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February 10, 2014

Upward Mobility Still Alive and Well

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One of the most important principles underlying the American dream is upward mobility — the ability to move up the income ladder. The freedom to build a better life for yourself and your family fuels the dreams not only of immigrants who came here to live, but of those born here as well.

To hear some politicians tell the tale, though, its day has come and gone. According to them, upward mobility may have helped your parents and your grandparents, but it likely won’t help you. The dream is over.

“We’ve seen diminished levels of upward mobility in recent years,” President Obama said in a recent speech.

A major new study by Harvard economist Raj Chetty, however, shows things haven’t changed all that much. “Children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s,” it finds.

That doesn’t mean politicians can’t improve people’s chances of rising. It’s just that the best way they can do so is by getting out of the way.

After all, upward mobility has been working for a long time without any help from the federal government. In 1860, Abraham Lincoln made the classic argument for it:

“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 on capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.

“I want every man to have the chance in which he can better his condition — when he may look forward and hope to be a hired laborer this year and the next, work for himself afterward, and finally to hire men to work for him! That is the true system.”

Lincoln’s “true system” continues to generate opportunity and upward mobility today. Entrepreneurs and small-business owners are creating new success stories all the time.

Their faith in this “true system” causes most Americans to think of themselves as middle class. In one Pew survey, 50 percent of Americans called themselves middle class, while a mere 8 percent considered themselves lower class.

Those confident Americans are correct, since even if they’re not exactly middle class this year, they have the opportunity to be — and they may well reach their goal in a year or two.

According to an old rhyme: “Money is a matter of functions four, a medium, a measure, a standard, a store.” That is, money serves as a medium of exchange (a way of avoiding the inconveniences of bartering), a unit of account (a way of tracking profits and losses), a standard of deferred payment (a way of settling debts), and a store of value (a way of saving that inflation erodes).

Americans use money to help create, produce and deliver products and services that people want, need and will pay for. No other nation can boast an Eli Whitney, a Robert Fulton, a Thomas Edison and a Steve Jobs. Here, practical treatment is rewarded with financial gain.

Bill Gates became the richest man in America by creating Microsoft, and we’ve all benefited from his work. Microsoft created an operating system that made it simple to share information.

The chapters of most books are drafted in Microsoft Word and shared over and over again by authors and editors long before you read them. Imagine if they had to convert from one word-processing program to another to edit each draft, or retype each version completely by hand.

This standardization has also created untold thousands of jobs. If you’re proficient in the Windows suite of programs, you can work in virtually any office without needing to spend days learning how the computer system works.

We can thank upward mobility for this and many other smaller blessings. If politicians want to rekindle the American dream, they don’t need a new government program. They just need to step back — and let the “true system” work like it has for decades.

 - Ed Feulner is the founder of the Heritage Foundation

Originally appeared in the Washington Times

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