Manuel Serrano: Nowadays, the debate over inequality is pervasive. Some people have wealth, proper education and proper healthcare. Others do not. They have poverty, poor healthcare and even poorer education. How unequal are our societies today?
Gregory Clark: Compared to past societies, ours is less unequal – less unequal than it was before the Industrial Revolution. But if you go back in time, to the hunter-gathered societies, then it is obviously more unequal. As soon as agricultural land became important, societies became highly unequal: a quarter of all income went to the landowners. Ownership of capital is vastly unequal. However, one of the things that kept inequality down in the modern world was the share of labour. The problem is that the share of labour is currently declining. For example, in England, in the last ten years, wages have been declining at about 1% per year. The last time anything like this occurred was during the Napoleonic wars. That is the big worry now: property ownership and the share of profits and capital is steadily increasing.
A second problem is that the rewards for experts will keep increasing too. Within a global economy, these skills can be sold to the entire world. In Davis University, for example, we have a list of everyone´s salaries. The two football coaches top the list. Just after them are medical doctors, who are getting now between two or three million dollars per year. The reason why they are being paid this much is simple: they generate a lot of income. People are willing to travel to Los Angeles to get treatment.
Both the increasing share of income that goes to capital and to experts and very small groups of talented people makes it very difficult to know where our societies are heading to - and how unequal the future will be.
If we are now entering a period of greater inequalities, what we should do is tackle the inequalities directly.
MS: You argue that too much faith is put in the idea of movement between classes. Why is it better to focus on improving income equality than on social mobility?
GC: The reason I say this is because evidence suggests that it is almost impossible to change the rate of social mobility. Look, for example, at the Nordic countries. They are the ones who have done most to try to provide a proper education for everyone, good nutrition for children, family support, and guaranteed income. They have done all of this, and yet it turns out that the Swedish elites of the eighteen century are still the dominating class in Sweden today. If Sweden cannot change the rate of social mobility, what chances do other countries stand?
What we have to ask ourselves is: what is the maximum level of social intervention that we can have to improve the social mobility rate? Adoption, for instance: we should aim at guaranteeing that all children are brought up in nurturing families. But evidence suggests that these children end up resembling their biological parents, much more than their adopted parents. Studies analyzing their occupation when they are forty or fifty show that being adopted change very little their outcome in life. This is the maximum level of social intervention possible, and it fails to have a significant impact in the children´s outcomes.
The evidence we have is that it is very hard to change the rate of social mobility. So, if we are now entering a period of greater inequalities, what we should do is tackle the inequalities directly. We know that we can reduce them dramatically, as has been done in countries like Sweden or Norway.
It turns out that the Swedish elites of the eighteen century are still the dominating class in Sweden today.
MS: You maintain that the magnitude of social inequalities varies across societies, but that democratizing education and eliminating discrimination over the last century has had no noticeable effects on mobility. What impact do social institutions have on inequality?
GC: You can change inequality in society by taxing people and redistributing income. But, surprisingly, when Britain went through its period of great redistribution, it did not affect those who were admitted to the best universities. Poorer students were still not getting into the good places. It did not change the distribution of occupation. Inequality could not be made less obvious in society, nor could the benefits of those at the top be reduced. It turns out that is very hard to stop certain families from being at the top of the distribution ladder. After looking over hundreds of years of data, I must say that there is, in fact, complete social mobility - the only problem is that takes around three hundred years. This is a philosophical problem we face: we are all equal, but in the very long run.
MS: And what about the role of social movements? What about America´s civil rights movement? Do they not have an impact on the social mobility rate?
GC: There are some cases where social institutions have indeed been responsible for changes in social mobility rates. America is a good example, especially as regards the peculiar history of the South. But those are extreme cases. Even medieval England had the same rate of social mobility as modern Sweden. Medieval England actually had complete social mobility, as the lower classes could eventually become the upper classes. But it turns out that it takes fairly extreme situations to affect the rate of social mobility. India is another good example. But in terms of the kind of institutional changes that people would expect in countries such as Spain or Portugal, there is absolutely no evidence that moderate levels of intervention would do anything to change the rates of social mobility. There is no evidence that supporting university students, for example, would achieve anything in this sense. Extreme interventions yes, moderate interventions no.
This is a philosophical problem we face: we are all equal, but in the very long run.
In Britain, for example, public education only became available in the late nineteen century. It had no significant effect on the rate of social mobility. Nor did free colleges in the nineteen forties. Take, for instance, a group that can be classified as elite in Britain: the members of Parliament. When the Labour Party became the dominant party in the twentieth century, it did not have any significant effect on the class composition of Parliament. The new leaders of Labour were the same as former leaders of other parties and remained an elite. Another example is the former editor of The Guardian, Alan Rusbridger: we remember his name because that was an elite surname in the nineteenth century.
In my forthcoming book, From who the bell curve tolls, I am going to explore why social mobility is so resistant to change. And it will contain a controversial claim: because genetics have a surprising importance in determining a person´s social position, whatever the social environment may be. As part of the analysis, we have started going through some data coming in from Russia which suggest that even in societies that have been transformed by revolution, the rate of social mobility does not change that much. People just adapt. Some turned out to be very good Communists, others turned out to be not that good. The interesting puzzle is why is it so difficult to change the rate of social mobility.
MS: That will certainly be very controversial. In your latest book, The Son Also Rises, you have conducted a study on surnames and the history of social mobility. Could you explain your findings?
GC: Basically, in many societies, when surnames were first formed, some of them had a high status on average, and some had a low status. It was just the way surnames were formed. In Britain, if you were called after a place, that was a high status surname in medieval times. We can actually sort out those names and see if, in a high social mobility world, the children of high status people become low status, and their surnames lose their information content. This allows us to test much social entropy there is in a given society.
The amazing thing is that the surnames, in all the societies we have been able to observe, show a very strong persistence of status. We have done studies, for example, on Australia, a completely new society which broke away from Britain with new institutions, and we have found the same rate of social mobility as in the metropolis. We have looked at Sweden, at India, at China and we have found very different configurations, but very similar rates of persistence.
Even in societies that have been transformed by revolution, the rate of social mobility does not change that much. People just adapt.
Another thing that happens in societies like England, is that there are one and a half million surnames, and lots of them are very rare. And what happens is that, just by the random forces in society, after a certain number of generations, some of these surnames end up as being average, despite the fact that, originally, those who had them were either very educated or wealthy. We can just go to any generation, find the surnames that are doing very well or doing badly, and track them over the next three hundred years, and see how they do.
We can also track prehistory, and find very interesting dynamics: it typically took high status people three hundred years to get them to that position. This means that social mobility is even slower than you think, because it takes three hundred years to go from the top back to the average, but it takes another three hundred years to go the other way – so, it is a six hundred year process for these families.
Gregory Clark during the conference. Alfredo Matos. All rights reserved.
MS: In the same book, you also argue that the “the world is less corrupt and nepotistic than people might think”. A lot of people would disagree with you on this.
GC: The important thing here is that a lot of people think that there are some in our societies that have not had a fair chance in life - they did not have the opportunity to thrive, because their parents were born in a particular setting. But studies and evidence seem to go against this idea. It may be the case that people at the bottom of the distribution ladder do not have as many good opportunities to make it to the top, but it turns out that these are not particularly relevant opportunities for many people at the bottom. The interesting aspect, however, about social processes and dynamics is that there is always a movement upwards from the bottom and that, surprisingly, those in the worse circumstances are the ones who actually make bigger gains. They are not stuck in the bottom, as the surname study revealed. They will end up back again on top.
Social mobility is even slower than you think, because it takes three hundred years to go from the top back to the average, but it takes another three hundred years to go the other way.
What you can extract from the data is that there is not a poverty trap in society and that the children of those living in the most desperate circumstances are systematically doing much better. Actually, what makes it very difficult to deal with the poverty burden is that helping those in the bottom does not help the next generation, because they are not the ones being helped. It is very hard to identify who is going to drop to the very poor circumstances.
A lot of people have a depressive view on this, but I am more optimistic: there is no poverty and no wealth trap. Processes are slow, but they are slow because children resemble their parents to a very high degree. In the end, we live in a world where it is just not the case that a huge number of people are being denied opportunities. And it is not the case that there a vast number of wealthy children with zero talent are running our modern societies. There is a steady downward movement: the upper class desperately wants to hold on to their position, but they cannot protect their children from downward mobility. Even if the process is slow, what is interesting is that there is a process, a mixing actually going on. And that if you want to know what the future of your great great great grandchildren is going to be, the answer is that, on average, they will be average.
The American Dream really is a myth. People have the same opportunities in the market, but inequality takes place before entering the market.
MS: What about the American Dream, then?
GC: America is in the process of creating what will be, inherently, an enormously unequal society. It is already quite unequal, but its immigration policy is now bringing into America elite groups from several places in the world. Social processes being very slow, the interesting thing is that the old white Protestant upper classes in the United States are now average, having been displaced by new elites. But, at the same time, many extremely poor immigrants are arriving. In terms of inequality, California is now like Colombia. And there is no speeding up of social processes in America: the American Dream really is a myth. People have the same opportunities in the market, but inequality takes place before entering the market, and America cannot wipe that away. The poor people who are arriving will stay at the bottom, while the rich people will remain at the top - but now in a different country. America is reproducing many inequalities from across the world.
If you want to know what the future of your great great great grandchildren is going to be, the answer is that, on average, they will be average.
The one thing in favour of America is that it has been very tolerant with the replacement of the old upper classes by new ones. It is still a society that is very open to this transition, and that is admirable – except, that is, that part of society supporting Trump: people from a traditional class that has been losing out, and who are resentful because their position in the social ladder is sliding downwards because of the high skilled new emigrants arriving.
America is an interesting laboratory, but the differences between social groups are so great, that they are driving up inequality in the country.