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[Jeff Harkins]

Andreas,

We can have a robust conversation but please try to avoid slurs about 
my knowledge and understanding of issues - I will not castigate or 
denegrate your knowledge and understanding.  Otherwise, I am 
confident that a dialogue would serve no purpose.

Social mobility studies suggest that the friction that restricts 
movement of low income levels to higher income classes is highly 
correlated to education (quality and level achieved) and a set of 
transferable/marketable skills (ability to provide value added 
services). If one wants to enhance the opportunity for moving from 
one social class to another, improve access to quality education 
systems. Other significant factors appear to be indifference (don't 
care), place bound (not able or unwilling to relocate) or believe the 
shift would require too much effort on their part.

These same studies support the notion that human will/spirit is the 
prime element in moving from one income class to another.

Your model would seem to imply that being a member of a society 
entitles you to a "social equity" income class - sounds like a pitch 
for welfare to me and not far removed from the "living wage" 
concept.  The fact there is no reason for a business entity to pay 
more for labor than the value of the labor in the production and 
delivery of goods and services.  Thus, unless the employee 
contributes to the value of the enterprise (marginal revenue product 
exceeds marginal cost), there is no reason to employ that 
individual.  And over time, unless that individual enhances their 
value (e.g., added or improved skills, lower error rate), there is no 
basis for increasing the wage compensation of that individual.

The fact is though - very little can stop the cream from rising to 
the top.  Persistence and determination, coupled with observation and 
ingenuity will nurture a robust opportunity for individuals to move 
through the social stratums. There seems little substitution for 
effort and achievement.

You seem to confuse achievement with consumption. Why would you 
define the "American Dream" in the context of a gold-plated Rolls 
Royce?  The American Dream that I subscribe to is built on the notion 
that "if you are willing to make the necessary sacrifices and 
efforts, you have a great likelihood that you can be what you want to 
be. In this world, there is no free lunch.

I've read volumes about the captains of American Industry. I've 
carefully selected the recommended biographies.

At 11:03 AM 8/29/2006, you wrote:
>On 8/28/06, Jeff Harkins <jeffh at moscow.com> wrote:
>>Bill,
>>
>>Here is a simple thought for you to ponder ...
>>
>>The ultimate force that assures that competitive behavior and free
>>choice will provide a check on greed is that there is nothing that
>>can prevent you from becoming the next CEO earning $200 million - you
>>simply have to be willing to commit to that agenda and be willing to
>>make the sacrifices necessary to achieve your goal.
>
>This is utter nonsense, Jeff. As an economist, you should know
>full-well that it's utter nonsense.
>
>Social mobility has declined since the 1970s. 42% of people born in
>the lowest income quintile die in the lowest income quintile. 24% move
>up a quintile. Less than 5% reach the top income quintile. Likewise,
>36% of people in the top income quintile remain in the top income
>quintile. Note, also, that this is lifetime social mobility --
>including the expected increase in wages over a lifetime. This is a
>problem, both in terms of social equity and in terms of efficiency:
>talent is spread more widely than income, and we are insufficiently
>capitalizing on the talents of our low-income citizens.
>
>For God's sake, Jeff, social mobility is higher in Finland, Norway,
>Germany, France, Canada, and Denmark. Only Britain has a lower degree
>of social mobility than the United States. The "American Dream", at
>least insofar as the "American Dream" involves becoming a
>multi-billionaire capable of gold-plating his Rolls Royce, is, in the
>21st century, a collective hallucination on the part of the American
>people.
>
>>Yes indeed - you could be the CEO of WalMart and you could then
>>restructure that company or any other multinational firm as you see
>>fit - as long as you satisfy the return on capital demands of the
>>shareholders and the expectations of the capital markets.
>>
>>It really is that simple.
>>
>>You might consider reading the biographies of Dupont, Firestone,
>>Ford, Hughes, Vanderbilt, Osborne - even Gates (to name a few) to
>>gain a sense of how this is possible.
>
>You might want to consider reading the biographies of Paris Hilton,
>John E. Du Pont George W. Bush, Edsel Bryant Ford. You might then want
>to take a chance with the biographies of the second generation of
>robber barons: the children of Astor, Morgan, Carnegie, and
>Vanderbilt. Then you might take a moment to remember that Ford was a
>vocal pro-fascist who used his considerable wealth to promote very
>little other than anti-Semitism. Then you might take a moment to
>consider the social good acomplished by ridiculous and unprecedented
>concentration of wealth in the hands of a small number of people.
>
>-- ACS
>