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The myth of upward mobility

Written By: - Date published: 9:00 am, November 6th, 2009 - 62 comments
Categories: capitalism, class war - Tags:

Yesterday, we looked at what a vastly unfair and unequal system capitalism is.

plutocracyThe control of the fruits of production by the few means that wealth accumulates to them and the rest of us get a pittance. The wealthiest 10% of people own over half of the wealth of this country – net worths of $650,000 each (actually, a small fraction of them will control most of that wealth too). 50% of us have just 3% of New Zealand’s wealth amongst ourselves – with average net worths of $7,000.

But a lot of people have the notion that although they’re being screwed now, it’s OK because a) it’s the ‘natural’ order (I’ll come back to that some time) and b) one day they’ll be the ones doing the screwing.

It’s a myth. If you’re working class or middle class odds are you’ll stay working class or middle class. And the wealthy nearly always stay wealthy. This Stats NZ study looked at the movement of people among income deciles over a five-year period (2002-2007, but there’s no reason to think it wouldn’t be the same over any five-year period).The size of the circles is the percent of people who had been in each decile in 2002 who were in a given decile in 2007:

income mobilityAs you can see, most people are in the same decile five years later or very close to it. There’s some mobility among the lower deciles and some mobility among the higher deciles but very few people (only 18%) who were in the 10th (richest) decile in 2002 were below the 8th five years later. Only 10% of people who started off in the lower five deciles made it into the top two or three.

In fact, the mobility you can see is largely a factor of life-cycle – students moving into high paid jobs etc. The study breaks down the age groups and income mobility is very low with life-cycle movement taken out.

So not only is our political economic system designed to concentrate wealth in the hands of a few people, who those people are doesn’t change either. If you’re not one of them now, the odds are you never will be. So the question arises – why support a system that steals the wealthyou produce with your hard work and gives it to them? Are the crumbs that fall from their table enough?

62 comments on “The myth of upward mobility ”

  1. Gosman 1

    So your whole argument is based on movement over a five year period?

    I’m not sure anyone makes claims that Capitalism encourages social mobility over such a short period of time.

    Your argument would have more validity if you had a study with data over a 50 year or more period.

    • Marty G 1.1

      You mean over a period longer than a person’s working life? Um, that wouldn’t work eh?

      In case you missed it, this shows how the incomes of individuals changed among income deciles over time.

      It would be nice to have several 5 year periods to compare but this is the first stud of its kind that I could find.

      You can’t dismiss the findings just because you don’t like them.

      • Gosman 1.1.1

        Social Mobility goes beyond a single person’s lifetime. I thought you would be aware of this.

        Try finding studies that have been done which look at whether people’s children remain in the same social group over time.

        • Pascal's bookie 1.1.1.1

          The Economist did one a while back on meritocracy in the USA. What they found was that there isn’t much, and there’s less than there used to be. It’s all very sticky, and getting stickier.

        • BLiP 1.1.1.3

          And this:

          A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK.

    • Sam 1.2

      Ah there has been research done in 2005 that compares the vocations put down in census data (after it is standardised etc with changes in interpretation) and the fact is that since 1896 the working class has grown while the employer and self-employed have shrunk. The trend was interrupted somewhat in the 80’s and 90’s but this was due to the casualisation of the labour market, the high levels of unemployment we’ve had since the 1970s, and in my opinion, the “class confusion” that many of the Middle Class suffer from (that is, they don’t see themselves as workers when they are). That’s not social mobility, that’s capitalism doing what it does – concentrating wealth and power into the hands of fewer and fewer people.

      (If you want the reference to this study: Hayes, Penelope, 2005. “The end of class? An empirical investigation into the changing composition of New Zealand’s class structure, 1896-2001” in New Zealand Sociology 20(2):41-72)

      So Marty is entirely correct – egalitarianism and social mobility are myths. It’s arguable that it ever existed at all beyond the first waves of European migration, but it’s certainly an outright fallacy after 1984. However for some reason we cling to this idea and it obscures our perception of what is really happening. Which, if you are in the top 10 percentile is exactly what you would want…

      • Gosman 1.2.1

        ‘”class confusion’ that many of the Middle Class suffer from ‘

        Classic piece of leftist thinking there!

        I have a question for you.

        I work as an It Contractor for a NZ Bank. Does that mean I am a worker?

        However My wife and I run an own a small business. Does that mean I am a Capitalist?

        Then again my Wife does all the work in the business so we aren’t oppressing anyone except ourselves.

        Oh the dilemmas that people on the left face. How do you make it through the day?

        • Sam 1.2.1.1

          If you sell your labour you are a worker. If you exploit others’ you are a capitalist. If you exploit your own you are a member of the petit-bourgeois class.

          But by all means, be arrogant and dismissive of things you have no idea about. Keep it up.

  2. vto 2

    Interesting interesting. What would make it more relevant is a comparison with other places in time in NZ and with other places in the comparable globe. To see if / how the mobility changes over time and place. For example, if the mobility now is greater than it was in say the 1970s, 1940s, 1900s, mid-1800s, dark ages, etc then there is some good to be seen ya?

    As it is, it is interesting but without a comparison point it is difficult to see whether things are on the improve or deprove..

    My 2c suspects that mobility today is higher than it was in near-all NZs previous epochs / periods / governances / etc.

    • Marty G 2.1

      Well, I spent over an hour assembling the data and checking it to show what I’ve shown about income mobility.

      How about you show some evidence for your assertions? I’m not saying they’re wrong – but you’re clearly trying to blame Labour for it somehow. However, I would strongly suspect that in the great depression and in the 1800s before the great stations were broken up income mobility was far lower.

      Either way, it’s still incredibly low now and that shows the nature of capitalism

      • vto 2.1.1

        Ay? Labour to blame? Dont think I suggested that. My point was, good point but difficult to see if things are on the improve or deprove, or even whether such a level of mobility as you have shown is good or bad. Obviously total mobility would be some sort of aim, however then the top 10% woudl be crowded with 100% of the people – a conundrum thingy methinky.

        I have no evidence for my 2c suggesting more mobility now than in NZs history – only anecdotal.

        Good effort MartyG

        • felix 2.1.1.1

          “Obviously total mobility would be some sort of aim…”

          Can you tell us a bit more about what you mean by this? I’m not quite grasping it.

          • vto 2.1.1.1.1

            I mean Felix such mobility as allows people to move between deciles pretty much at will (or with only work etc being the barriers, not social position, wealth, or lack of, etc). Then everyone would want to go to the top decile, and get there, if mobility was simple.

            But I see this whole post has moved on now. I’m a day late.

        • Draco T Bastard 2.1.1.2

          Actually, the anecdotal evidence is that upward mobility is less now than before. Most of the people today are worse off than they were in 1984 which kind of puts a crimp in any sort economic activity.

  3. Again, further evidence of how far removed some here are from the real world.

    Even the most ardent capitalist wouldn’t say capitalism has its faults.

    The reality is of course that for the most, regardless of its weaknesses, the core of the current system allowing for electoral swings and roundabouts is manifestly superior to any of the other systems.

    Tellingly, you highlight perceived faults without proposing an alternative method. The problem is that the alternative methods employed to address the inherent weaknesses in capitalism have been spectacular failures. Even China has been forced to move more towards a capitalist model.

    I think you also miss a significant feature of capitalism and the market economies. Capitalism relies on a free flow of information and as such assists in the democratic rights we have. It is interesting to note that those who actively choose to take the non-capitalist path can only do so by controlling free speech and the democratic processes. It simply illustrates how out of touch you are to propose (by inference) systems that require force and restrictions to succeed.

    • Marty G 3.1

      Not very post is a complete thesis, Daveski. Yesterday a number of lefties, notably Irish, proposed simple reforms that would do much to create a more equal and fiar society still built on a capitalist base.

      I will be doing the same later in this series.

      And I note you don’t even attempt to address the issue here – income mobility is a myth. If you’re born poor you’ll likely die poor, and the rich, whom capitalism is designed to serve, stay rich.

      I’m not proposing anything that would restrict free speech. And if you think we have free speech in a country where the media are controlled by four (three foreign owned) corporations, well you’re wrong.

    • Daveo 3.2

      I’m taking it you’ve never heard of democratic socialism Daveski. Capitalist regimes can, and historically have been, just as undemocratic as any socialist regime. There’s nothing inherent in capitalism that supports free speech and democracy.

      Anyway, I wouldn’t get too worried. This looks like the start of an ongoing series. I’m sure if you’re patient Marty will start getting into democratic alternatives or reforms to capitalism in good time.

  4. Harpoon 4

    The chart is very pretty … congratulations!

    BUT can somebody please explain (in plain English) how to read it? Ta.

    • Richard 4.1

      The horizontal axis shows income deciles in 2007, the vertical in 2002.

      If you want to find out where people who were in the 5th decile in 2002 ended up in 2007 you would:
      – find 5 on the vertical axis.
      – read across horizontally.
      – the size of the bubbles indicates the number of people.
      – so most people who were in the 5th decile in 2002 are still in the 5th decile in 2007, because that has the biggest bubble. Quite a few are now in the 4th decile, some in the 6th. Decreasing amounts in the other deciles.

      Hope that helps.

      • Richard 4.1.1

        The fact that the biggest bubbles lie on the diagonal, tell us that most people did not move decile.

      • Lew 4.1.2

        Would be a bit more intuitive if 2007 was charted on the X, so that upward mobility was represented by movement ‘up’ rather than ‘right’. Although, now that I think of it that way, there’s a certain poeticality to that plotting.

        L

      • Rob 4.1.3

        I also find this confusing and not the way I would present this data.

        I actually think the chart is flawed, a simple method of presenting this data would be by two proprtional columns showing change is segments over the two time periods. All you are trying to achieve is a delta from two time periods.

        Also that would enable you to expand and increase the number of time periods, so you could see the % change in segments over many time periods. It would present a much better view on segment size and change.

        • Richard 4.1.3.1

          The proportional columns idea doesn’t work. There are always 10% of people in each decile — that’s what decile means.

          What this graph shows is how the people in each decile moved from period to period. Did they change decile or not? As the big bubbles are on the diagonal, the answer is that most people did not change decile.

          Your suggested method doesn’t seem to show this information.

  5. If it wasn’t for capitalism you wouldn’t have the internet.

    • Lew 5.1

      Brett, because the internet was invented by … IBM, no … Microsoft, no … google, no … Al Gore, no, but … The US Federal Government Department of Defence!

      Thanks, big government. You’re good for something after all.

      L

      • Quoth the Raven 5.1.1

        Thanks America’s military-industrial complex you’re a force for good in the world.

    • felix 5.2

      Well that proves it, Marty. There’s heaps of income mobility in NZ.

      Well done pointing it out, Brett.

    • Bill 5.3

      If it wasn’t for capitalism we wouldn’t have second rate technologies foisted on us as a result of a competitive environment where economy of scale rather than excellence is often the deciding factor as to which technology or product prevails.

      And the internet resulted from publicly funded R&D. Government then handed it over to the private sector for them to make profits on it. Hardly hard core capitalism. Some might even call such a leg up Corporate Communism or some such.

      • Lew 5.3.1

        And the internet resulted from publicly funded R&D. Government then handed it over to the private sector for them to make profits on it.

        … and those of you hard-core capitalists who’re connected to the interwebs using wi-fi — Big Government R&D, you’re soaking in it.

        L

  6. Edosan 6

    I would really like to see what happened to that graph over the next two years, what with the latest unemployment stats. A bit of mobility the other way I would say.

  7. burt 7

    I’m not surprised that under social polices that promote welfare dependence that there was little movement across income brackets. The lack of incentives to earn more as a result of harsh abatement rates and the effect of very low “rich prick” thresholds did exactly what Labour wanted it to do… Nobody shall earn too much and nobody shall earn too little.

    • Daveo 7.1

      I want some of what burt’s on.

    • So Bored 7.2

      Yes you are right Burt, if we got rid of welfare and left the poor to die the figures would look much nicer for proponents of upward mobility myths. Mind you there might also be some downward mobility from the top too as the poor chose to loot the wealthy.

      • burt 7.2.1

        So Bored

        OK, so let’s look at this. Stats from a 5 year period during which the Labour party social policies were in place showed little mobility between income brackets.

        The partisan hacks who love welfare dependency in the middle class automatically say it would have been worse under National. How so ?

        Why when I suggests that middle class welfare and harsh benefit abatement rates are a disincentive to people increasing their earnings do complete idiots read that as a suggestion that welfare should be scrapped completely? I will stand up and be counted as a person who strongly supports scrapping welfare for people earning up to twice the tax system definition of “rich prick’ but that is a very long way from saying we should not have welfare.

        If you are incapable of discussing benefits for middle and high earners (eg: WFF for people earning up to $120K) as being something completely different from paying unemployment or sickness benefits then don’t waste my time pretending to understand benefits, abatement rates and personal motivations to change personal circumstances.

        • Bright Red 7.2.1.1

          There’s no suggestion in the study that the lack of income mobility has anything to do with policy of the government of the day. It’s inherent in the capitalist system.

          It really is pathetic of you to try to blame it on Labour for no other reason than that Labour happened to be the government during the period of this study.

          • burt 7.2.1.1.1

            So it’s the fault of the failed policies of the 90’s then….

            If you are prepared to say that the policies of the govt de-jour are not a factor then clearly state that now. I’ll bookmark the link and next time you start blathering on about the policies of national increasing the gap between rich and poor I’ll remind you it is the capitalist system rather than the govt.

            What a twat…. might as well say it is human nature and just accept it as “it is what it is”.

            • Bright Red 7.2.1.1.1.1

              “So it’s the fault of the failed policies of the 90’s then .” no. It’s inherent in capitalism.

              And contrary to this: “might as well say it is human nature and just accept it as “it is what it is’ (which i see in the post marty predicted you would say) capitalism isn’t a state of nature, it is a socio/economic/political construct

              In the case of income mobility the policies of the government of the day (short of radical reform) are likely to have little effect. However (and bookmark this) obviously a government’s policies can and do influence the difference in wealth between deciles.

              national undermined unions and let the minimum wage fall in the 1990s, and the poor got poorer while the rich got richer. Labour reversed that to some extent. That’s a different issue to income mobility.

              I think that’s pretty clearly explained. Naturally, you will attempt to misconstrue it, because that’s what you do.

            • burt 7.2.1.1.1.2

              Classic

              I didn’t think you would have the balls to say that the policies de-jour don’t have an impact but you are too myopic to consider the govt de-jour when the study was done as being a factor in the stats.

              Wimp.

        • Now Very Bored 7.2.1.2

          Burt, get a sense of humour. And if you want to discuss benefits you might want to start with tax benefits etc, all those little devices for keeping the money fl;owing upwards (which result in the graph being as it is).

    • roger nome 7.3

      Burt – as someone pointed out further up the thread, the social democratic, high-tax, large welfare state Scandinavian countries have the highest social mobility, and the low-tax, relatively free market countries (Eng, US), have the lowest.

      No surprise that you missed that.

      • burt 7.3.1

        roger

        One of the concepts that I have been led to believe is that part of the ‘Scandinavian’ concept of welfare is a degree of entitlement attributed to contributions made. Fir example a big tax payer might get a bigger benefit for unemployment than a perpetual beneficiary. Can you start to see where equity of income also becomes a factor in welfare systems when the two are intrinsically linked via an ideology? Are you comfortable with that?

  8. The graph shows that tin pot aspirational capitalists are likely to remain just that. One of capitalisms many grubby little secrets is that there is always only going to be a self limiting small club at the very ‘top’. The same clubs mass media and manipulative tory marketing manage to persuade thousands of this section of voters otherwise of course.

  9. prism 9

    Exciting possibilities now Nats are in about changing abatement rates? Think I heard in passing recently that plans have been dropped. People on welfare can’t better themselves, they are not allowed or wanted to, that’s where the tall poppy syndrome is really seen to be at its most cutting. And attitudes are still negative to welfare, both from those who have achieved financial success and jobs that enable good livings, but also from the downers who get a quick burst of superiority by sneering at others. Encourage low income people, support and help to improve their own situation and lessen long-term welfare costs – hey that’s – a bit radical?

    • burt 9.1

      People on welfare can’t better themselves, they are not allowed or wanted to…

      OMG – You are chanelling Dr Cullen… or was that snippet something Clark sent you in a txtda recently ?

  10. BLiP 10

    Why is it when even given the undeniable data, well presented in a simple to understand format (top marks Marty, thanks) the average punter still doesn’t get it?

    The more I see of it, the more I am convinced we have become captured by our selfish desires at the expense of our rational mind. Maybe the scientists are correct: human beings are little more than life-support systems for DNA molecules.

    Ah, well, never mind. I finally got paid for the overtime I did last Christmas and I just soooo need to a Iphone.

  11. prism 11

    Facts, and graphs, and stats – The way our employment figures are gathered interests me. I understand that an individual only has to do one paid hour work a week to be included in the employment stats. If so the totals we hear about are not useful for practical understanding. Also if true, why do we include such nebulous figures. Does the OECD want it and we want compatability with them – and do all ‘developed’ countries count their working population like this? USA, Brit?

    • Bright Red 11.1

      The hours worked is the one to look at, not the number of unemployed, because like you say, a person working 1 hour or a person working 40 counts the same, even if the person working one hour wants and needs more work. Plus if people give up looking for work altogether they disappear from the unemployment figure.

  12. randal 12

    whoever said capitalism was fair?
    it isnt.
    its horrible and it destroys everything and supplies endless amounts of goods that are dangerous, poisonous and ultimately fatal for the health of the planet yet some people think that it is possible to replace it.
    soory folks but people are adventitious.
    if capitalism is to be critiqued then it cannot be done so on the basis of unequal possession of goods and services when it is those goods and services in the first place that are creating the ulitmate destruction of the ability of this planet to sustain itself in the long term.

  13. Malcolm 13

    Who said a meritocracy should equate with social mobility?

    Perhaps lower social mobility just means that people are getting to their natural level earlier in their lives. Or a lot of people are condemning their own kids by the example they set. Or more people are wealthier than ever and choosing to do other things with their time, than climb the ladder. So many options.

    And none of them point to a fundamental failing of capitalism.

  14. prism 14

    Perhaps smugocracy is what you get when you no longer have aristocracy and meritocracry.

  15. Olwyn 15

    I like the smugocracy remark prism. While people rail against welfare, in fact it cushions everyone from deeper and harder questions. Firstly, just about 100% of welfare payments end up in the hands of businesses, having briefly prevented starvation along the way. And a huge part of the welfare bill goes to compensating for the fact that we no longer have any notion of a living wage, along with property prices that bear no relation to the real money generated in this country. If you were to take welfare out of the equation, those howling about it now would be howling even louder. This extension of welfare, however, contributes to the lack of social mobility – one has to be way above the storm to really be above the storm. If you earn a bit more, your accommodation supplement goes down and you find yourself in debt to working for families – to get lucky you have to get very lucky indeed. Meanwhile the smugocracy pockets its indirect welfare payments and pens another letter to the editor about the scourge of the beneficiary.

    • Herodotus 15.1

      I am glad you mentioned “ompensating for the fact that we no longer have any notion of a living wage”. I have long been thinking about this topic. I can see no comment regarding this anywhere. I believe based on first principles hat this subject needs to be brought up, as andy assistance from govt,tax policy, superannuation, min wage etc needs this as its foundation. What quality of life do we wish as a base level for all of us? I think it was stats NZ reported that the average household outgoings were about $950/week

  16. prism 16

    Olwyn you know your stuff. These are the realities but the GAS group don’t want to know these. (GAS Gripe and Sneer). People don’t get easily onto welfare, but then because of the bias against welfare by many and particularly politicians, they make it hard to get off again.
    They do this by cutting back on grants and supplements that enable beneficiaries to manage life plus get out to work, study etc. So if you are poor, get a job, but an entry-level or part-time one not paying well, the withdrawal of supplementary benefits can mean that you end up with less money than before, so you are money poorer and time poorer. And time to look for cheap and second hand things enables a better level of living than just surviving. So less time and less money can make the move to get a good job, better income and welfare independence near kaput.

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