Some economists centrally plan the economy, while others research poverty alleviation strategies. In a recent article, aptly titled: Achieving the ‘American dream?’ A lot of it depends on where you grow up, CNBC reported on a study conducted by academics from Harvard and Brown universities revealing that the neighborhood in which you grow up has a lasting influence on your future success in life.
The findings were presented at a World Bank Conference, where one expert remarked:
We are thought to be the country of the American dream, [where] once you start from the bottom, you move to the top. But that’s just not really what we see.
Economists found:
… numerous variables that define neighborhoods — such as the quality of their school districts, poverty rates and conditions that influence social capital in a community — all have lasting impacts on children’s future income.
What becomes newsworthy is hardly novel. It’s not a stretch of the imagination to recognize that a family raised in a dual-income household in an affluent neighborhood, with access to prestigious private schools, will likely provide their children with a better chance of success than a child growing up in a single-parent household, struggling with poverty, and attending public schools.
According to their findings:
The data shows a child can earn an average of $56,000 as an adult if they grow up in one neighborhood, versus just $33,000 if they grow up in an adjacent area.
Some of the characteristics of what’s considered to be a good neighborhood:
… include lower poverty rates, more stable family structure, greater social capital and better school quality.
Yet the way they phrase it, it seems as if the child has a huge sway in the matter of their upbringing:
… a good neighborhood may translate into better chances for success in adulthood, it also highlights that being immersed in these areas at a young age is important …
What comes out of the study is the idea that the government can find a way to help the disenfranchised through interventionist strategies, as explained:
These insights could help to shift the tide against worsening rates of intergenerational mobility in the U.S. by informing policymakers as to which decisions could be the most influential in shaping upward prospects…
Besides letting the free market create greater opportunities for the majority, it’s challenging to say what exactly policy makers could do to enhance the situation. However, one certainty remains: the American dream is still just a dream for many. The data indicates that very few poor Americans will ever transition to the category of rich Americans.
In the U.S., there’s 13.1% average probability that a child of parents in the bottom half of the income distribution can make it to the top quartile…
Professor John Friedman, Brown University, tries to shed light on the matter:
College is much more expensive than it used to be, but it remains [about] the single best investment most people can make.
Those who are indebted to the U.S. Government’s $1.8 trillion student loan asset may hold a different perspective.
On one final note. Any serious discussion about poverty in America, poverty alleviation strategies, upward mobility, or the American dream, should only be taken seriously if they include an honest critique of the Federal Reserve. The now $33.7 trillion debt level and the Fed’s $7.9 trillion balance sheet, price inflation, never-ending boom-bust cycle, and the next economic crisis to come, can all be largely attributed to the Fed.
If anyone wants to have a serious discussion about inequality in America, the Federal Reserve needs to be part of that discussion.
