What’s luck got to do with it? When it comes to money, quite a bit

Pedro da Costa

Pedro da Costa Communications Director, EPI

The notion that hard work is all that’s needed to achieve a prosperous or even comfortable living in the United States has come under increasing scrutiny in recent years as stagnant wages for most workers have led to talk about the demise of the American Dream.

Randy Schutt, a long-time progressive activist and researcher, has created a simple model to help illustrate just how much dumb luck, mere chance and circumstance, can play a role in who becomes wealthy and who remains poor.

The project, intended to illustrate certain nuances about economic inequality to students and researchers, is called “The Chancy Islands: A Land of Equally Capable People But With Unequal Luck.

His imaginary archipelago includes places like Rugged Island and Mercy Island, the first unforgiving, the latter much less so, and everything in between—Flat Island, Combo Island, Parity Island, etc.

“We’re always told that if you work hard and persist through adversity that you can rise above your humble (or horrible) circumstances and become wealthy. But that isn’t true,” Schutt said. “Most people are so beaten down by our economic system that they have to be lucky just to get by. And they have to be very lucky to do well and extremely well to get super rich.”

The statistics bear our Schutt’s narrative. Economic mobility, defined as the chance that someone born in the bottom fifth of the income distribution can sweat their way to the top fifth, is extremely low in the United States (around 7.5%)—and actually much lower than other rich nations, because of a much weaker social safety net.

You can explore the models for yourself by going to the website. But Schutt comes to the following conclusion after having examined all of the different combinations and possibilities exhaustively:

“It turns out that even with absolutely no differences in talent or effort, severe inequality can still arise just from the random shocks of wealth-depleting natural events such as serious illnesses, bad accidents, and natural disasters,” said Schutt. “Some households will amass vast fortunes without having done anything to justify their windfall; others will slide into poverty and homelessness without having done anything to warrant their impoverishment.”

Schutt adds, on a hopefully note, that his model also suggests “a few simple mitigation measures can almost completely rebalance such a society, essentially eliminating any long-term inequality.”

Such policies include, perhaps unsurprisingly, taxing the wealthy in ways that are becoming increasingly popular with the American electorate.

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Reposted from EPI

Posted In: Allied Approaches

Union Matters

Steel for Wind Power

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

Siemens Gamesa last month laid off 130 workers at its turbine blade manufacturing plant in Iowa, just months after GE Renewable Energy decided to close an Arkansas factory and eliminate 470 jobs.

The companies reported shrinking demand for their products, even though U.S. consumption of wind energy increases every year.

America’s prosperity depends not only on harnessing this crucial energy source but also ensuring that highly skilled U.S. workers build the components with the cleanest technology available.

Right now, the nation relies on imported steel and turbine components from foreign manufacturers like China while America’s own steel industry—well equipped for this production—struggles because of dumping and other unfair trade practices.

Steel makes up the bulk of turbine hubs and the wind towers themselves. It’s also used to make the cranes and platforms necessary for installing the towers.

Yet the potential boon to America’s steel industry is just one reason to ramp up domestic production of wind energy infrastructure.

American steel production ranks among the cleanest in the world, while China has the highest carbon emissions of any steelmaking nation and flouts environmental regulations.

The nation’s highly-skilled steelmaking workforce must play an essential role in the deeply-needed revitalization and modernization of the nation’s failing infrastructure. Producing the components for harnessing wind energy domestically and cleanly is an important step that will put Americans to work and position the United States to be world leaders in this growing industry.

 

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There is Dignity in All Work

There is Dignity in All Work