Our former co-blogger, Arnold Kling, has an excellent review on Econlib of Gregory Clark's latest book, The Son Also Rises. The review is titled "The Heritability of Social Status."
You may have noticed that Clark, an economist historian at UC Davis, likes to come up with titles that sound almost like those of Ernest Hemingway. He does so even if he has to shoehorn the title to fit the content. A Farewell to Alms, his previous book, wasn't accurately titled because that was hardly the main message of the book. This one, The Son Also Rises, is at least closer to accurate, although a better title would have been the one I use for this post. I look forward to Clark's next book, which is rumored to be about a former Treasury Secretary in the Clinton Administration and to have the title, The Dangerous Summers. If Clark branches out to other writers for his titles, maybe we can look forward to another book titled The Class Menagerie.
Back to the more serious issues. The reason for my title is that the book is really not about whether the son of the successful father is successful by some social status measure. It's about whether subsequent generations are. And Clark shows that they are.
Arnold does a nice job of laying out Clark's argument. One key paragraph:
Clark and his researchers looked at multi-generational outcomes on a variety of measures in several countries. They concluded that under many different institutional arrangements and across many time periods, the true correlation across generations in social status is somewhere between .7 and .8, which is much higher than most conventional estimates. In short, persistence of social class is much higher than most researchers believe it to be, based on single-generation correlations that are biased downward by measurement error. [Italics his]
I have two personal stories to illustrate the point. I hasten to add they illustrate, not that two anecdotes in themselves are strong evidence.
The first is about my heritage. My grandfather, born in 1855, was a wealthy apartment owner in Winnipeg. His three sons were, from oldest to youngest: a fairly low-paid minister, a moderately paid high school teacher, and a medical doctor. The middle one was my father. I'm not as high up in the current income/wealth category as my grandfather was in his, but I'm way higher up than my father was.
The second is from Jeff Hummel and it's solely about perceived IQ, not social status. Back in the 1990s, he was invited to have Thanksgiving with his friend David Friedman and David's family, including Milton and Rose Friedman, Aaron Director [David's uncle and Rose's brother] and David's kids, Becca and Bill. I still remember Jeff's line when he came back from that event: "If there's reversion to the mean in IQ, I sure didn't see it in that family."
Back to the big picture. So what? Arnold argues that there are two so whats, one for life arrangers (my term for Arnold's term, "social engineers") and one for libertarians.
For life arrangers, the moral of the story is: "[H]is [Clark's] findings argue against extensive efforts at social engineering that try to achieve parity across groups."
For libertarians, the moral is:
[H]is findings argue against the need to create strong incentives to succeed. If some people are genetically oriented toward success, then they do not need lower tax rates to spur them on. Such people would be expected to succeed regardless.
I think Arnold goes too far on this latter. Wouldn't marginal tax rates change incentives on the margin? Can't we imagine someone who is successful at a 50% marginal tax rate (a rate that many people in the United States now face at the combined state and federal level) who would be even more successful if the combined marginal tax rate were, say, 40%? Also, of course, libertarians have not focused just on marginal tax rates. There are many other government barriers to success. Simply having to get government permission for an innovation--whether in retailing cars or introducing new pharmaceuticals--is a huge barrier to success.
But there's an even more important point to make about Clark's findings, if true (as, I suspect, they are.) It is that all of them are about where one is in the social pecking order. What if you, like me, don't care much about the pecking order? What if you want pretty much everyone in the world, except for evil dictators and a few others, to be better off?
In his review of The Son Also Rises in the Wall Street Journal, Trevor Butterworth wrote:
If policy intervention can have, at best, only a modest effect on social mobility, what policies should we pursue? If we are lucky, bold and careful thinkers will take up this challenge. If not, we are all going nowhere fast.