The Meritocracy Trap
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the same basic model as payday lending: International comparisons further emphasize the astonishing scale of debt-financed consumption in the United States. Americans financed their spending, in 2006, by borrowing roughly 70 percent of the entire world’s excess savings (so that Americans became, in effect, the consumer of last resort sustaining demand across the entire global economic order). Rajan, Fault Lines, 203. Net exporting economies, including most notably China, generated massive savings where—in stark contrast to the United States—social and political orders managed to restrain the consumption expectations of ordinary citizens. By loaning their savings to the United States, these economies artificially depress their own currencies, and further boost their exports and hence savings. Accordingly, insofar as U.S. policy that stimulates domestic debt-financed consumption also stimulates foreign export-financed savings, the U.S. stimulus supports employment overseas rather than at home. For a similar observation, see Rajan, Fault Lines, 106.
Moreover, Americans consume staggeringly more than their counterparts in other rich nations. Broadly comparable measures that aggregate an individual’s personal consumption are difficult to construct. But because almost all consumption requires energy somewhere along the way, oil use is a good proxy for consumption. And the average American consumes roughly twice the oil of the average citizen of Germany, France, or Japan—even though the United States and these countries have roughly equivalent per capita GDPs. Rajan, Fault Lines, 203. The extra 100 percent of the average German’s consumption that the average American consumes must, over the long run, be debt financed.
The Returns to Skill and Unequal Investments in Education: The data for the figure come from OECD, OECD Skills Outlook 2013, “Difference between adults with at least one parent who attained tertiary and neither parent who attained upper secondary,” Table A3.1; “Tertiary gap in wages and in the use of skills at work,” Table A4.13.
“participate in society”: See OECD, PISA 2012 Assessment and Analytic Framework (2013), 60, www.oecd.org/pisa/pisaproducts/PISA%202012%20framework%20e-book_final.pdf. The figure uses literacy rather than mathematics skills because the OECD has not published data reporting the effect of parents’ incomes on children’s mathematics skills. Nevertheless, literacy and mathematics skills are highly correlated throughout the OECD’s data.
Children’s Changing Odds of Earning More Than Their Parents: The figure follows Raj Chetty et al., “The Fading American Dream: Trends in Absolute Income Mobility Since 1940,” Science 356, no. 6336 (April 2017): 398–406, Figure 1.
The average age at first birth: Hymowitz et al., Knot Yet, 8, Figures IIA–IIC.
the average life expectancy: Raj Chetty et al., “The Association Between Income and Life Expectancy in the United States, 2001–2014,” Journal of the American Medical Association 315, no. 16 (2016): 1750–66, 1753.
the average annual . . . return for the S&P 500: See “Online Data Robert Shiller,” Yale University Department of Economics, http://www.econ.yale.edu/~shiller/data.htm.
the average annual real rate of return for the entire U.S. stock market: Personal communication from Eric Haas, who derived the rates using index data from Dimensional Fund Advisors.
ABCDEFGHIJKLMNOPQRSTUVWXYZ
INDEX
The page numbers in this index refer to the printed version of this book. The link provided will take you to the beginning of that print page. You may need to scroll forward from that location to find the corresponding reference on your e-reader.
abortion, 208
Acemoglu, Daron, 359n(142), 379nn(203–204), 392n(249), 393nn(250–51), 394nn(252–53), 395nn(254), 397n(267)
achievement gaps
income-based, 26, 41, 131–33, 300fig, 301
race-based, 26, 50, 99, 131
Affluent Society, The (Galbraith), 21, 99
Afghanistan war, 205
alcohol abuse. See drug/alcohol abuse
alienation, 37–38, 39–40, 192–93
altruism. See elite service promise
Alvaredo, Facundo, 316n(13), 319n(23), 335n(87), 337n(91), 376nn(188)
Amazon
elite work intensity, 43, 44, 82–83
labor market polarization, 177, 178, 187
management innovations, 172–73, 175
workplace subordination, 173, 206
ancien régime. See aristocracy
anti-immigrant policies, 271
anti-intellectualism. See populism
Apple Computer, 83, 141, 246
aristocracy
capital dominance under, 92
class divide under, 46
consumption under, 216
economic justice arguments on, 15, 106, 109
elite education under, 6, 7, 17, 111–12, 114
elite leisure under, 3–4, 77, 79–80, 86–87, 95–96, 193–94, 207
and elite rituals, xii
elite work under, 8–9, 11
families under, 207
industry/income opposition under, 3–4
and inheritance, xiv–xv, 4, 89, 94, 115, 145–46, 150–51, 261
meritocracy as positive alternative to, ix, xi, 14, 263–64
meritocracy as return to, 15, 47, 260–62, 268–69
nature of elite wealth under, 3–4, 35–36, 262
1960s rebellion against, 284–85
as virtuous, 262–64, 268
wealth as emancipatory under, 36, 37, 41, 193–94
Aristotle, 262, 263
asset management services, 236
See also finance industry
assortative mating, 116–17
athletes, 43, 84
AT&T, 173
auto industry, 20–21, 22, 23
bankers’ hours, 10, 81, 82
banking. See finance industry
Bell Labs, 237
Bender, Wilbur J., 112
Bentley Motors, 220
Beyoncé, 178, 221
Bezos, Jeff, 9, 82, 178
Biden, Joe, xii
Bishop, Bill, 324n(47), 325nn(48–49), 356n(136), 378nn(199), 379nn(204), 384nn(224–25), 385nn(225, 227)
Black-Scholes model, 237–38
Blankfein, Lloyd, 98
Boston Consulting Group (BCG), 245–46
Boutmy, Émile, 260
Brandeis, Louis, 71
Brewster, Kingman, 6, 113, 115, 148, 151, 263–64
Brooks, Arthur C., 109
Buckley, William F., 114
Buffett, Warren, 58, 95
Bunnell, Sterling, 251
burdens of meritocracy. See elites, burdens on; middle class, burdens on
Bureau of Labor Statistics, U.S., 181, 317nn(18), 330n(67), 335n(87), 337n(93), 341n(104), 351n(127), 352n(130), 355n(134), 364n(166), 365n(171), 366nn(174), 369n(179), 371–72nn(182–83), 375nn(185–87), 383n(220), 396n(267), 401n(282), 402nn(293, 298),
burnout, 43
Bush, Barbara, 229
Bush, George W., 68, 197, 198, 224
Bush, Jenna, 229
campaign financing, 52
Cantor, Eric, 57
capital asset pricing model, 237–38
capital deepening, 253–54
capital dominance, 13, 15, 18, 88–89, 92–94
Capital in the Twenty-First Century (Piketty), 88
Cappelli, Peter, 333n(83), 358nn(140–41), 359n(141), 364n(167), 365nn(169–70), 366–67nn(173–74, 176), 368nn(176–77), 370n(180), 371n(182), 379n(203), 392n(248)
Carnegie, Andrew, 51
Carnevale, Anthony, 353n(132), 354n(132), 356nn(136), 359nn(141), 372nn (182–83), 374n(183), 403nn(305)
carried interest, 91–92
casino lobby, 54
celebrities, 85, 97
Census Bureau, U.S., 314n(3), 316n(13), 318nn
(21–23), 319nn(23, 25), 322nn(41), 324n(46), 325nn(48, 50), 334nn(85–86), 339nn(99–100), 340–41nn(102–4), 345n(117), 346nn(118), 349n(125), 350–51n(126–27), 354nn(132–33), 357n(138), 359nn(141–42), 365n(169), 368nn(177–78), 372nn(182), 375n(186), 378n(201), 382nn(216), 393n(251), 401n(292), 402n(293), 403nn(305–6)
Center for American Progress, 283
CEOs. See management
Cervantes, Miguel de, 263
charity. See elite service promise
Chase Manhattan Bank, 18
chefs, 84–85
Chekhov, Anton, 37, 38
Cherry Orchard, The (Chekhov), 37
Chetty, Raj, 317n(20), 353n(130), 355nn(134–35), 356n(137), 371n(182), 385n(227), 404nn(308, 312)
childhood. See educational inequality; elite childhood; elite education
civil servants. See public sector wages
Clark, R. Inslee “Inky,” 113–14
class divide, x, xvi–xviii, 47–49
under aristocracy, 46
Clinton/Bush case studies, 197–98, 199, 228–29
common view of, xix–xx
and consumption, 216–21, 224–25
and culture, 48, 202, 208–9, 211–16
and debt, 218–19, 222–23
and divorce rates, 118
and educational inequality, 144–45
and elite complacency, 60
and elite contempt for middle class, xviii, 61–62, 69, 70
and elite work intensity, 206
and gender norms, 209–10
and geographical concentration, 28, 41–42, 48–49, 57–58, 127, 223–28
and health, 230–32
and hiring practices, 203–4
and innovation-based labor market polarization, 256
and labor market polarization, 182, 202–3, 204, 255
and leisure, 215–16
and marriage, 48, 116–17, 207–8, 210–11
and meritocratic inequality, xvi, 201–2
midcentury dampening of, 46–47, 199–201, 217, 223–24
and middle-class resentment, xvi–xvii
and middle-class workplace subordination, 205–6
and military, 204–5
and nativism, 60
and politics, 211–14
and populism, 60, 64–65, 211
and private vs. public sector work, 56–57
and religion, 48, 208–9, 211
and shared dissatisfaction, xxii, xxiii, 274–75, 285
and shrinking of middle class, 201–2
and social connectedness, 51, 208–9
and Trump presidency, xvii, xviii, 69, 214
and valorization of industry, 202, 206
clerical jobs, 178
Clinton, Bill, xii, 197–98, 199, 224, 228, 234
Clinton, Chelsea, 228–29
Clinton, Hillary, 61, 69, 70, 198
Cohn, Gary, 58
collective anxiety, xvi, xviii, xix
college wage premium, 239, 251–52, 307fig
competition
and admissions, 6–7, 17, 33, 34, 122–23, 133–34, 142–43, 151–52
and burdens on elites, xvi, xvii–xviii, 33, 34–35, 37, 153–54, 155
and elite education, xvii–xviii, 8, 35, 153–54
and elite work, 33–34, 35, 82–83, 158, 188–89, 190
and human capital, 37, 154
and precarious dynastic succession, xv, 35, 115–16, 262
and valorization of industry, 157–58
Conant, James Bryant, 6, 112
Congress, 57
consulting industry, 90, 97, 174, 176, 245–46
See also management
consumption
and class divide, 216–21, 224–25
and debt, 233–35, 306fig
and poverty rates, 102–4, 293fig
Container Corporation of America, 172
corporate control, market for, 243–44, 280
corporate reengineering, 246
corporate restructuring, 83, 173–74, 176, 243, 244–45, 246
critiques of meritocracy, xx
and aristocracy, 15
and burdens on elites, 78, 273
and capital dominance, 13, 15, 88–89, 92–94
early, 258–59
and individual morality, x, 16–17, 18, 154–55, 268, 269
and meritocratic inequality as justified, 106–7, 109–10
unhelpfulness of, 16, 79, 272–73
culture, and class divide, 48, 202, 208–9, 211–16
cycle of meritocracy, 12–13, 27, 71–72
and competition, 34
and definition of merit, 264–67, 268
and elite dynastic inheritance, 71–73
and farmer/warrior parable, 267–68
and inequality of opportunity, 254–55
and innovation-based labor market polarization, 239–40, 254, 267–68
instability of, 264–65
and labor market polarization, 255
and reform agenda, 283–84
and resource curse, 256–57
and return to aristocracy, 261
Dahl, Robert, 51, 52
debt, 218–19, 222–23, 233–36, 306fig
debt financing, 242–43
democracy, suppression of, 71
and elite political power, 51–54
and government responsiveness, 52
and income defense industry, 54–58
democratic culture
midcentury society, 29, 47, 170, 197–201
in middle-class cities, 28–29
democratic equality, 70–71, 285–86
depression, 42
derivatives, 53–54, 167
See also finance industry
Dickens, Charles, 219
Dimon, Jamie, 18
Disraeli, Benjamin, 50
diversity. See identity politics
divorce rates, 118, 207–8
DLJ (bank), 192
doctors. See medical profession
Dollar General, 218
Drexel, John R., 200
Drexel Burnham Lambert (investment bank), 24, 238, 243
drug/alcohol abuse, 31, 42
Dryden, John, 60
“Duck Syndrome,” 41
Durant-Dort Carriage Company, 169–70, 172
early twentieth century
consumption, 216
management, 169–70, 240–41, 242
postgraduate schooling, 140
poverty, 77
Eastman, George, 179
education
charter schools, 53
middle-class rates of, 22
See also educational inequality; elite education
educational consultants, 122–23
educational inequality, xiv, 24–27, 298fig, 299
and achievement gap, 26, 41, 131–33, 300fig, 301
and class divide, 144–45
and college admissions, 133–34, 135–37
and college graduation, 134–35
and elite educational investment, 25–26, 138–39, 143–44, 145–46
and gender norms, 210
and geographical concentration, 224, 226–27
and inequality of opportunity, 153
international comparisons, 307fig
and labor market polarization, 182–84, 305fig
and middle-class resentment, 152–53, 278
and middle-class students at elite institutions, xvi, 24–25, 61–62, 151, 229–30
moral critiques of, 154–55
and postgraduate schooling, 139, 143–44, 183
and public schools, 126–28,
133
reform agenda, 275, 276–79
and social mobility, 27
as triumph of meritocracy, 149–50
and undermatching, 148–49
See also elite education; elite educational investment
elite childhood, 34, 119–23
and emotional skills, 121–22
enrichment activities, 124–25, 128–31, 208
and financial security, 119
parental time investment, 119–21, 124, 209
parenting style, 121, 154, 156
and precarious dynastic succession, xv
preschools, 7, 33, 122–23
school-age parenting, 124–25
symptoms of elite burdens during, 41–42
See also elite education
elite dynastic inheritance
and cycle of meritocracy, 71–73
educational investment as, 146–47, 150–51, 189, 276, 311tab, 312
precarious nature of, xv, 35, 115–16, 262
elite education, 5
under aristocracy, 6, 7, 17, 111–12, 114
and assortative mating, 117
author as product of, x–xi
burdens of, xvii–xviii, 32, 34, 41–42, 152
competitive admissions, 6–7, 17, 33, 34, 122–23, 133–34, 142–43, 151–52
competitive nature of, xvii–xviii, 8, 35, 153–54
and consulting industry, 245–46
and elite service promise, xi
graduation ceremonies, xii, xxi
homeschooling, 125
and human capital, 38–39, 115, 116, 154
and income segmentation, 12
international comparisons, 253
legacy admissions practices, 17, 111–12
and meritocracy as return to aristocracy, 15
meritocratic reforms, 6, 112–15, 148, 252
midcentury, 6, 7, 111–12, 298fig, 299
and midcentury middle class, 198
multistage nature of, 7, 33
and Obama presidency, 66
postgraduate schooling, 139–44, 183, 184–85, 252
as preparation for work intensity, 155
public schools, 126–28, 151–54
and social participation costs, 143–44
and tax policy, 276–77
See also educational inequality
elite educational investment
and achievement gaps, 26