The Failure of Ideology to Reflect Reality

I've been reflecting on the last chapter of Alesina and Glaeser's Fighting Poverty in the US and Europe.  I won't review all of their findings here, basically their contention is that politics have shaped attitudes to the poor rather than basic differences.  They find that hours worked by different income quintiles varies among countries, but the US tends to be near the top of hours worked at all income quintiles.  In some countries the poor work more than everyone else, in some less.  There's no clear pattern with actual behavior.  Also, attitudes towards the poor don't vary based on income mobility, their claim is that there is no evidence of greater income mobility in the US, depending on the country compared the poor may be somewhat less mobile hear while the middle class is somewhat more mobile.  There is also no evidence that the US has been more mobile historically than Europe.  Other works I've read on this dispute some of the details, but I'm not sure whether this is different and newer data or different interpretations of the same data (and I don't care enough to compare bibliographies to answer this question).  These accounts differ in claiming the US used to be more mobile but that this has changed in more recent decades, particularly regarding mobility among the poor.

So that's the snapshot picture of what's actually happening.  What's more troubling is the extent to which the reality differs from perception and ideology's role in this.  In the US, this is primarily right wing ideology.  While this ideology breaks down in the universities, we're pretty much taught a story about how hard work is rewarded and sloth punished, comparative international mobility rates and poverty statistics be damned.  In Europe however, the teaching is more Marxist influenced (to some degree my personal experiences bear this out, I do remember a bit more hard work indoctrination in the US than Canada and supposedly Europe is even farther left than Canada in its teaching, mostly though I'm going off what I've read here and elsewhere, I've never set foot in a European classroom).  This Marxist influenced left wing ideology emphasized the permanence of class and that society is based on privilege, one really can't leave behind the circumstances one is born in.

The problem is that neither view comes close to being even an approximation of the available data.  Both are simply dead wrong.  Income mobility is real and fairly common, and has been throughout human history.  However, mobility rates vary and are likely highly dependent on social and economic policy (I don't know if anyone has studied this empirically, I plan to find out), the laissez-faire approach does not maximize opportunity.  This also however, refutes Marxist class ideas, individuals do respond to incentives, capital does not necessarily come to dominate societies (unless institutions are structured to give it advantage and this is met with an enabling ideology), and cross-cutting cleavages dominate considerations such as class (again, contingent upon institutions, the state must be able to dominate sub-state level political alliances that threaten to overwhelm the normal process of group disintegration).  Neither ideology describes a world where socioeconomic change drives society level responses leading to ever higher rates of mobility and participation.  The right wing ideology fails because it can't explain why participation and mobility has increased as the state has, the left wing ideology fails because it fails to explain why class fails to be the major political and economic identity and how a population can be so economically mobile within the current system.  The left wing ideology also fails to explain how continued growth has not resulted in the takeover by privileged interests.

If these ideologies simply led to some idiosyncratic beliefs, there wouldn't be an issue.  However, the flawed perceptions of each lead to actively destructive policies.  On the right, the failure to acknowledge that the myth of pulling oneself up by one's boots leads to the failure to make investments that would promote income mobility and thus greater utilization and specialization of labor. It leaves a great deal of potential opportunities idle and disempowers people who may otherwise be able to engage in a bit of creative destruction, if only the institutions existed to give them access to the resources needed to compete effectively in the market economy.

On the left, we see a number of destructive labor market policies designed based on the false belief in class immobility.  There are too many impediments to entrepreneurship and union and state policies are designed to protect someone where they are, rather than optimize their ability to move and change.

On the whole, what's necessary is to move past ideologies that were designed to explain a changing economic world we had little data on.  We have the data now and could formulate beliefs that are more accurate to our observations.  What is necessary to realize is that opportunity rarely exists spontaneously, it is created via social and economic investment.  But for individuals to act on these opportunities there need to be sufficient incentives to do so, if they see too much downside risk or too little benefit individuals won't act.  Society and the individual are essential complements, no individual can pull themselves up by their bootstraps (just try, pull hard enough and you might fall) but neither will an individual bother to try pulling if they can't move up by doing it.  As with everything, it is balancing the costs and benefits that is necessary, tipping to one side or the other is inefficient and hurts both people and society.