[ExI] The Great Gatsby Curve

John Clark johnkclark at gmail.com
Fri Mar 1 18:03:25 UTC 2019

Americans like to think they live in a meritocracy but they don't, the
truth is if you're born poor in the USA and are talented you're less likely
to get rich than if you were born in other advanced countries, particularly
one of the Scandinavian socialist countries. Take a look at this graph,
it's informally called "The Great Gatsby Curve" by economists and is a plot
of the Gini coefficient for several industrialized countries (a measure of
economic inequality) against economic mobility (the likelihood if you're
born in one economic class you'll die in the same economic class):

The Great Gatsby Curve

As you can see the USA is in the extreme upper right of the plot and that
is exactly where you don't want to be; enormous economic inequality and
little economic mobility, the same conditions that occurred just before the
French Revolution. The only reason there hasn't already been blood in the
streets is probably because the poor are unrealistically optimistic about
getting rich. Here is another interesting graph, it plots several countries
actual economic mobility against the perceived economic mobility with the
diagonal line representing a accurate assessment of posabilities. As you
can see Americans are far too optimistic while most other countries are
somewhat too pessimistic, only the Italians get it about right and see
things as they actually are:

Actual Mobility Versus Perceived Mobility

So we're sitting on a time bomb and the only thing stopping it from going
off is a misperception by the poor and lower middle class, but it's only a
matter of time before they wise up and when they do I suggest you invest in
guillotine futures.

 John K Clark
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