The 9.9 Percent Is the New American Aristocracy

[Campitor]

What does the author propose the money lenders, lawyers, and doctors do?

Oh, I was trying to have a conversation based on the premise that you read the article given by the topic starter, as you would know that the author is not suggesting any solutions. This is just a subjective sociopolitical analysis, an elaborate opinion on what is going on. And I did not even express my agreement or disagreement, so maybe I'm not the best person to speak for the author when questions like yours arise. You trying to dissect the ethics of it, but I don't think there is a need.

I did read the article in its entirety. The ethics implied in the article do need to be dissected because what he’s preaching is equality of outcome which can only be achieved via a form of tyranny so potent that it would wreck society and banish the successful and educated dissenters to the gulags. Like you I’m also an immigrant, was poor, and English wasn’t my native tongue. And I didn’t think you we’re defending him ; you were just clarifying.

I felt compelled to post on how idiotic his train of thought was and how such thinking (blaming others for one’s bad choices) can lead to loss of vital services.

[7Wannabe5]

Would the family featured in Louisa May Alcott's "Little Women" be considered part of the aspirational class?

Once any woman learns to read, how might that skill subsequently be lost along her maternal line of descendants? Would the same rule of thumb apply to programming a computer?

[ThisDinosaur]

brute sees this from the libertarian point of view: services rendered by the 9% (or the 0.1% for that matter) are only immoral or problematic if they consist of rent-seeking instead of voluntary exchange of goods and services. lobbying to block entry into a profession: bad. performing a service and charging money for it that the consumer pays voluntarily: good.

What is the ethical difference between rent-seeking lobbyists buying benefit for themselves and yuppies buying a path to success for their kids? At the expense of poorer kids?

@Campitor & CECTPA, no solutions were offered, but I thought the article seemed to imply that more class warfare was a solution. He also seemed to be seeking penance for his family's history of privilege.

[jacob]

Speaking in terms of averages (the mean of the distribution) again.

It's also been noted (by Stanley in Millionaire Next Door) that first-generation immigrants have an edge over natives and usually end up better off than the natives. I don't know/recall what the exact explanation was but I can think of three.

First, immigrants might have more of an X-factor in the sense of entrepreneurial spirit or risk-taking. After all, it takes something special to move your life from one country to another country as opposed to staying at home in the valley you grew up in. This effect is lost in the second-generation---probably because it has a lot to do with personality-type.

Second, it might be that only the better off (socioeconomic, educational strength, IQ, ...) are capable of successfully getting out of their former country. Successful refugees probably don't comes from the poorest layers of society but rather the layers with more resources. This advantage is lost eventually. "They say" that wealth is made by the first, held by the second, and lost by the third generation. This goes for everybody.

Three, immigrants tend to bring their consumer habits with them so moving to a higher earning/spending country will typically lead to higher savings rates because the immigrant family has not yet learned the consumer habits that allow them to blow all their money. I've seen this over and over. When I grew up, the natives were bitching about how certain refuges drove around on brand new bicycles while on government support. Later I learned how/why? They were getting more support than anyone else. They just spent it more wisely. I've never done/seen the survey, but I bet the concentration of immigrants in the personal finance sphere is higher than the native-born. ERE is immigrant. MMM is immigrant. Of the couples I've met over the years via ERE meetups and visits, a significant fraction was 50% immigrant. This advantage is also lost on average over subsequent generations.

As for taking credit, one should be careful about attribution error, that is, the tendency to associate success success with one's own deliberate skill, talent, ... and failure with society, random luck, ...

All three factors above can play a role at the same time for individuals. The statistical combinations determine what happens to the mean distribution though.

However, looking at my example or myself as representative/explanatory is a clear instance of selection bias. As an individual, it's not hard to imagine how I would not have been able to "solve" for my version of the American Dream (in 5 years ). Had I not been born with a talent for sitting on my ass for 12+ hour days while staring at complex equations. Had I not been born into a stable/supportive family---but instead an abusive or sick family where I would have needed to find a job asap to support a family member(*)---I would never have been able to develop that talent into educational credentials (phd) because I would have been too busy helping out/doing damage control. Without the phd I would never have been able to work in the US.

I would of course say I worked hard for what I have. Others might say I was lucky. It's impossible to rerun the experiment exactly. I can only argue that I would probably have done well on different paths as well.

(*) This is where culture and regulations play different roles depending on what they are. If the responsibility for such a situation fell on the individual+family, like in the US, that talent would have been wasted.

[Campitor]

What is the ethical difference between rent-seeking lobbyists buying benefit for themselves and yuppies buying a path to success for their kids? At the expense of poorer kids?

@Campitor & CECTPA, no solutions were offered, but I thought the article seemed to imply that more class warfare was a solution. He also seemed to be seeking penance for his family's history of privilege.

The ethical difference is a lobbyist is circumventing the free market by buying privilege - the lobbyist is essentially paying to get a monopoly. Yuppies purchasing services to benefit their children is not the same thing ethically nor violates free market principles. And although he didn't offer solutions, it's obvious from his choice of words that he is implying and advocating for equality of outcome which as I've stated earlier can only be achieved by a tyranny so vast and absolute that we would cease being a democratic republic.

The author is free to do penance by any means he desires, the problem is that he would force everyone else to follow his chosen path of penance (forced redistribution of income and equality of outcome).

[ThisDinosaur]

MMM is immigrant.

He's Canadian. English speaking Canadian is culturally interchangeable with US Midwesterner.

The ethical difference is a lobbyist is circumventing the free market by buying privilege - the lobbyist is essentially paying to get a monopoly. Yuppies purchasing services to benefit their children is not the same thing ethically nor violates free market principles.

The lobbyist and the yuppie parent are both buying economic advantage for their clients independent of market-assessed merit. Lobbyist is to corporation as Rich parent is to mediocre child. If we reduced rent-seeking, then the free market would allocate resources to the most productive companies. If we reduced financial advantage in education, then the free market would allocate the best credentials to the most deserving children. We're talking about how we choose who gets to be the next generation's doctors, lawyers, and corporate managers. Should it be the ones who could best do those jobs, or the ones whose parents could afford shinier credentials?

[jacob]

@Campitor - I did not see any advocacy of "equality of outcome" but perhaps I'm blind to seeing that interpretation?!

How I read it was the issue of "equality of opportunity" and how richer parents in the US have the monies and connections to buy more opportunity(*) for their particular children compared to a poor parent from the ghetto. This creates the effect I was talking about above in terms of January/Rich children and the Matthew effect. Heavily regulating early childhood opportunities and removing the connection between how rich/educated/connected one's parents are and how many opportunities a child gets create the higher social mobility you see in the rest of the developed world, where children have to succeed on their own merits to a higher degree.

(*) Tutors, time doing homework, connections for internships, smaller classrooms, fancy clothes for the lord of the flies school yard battle, ...

In other words, the reset button is hit for every generation. It's the educational equivalent of a 100% estate tax.

[CECTPA]

I would of course say I worked hard for what I have. Others might say I was lucky.

Just out of curiosity, Jacob, do you think you would be able to get into Harvard if you wanted to?

[jennypenny]

The advantage doesn't only come from money. There's a huge culture aspect. Kids of people in the professional class are expected to go to a name-brand college and enter a certain level of profession. That expectation lifts kids' own expectations of what they can do. They have friends who talk about 'whether' to be an engineer or doctor, not 'if' they can be. All of their peers talk about colleges, spend time studying for SATs, take part in too many extracurricular activities, take the same high school courses, etc.

That expectation can also be viewed as pressure but I don't think it's the same kind of pressure as someone who wants to go to college but their friends aren't going or talking about going, their parents don't encourage them or can't assist them financially, or their high school isn't preparing them well. I would think that's much harder since being the outsider is always harder.

[IlliniDave]

Should it be the ones who could best do those jobs, or the ones whose parents could afford shinier credentials?

Should be both, I suppose. I have no objection if someone wants to spend a lot of money on their kid. It's their free choice and they are exercising the free market. Taking their money from them and giving it to someone else's kid and saying they can't give money to their own kid is anti free-market. A kid isn't like a pair of shoes a parent can just turn their back on if there's a shinier one down the street.

[Campitor]

The lobbyist and the yuppie parent are both buying economic advantage for their clients independent of market-assessed merit. Lobbyist is to corporation as Rich parent is to mediocre child... If we reduced financial advantage in education, then the free market would allocate the best credentials to the most deserving children. We're talking about how we choose who gets to be the next generation's doctors, lawyers, and corporate managers. Should it be the ones who could best do those jobs, or the ones whose parents could afford shinier credentials?

There is a world of difference between buying a politician's vote in order to achieve a monopoly and a parent buying the voluntary goods and services of an excellent tutor. A lobbyist is seeking to circumvent the market via the creation of artificial barriers, enforced by the state, in order to achieve an unfair market advantage. A parent paying for the best tutors is paying for their willful service. Just because someone can't afford the services of the best tutors doesn't mean there is an injustice occurring. The tutor has made a conscious determination that his or her skills are worth a certain price and sells accordingly. If they calculate the worth of their services beyond what the market is willing to pay, they will either be out of a job or be forced to reduce their compensation.

There will always be imbalances in life because of freedom. We are all free to make choices that affect the magnitude of our success and compensation. I like computers and science and others like working in a bookstore - the asymmetry in compensation is a result of our choices. IT pays well while clerking in a bookstore doesn't. Should working in IT pay the same as clerking in a bookstore? IT is a pain in the ass - technology constantly changes and either you keep your skills sharp or you fall to the wayside; but I love it. Every day I get to solve puzzles that I find interesting. But if the pay weren't commensurate with the sacrifices (working weekends and evenings, being on-call 24/7, etc), you may have a preponderance of bookstore clerks and a lack of System Administrators and IT engineers. No economic system is immune to the underlying incentives created by its rules. Capitalism isn't perfect but it has done more to raise the standard of living of more people than any other system.

[BRUTE]

What is the ethical difference between rent-seeking lobbyists buying benefit for themselves and yuppies buying a path to success for their kids? At the expense of poorer kids?

the rent-seeking part of lobbying isn't buying a benefit for one's self (every voluntary transaction involves this), but buying disadvantages to others (e.g. by forcing them to pay licensing or other fees).

the yuppie case would depend on the definition of "at the expense of poorer kids". is the yuppie paying a teacher to give the poor kids a bad grade? bad. is the yuppie paying for extra tutoring so his kid will have an advantage over the poor kid that can't afford tutoring? only a part if school is designed as a zero-sum game in which no actual skills are gained. if the poor kid learns valuable skills for later, and the rich kid learns 10% more skills, they're both better off (skill theory of education). if the only reason kids go to this school is signaling and outdoing each other in a contest for jobs that don't actually require any of the skills taught in this school (signaling theory of education), then this school is a waste of resources for society. brute wouldn't necessarily say it's immoral for the yuppie to purchase the tutoring in this case, for he didn't necessarily set up the zero-sum game.

[Campitor]

@jacob

Some of the language used in the article:

• The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children.
• We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy.
• we’ve been quietly tossing down roadblocks behind us to make sure that they never catch up.
• They have taken their money out of productive activities and put it into walls
• we have silently and collectively opted for inequality
• It turns marriage into a luxury good, and a stable family life into a privilege that the moneyed elite can pass along to their children
• intrinsically invidious forms of wealth and power
• We look down from our higher virtues
• we see something that looks an awful lot like a cartel
• The American Bar Association operates a state-approved cartel
• five monster companies...Much of the rest of the technology sector consists of virtual entities waiting patiently to feed themselves to these beasts
• the assault on the productive classes
• Did I mention that the common man is white?

It's obvious that he is an advocate of forced wealth distribution (aka equality of outcome). And what I find the most strange, after the release of his vitriol, is that he doesn't see the irony of writing the following:

"Resentment is a solution to nothing. It isn’t a program of reform. It isn’t “populism.” It is an affliction of democracy, not an instance of it. The politics of resentment is a means of increasing inequality, not reducing it."

[7Wannabe5]

Based on brief skim of the topic, it appears that the SAT has been dumbed down in the sense that it no longer distinguishes between the extremely intelligent and the brilliant applicants. Harvard only considers applicants who score above 97th percentile, and more than 25% of the students accepted score 1600. So, the likelihood that a very intelligent, wealthy child could be coached up to a perfect score, rendering him indistinguishable on that basis from a poor brilliant child, has increased over the course of the last half century.

However, I do not think this re-calibration was effected for this purpose. I think it has to do with the fact that individuals with the highest IQs often do not perform as well in college as those who are above-above average and hard-working/ambitious, due to high correlation with eccentricity/arrogance/variety of forms of mental illness (bi-polar disease, etc.)/don't give flying f*ck about any societal expectations or measuring sticks.

My DD27 received a full-ride academic scholarship to one of the most expensive private universities in the country, in part due to the fact that she attended a rural high school in the Midwest and the admissions office was striving for geographical diversity that year and they were overloaded with offspring of super-wealthy Southern alumni. So, now my DD is engaged to a young man from oil money family, and two of her bridesmaids are the daughters of women who were debutantes. My nearest sister who recently went so nuts she was jailed for 5 days (we keep saying that this would not have happened if she had been living in academic town rather than inner city) was formerly married to a semi-famous musician (one of the founders of proto-punk) who was from a family of renowned paleontologists.

There are only around 3000 people in each of the 50 states who have an IQ over 150, so if one of them dropped in on a random wedding reception, he might not find that many people he would care to engage in conversation, but if I invited Jacob to my daughter's wedding, he might actually enjoy himself. Whereas, he probably wouldn't even enjoy hanging out with the sort of aspirational class $200 yoga-pants wearing bipsies who inhabit the wealthier suburban Whole Foods outlets, except maybe in bed.

[Sclass]

Based on brief skim of the topic, it appears that the SAT has been dumbed down in the sense that it no longer distinguishes between the extremely intelligent and the brilliant applicants. Harvard only considers applicants who score above 97th percentile, and more than 25% of the students accepted score 1600. So, the likelihood that a very intelligent, wealthy child could be coached up to a perfect score, rendering him indistinguishable on that basis from a poor brilliant child, has increased over the course of the last half century.

When did this happen? When I took my entrance exams in 87 it didn’t look like they could make such a distinction. I do know a young lady who attended Harvard in recent years and she fit your description. She was one of half a dozen or so kids in California who got 1600 that year. Her parents had put her in Kaplan SAT training in 7th grade and had her prepare several years. It was really sad in a number of ways. She actually told me how happy she was that the essay question was the same one she practiced on at Kaplan.

A mind is a terrible thing to waste.

[ThisDinosaur]

@brute & Campitor

Seems to me we could rephrase our disagreement as one about values and fairness. I'm saying that I value (1) the right of individuals to have equal opportunity for economic advancement based only on their own accomplishments above(2)the right of parents to buy, as a gift for their kids, a head start in a footrace or (3) the right of free people to buy or sell tutoring related services.

I'm sympathetic to 2 and 3, but I still think 1 outranks them. Partly due to my personal opinion about fairness, but also because I think it's a better way to optimize the resource of human productivity. The best man for the job will build more widgets at a lower cost than the nepotism guy.

Major flaws in my argument include, what if state run schools are super awful, and private education is the only hope for the next generation? That's not impossible, but I don't think we're at that point currently. There would be a hypothetical balance between how bad schools could get before the inefficient allocation of good education to rich underachievers is the preferred option.

[ZAFCorrection]

I disagree somewhat with the characterization of this system as nepotism. Parents seem to be paying for skills to a significant degree, and unless we are saying those skills are only signalling competence rather than actual competence, the yuppie kid probably would in fact do a better job than the poor kid. In that case while it may not be fair as we understand it, the economy would do just fine.

[IlliniDave]

What happens when a person's best opportunity based on his merits to advance himself economically is through tutoring, or to invest in his children's economic advancement? How do you define "their own accomplishments"?

[jacob]

What happens [to society] when a society decides to allocate opportunities to the present generation based on the wealth distribution of the previous generation?

It leans towards aristocracy.

Insofar culture/education is transferred along family-lines rather than society lines, that's eventually what you're going to get. The son of a knight becomes a knight. The son of a peasant becomes a peasant. The sons and daughters of the professional class become the professional class. Essentially, socioeconomic position becomes heritable when socioeconomic position is established in a system by money (as opposed to blue blood, ...).

There might be some cognitive dissonance is reconciling the American Dream with individualism when that individualism begins to make the American Dream impossible for those who weren't born with a silver spoon in their mouth. At that point, the cohesion derived from the AD might begin to falter---what other narrative would replace it?

[IlliniDave]

What happens when a society (i.e., a government) takes it upon itself to dictate how opportunities are allocated? It leans towards ending very badly.