Social Mobility In the United States

A question about social mobility was posed to me as follows:

Do you think that you ever oversimplify the ease of social mobility and financial success? I think that if you’re at least mildly intelligent, hard working, and have a knack for perseverance, your advice is excellent, even life-changing.

But I think about some of the “characters” in my life that I know – the girl trying to raise four kids under the age of six, a guy with a gun tattooed across the top of his hand (try interviewing with that), and some people who, after I hear them talk in class, are a couple cocoa puffs short of a full bowl, if you catch my drift.

I guess what I’m getting at is this – it’s really easy to run a business into the ground, make god awful investments (Countrywide probably would have sounded like a legit investment to me a decade ago, if I was old enough to be into investing then), and there are a lot of jobs that are simply of the dead-end variety, but you may not necessarily see that at the time.

That is a great inquiry. It is one that I get a lot among some of my friends, actually.  Here is how I think about social mobility in the United States, having benefited from it personally.  Let me start with a few basic points about my beliefs on the topic:

• Social mobility is good for civilization.  The broader the middle and upper classes, the more advanced we can become because students who would otherwise be starving and fighting in the streets are instead learning calculus and chemistry.
• The best way to achieve social mobility is to have certain “escalators” that can help guide people up the social stratosphere.  Traditionally, in the United States one major escalator of social mobility has been the military, which offered housing and education benefits based upon service to the nation.
• Access to social mobility should be considered a right but actual prosperity and results are not.  We are guaranteed the pursuit of happiness, not happiness itself.  No one promises that we will reach the goal line we set for ourselves.

Understanding Social Mobility

The idea of social mobility is that overtime, a man or woman is able to afford nicer material things, an easier life, and higher social prestige.  This comes via greater financial security and higher pay.

We’ve already established that, for those who follow the law and act ethically and morally, money is the byproduct of exchanging your best efforts for the best efforts of others.  That is, I take money that would have been my profit for the efficient management of my capital and gladly give it to a lawyer for his ideas, experiences and services, which he has as the result of years of studying arcane legal cases and passing the bar exam.  It took me years to become knowledgeable enough to earn money that way.  We are freely exchanging our goods.  I’m not paying the legal bills out of joy or happiness or charity.  I’m renting my lawyer’s mind.

[mainbodyad]It doesn’t matter if you are a doctor selling healing knowledge or a prostitute selling sexual services, money is merely a symbol of exchange traded between two consensual parties.  If you have something another party wants, they will be willing to pay you for it.  How much you are paid depends upon how scarce your product offering is and the utility they have for it.  That is, BP might be willing to pay more for a solution to plug an oil leak when they are losing hundreds of millions of dollars a day than they would be when they think the possibility of a major blowout is a remote contingency.

If you aren’t offering anything of value to society, you aren’t going to find someone willing to exchange you money for it.  Thus, you will never have upward social mobility. Don’t believe it?  Open your check register or your credit card statement.  The clearest look into a man or woman’s priorities is to look at what he or she spends money on each month.  Each dollar you spend is a “vote” for your priorities.  Humans prioritize shelter and food above everything else, which is why those bills get paid first.  You exchange your money, which represents your time in most cases, for the things you value most.

If you are unable or unwilling to provide value to society, and thus to exchange your value for money, you will be stuck in a series of dead-end jobs that leave you miserable and unfulfilled because all you have to offer is manual labor. There are a handful of notable exceptions we have discussed in the past, such as foster parents, but honestly these fall under the concept of the “tragedy of the commons”, which is an important exception.

Success and Social Mobility Are Simple – That Doesn’t Mean They Are Easy

Joe Woodhull and I were discussing the fact that we are all dealt certain cards at birth.  Some cards say “attractive” and some say “ugly”, some say “rich” some say “poor”, some say “smart” some say “dumb”.  We cannot control the cards that we are dealt, nor can we take credit for them.  But we can control our reaction to those cards and how we play them in life.

As I talked about in Intelligence, Knowledge, Wisdom, Discernment and Temperament, this is where temperament dominates. Someone who doesn’t give up, who saves money rather than wastes it, who is patient rather than impulsive … that person can have far better social mobility and results in life than someone who is much more intelligent or even knowledgeable.  Temperament can turn even a crappy hand of cards into a winner because your opponents in life are too busy getting drunk, cheating on their spouse, or gambling away their capital to notice that you are passing them by, little by little, day by day.  That is why I think temperament is much more important than IQ in life.

The situations you described – a girl with multiple children and the guy with the gun tattoo – are cases not of cards being dealt but of choices (unless the girl was raped, but seeing how it is four children, that doesn’t seem statistically possible).  They are in the situation they now find themselves because of choices they made.  Causality.  That doesn’t mean they can’t get out of it, but it does mean it may mean social mobility is going to be much more difficult for them than an unattached, single man in his 20’s with money in the bank and a sharp mind.

This leads to one of the most important lessons you will ever learn about life, financial success, and almost anything:

The rules for doing well and coming out ahead in everything are almost always simple.  That doesn’t mean they are easy.

My Target Audience on Social Mobility

When I sit down and start working on another essay each night in my study, the target audience for which I raise my pen consists of those men and women who want a better life, who are willing to make it happen, and who have enough common sense to realize that causality is real and it cannot be ignored.

[mainbodyad]I write because I want those people to be successful.  As someone who traveled the same road they are about to take, I want to send a letter back, a la Pilgrim’s Progress, and say, “Watch out for this …” and “Have you considered …?”  I do it because my intellectual heroes – the Benjamin Grahams, Charlie Mungers, Warren Buffetts, and Peter Lynches of the world – were willing to sit down and explain what they did, the mistakes they made, and the things they wish they had known.  It’s my way of paying forward their intellectual generosity.

To the people with the good sense to “seek wisdom” and “get knowledge”, I desire that they have everything they dream.  I want them to have homes overrun with happy children and bank accounts filled with gold, portfolios stuffed with stocks and product launches that remain oversold.  In good times, in bad times, whenever their story is told, I want it to be said that they were successful enough that they spend their time living instead of merely growing old.  That is what I want.

But for those who don’t have that natural spark of curiosity, who don’t want to find out how the world works … for those who think they should be able to have whatever they want regardless of whether or not they meet the product or service needs of their fellow man … to those people, you are right.  Social mobility is limited for them.  Frankly, shouldn’t it be?  The idea of social mobility is that you get to move up in life both in terms of material possessions and rank.  If they aren’t providing service to their fellow man, why should they be entitled to a nicer car or house?  If tomorrow, I stop doing what is necessary to earn money and instead sit around doing drugs all day and watching television, don’t I deserve to have less?

Negative Feedback Loops for Social Mobility Do Exist and Should Be Rectified

Make no mistake – there are significant negative feedback loops for social mobility that can trap some people who have done very little wrong or made only a single mistake.  An example is the credit score situation you asked me about, where the man can’t get hired because his credit is bad, but his credit is bad because he was laid off and couldn’t pay his bills.

The thing is, my approach in life is this: Social mobility is still possible for him, he just can’t go through the pathway of achieving it from an employer. If no one will hire him, he needs to hire himself.  If he is in sales, find a way to get $10,000 worth of merchandise on trade terms with 10x markup and sell it for $100,000, pocketing the $90,000 profit as starting capital.  If he is an executive, start a consulting agency and bill firms for your expertise, which requires no start-up funds.  If he has a bike, start a delivery service.  Stop waiting around for everyone else to give you a job, get off your ass and hire yourself!

What is really happening is entitlement and expectations.  The man wants someone else to provide him with a job.  He thinks it is his right to force another human being to hire him even if he doesn’t meet the criteria they say is necessary for the work.  It’s madness.  My neighbors don’t owe me anything.

(In this particular case, I would say it is perfectly rational for a state legislature to decide that credit scores have no influence on employment fitness and outlawing their use in hiring decisions as a form of financial discrimination.)

An Extreme Example to Explain Why Choice Matters in Social Mobility

Entitlement will sink social mobility faster than almost anything else because it creates a victim mindset where a few obstacles make things impossible to overcome.  The girl with four kids?  Sure, it sucks for her.  But if she has even a modicum of intelligence, she could make money doing something online.

Alternatively – and this is an extreme example I’m using as a literary device to underline my point – she could put her kids up for adoption.  Again, I’m not seriously suggesting she should (I wouldn’t).  [Sorry it is necessary to reiterate this but somewhere out there, there is someone stupid enough to read that line and actually believe I advocate dumping your kids off at an orphanage for the sake of making more money.]

My point is, by choosing to keep the kids she sired, she is choosing to limit her social mobility to some degree.  That is what freedom is.  If, in 20 years, she is complaining that her classmates live in gated communities and have private jets, she is basically saying that life is somehow unfair because they made different choices.  But if she chooses to sleep with men without demanding a condom or using birth control, she chooses to raise the kids instead of putting them up for adoption, she chooses to never take online courses or finish college, and she chooses not to save money or build something that generates cash (I don’t want to hear it isn’t possible – I watched my parents do it), then she has chosen not to move up the social stratosphere.  Her existence doesn’t mean social mobility is limited.  It means she made choices that were inconsistent with upward mobility.  There is an enormous difference between those two things.

What is stopping the guy in your class from removing the gun tattoo?  If it is his temperament, then there is no question his social mobility is limited because he won’t do what is necessary to move up in the world.  In that case, his situation is just too damn bad.  It is wasted time and effort to worry about his outcome in life.

It is not always possible to have your cake and eat it, too. Otherwise, to insist that somehow your classmate has been disenfranchised by the system is to unwittingly state that everyone has a right to have whatever they want, regardless of their choices or the cost that others must bear to provide it for them.  That is unjust and evil.  I wouldn’t want to live in a system like that.

Reader Comments (2)

Comments are presented chronologically, with replies indented beneath the comments to which they respond.

F

Frat Man

November 5, 2010

Hey Joshua. Thanks for answering all of my questions, I greatly appreciate the time you consistently put forth. That says a lot about you, and I appreciate it.

And I do tend to agree with most of your opinions. I do think there is one more overarching question this all gets at-a lot of times, by embracing competition and rejecting the legitimacy of most entitlements and forms of guarantees and handouts, there is a tendency to come across as harsh.

With friends and professors in particular, I'm often considered the "house conservative" opinion, and I try my best to explain that I volunteer weekly, will donate substantially once I have the means, and try my best to live morally. But often times, conservative philosophy comes across as harsh. I have no desire to come across as curmudgeonly, I just put on a pedestal the difference between doing something voluntary and doing something by compulsion. This question might sound superficial, but what's the best way to advocate free markets and such without coming across as a person without a heart on his way to becoming a curmudgeonly old man?

J

Joshua Kennon

November 5, 2010

Replying to Frat Man

If dealing with an audience that doesn't think rationally, always frame your arguments to appeal to their interest, not their morality (to paraphrase Benjamin Franklin).

That is: Say they want to increase taxes to pay for things for the homeless. Now, that may be a perfectly rational goal and acceptable but let's imagine you were on the other side of the debate. Instead of talking about why it is rationally bad, instead frame your argument like this: "Take a young single mom who is working two jobs and trying to support her kids. This tax is going to take [$x] out of her pocket - money that she doesn't have - so that she can't spend it on her children, putting food on the table and clothes on their back - but rather ship it to a 50-year-old man who doesn't have a job. Is that just? Is that righteous?"

By framing the argument with a more sympathetic central figure, you can illustrate the inherent unjustness of a particular scheme because people won't feel the same way - even though the law is the same - if instead you talked about a bank president making $600,000 per year.

Also, lay out the foundation of your statement before you begin. There is a lot of evidence that rent control drastically increases the cost of living in a particular city. In fact, a luxury condo developer would probably do better in a city with rent control than one without (it would take too long to explain the reasons). If you say "I'm against rent control" people only here "I'm against old people keeping their houses. I want to evict them and keep my profits." Instead, frame the argument like this:

"I believe that poverty is evil. I think our goal as a society should be to eradicate it. But looking at the data, there is considerable evidence that things like rent control actually RAISE the cost of living for most families except for the lucky few who manage to hang on to an apartment. By supporting rent control, you are directly responsible for making the city unaffordable for working parents and young children. It is one of the reasons families keep having to live further and further away from their jobs in Manhattan, first to Brooklyn and Queens, then to New Jersey, adding hours to their commute, which is time taken away from their families and more money out of their pocket in transportation expense. Rent control is like doctors who used to believe blood letting helped patients - the evidence is that it is the poor themselves who are hurt and a few individuals who benefit. It doesn't affect the rich at all."

Now, you've established a moral dilemma for your audience. It is not merely people vs. profit. It is people vs. people. If you can persuade them that their position is responsible for increasing poverty more, and call them heartless, you will have taken the moral club out of their hand. Most people don't know how to deal with that and fall apart.

People like you and I, and most of the people who read this blog, believe that something should be approved or disapproved based upon rational examination of the facts and the probability that a course of action will lead to a desirable outcome. You cannot speak the language of logic to those who don't understand it so you have to cloak your rational logic in clothes they grasp - most of the thing, this is the human condition aspect.

That is, we cannot say we want to cut social security and medicare. We need to say, we want to cut benefits for these programs to save the nation for going bankrupt because it is better for everyone to have a little less than no one to have anything. Paint the picture of what will happen if the deficits remain out of control - grandma taking truckloads of cash to buy bread and starving most nights of the week.