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The rich shall inherit

23 April 2014 By Edward Hadas

The children of the poor tend to end up poor. The children of the elite seem pre-ordained to inherit a good part of their parents’ status and income. Is that just?

Things aren’t as bad as they were. In developed economies, social stratification has far less effect on children today than a century ago. The modern gulf is between developed and developing economies. In rich countries most people are middle class and the gap in lifestyle and education between poor and rich has narrowed.

Still, family remains a big part of destiny. That’s especially true in the United States, in spite of its claim to being a land of opportunity. A recent paper by Raj Chetty and other economists found a strong tendency for American children to end up in about the same position as their parents in the hierarchy of income. An international comparison by Jo Blanden of the University of Surrey concluded that the economic weight of inheritance in the United States is currently relatively high among affluent countries.

It is hardly surprising that social positions persist through the generations. Just look at the environment in which children grow up. The more privileged the young, the more they tend to absorb the sophisticated discussions of their more educated parents, the more likely they are to be pushed and supported, and the more potential employers will find their manners and connections pleasing. Hence Chetty’s conclusion that the parents who can afford to live in a certain community are likely to produce children who can afford to live in similar communities. Conversely, the poorer the parents, the less socially propitious the children’s role models, schools and behaviour.

For anyone who believes that all children should have an equal opportunity in life, any tendency for social position to be inherited is simply a bad thing. Yet egalitarians who happen to be well-off do make exceptions for their own offspring. Like almost all parents, they work hard to help the next generation.

From a strictly egalitarian perspective, such efforts are hypocritical. But equality of opportunity is not the only standard of social justice. In a fair society, parents have the freedom to promote their children’s welfare. A parent who is simply supposed to accept fate or to trust the state is not able to live up to the responsibilities which come with the role.

The conflict between children’s equality and parents’ freedom is irreconcilable. In such a situation, it is necessary to call on a much used and often underappreciated rule of social organisation: when sound principles conflict, the best policy answer is usually a muddle. Perfection is not a realistic goal, but it is possible to eliminate the worst excesses.

One way forward is to help the very poor children who are most likely to inherit disadvantages. Give their mothers extra financial support and advice during pregnancy. Spend more on their schools. Find volunteers to tutor them. Support them when they get into trouble. And recognise that broken families amplify the already bitter heritage of deprivation. It is worth promising poor fathers a living wage if they stay with the family.

Another approach is to counteract flagrant individual injustices. On one side, put talented poor children into superior schools. That used to be common practice in British grammar schools, and it still makes sense, even with long journeys from poor neighbourhoods to good schools in better parts of town.

On the other end of the scale, try to reduce the privileges of affluent children. That is harder, since the young rich usually are genuinely more attractive candidates. Still, by downplaying the value of personal connections, an inherited labour aristocracy can be turned into something more like a meritocracy.

Finally, focus more on what happens to adults. After all, if adult incomes are more equal, their children’s fortunes will be less determined. Besides, polices which reduce the inequality of outcomes among grownups can be less oppressive than those which fight against the inequality of opportunity for children.

These days, the greatest injustice in outcomes is found in the ultra-high pay received by the top 1 percent of the population, even after taking into account the higher tax rates on big incomes. An effort to rein in their pretax pay would take some of the worst sting out of the determinism of inheritance.

The children of the elite may always do well, but less unequal salaries would make their advantages less galling. There’s another benefit. Less extreme pay could reduce the isolation of the rich from their compatriots. Then there would be fewer advantages to inherit.

 

 

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