-ha-ha-ha-ha……….
sorry, couldn't help myself – when i read this kind of junk masquerading as serious thought, well, i just get the giggles
btw, well said, mr. goodwin
Wow, what a pile of tripe.
"Let's work less so we produce less carbon. That will pull us out of recession!"
No entrepreneurialism? Could it be because they can't compete with the big government bureaucrats who have been captured by big business lobbyists to provide favorable legislation? Nah, it's because of health care.
No class mobility? Could it be because of rampant government-mandated inflationism that benefits the rich first by providing them with endless pools of credit availability to buy up assets before they reflect the new supply of money and credit? Nope. It's the evil capitalist profit motive.
Seriously, sometimes I just wish all of these socialist fantasies would come true so it can inevitably fall on its face. Until these utopians see it with their own eyes, they'll keep writing this garbage.
Bob Goodwin:
"There is no way you can link carbon footprint to vacation time."
Not silly at all. Passenger cars are about 40% of oil consumption. Let's say very very conservatively, half of that is commuting(sorry, quick search I can't find exact numbers.)
Lets also say, that on average, compared to commuting, people use less oil. That cuts carbon production. How much, open to question, but far from silly.
The bigger deal is less work and less consumption equal less carbon, that's where we need to go.
Seems the article struck a nerve base on some of the reaction its getting here.
There are no good arguments against single payer health insurance; offering everyone the option for joining Medicare would pull the rug out from under all the violence mongering tactics being covered so avidly by corporatist/Republican media in their 60-year'war against universal basic health care.'
Employer provided health care insurance with no affordable alternative such as the public option enslaves workers. Its like giving workers the old time company living quarters and a company store with credit -they're trapped; the modern version of health insurance and credit cards given that private health insurance can cost more than housing.
"The reason we have fewer small businesses is because the ones we had grew big." and bigger and gulp, bigger and bigger.
The population grows, the number of people needing employment grows and the number of new businesses need to continue to grow. They haven't been growing and the big getting bigger become monopolies by gobbling up small companies and stifling innovation and competition.
Look at Microsoft -how many thousands of little companies has Microsoft gobbled up to put superior products out of business and stifle innovation in the bud.
I love the way opinion masquerades as insight. In case none of you bothered thinking it through, not having health insurance is a very big deal. And as for "small businesses get big" do you have any facts to back that up? I'm sure you don't. That's because 9 our of 10 businesses don't get big, they fail in the first five years.
The labor mobility argument cuts both ways. A lot of people go into business for themselves out of necessity, that they lost a job or got into a political corner where they are now. That's a result of employment at will. Having undercaptialized people starting up businesses out of necessity is hardly a prescription for success. And that fact would lead the US to tend to have more small businesses than otherwise.
how 'bout we work less so we can work less? that's good enough, isn't it? there's a sweet job at GE I'd love to have. Interesting work, decent pay. But they are totally unflexible on their vacation policy. doesn't matter that I'm 50 and have already worked in similar jobs elsewhere, I have to start with 2 weeks vacation per year, none available in the first 6 months plus 7 holidays. Non-negotiable, not against lower salary or anything. well, I'm voting with my feet. sorry, that's inadequate for me at this point in my life. maybe when i first got out of grad school, but even then….
why do you repubs defend stuff like no vacation time and health insurance tied to employment status. what's wrong with you? self-loathing? masochistic?
Like most, Yves turns her brain off when looking at information that conforms to her vanities and biases.
I do hope that her book is devoid of such nonsense.
The Divagator,
What about the fact that the American consumer basically subsidizes the cost of drugs in the EU and elsewhere?
And what about the fact that the rest of the world basically subsidizes the cost of oil, pollution and green technologies in the US?
It's true that there's a huge leap between having less big-corp employment share and connecting that to universal healthcare. But it's also obvious that universal healthcare makes it easier to get self-employed or manage small companies.
So that study may have a point. Anyway, the myth that most Americans in the computer-services industry or in R&D worked for small ventures becoming the next Google has been proved wrong.
The US R&D structure is more similar to countries with relatively low R&D than to those with high R&D; and its computer-service industry is more similar to those efficient, but unentrepreneurial (like Spain), than those famed for innovative ventures (Sweden, UK).
I know of at least 2 smaller companies that closed up shop this year because the owners correctly determined that they would be better off working for someone else.
In both instances the owners were offered and then went to work in the burgeoning public/private segment of the economy here in upstate NY.
Can't fight it, just join the bureaucracy.
Health care was top on the list of the owners who are both above 50.
bob
WOW!
WOW!
yes, the main reason we have a smaller number of self-employed is due to HEALTHCARE? I'm giving myself 60 seconds to think of more relevant reasons, off the top of my head. here we go:
– immense power of US gov controlled by large corporate lobbies&donations, educational system – puts students on track to getting corporate jobs rather than thinking for themselves, bailouts for large institutions now and in the past, inflationary policies that favor those closest to the money spigot, …
I love NC but this is just pathetic. Highly politically motivated article right off the bat, between the healthcare and slightly pro-cap-and-tax arguments. Maybe we should talk about real economic problems instead of political smokescreens?
Yeesh.
Kyle,
d'you know why you thought about more relevant reasons? Because you gave yourself just 60 seconds.
The authors have actually spent far more time reviewing past studies, including Wellington's:
"Using data from the 1993 Current Population Survey (CPS), the author focuses on the impact of having health insurance through one's spouse on the likelihood of self-employment. The best estimates suggest that a guaranteed alternative source of health insurance would increase the probability of self-employment between 2.3 and 4.4 percentage points for husbands and 1.2 and 4.6 percentage points for wives."
Incidentally, those 4 percentage points in self-employment are the difference between the EU average and the US.
@Chad
"Why do we have scores of illegal immigrants flooding our shores if there isn't any mobility?"
There is a difference between actual mobility, and the myth of it. That's the point of the article.
The flood is a result of the myth.
I lived south of the mason dixon, and most of my middle class friends there were Mexican. But believe me, there are a lot more people who never had a chance to work their way up.
…
As far as health insurance and entrepreneurialship goes, I think the problem is the cost of health care.
In the past, a trip to the hospital wouldn't bankrupt the average citizen; today it does.
Health insurance was the bridge over that gap; but make no mistake, the root cause was the cost of the care, less so the insurance. The problem now is that the cost of insurance is just as unbearable as the cost of care.
That's why it makes more sense for an intrepid worker to get employer subsidized insurance, rather than shoulder that cost solo on top of the cost of starting a new business.
it's a cost issue, not a Marxism/McCarthyism, or socialism/capitalism issue.
I agree this post definitely hit a nerve. American healthcare with its out of control costs, unequal distribution, and comparatively poorer outcomes is going to have economic impacts. It would be silly to think otherwise. Yet this too is a myth that has been sold for decades that the US has the best healthcare in the world. At the same time, the social safety nets in European countries, including healthcare and vacation also have real economic effects as well. Apparently all this is to be disregarded since to accept it would challenge some people's economic ideologies. This is especially bizarre considering how catastrophically wrong current events have shown those ideologies to be.
Wages in this country have been flat for 30 years. Wage increases were demonized as inflationary. What wealth that was created during this period went to the upper 1-2 percent of the population. Another myth "trickle down" economics that was used to justify this never, never worked. But if the middle and lower classes have been treading water and the richest have been getting vastly richer, how could you not expect economic inequality to increase? Put the ideology and rose colored glasses aside and do the math. And what by the way was the result of this massive transfer of wealth upwards? A series of speculative bubbles and a paper economy. Was this really a more productive use of those funds than increasing middle and lower class wages? As we have seen it has resulted in vast wealth destruction. And even though the wealthy have lost some in these bubbles, it is the middle and lower classes that really get socked by them in job losses, upside down mortgages, joke 401ks, other pension losses, and, of course, the bill for the mammoth bailouts to save the wealthy and corporations from themselves.
The reaction here shows that these myths still pack a punch no matter how debunked, or like so much else nowadays, bankrupt they are. But as the financial meltdown and healthcare debate have shown most modern economic theory is bad fiction and our present system of healthcare is unsustainable. The response of our policy elites and many here, however, is to defend and prop up these failed systems based on failed ideas. Under such circumstances, is it any surprise that more failure is what we have to look forward to?
Yves, I am surprised you would publish this piece. It's not up to your usual insight.
Basically this is a phony hit piece for those in favor of national health care.
1. Since small business owners aren't required to offer health insurance to their employees (yet) why would that hinder the formation of new small businesses? The increased cost of health care on businesses would decrease business formations.
2. Since taxation must increase to cover national health care, the additional cost to businesses would help keep them smaller as their profit margins shrink. It would be a great tool to keep small businesses small.
3. In much of Europe there are regulations protecting small businesses from competition from larger businesses. That's why they have more small businesses.
4. Also Europe's overall tax rates are higher making it more difficult for small business to expand.
5. As pointed out above, we have incentivized our small businesses to grow into larger businesses if they succeed. Who cares if businesses are small or large?
6. Because of increased regulations and taxes in the US, the scale of larger businesses is better.
7. We have the most vibrant venture capital system in the world, creating more new businesses than any other country.
There is no economic justification to say that lack of a national health care plan inhibits business formations. They just made up phony statistics to justify their pro-national health care agenda.
Is not the present health care system akin to the company store, in the end they get it all back (All value returns to Wall St). Too much like Matewan if you ask me.
How many generations have eaten from the bowl (Corporate/Wall St. ideology) set before them since birth, ingrained in every fiber of their being and what will become of the great American mantra we are number #1. Just remember we are human beings first, then Americans.
A/V http://www.youtube.com/watch?v=FWjdpgtXR1w&feature=related
Skippy…You live your life like a Canary in a coal mine, you get so dizzy you can't walk in a straight line.
PS. Love the influenza line, wife has the piggy flu.
Well, this hit a nerve, and pops a bunch of myths.
Wow, Econophile, talk about lack of good insight.
Who's going to work for your new small business if you don't offer any health insurance? Not smart employees.
If some sort of national healthcare system was implemented and caused higher taxes on small businesses don't you think that the healthcare expenses of those businesses would then be reduced by up to 100%. So now, what would the net effect on small business income statements actually be? Do you not think any of this through?
And then numbers 3 – 7 on your list just don't make any sense.
Well, keep going with the ignorant belief that the US can learn from no one. It has worked so beautifully up til now, don't you think?
Hi Yves:
In the three articles I sent you, I told you one was my favorite topic. I am going to expand upon the topic here if you don't mind.
Tom Hertz in "Understanding Mobility in America" breaks down the question of whether society is any more upwardly mobile today then previously. Findings relating to intergenerational mobility (Hertz):
– "Children from low-income families have only a 1 percent chance of reaching the top
5 percent of the income distribution, versus children of the rich who have about a 22
percent chance.
– Children born to the middle quintile of parental family income ($42,000 to $54,300)
had about the same chance of ending up in a lower quintile than their parents (39.5 percent) as they did of moving to a higher quintile (36.5 percent). Their chances of attaining the top five percentiles of the income distribution were just 1.8 percent.
– Education, race, health and state of residence are four key channels by which economic status is transmitted from parent to child.
– African American children who are born in the bottom quartile are nearly twice as likely to remain there as adults than are white children whose parents had identical incomes, and are four times less likely to attain the top quartile.
– The difference in mobility for blacks and whites persists even after controlling for a host of parental background factors, children’s education and health, as well as whether the household was female-headed or receiving public assistance.
– After controlling for a host of parental background variables, upward mobility varied by region of origin, and is highest (in percentage terms) for those who grew up in the South Atlantic and East South Central regions, and lowest for those raised in the West
South Central and Mountain regions.
– By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income
countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States."
Without getting to winded, "some" key finding relating to year to year income movements:
– "Households whose adult members all worked more than 40 hours per week for two years in a row were more upwardly mobile in 1990-91 and 1997-98 than households who worked fewer hours. Yet this was not true in 2003-04, suggesting that people who work long hours on a consistent basis no longer appear to be able to generate much upward mobility for their families.
– The median household was no more upwardly mobile in 2003-04, a year when GDP grew strongly, than it was it was during the recession of 1990-91.
– The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term
mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile
($122,880 and up) saw a reduction in the frequency of large negative income shocks.
– For the middle class, an increase in income volatility has led to an increase in the frequency of large negative income shocks, which may be expected to translate to an increase in financial distress.
continued
If anyone here believes there is greater ingenerational mobility and income movements for 80% of the population today than what existed in the short term of 20 years, I would love to hear the reasons and from what part of the US you live in so I can move there. Telling people to pull themselves up by their own bootstraps to succeed and climb to the next level as detailed in The American Dream or the Horatio Alger story is silly when we have eliminated a number of the rungs of the ladder necessary to climb to the next level.
Yves, I'm a little surprised… you are a very cogent writer and I enjoy reading your take on things. But this guy?
This article is a string of assertions created using nuggets of fact taken out of context and then jumbled together to combine the MSM talking points du jour (Gov’t Healthcare, global warming, evil corporations, governments always provide the best solution, housing bubble caused by un-regulated markets, etc…).
“Internationally competitive”… we are still the largest manufacturing country in the world but he says we are not competitive?
America's "economic dynamism"… not sure what he means by this but how I interpret it, we have one of the most robust venture capital system in the world, and with this we have some of the loosest regulations on starting businesses meaning more ideas can be tried (even if they fail) with less red tape (which is usually a barrier to entry in many parts of the world).
Nobody says that the US is the model of competitiveness and “dynamism”… what they argue is that we are competitive and dynamic relative to everyone else.
A few questions for the author… Would we really be so much better adopting a European system that resulted in stagnating growth in the Eurozone for the last 10+ years? Why are a lot of the governments in the EU attempting to change their work rules? What is the unemployment rate in Spain/Germany/UK? What has it been for the last decade? If we reduced our work hours to that of the EU, what would happen to our productivity?
We stopped looking at the EU because that is not who we are competing against anymore… look east… but for the record I would love 5 weeks of mandatory vacation.
Seems like a very biased article. Let's challenge the use of one stat, by looking at another. The Russell 5000 is an index of "small" companies. But if a company is wildly successful, like a Google or a Microsoft or an Intel, it quickly becomes "too big" and is taken out of the index. Thus, the Russell 5000 necessarily keeps only the low/no/negative growth companies.
Now let's look at "households escaping poverty," a stat used in the article. First, the definition of poverty pretty weak: the poorest Americans are better off than a very high percentage of the world's population: by the standards of someone living in the slums of Jakarta or Rio, Americans (even the poor ones) are rich. Second, the "poverty line" moves. Theoretically, this is an unbiased statistic, but it's based on a weak definition. Just a small amount of bias, intentional or not, can lead to vast numbers of people being chained to… or escaping… poverty. Like the Russell 5000, the line on what is "too big" is fluid, rendering the resultant sample inherently biased to the bad.
Shall we now look at the other statistics?
Yves:
The vast majotity of small business make less than $300,000 per year, which placed Joe the Plumber out of risk for any tax increases discussed during the campaign. Universal healthcare or one payer healthcare would place small companies on a different plane. Obama has discussed assisting small businesses lower the 18% premium paid by small businesses when compared to larger businesses.
Is there anyone here that does not believe healthcare is not a factor for most of America internally and externally when competing globally? Your private healthcare is next up to be chopped when competing globally as acost that makes many businesses uncompetive globally by adding to Burden.
Chuck:
The US is not competitive when one takes into consideration the Burden associated with US workers in comparison to Asia where such a Bueden does not exist.
I've been reading about the death of America for forty years and now it is even at Naked Capitalism. How pathetic.
Yes, yes I think you are on to something. We suck because we don't have universal health care. Too funny. How did we ever make it to 2009?
I am as apolitical as they come. However, health care that goes with you where ever and whatever you do equals Freedom.
This does not scare me.
Nuff said.
Not sure how the topic of ingenerational mobility got brought up but I have a couple quick thoughts…
1. a good economic mobility setup does not mean families have wild swings in economic status between generations. It means that there is the opportunity to move between economic statuses if one applies themself… and in America that opportunity exists… I have done it and I know many others that have done it as well with surprising ease (and a lot of hard work).
2. States go out of their way to make sure “disadvantaged” youths get access to colleges and other important institutions (especially libraries), but it is up to the individual to study and apply themselves”. (again… been there and done that)
3. The culture in any given socio-economic level or community is much more of a barrier to changing economic levels than anything else… this is not a systemic barrier but a personal barrier. Values, beliefs, ways you think about money, family, business, etc… you need to relate to people to be accepted by them. This is the hardest part because you need to examine the cultural values you were raised with and decide what works for you.
4. This leads to… People help out and hire people they are friends with and relate to… this is true in socialism, capitalism, oligarchies, and dictatorships… there is no way around this and no way to legislate this away. You need to assimilate… if you want to be an investment banker, you need to fit in with investment bankers. “Rich kids” have the advantage because they already “fit in”… but what are you going to do?… life isn’t fair. By the way 22% of rich kids remaining wealthy isn’t a lot.
5. Stop measuring against the top 1%… what a ridiculous level for anyone to attain to be considered “moved up”. By definition it is a narrow band of society… hell Obama and Clinton aren’t in the Top 1%… I know very well off people not in that level.
Not sure how the topic of ingenerational mobility got brought up but I have a couple quick thoughts…
1. a good economic mobility setup does not mean families have wild swings in economic status between generations. It means that there is the opportunity to move between economic statuses if one applies themself… and in America that opportunity exists… I have done it and I know many others that have done it as well with surprising ease (and a lot of hard work).
2. States go out of their way to make sure “disadvantaged” youths get access to colleges and other important institutions (especially libraries), but it is up to the individual to study and apply themselves”. (again… been there and done that)
3. The culture in any given socio-economic level or community is much more of a barrier to changing economic levels than anything else… this is not a systemic barrier but a personal barrier. Values, beliefs, ways you think about money, family, business, etc… you need to relate to people to be accepted by them. This is the hardest part because you need to examine the cultural values you were raised with and decide what works for you.
4. This leads to… People help out and hire people they are friends with and relate to… this is true in socialism, capitalism, oligarchies, and dictatorships… there is no way around this and no way to legislate this away. You need to assimilate… if you want to be an investment banker, you need to fit in with investment bankers. “Rich kids” have the advantage because they already “fit in”… but what are you going to do?… life isn’t fair. By the way 22% of rich kids remaining wealthy isn’t a lot.
5. Stop measuring against the top 1%… what a ridiculous level for anyone to attain to be considered “moved up”. By definition it is a narrow band of society… hell Obama and Clinton aren’t in the Top 1%… I know very well off people not in that level.
archimedes:
If you read through the comments, I am not the first one to discuss economic mobility. I just answered the thought. Further more there were references to Europe.
If you also read through the post carefully, you will find I didn't speak of the top 1% (you did), I did speak of the top 5% which equates to ~$200,000/year, which is upper middle class. In America that opportunity to rise to the upper middle class has decreased significantly unless one is amongst the middle class already. Median income is more than likely the bottom of the middle class unless single.
The one doorway to the middle class for many of the poor and minorities has been manufacturing which has shed jobs by the millions thereby lowering tax revenues in the rust belt and the ability of the poor to rise in income. The ability of the rustbelt to offer help to the poor has decreased significantly since 2001. Your ascertion is faulty.
As I have pointed out, it is much more of a systematic and economic barrier rather than a cultural barrier. although I will admit to the existence of prejudice. Quit trying to blame those who are poor for not being able to "lift themselves up by their boot straps."
I quoted one study and you are welcome to quote a few of your own.
If you can not rise to the next levels, how does one become self-employed?
“The US is not competitive when one takes into consideration the Burden associated with US workers in comparison to Asia where such a Bueden does not exist.”
You can not be the largest manufacturing country and not be competitive at the same time… it is like arguing that Wal-Mart isn’t competitive in the retail space.
You are correct, we do have added burdens on our workers which is why our worker productivity and level of automation is so much higher than most of the world. But you are not seriously arguing that we need to go down to their level by cutting wages, gutting environmental laws, lowering corporate taxes (wait a second), etc. etc…
I realize you are insinuating “Universal Healthcare” is the answer but that is ridiculous… shifting cost does not take cost out of the system, (just like shifting risk did not take risk out of the system… for you bankers in the audience.) The bill still needs to be paid… and it is paid by taking money from the productive parts of society one way or another.
By removing market forces from that equation, you do not get better results… you get worse results and almost always at a higher cost. (look at airlines before and after regulation… private schools vs. public schools… the examples are limitless).
Oh and Archimedes:
You do not beleive Bill Clinton or his wife make >$500,000/year which is the upper 1% of income as reported by the Tax Policy Center?
And Obama? "Mr. Obama and first lady Michelle Obama reported a taxable income in 2008 of $2,656,902, paying $855,323 in federal taxes and $77,883 in their home state of Illinois." Washington Times
I guess Obama is right up there also. Get your facts together please.
@Anonymous 9:03
You have absolutely no idea as to what you are talking about.
First off, there is no such thing as the Russell 5000.
There are, however, the Wilshire 5000, and the Russell 3000 indices, both of which have MSFT, GOOG, & INTC, which nullifies your 1st argument, though I'm not even sure what it was to begin with.
http://www.russell.com/indexes/PDF/fact_sheets/US/3000.pdf
http://www.fool.com/school/indices/wilshire5000.htm
Your point regarding the emerging market nations makes no sense either, as these studies are specifically targeted at the OECD only. The correct comparison would be comparing the poor in the US vs the UK, or Indonesia vs the Philippines. What you are insinuating is just a silly non-sequitur. It's like saying, "The true way to compare Tiger Woods' golf skill is to compare him to LeBron James."
I have never seen so many straw man, self-defeating arguments as I have in the last month or so. And they all come from the same place.
It's maddening as hell.
Chuck:
Ok, you can keep sticking your head in the sand and completely ignore the fact that your:
– healthcare
– unemployment comp
– workman's comp
– vacation pay
– OT Laws
– Child Labor laws
– OSHA Laws
– 401k contributions
– any remaining pensions
– EPA (think Benzene down a Chinese river)
– etc.
are a damn anchor on manufacturing and the service industry which business can escape by relocating to Asia where those costs don't exist except for a doctor or nurse on staff, two meals a day and transportation back and forth to work. Which do you want?
This is a copy of a chart from the BLS as shown in Der Spiegel: http://www.spiegel.de/img/0,1020,1062396,00.jpg ~4 million jobs lost to globalization and it doesn't discuss comparative advantage sans manufacturing efficiencies. Is all about that Burden or 30% of the cost of manufacturing. Psst . . . Direct Labor Cost is ~10%. Gettelfinger had it right and Miller at Delphi was lying.
Automation and manufacturing efficiency has eliminated the Cost of Direct Labor as the target, which is why we are whacking labor today? God Bless Corker and McConnell for being transparent.
The private market has taken the easy way out by going overseas. Why? Because the WTO will protect them. Canada and many other countries wrote exemptions into the WTO agreement. The US just signed it and passed it along and duplicated it in other agreements as well. As far as manufacturing? It sure as hell not coing into the service industry which still creates value. The nature of business in the US is W$ wghich passes paper.
And no I am not implying Universal Healthcare is the answer; but, it is a start. The rest you, I, and the rest of the nation has to sort out as to what we can live without.
jest:
I would leave the Philippines and Indonesia out of the mix. Vastly different economic setting there. Have you ridden the jitneys?
"shifting cost does not take cost out of the system"
actually that is exactly what it does. Single payer universal healthcare produces better outcomes at lower costs everywhere it has been tried. So yes, if you transfer the costs to a more efficient, higher quality actor, you get more and better output for your input.
"By removing market forces from that equation, you do not get better results… you get worse results and almost always at a higher cost"
This is the re-statement of ideology in the face of contrary evidence I pointed out in my previous comment. The last two years have shown that "market forces" are a sick, sad joke used to separate rubes from their money.
"Single payer universal healthcare produces better outcomes at lower costs everywhere it has been tried."
Except Medicare and the VA…
"if you transfer the costs to a more efficient, higher quality actor, you get more and better output for your input."
I would love to here your examples of when the feds have ever been a "more efficient higher quality actors"…
patrick neid
"How pathetic." guess you were out of the loop -we didn't make it to 2009.
didn't you hear about Hank Paulson sticking up the US Congress in broad daylight on the TV in front of the world? Some kind of cockamamie Armageddon threat on bended knee before Nancy Pelosi: 'gimme the seven hundred billion now and don't ask no questions -not now or ever, and don't ask my friends -ahh, cronies, either,' followed by Bernanke.
Congressman to Bernanke:
Will you tell us who got the $2 Trillion Mr. Bernanke?
Bernanke answer: NO
ChuckD,
I guess you rule out our military, hhm? Go read Felix Rohatyn. He has a whole book with lots of examples of public sector successes at things the private sector either did badly or could not do at all.
Your info on the VA is dated, In the last few years it has done a great deal to improve its services and now gets very high ratings.
"I would love to here your examples of when the feds have ever been a "more efficient higher quality actors"…"
Did you just miss the last year? Wall St financial capitalism died. If the Feds weren't around Wall St would have ceased to exist.
Yves,
thank you for this post. It has proved those myths are alive and well, and many Americans can't even get to think about the facts debunking them.
The problem with health care is that fixing it, in any real way, would have a MASSIVE effect on GDP. There would be quite a few people out of jobs, most of them the clerky type.
Every step of the way in the medical establishment there is another person adding his 20% to the bill.
Most of the higher end equipment in a hospital is not even owned by the hospital anymore, it is owned usually by the doctors who can then bill it back to the hospital after adding their 20%. CAT scan machines and MRI's are a good example.
Look at who owns the parking garages, that is a good one. That same doctor that keeps you waiting for 3 hours? Yeah, he's also a partner in an LLC that is charging you by the hour for parking. Interesting incentive to overbook…..
Remember folks, every new name on a billing trail means that not only do costs have to be covered they also have to have a reason to be in business, profit.
Single payer would eliminate a lot of this, as it is the healthcare system is just getting wider, more mouthes in the middle.
Healthcare is not free market, there is no choice. Those of you who live in urban areas may have some sort of "choice".
Unless you are in a city with more than half a million people you have only one choice most of the time. Medical school admissions bare this out, good luck getting the AMA to talk about that.
Medicare "looses" money and spends a lot of it for the same reason that private healthcare makes money. All of the people without money, or any more money, end up on medicare/emergency room line. It is a zero sum game.
A free market, as so many people like to espouse, requires customers. How often do you allow the supermarket to let you wait in line for 2 hours?
Do you let your doctor call you a customer? You are a patient, words say a lot.
Moral medicine does not allow for a free market mechanism. Intelligent medicine does not either. We have moral medicine now in some respects, we just don't want to tell anyone. No worries, well keep it between us, just add another 20%.
bob
You can argue from a theoretical standpoint all you'd like (and the naysayers are doing a rather poor job of arguing, I might add), but what does that have to do with the real world? My experience as an entrepreneur and owner of two small businesses is that people tell me all the time that they, too, would like to start their own business, but don't dare leave the security of their corporate job's steady paycheck and health insurance.
I favor universal health care. I believe that The US still has class mobility. I also believe that it is very important in the evaluation of class mobility to apply benchmarks that are truly descriptive of our class/cast cultural system. The system in the US is different from those that exist in Europe and Asia.
Go to Wall St and learn how many rather important traders come from rather humble antecedents. In the US social class is largely defined by three factors; Income, Education, and Cultural Depth. Of those three elements, it is very difficult to measure cultural depth.
The argument hoisted here that the absence of universal healthcare is causative of the diminishing opportunities that present to our our society at large is spurious! The reason for the fact of diminishing opportunities lies in the evolution of our culture and the inclusion of other cultural norms and mores. For example, personal responsibility seems to have been thrown out with the bath water. You signed a bad loan/mortgage agreement. You have an 'excuse' you didin't know what you signed. Perish the thought that you should know what you were signing. Blame it on that conniving thief of a loan originator. Scoundrel that he may have been, what the hell happened to caveat emptor?
We need universal healthcare in order to contain the rising costs of health care services. For that reason and that reason alone.
I have had 5 careers. The forces of obsolence and employment at will have pushed me along. At one stretch I was self employed and enjoyed healthcare coverage by way of my wife's employer. Over the years the benefits provide by the company provided coveraged have shrunk.
Incidentally, any company offering so called health insurance is actually self insured. The so called health insurance company provides the service of a certain cost contract and the administration of claims. The company pays the cost of the services. The premium deducts and copays pay part of the administrative costs. Company provided Health Insurance has not been insurance for a very long time.
Universal Health Insurance might actually become real insurance where costs are competitive and premiums are actuarially sound. When you ask for universal health insurance be careful who administers the program. Remember, Social Security is a Tax whos eobjective is the redistribution of income! You could look it up.
Siggy,
The argument hoisted here that the absence of universal healthcare is causative of the diminishing opportunities that present to our our society at large is spurious!
The only argument here is that lack of universal healthcare may explain a fact, namely: the US has less self-employed people and less employment in small-sized companies than Europe.
The system in the US is different from those that exist in Europe and Asia.
If anything, it is different from Europe because money is even more important, social classes are more seggregated, and there is less social mobility, as proved by studies.
Amazing the number of posters that get all worked up on health care…again.
What's wrong with you people? Any of you have *first hand* knowledge about the differences in health care between the rest of the industrialized world and the US?
I do: both as a health care professional and a patient. And the impact of these differences on potential entrepreneurship have to be substantial. Instead of reacting like the hard-core nationalists like we have in Québec, or the birthers and town hall trolls…THINK! If a sudden illness could put you in bankruptcy and the cost of health care on the individual market is very high AND this so-called insurance (because in reality, it is NOT insurance…see Simon Johnson from baselinescenario.com about that) can be withdrawn anytime for any reason, well…what the hell does one call that? A very high risk proposition for anyone who want to strike on his/her own.
Why is this such a difficult concept to fathom, if not for the fog of narrow and misplaced nationalism clouding common sense?
Speaking of Québec, just look at the number of small businesses out there. By FAR, the biggest provider of econ activity. Logical: when an employer's health care costs per employee is less than 100 CDN a MONTH, (that is the family coverage, mind you) you tell me if this is comparable to the burden US employers face year after year.
Do you know any would be entrepreneur who'd have a problem paying such low premiums? Compare with what his US counterpart has to pay if he/she needs to cover self, let alone the whole family.
When it comes to health care, one wonder by which miracle Americans can muster the effort to think.