Paul Krugman uses Martin Luther King Day to latch on to income inequality as the new "evil" to be opposed as vigorously as racism.
He cites a recent speech by CEA chair Alan Krueger, described by Timothy Noah; the speech took inspiration (and the Great Gatsby Curve) from this thoughtful and interesting paper by Miles Corak (who provides more background here.).
At a quick read I would say that Corak does not come out of the shadows on immigration, as Krugman did briefly in 2006. The gist - allowing unskilled Third World workers into the US to work improves their income situation and helps global income inequality but depresses the wages of unskilled native Americans, thereby hurting US income inequality statistics. Furthermore, the public won't support both a generous social safety net and open borders. So, although the moral case for the de facto open border policy favored by Democrats may make sense to some hypothetical President of the Americas, the case is a bit less compelling for a President of the US. Krugman does not add that the case for open borders becomes more compelling if there are lots of prospective new voter to co-opt.
I will also add that what is missing here is a baseline - David Brooks explained years ago that a hereditary meritocracy may not be what we want, but it is not surprising:
At the top end of society we have a mass upper-middle class. This is made up of highly educated people who move into highly educated neighborhoods and raise their kids in good schools with the children of other highly educated parents. These kids develop wonderful skills, get into good colleges (the median family income of a Harvard student is now $150,000), then go out and have their own children, who develop the same sorts of wonderful skills and who repeat the cycle all over again.
In this way these highly educated elites produce a paradox - a hereditary meritocratic class.
And at the bottom of the ladder:
And this is not even to speak of the children who grow up in neighborhoods in which more boys go to jail than college, in which marriage is not the norm before child-rearing, in which homes are often unstable, in which long-range planning is absurd, in which the social skills you need to achieve are not even passed down.
The Corak paper discuss this, after citing Solon 2004:
To understand these differences we need to appreciate the possible underlying causes of generational mobility, and an important starting point is Solon (2004) who has adapted a standard perspective in the economics literature and made it appropriate for comparisons across countries.
Very broadly speaking, the reasons for the differences in the intergenerational elasticity across countries has to do with the role of three fundamental institutions determining the life chances of children—the family, the labor market, the state—and the different balance struck between their influence across countries.Solon’s model invites us to think of families differing in their capacities and resources to invest in their children, but also as facing different incentives to do so according to their socio-economic status and the social context in their country. While some of these capacities and incentives to invest in children may be genetic or due to family history and culture, others are influenced by how families interact and interface with the labour market and public programs. It is these later influences that are related to public policy and choices.
Corak also discusses the implications of the cost and return to education:
As another example, an increase in the cost of human capital investment, such as in market-based provision of child care or health care, private primary schooling, or higher college tuition fees, will implylower human capital investment. In a similar way a higher potential return to human capital will create an incentive for more investment. Solon (2004) takes the rate of return to education as an indicator of the degree of inequality in the labour market, and shows that societies with labor markets characterized by more cross-sectional inequality—that is, a higher return to education—will be less generationally mobile.This is because a higher income, dual earner family with fewer children not only has a higher capacity to invest in the education of their children than a single parent low income family, but also because the incentives to do so are greater. Inequality in demographics and labor markets in the here and now will have an influence on the degree of inequality in earnings in the next generation. Consequently we can expect the intergenerational elasticity to differ across countries for reasons associated with the costs and returns of investing in a child’s human capital, the way in which the labor market works and how “good jobs” are obtained, and the income inequalities between parents.
A country with confiscatory taxes and a generous social safety net has less incentives for investment in education than, for example, the US. .
Finally, Corak presents a troubling, if unsurprising, finding in a comparison of the US and Canada:
In both countries there is a considerable degree of mobility among the broadly defined middle earnings group, but both the sons of high and low earning fathers are more likely to grow up to be, respectively, high and low earning adults.
...There is in fact a good deal of fluidity in the American earnings distribution across the generations with the children of most middle earning parents experiencing outcomes that are not strongly associated with their parents’ income levels. But even so, on average, the United States stands out as being among the least generationally mobile among the rich countries, and in particular the overall degree of relative earnings mobility across the generations is almost three times greater in Canada, a country to which it might be most apt to make a comparison. This difference is due to a greater stickiness in earnings across the generations at both the top and the bottom.
So Horatio Alger is alive and well in the middle class - a permanent underclass and a semi-permanent overclass would be the problem. Now, Paul Krugman's child, the offspring of two Princeton profs, is undoubtedly being raised in advantaged circumstances and will get into the college of her choice. My suspicion is that Paul Krugman does not consider his decision to raise his child with attention and care to be "evil". So maybe the notion that the well-to-do are making the ffort to raise their kids well is not really the problem. If class status was conferred by the inheritance of land, well, one might feel differently. But if parents pass down, through nature and/or nurture, some combintion of height, high energy, good health, good looks, intelligence, motivation, and organizational skills, well, is that really so terrible?
At the bottom of the ladder the problems are very different. I assume nobody wants to hear from a middle-class white guy on this topic, so let's cut to a middle class white gal - Megan McArdle attempted to imagine the difficulties of pulling a Hoartio Alger act from the ghetto, and struck me as quite insightful. Her point is that even if the door to success is open, expecting a kid to make the choices necessary to walk through it is not the high-probability bet.