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Critique Assignment

The essay, The Death of Horatio Alger by Paul Krugman tries to show how it was easy to achieve the American dream in the past (in 1950s), and how at the current state of social immobility in the America, most people are finding it hard to become richer. Published in December, 18, 2003 in McGraw-Hill Reader, Krugman examines income mobility and social mobility of most of the American families in the past and the factors that contributed to the achievement of the American dream. He further examined the current “Wal Martization” economy in American that has resulted to the inability of low-income Americans to move up the social ladders. So to say, as Krugman observed, it seems that the American Dream is continuing to become a myth and a life of the past since as he predicts, there is a high likelihood that in the future, it will be more difficult for the low-income earners to moved up the income ladders and become rich (Krugman, “The Death of Horatio Alger”).

Krugman begins with an anecdote involving outrageous claims of a society in which the poor are becoming poorer; no matter how they work harder. He further observes that the sons are inheriting the wealth from their social economic fathers compared to how it was in the early 1930s. According to “Waking Up From the American Dream”, an article that was published in Business Week, a research that was conducted in the United States revealed that there was a considerable decline in social mobility as a result of the increase in wealth and income inequalities. According to the research, America has become more of a class-ridden society. Krugman observes that “Our political leaders are doing everything they can to fortify class inequality, while denouncing anyone who complains–or even points out what is happening–as a practitioner of “class warfare” (Krugman, “The Death of Horatio Alger”).

Krugman explains that there have been fluctuations in income distribution for the Americans since the early 1920s. For instance, he examines that for the last thirty years, America was a middle-income nation. He further indicates that according Claudia Goldin and Robert Margo, who were economic historians, they revealed that America experienced Great Compression during 1930 and 1940. During those years, there was great narrowing of income gaps as a result of the New Deal policy that led to the economic order. The New Deal introduced economic elements that ensured relative equal income distributions among the American people. These economic elements included the strong unions, taxes on corporate profits, inherited wealth, high incomes and the transparency in the corporate governance. As a results these strict economic measures, the new economic order was maintained for over a generation. The economic measures helped to maintain small income gaps among the American people. Moreover, Krugman presented a contrasting socioeconomic order by explaining how inequalities have dubbed the American lifestyle today. He reveals that the income gaps in America today has moved back to the Gilded Age America in 1920s; where the nation was characterized by the highly unequal society. According to the 1973 and 2000 data that was collected by economists Thomas Piketty and Emmanuel Saez, it revealed that the real income of the majority low-income American taxpayers dropped by 7 percent. Meanwhile, the incomes of the minority high-income earners rose by 148 percent while the top 0.01 percent of the high-income earners increased by 599 percent; resulting to the high levels of inequality. However, Krugman explains that there are a lot of explanations that people are putting forward to explain the continuing socioeconomic inequality trends in America. For instance, apologists such as those of the 2001 Heritage Foundation piece have published papers such as the “Income Mobility and the Fallacy of Class-Warfare Arguments”. They purport that American is not a caste society and as a result, people may be rich at one time and poor next time and that, acquisition of wealth is open to all. However, Krugnam sheds a red light into the exceedingly socioeconomic inequalities in America by explain the present state of social mobility (Krugman, “The Death of Horatio Alger”).

He explains that people are finding it difficult to move up and down the social ladders especially when they reach their 30s. According to the 1992 report by Glenn Hubbard, it shows that majority of the Americans can who move from low-paying jobs to high-paying jobs succeed to do so only during their working lives. As Kevin Murphy comments, it is the same as “the guy who works in the college bookstore and has a real job by his early 30s”. It is however true that, during fist 30 years after the World War II, intergeneration mobility was a real experience in America. The Business Week has come up with a new report that shows that the past generation mobility has declined significantly. The decline has been attributed to the proliferation of dead-end, lack of jobs and low-paying jobs. In conclusion, Krugmans tries to come up with ways people practice to increase their wealth and become rich. He suggests that the government should cut down payroll taxes, estate taxes, and taxes on corporate dividend and capital gains; in order to pass their wealth to the next generation (Krugman, “The Death of Horatio Alger”).

Kugman is more informative on his article and has used a lot of evidence. Not only does he use his own observations and research, but he has used a wide range of information to back up his interpretation. For example, Krugman has cited the Business week magazine, the data from Congressional Budget Office and quotes from economist such as Kevin Murphy to elaborate his thesis. The use of the rich sources of information from different research sources makes his arguments relevant. Furthermore, the uses of quotes from famous economist and as a result, the data has added more strength to his article since it shows that he research is based also on primary sources. Lastly, Krugman has hypothetically expanded his claims and arrived at a valid conclusion. Although the article was written in 2003, I find it to be reliable and relevant because it reflects the current American society. As such, I agree with Krugman’s thesis that social inequality is here to stay in America and, the American dream will continue to be a myth.

Conclusion

The American dream of rags-to-rich storing is now being overlooked with a glaring face since there is now a strong correlation between what one is worth and the economic class in which a person is born. As a result, today, there are few people from the poor niche who are succeeding to make an entry into the affluence class. As the social and economic inequality continues to expand, it is becoming undeniably factual that we are living a rich-man-rich society.

Works Cited

Krugman, Paul. “The Death of Horatio Alger”. The Nation.

Retrieved from: http://www.thenation.com/article/death-horatio-alger#