For parents in the top U.S. decile, 46 percent of their kids will end up in the top two deciles and only 2 percent in the bottom decile. The members of the top decile comprise a New Class of lawyers, academics, trust-fund babies, and media types—a group that wields undue influence in both political parties and dominates our culture. These are the people who said yes, there is an immigration crisis—but it’s caused by our failure to give illegals a pathway to citizenship!
There’s a top ten percent in Canada, of course, but its children are far more likely to descend into the middle or lower classes. There’s also a bottom ten percent, but its children are far more likely to rise to the top. The country of opportunity, the country we’ve imagined ourselves to be, isn’t dead—it moved to Canada, a country that ranks higher than the U.S. on measures of economic freedom. Yes, Canada has its much-vaunted Medicare system, but cross-border differences in health care don’t explain the mobility levels. And when you add it all up, America has a more generous welfare system than Canada or just about anywhere else. To explain Canada’s higher mobility levels, one has to turn to differences in education systems, immigration laws, regulatory burdens, the rule of law, and corruption—on all of which counts, Canada is a more conservative country.
America’s K-12 public schools perform poorly, relative to the rest of the First World. Its universities are great fun for the kids, but many students emerge on graduation no better educated than when they arrived. What should be an elevator to the upper class is stalled on the ground floor. One study has concluded that if American public school students were magically raised to Canadian levels, the economic gain would amount to a 20 percent annual pay increase for the average American worker.
The U.S. has a two-tiered educational system: a superb set of schools and colleges for the upper classes and a mediocre set for everyone else. The best of our colleges are the best anywhere, but the average Canadian school is better than the average American one. At both the K-12 and college levels, Canadian schools have adhered more closely to a traditional, conservative set of offerings. For K-12, a principal reason for the difference is the greater competition offered in Canada, with its publicly-supported church-affiliated schools. With barriers like America’s Blaine Amendments—state laws preventing public funding of religious schools—lower-class students in the U.S. must enjoy the dubious blessing of a public school education.
What about immigration? Canada doesn’t have a problem with illegal aliens—it deports them. As for the legal intake, Canadian policies have a strong bias towards admitting immigrants who will confer a benefit on Canadian citizens. Even in absolute numbers, Canada admits more immigrants under economic categories than the U.S., where most legal immigrants qualify instead under family preference categories. As a result, on average, immigrants to the U.S. are less educated than U.S. natives, and unlike in Canada, second- and third-generation U.S. immigrants earn less than their native-born counterparts. In short, the U.S. immigration system imports inequality and immobility. If immigration isn’t an issue in Canada, that’s because it’s a system Trump voters would love.
For those at the bottom of the social and economic ladder who seek to rise, nothing is more important than the rule of law, property rights, and the sanctity of contract provided by a mature and efficient legal system. The alternative—in place today in America—is a network of elites whose personal bonds supply the trust that is needed before deals can be done and promises relied on. With its more traditional legal system, Canada better respects the sanctity of contract and is less likely to weaken property rights with an American-style civil justice system which at times resembles a slot machine of judicially-sanctioned theft. Americans are great at talking about the rule of law, but in reality we don’t have much standing to do so.
Then there’s corruption. As ranked by Transparency International’s Corruption Perceptions Index, America is considerably more corrupt than most of the rest of the First World. With our K Street lobbyists and our donor class, we’ve spawned the greatest concentration of money and influence ever. And corruption costs. In a regression model, the average family’s earnings would increase from $55,000 to $60,000 were we to ascend to Canada’s level of non-corruption, and to $68,000 if we moved to Denmark’s level.
In a corrupt country, trust is a rare commodity. That’s America today. Only 19 percent of Americans say they trust the government most of the time, down from 73 percent in 1958 according to the Pew Research Center. Sadly, that is a rational response to the way things are. America is a different country today, and a much nastier one. For politically engaged Republicans, the figure is six percent. That in a nutshell explains the Trump phenomenon and the disintegration of the Republican establishment. If the people don’t trust the government, tinkering with entitlement reform is like rearranging deck chairs on the Titanic.
American legal institutions are consistently more liberal than those in Canada, and they are biased towards a privileged class of insiders who are better educated and wealthier than the average American. That’s why America has become an aristocracy. By contrast, Canadian legal institutions aren’t slanted to an aristocracy.
The paradox is that Canadians employ conservative, free market means to achieve the liberal end of economic mobility. And that points to America’s way back: acknowledge that the promise of America has diminished, then emulate Canada.