Tuesday, November 17, 2009

What will it take to forge a new social contract?

Via:  FT 

Clive Crook reviews Creating An Opportunity Society by Elizabeth Sawhill and Ron Haskins.

By international standards, intergenerational mobility in the US is quite low. This will surprise few who have ventured into a US public housing project or troubled inner-city school, but many middle-class Americans never have. The figures show that US children born in the lowest and highest quintiles of the income distribution are more likely to stay there than in Britain, for example, and much more likely than in countries such as Sweden and Denmark.

But what to do about it? The book confirms a finding well established in the literature, that transition to the middle class is all but guaranteed for poor children if they do three things: finish high school, work full time and marry before having children. The US underperforms as an opportunity society because so many of its young people fail at one or more. The book focuses on these areas.

Education, as the Obama administration recognises, is pivotal. The book calls for gradual increases in spending on early education programmes for the poor, an exceptionally productive investment according to all the research.

The authors also suggest policies to improve schools, such as adopting national standards (a strengthening of the state-based standards of the No Child Left Behind law); new federal incentives (like those being introduced by the Obama administration) to encourage the hiring and retention of good teachers; and support for “paternalistic” schools that stress order, good attendance, basic skills and frequent assessment. Teachers’ unions find plenty to object to here.

Incentives to find and stay in work could be improved by extending the earned-income tax credit, say the authors, and through support for vocational training. But work requirements under the 1990s welfare reforms should be maintained or tightened, they say. At this many liberals will bridle, as they will at the claim that the “success sequence” of school, employment, and children after marriage requires firmer pro-family suasion and incentives. “To those who argue that this goal is old-fashioned or inconsistent with modern culture, we argue that modern culture is inconsistent with the needs of children.” So there.

The cost of these new and expanded interventions, net of savings from schemes the book wants trimmed, would be about $20bn (€13.4bn, £12bn) a year. This seems modest by current standards, but, as good fiscal conservatives, the authors think the country cannot afford its present commitments, let alone new ones. Here, therefore, they make their boldest suggestion of all. The US social contract needs to be revised, so that the elderly, many of whom are comparatively well off, receive less so that the poor can get more.

The authors lay out an admirable agenda.  The only problem is that it would require a new social contract already in place to get it legislated.

I had a neighbor years ago when I was living in an apartment complex in Philadelphia who first expressed to me what I have come to think of as the “perennial wisdom” on this topic:

“It will take a depression to bring people back to their senses,” the cantankerous gentleman said.


  1. Unfortunately, it doesn't seem that the current administration is taking this "lack of mobility" seriously enough. Along with a 'new' New Deal, we do indeed need a new social contract for Americans, which can guarantee education, health care, and employment to all citizens. We need FDR's policies to get American's back to work if we want a future for our children. The Roosevelt Institute has been running a series called 'Navigating The Job Crisis' with daily articles from Randall Wray, Majora Carter, and others and its definitely worth a read!

  2. Bob,

    Thanks. www.newdeal20.org is a good site.


  3. Thanks for sharing this. If we, here on the local level, could get that modest three-part message across:

    'finish high school, work full time and marry before having children'

    ...we would see drastic improvement in the culture, and then the economy.

    Even chop it down to some sort of slogan:

    'YO! FWM ya'll!'