Meritocracy in America - Excellent article from 2004

[Wind Dancer]

Ever higher society, ever harder to ascend

Dec 29th 2004 | WASHINGTON, DC
From The Economist print edition
Whatever happened to the belief that any American could get to the top?
Corbis

THE United States likes to think of itself as the very embodiment of meritocracy: a country where people are judged on their individual abilities rather than their family connections. The original colonies were settled by refugees from a Europe in which the restrictions on social mobility were woven into the fabric of the state, and the American revolution was partly a revolt against feudalism. From the outset, Americans believed that equality of opportunity gave them an edge over the Old World, freeing them from debilitating snobberies and at the same time enabling everyone to benefit from the abilities of the entire population. They still do.

-snip-

But are they right? A growing body of evidence suggests that the meritocratic ideal is in trouble in America. Income inequality is growing to levels not seen since the Gilded Age, around the 1880s. But social mobility is not increasing at anything like the same pace: would-be Horatio Algers are finding it no easier to climb from rags to riches, while the children of the privileged have a greater chance of staying at the top of the social heap. The United States risks calcifying into a European-style class-based society.

The past couple of decades have seen a huge increase in inequality in America. The Economic Policy Institute, a Washington think-tank, argues that between 1979 and 2000 the real income of households in the lowest fifth (the bottom 20% of earners) grew by 6.4%, while that of households in the top fifth grew by 70%. The family income of the top 1% grew by 184%—and that of the top 0.1% or 0.01% grew even faster. Back in 1979 the average income of the top 1% was 133 times that of the bottom 20%; by 2000 the income of the top 1% had risen to 189 times that of the bottom fifth.

Thirty years ago the average real annual compensation of the top 100 chief executives was $1.3m: 39 times the pay of the average worker. Today it is $37.5m: over 1,000 times the pay of the average worker. In 2001 the top 1% of households earned 20% of all income and held 33.4% of all net worth. Not since pre-Depression days has the top 1% taken such a big whack.
More dynastic than dynamic

Most Americans see nothing wrong with inequality of income so long as it comes with plenty of social mobility: it is simply the price paid for a dynamic economy. But the new rise in inequality does not seem to have come with a commensurate rise in mobility. There may even have been a fall.

-more-

http://www.economist.com/world/na/displayStory.cfm?story_id=3518560