It's Sunday. My random 'newspaper' internet search day. No, I normally do not read standard newspaper, but you get it what I am talking about. During the week I get very limited time to do current affairs type of reading. I should, but I don't. So over the weekend I try to catch up a bit. So I was talking over the phone with a good friend of mine. We rarely call each other, but when we do, we talk for at least an hour! The direction the conversation went is the current status of the American and Global economy. It is a hard subject to talk about. Especially my friend is a skeptic and cynic. There is nothing wrong with that, he balances me I guess. One of the thing he was saying that he is certain that his son won't earn as much as he does; and not even close. His oldest in 10 year old, my oldest is 9. So I said that's a pretty pessimistic, Nick! But, when I look at the data below, I think it is me who is overly optimistic perhaps...
Above is a chart of the data from the United States. In emerging economies it will likely be different, but there should be similarities. The plot above is the probability of a 30-year old person to out-earn their parents (plotted in vertical axis), against their parents income percentile (plotted in the horizontal axis). Left side of the horizontal axis represents the lowest earners of the United States, while the right side represents the richest Americans. So the way to read this chart is during 1940's 93% of the Americans (age 30) was out-earning their parents at 50th percentile (mid level earners). Even for the top earning parents, 43% of the Americans were out-earning their parents. Earning higher than the parents is a simple example of improving economic condition, and its called upward mobility.
Trouble is the shape of the plot in each subsequent years all the way to 1980s. Chance of outpacing their parents at 50th percentile of earning is only 43%, that at the top percentile is at only 8%! That is a classic example of decline in socio-economic condition and more and more people are going into poverty. If that continues, the only thing we can expect is more of more frustation among youth and a rise of hopelessness. That will lead to the rise of social unrest, which we are seeing now.
Upward mobility is a difficult thing to talk about, but being born in a developing country, I am personally a classic example with a person of upward mobility. My wife and I both earned a couple of orders of magnitude more than our parents. My parents were first generation immigrants to India. They came to the country with nothing and did fairly well all thoughtout their lives. My wife and I are first generation immigrants to the United States, just like my parents in India. I am hopeful, that my daughters will also be immigrants to some other country as opposed to be stagnant here, and continue the family tradition.
I do not have the data to prove, but I do have a gut feeling that being immigrants to a country challenges an individual in certain way that no other thing does. Perhaps that will drive my kids to do better in their life. I do not care if they earn more than us or not. But as long as they are happy with their lives, that is all that we can hope for as parents. I do hope they immigrate to a different country though. I hope :)
