The 9.9 Percent Is the New American Aristocracy

Should you squeeze the toothpaste tube in the middle or from the end?
User avatar
BRUTE
Posts: 3082
Joined: Sat Dec 26, 2015 5:20 pm

The 9.9 Percent Is the New American Aristocracy

Post by BRUTE » Thu May 17, 2018 10:13 pm

https://www.theatlantic.com/magazine/ar ... _page=true

brute found this article very interesting. a bit like Marx, it's better at diagnosing problems than at proposing solutions.

brute shares the vague analysis that "something's not right", but believes the author confuses a few issues, and has no useful suggestions for how to fix them. but then again, brute is a libertarian, so no big surprise there.

- the idea of the "9.9 percent", the urban, educated, professional, liberal elite clearly seems to have merit.
- the idea that the 9.9 percent somehow rope themselves up by rent-seeking and building barriers... brute thinks this is true to a degree, for sure, mostly through real estate regulations and zoning.
- brute thinks the author confuses zero-sum (rent-seeking) behaviors by the 9.9% with non-zero-sum behaviors. educating a human child is not inherently bad for other human children. the current arms race of student loans and credentialism is. Bryan Caplan has an interesting case with Against Education.
- the suggested solutions are pretty standard urban liberal wishful thinking: if only the federal government were to do something! higher taxes! yet the article chronicles a long list of cases where regulation is being used by the 9.9% against the bottom 90%. cognitive dissonance ensues.

as a libertarian, brute thinks naturally that deregulation would solve many of these problems, including the real estate, licensing, and many education issues. nonetheless, in recent times brute must admit he's become more "conservative" in the sense that "culture matters". the article bemoans that single parent households are the best predictor for being poor later on in life, and that the 9.9% ensure their children have good education, which in turn makes it much easier to become part of the 9.9%.

maybe the right is correct in their assertions that instilling certain values in human children, and having an intact family, are beneficial? maybe the cultural postmodernism of the 70s onwards is directly responsible for these wealth inequalities, by giving humans the impression that culture didn't matter, and wealth could be achieved still? meanwhile, most of the 9.9% followed the exact same formula from before.

looking back, even though brute's upbringing was pretty left and liberal (typical 9.9%, probably), most of his successes are direct results of all the stuff the right keeps talking about: education, good parenting, yadda yadda. proverbial middle class silver spoon. it almost feels dishonest denying these "right" culture ideas, when brute clearly (and unconsciously) was brought up by them and has had pretty good success as a result.

thoughts?

ZAFCorrection
Posts: 24
Joined: Mon Aug 14, 2017 3:49 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by ZAFCorrection » Thu May 17, 2018 10:50 pm

I'm wondering which social engineering mechanism we can use to bring back the folksy wisdom.

Also, technology seems to have created a set of jobs with an extremely wide variation in cognitive and conscientiousness requirements. Sometimes the pay does not always match the requirements, but I would say it does more often than not. My first pass at this problem is you are either going to have to engage in huge redistribution, which can't ever entirely fix the problem as some group is always going to have their hands on the political steering wheel, or you got to collapse the variation in available jobs, also known as a dark age. I don't believe the latter has ever been seriously considered as an option.

I see it as possibly analogous to the climate change/resource depletion issue where the major factions have all come up with various narratives on how we can have our cake and eat it too. It is possible that humans can't very well handle this situation no matter how we try to optimize our way out of it.

User avatar
BRUTE
Posts: 3082
Joined: Sat Dec 26, 2015 5:20 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by BRUTE » Fri May 18, 2018 12:25 am

it certainly seems a popular narrative that technology and automation are going to reduce the number of available jobs drastically, and maybe only the 9.9%ers or "cognitive elites" will have decent jobs, or jobs at all.

brute isn't sure this is true. it also seems a plausible narrative that many of those "decent" cognitive jobs are just relatively new, or have their own strong lobbies. or maybe it's just part of the economics of a domain. the food industry has extremely low margins, brute has heard around 3% on average. that's not a lot to provide decent jobs. the "cognitive elite" jobs like lawyer or doctor have much higher margins, so they can afford to provide higher salaries and better benefits. brute would think that over time, margins went down in all industries through competition, approaching the cost of borrowing capital. there certainly seem to exist exceptions, and often times these have strong lobbies or other rent-seeking organizations: bar associations, AMA for doctors, and so on. tech monopolies might be "different", or maybe tech is just too new. not to forget, Google is barely 20 years old, and Facebook less than that. what did margins in the food industry look like 20 years after its inception?

brute guesses it boils down to an argument about pessimism or optimism. brute is an optimist in the sense that he intuitively believes "all humans should be in the cognitive elite and have decent jobs". pessimists believe that that's not possible, either because of these jobs are not a good fit for the majority of humans, or because those jobs are only decent because of their scarcity.

tbh brute is completely undecided on the automation issue. there have been cries about automation stealing all good jobs going back to the industrial revolution in England. but this time might be different. maybe the age of "decent jobs for the majority of humans" is an exception that only held true for a subgroup of humans in the west between ~1950 and 1980. maybe the Boomers really got lucky. or maybe it was all an illusion, and they were just the first ones to discover large-scale money printing, which has since stopped working.

if automation, brute also isn't sure that vast redistribution isn't going to create a more permanent underclass instead of what's promised, just as he believes the majority of current welfare programs actually hurt their recipients in the long run.

things brute definitely believes would help in any case:
- deregulation, and reduction of zero-sum behaviors like rent-seeking, licensing, zoning, monopolizing (AMA/bar), subsidizing an educational arms spiral via student loans
- a push towards clarity about which cultures/values produce which outcomes. it's ok not to desire the same outcome as another human, but there should be a somewhat clear mapping that "if humans desire X, they should value Y". it's not feasible any more to promise that any culture will lead to any desired outcome. that's just not how reality works.

humans might still be fucked if the "boomers got lucky" theory is right.

classical_Liberal
Posts: 313
Joined: Sun Mar 20, 2016 6:05 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by classical_Liberal » Fri May 18, 2018 2:18 am

BRUTE wrote:
Fri May 18, 2018 12:25 am
brute guesses it boils down to an argument about pessimism or optimism. brute is an optimist in the sense that he intuitively believes "all humans should be in the cognitive elite and have decent jobs". pessimists believe that that's not possible, either because of these jobs are not a good fit for the majority of humans, or because those jobs are only decent because of their scarcity.
What do you mean by "good fit"?

I absolutely believe that not all humans have the inherent abilities required to perform all jobs. For someone to become a doctor, they not only need above average IQ, but also the tenacity to struggle through medical school and multiple years of very low paying residency with 16 hour day/6 day weeks. Not everyone is wired for this capacity. Sure, you can argue such requirements wouldn't exist without regulation or monopolization, but the cogitative ability requirements are still apparent enough. Even in a total free market, few will go to an incompetent doctor who kills all patients. If they do, he certainly won't be able to charge as much as a competent one, and hence not earn "decent job" money.

As jobs become more technical in nature, more and more people are excluded, creating scarcity. This is not because of privilege or better schools, rather there are less people mentally capable of performing these functions. The problem with discussing these issues is those who do the discussing are on the right side of the bell curve. Hence they have difficultly understanding whats its like to be on the other side. For everyone to have "decent" jobs, we wind up circled back to an "each according to his ability" mindset. Obviously that doesn't work.

IlliniDave
Posts: 1952
Joined: Wed Apr 02, 2014 7:46 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by IlliniDave » Fri May 18, 2018 7:37 am

For me that was a tedious read. But I agree w/brute that it was long on identifying perceived problems and short on ideas for improvement.

I'm in the ballpark of his "9.9 %" though I got there from the opposite direction than what he described. My grandparents were all children (or in one case a grandson of) dirt-poor immigrant farmers. 3/4 of the farms did not survive the Great Depression, sending parents and children alike into the nearby cities seeking manual labor employment suitable for the uneducated. I also "got here" via State U and subsequently mostly through not behaving like an aristocrat. A big part about what made the anecdotal accounts alien to me is the difference between my experience and that of an old-money descendant pretty much at the end of the old money. My spoon was caked in Midwestern loam with a coating of machine oil on top.

The bad news I fear is that even the hand of a heavy-handed government isn't going to undo the hardwiring humans have to segregate themselves into tribes, and relative wealth is one of those things that people coalesce around. I saw one of those clickbait slideshows somewhere about the wealthiest counties in the US. An eye-raising number were clustered near Washington DC. So it is hard to believe policies from there will ever do much for wealth inequality. The only thing I take comfort in is that most of the time in the US wealth doesn't persist though very many generations.

I wonder if the "wealth inequality" maybe isn't less evil than it appears. Total wealth grows faster than the cost of living and I think a larger portion of the population than we like to admit is content to identify the minimum (of effort and foresight) they need and then try to get by on 90% of that. At minimum that seems to be the M.O. of the preponderance of people I am most closely genetically related to. They don't want to "compete" with the wealthy for the growing overall pile of wealth, even in the token manner I do by downsizing lifestyle and tossing money into the capital markets and hanging on for the ride.

User avatar
Seppia
Posts: 466
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: The 9.9 Percent Is the New American Aristocracy

Post by Seppia » Fri May 18, 2018 7:59 am

IlliniDave wrote:
Fri May 18, 2018 7:37 am
I think a larger portion of the population than we like to admit is content to identify the minimum (of effort and foresight) they need and then try to get by on 90% of that.
This would be contrary to all evidence and all microeconomic theory amassed in decades/centuries though.

True, a few poor people are poor because they are just not ready to put in the necessary work to progress financially, but it's a minority, especially considering that the marginal utility of money decreases as money available increases.

Dream of Freedom
Posts: 182
Joined: Wed Aug 29, 2012 5:58 pm
Location: Nebraska, US

Re: The 9.9 Percent Is the New American Aristocracy

Post by Dream of Freedom » Fri May 18, 2018 8:03 am

It may be true that some people grow up with all kinds of advantages. Though I think what is more harmfull is the attitude that comes with believing yourself a victim because you didn't grow up with a silver spoon in your mouth. Sure it might make you feel better. Misery loves company as they say, but when you have that victim mentallity it is so tempting to say "why sould I have to change? Why should I have to work hard to better my life? It isn't my fault."

User avatar
Sclass
Posts: 1331
Joined: Tue Jul 10, 2012 5:15 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by Sclass » Fri May 18, 2018 8:17 am

This seems to be a topic coming up more often. I first read about it a year or so ago in the book “Dream Hoarders”. The Atlantic article sounds like a repeat of that thesis.

Part elitist guilt. Part self aggrandizement. Part pandering to the educated elites who enjoy reading rather than watching TV.

I think some things are a little confused. Agree with Brute. The article starts off talking about wealth thresholds but really a lot of this educated elite phenomena is about income elitism. Isn’t that what college does? It enhances the student’s ability to generate income...not necessarily build wealth. A lot of the lifestyle observations in the article are about buying privilege with a high professional income.

As a wealthy person with a relatively low income I don’t see these folks as a problem. In fact their frenzied toiling for their W2 income is what powers the wealth machine forward. You want to work harder and get more pay in the meritocracy working for the wealty be my guest. Just leave the dividend check/income taxes at the door before you leave.

There is probably a great deal of truth in this. I spent a lot of time with professional families with young kids and they are training the hell out of the tykes to be a bunch of good little robots. More so than lower middle class folks do. But I’m not sure it is something to be proud of...or worse like the article suggests, something to feel guilty about.

Their kids will still be owned by a real aristocracy just like their parents. I’ve been watching the BBC series “Last Kingdom” and the king still sends his loyal warrior lords and their people to their death to achieve his ambitions. The Samuri in Japan were only the fist of the elites and later on were disposed of when not needed to govern the masses.

Hey if these guys want to take the guilt and blame for the massive shift in wealth and work really hard at the same time to further the cause of the 1% as their servants I’m all for it.

ffj
Posts: 1784
Joined: Thu Aug 26, 2010 3:16 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by ffj » Fri May 18, 2018 8:56 am

Goodness gracious, I couldn't finish the article.

The whole premise of the article is that in order to become wealthy and stay wealthy, then it necessitates taking from someone less fortunate. Therefore, if you are wealthy, you have basically stolen opportunities and resources from others who couldn't be born white with wealthy parents.

When is this going to end?

Graduate high school
Don't have kids until you have stability and a partner
Get a job
Apply all the fundamentals of this site to your life (pick your level of intensity)
Hang in there for as long as your intensity dictates
Join the 9.9% without once denying a poor kid his opportunity to do the SAME exact thing
Live a good life on the merits of your hard work and good decision making skills without once ever feeling guilty for factors beyond your control

User avatar
Tyler9000
Posts: 1402
Joined: Fri Jun 01, 2012 11:45 pm
Location: Austin, TX

Re: The 9.9 Percent Is the New American Aristocracy

Post by Tyler9000 » Fri May 18, 2018 9:58 am

Yeah, I also couldn't finish the article. The editor must have taken the day off.

While I do appreciate some of the points about the way the 9.9% finds ways to create barriers behind them (building restrictions in the Bay Area to keep real estate prices artificially high come to mind), overall the article comes across as just another gentry liberal guilt piece framed in trendy class/race/wealth terms with a weird amount (considering the topic) of humble bragging about their own generational family wealth. Also, I believe articles like this with no actionable information outside of emotional responses to become guilty, resigned, or angry about your luck in life generally do more harm than good.

BTW, I wonder if the author also believes that the zero-sum-game also applies internationally, where the privilege of the US 90% (really the global 9.9%) is taking opportunities away from kids in war-torn middle eastern countries. I'm going to guess not, because 1) it puts him squarely in the dreaded 1%, 2) that would imply MUCH more personal sacrifice than he's likely willing to accept to level the playing field, and 3) thinking in those terms starts to get at ingrained cultural and socio-political differences that don't follow the preferred narrative.
Last edited by Tyler9000 on Fri May 18, 2018 11:04 am, edited 2 times in total.

User avatar
jennypenny
Posts: 5716
Joined: Sun Jul 03, 2011 2:20 pm
Location: Stepford USA

Re: The 9.9 Percent Is the New American Aristocracy

Post by jennypenny » Fri May 18, 2018 10:05 am

The first half of the article was spot on ... he could be my neighbor in Stepford. But then he veered off into 'why did people vote for Trump?' (apparently a requirement in Atlantic articles) which was distracting and mostly irrelevant.

His statements like he was glad to have grown up middle class instead of in the 9.9% were also disingenuous. That kind of thinking is exactly was he said he was critical of -- the idea that people mistakenly assume that because they managed to improve their lot and end up living in Bogleheadville, anyone can. Further, he implies that people are better off if forced to prove their mettle when in actuality they are as much a product of luck-of-the-draw as they are of hard work.

I'm not saying that ffj is wrong. He is absolutely right. Aspiring to be FI (at any level) is very different than aspiring to live like the 9.9%. It's definitely within the reach of most people, and without a soul-crushing amount of hard work. And Duckworth's version of Grit is the absolute best legacy you can pass on to a child. But like I said in the discussion in the Frugality for the Rich thread, everything feels easier when you have lots of options and can choose your path instead of having to grind it out in a way that might not suit your talents or personality as well.

ThisDinosaur
Posts: 747
Joined: Fri Jul 17, 2015 9:31 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by ThisDinosaur » Fri May 18, 2018 11:43 am

The article is unnecessarily divisive. The 9.9% are just as opportunistic as I'd expect anyone to be.

And I don't agree that less regulation would fix this. If anything, better regulation would. Some ideas I have include the elimination of tuition-based private schools, the separation of public school funding from local property values, and making college education free and limited in supply. This should fix the IGE problem where mediocre wealthy children end up with more opportunity than above average poor children.

But I agree with the author that extreme wealth inequality is a self correcting problem. If too many people get too poor, they will vote the money out of rich people's pockets.

IlliniDave
Posts: 1952
Joined: Wed Apr 02, 2014 7:46 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by IlliniDave » Fri May 18, 2018 12:04 pm

Seppia wrote:
Fri May 18, 2018 7:59 am
IlliniDave wrote:
Fri May 18, 2018 7:37 am
I think a larger portion of the population than we like to admit is content to identify the minimum (of effort and foresight) they need and then try to get by on 90% of that.
This would be contrary to all evidence and all microeconomic theory amassed in decades/centuries though.

True, a few poor people are poor because they are just not ready to put in the necessary work to progress financially, but it's a minority, especially considering that the marginal utility of money decreases as money available increases.
I'm not talking about "poor" people (though it might apply to some). I'm talking about people I know who economically are somewhere in the middle class band for the most part: easily above poverty but below the "9.9%". My dad is an example. He worked his job, spent his money, relaxed during his evenings and on his days off. No side gigs, no hustling for promotion (administration didn't interest him, only teaching), never saved money to speak of, never took the time to learn to invest. He just didn't have enough desire for more than enough wealth to energize him to go out of his way to pursue it.

We're even like that here as a group to an extent. We all want to quit working for money (or drastically scale back), not accumulate as much wealth as our human capital might allow. There's a point beyond which we're not willing to pursue more. I think that's true for most people.

But I tend to see wealth as something most people have to make happen, not something that happens to them.

User avatar
C40
Posts: 2007
Joined: Thu Feb 17, 2011 4:30 am
Location: Western U.S.
Contact:

Re: The 9.9 Percent Is the New American Aristocracy

Post by C40 » Fri May 18, 2018 2:31 pm

ThisDinosaur wrote:
Fri May 18, 2018 11:43 am
... elimination of tuition-based private schools, the separation of public school funding from local property values...
This seems like one of the most straightforward ways to help with inequality in the U.S. It's been spoken about for a long time, but I don't ever hear anyone talking about actually implementing it. I don't recall hearing/reading it on any politician's platforms ever (though I follow politics very little).

Does anyone here know - is there any real talk of this happening? It'd probably not be acceptable to make huge reductions for schools in nicer areas, so, would it be extremely expensive to, say, fund all schools as well as what is currently like the 80th percentile)

User avatar
Sclass
Posts: 1331
Joined: Tue Jul 10, 2012 5:15 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by Sclass » Fri May 18, 2018 3:21 pm

Wait, but that’s not fair to all the 9.9 who paid inflated prices for their homes.

I’m not sure it was a good use of their money, but shouldn’t they get better treatment having paid for the premium service?

User avatar
BRUTE
Posts: 3082
Joined: Sat Dec 26, 2015 5:20 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by BRUTE » Fri May 18, 2018 4:12 pm

classical_Liberal wrote:
Fri May 18, 2018 2:18 am
What do you mean by "good fit"?

...

For someone to become a doctor, they not only need above average IQ, but also the tenacity to struggle through medical school and multiple years of very low paying residency with 16 hour day/6 day weeks. Not everyone is wired for this capacity.
that's basically what brute means. brute himself would be physically unable to become a doctor. he just doesn't have the capacity for sleep deprivation and pain that residency requires.

in the same vein, brute believes most humans don't have the biological capacity to be fascinated by logical puzzles for 40h per week, i.e. become programmers. it simply bores most humans to death.

that's what brute means by "good fit" - maybe the "cognitive elitist jobs" are really relying on biological outliers with somewhat autistic abilities in one area.

classical_Liberal wrote:
Fri May 18, 2018 2:18 am
For everyone to have "decent" jobs, we wind up circled back to an "each according to his ability" mindset. Obviously that doesn't work.
this is the basic question brute is unsure about. certain jobs or their worth are driven to the fringes just because of technical ability. certain jobs or their worth are driven out by monopolies, regulations, and rent-seeking zero-sum behavior. what is the ratio? brute is convinced that more economic freedom would certainly help, at least in the short term. eventually, all good jobs might still become too technical for the majority of humans. but will it take 50 years or 500? brute is unsure.

User avatar
7Wannabe5
Posts: 3446
Joined: Fri Oct 18, 2013 9:03 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by 7Wannabe5 » Fri May 18, 2018 5:03 pm

What struck me about the article is "the dark cave" perspective that 99.9% of the individuals in our something at least approximating a free market economy are locked into competition with each other for good jobs. I guess this leaves the task of job creation (except for the occasional household hire of nanny etc.) up to the .1%? If more individuals were actively engaged in job creation (the businessman quadrant in ERE) then people would have a different perspective on this issue.

Challenge: Create a small business that will be able to turn a profit in the world of the near future with a labor force consisting of inner city 4th graders who are currently at 1st grade reading level. Please recall that the individual best able to tutor such a child up to something resembling functional literacy might also be in demand as SAT "whisperer" in different zip code, so market rate for educational services will apply.

User avatar
BRUTE
Posts: 3082
Joined: Sat Dec 26, 2015 5:20 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by BRUTE » Fri May 18, 2018 5:07 pm

child labor is illegal under current regulations

IlliniDave
Posts: 1952
Joined: Wed Apr 02, 2014 7:46 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by IlliniDave » Fri May 18, 2018 5:24 pm

C40 wrote:
Fri May 18, 2018 2:31 pm
Does anyone here know - is there any real talk of this happening? It'd probably not be acceptable to make huge reductions for schools in nicer areas, so, would it be extremely expensive to, say, fund all schools as well as what is currently like the 80th percentile)
No, more the opposite in terms of less federal influence on schools and more state/local autonomy is what people want, even here in a state which ranks near the bottom in the US. I don't think more spending on public schools has produced much in the way of results even though it has grown in parallel with wealth inequality and federal intervention is targeted to areas with the highest poverty density. I don't think doing more of what doesn't work will help much. And I don't think the Feds can get away with telling a state or community they have to reduce their school funding or give away their tax revenues to others.

User avatar
7Wannabe5
Posts: 3446
Joined: Fri Oct 18, 2013 9:03 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by 7Wannabe5 » Fri May 18, 2018 6:06 pm

BRUTE wrote:child labor is illegal under current regulations
Right. I meant that the labor force with which you will be provided maybe 10 years hence, will consist of the 4th graders I am currently tutoring over and over again on the concept of the short vowel sounds. Alternatively, you may currently choose a labor force consisting of 50+ year old women who will have recently passed certificate courses on topics such as the safe loading of construction supplies into rental trailers, infant CPR, and basic techniques related to error-log trouble-shooting in Linux.*


*If she does not take the Yacht Guy up on his renewed invitation to go sailing with him this summer and abandon all productive pursuits. As JP noted, it is good to have options.

User avatar
BRUTE
Posts: 3082
Joined: Sat Dec 26, 2015 5:20 pm

Re: The 9.9 Percent Is the New American Aristocracy

Post by BRUTE » Fri May 18, 2018 7:31 pm

brute understands all the words, but doesn't know what 7Wannabe5 is saying.

User avatar
Smashter
Posts: 187
Joined: Sat Nov 12, 2016 8:05 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by Smashter » Sat May 19, 2018 6:14 am

Tyler9000 wrote:
Fri May 18, 2018 9:58 am
BTW, I wonder if the author also believes that the zero-sum-game also applies internationally, where the privilege of the US 90% (really the global 9.9%) is taking opportunities away from kids in war-torn middle eastern countries.
I wonder about stuff like this too. It gives me a lot of respect for companies like GiveWell and the effective altruism movement in general. They seem laser-focused on saying "all us first world folks are incredibly rich by global standards, so don't be greedy and buy some malaria nets for kids in Africa".

User avatar
7Wannabe5
Posts: 3446
Joined: Fri Oct 18, 2013 9:03 am

Re: The 9.9 Percent Is the New American Aristocracy

Post by 7Wannabe5 » Sat May 19, 2018 7:29 am

@BRUTE:

Sorry, context would be that according to what I recently read in "Basic Economics" by "supply-side" Sowell, the primary difference between the wealthy and those who gripe is total hours devoted to pure productivity, thus I am currently engaged in an experiment in Poly-Jobbery. So, I am simultaneously working at 3 different jobs while also engaged in a course of study in a theoretically high demand technical field. Therefore, I no longer have very much time to chit-chat/expound at length on a forum such as this.

User avatar
jennypenny
Posts: 5716
Joined: Sun Jul 03, 2011 2:20 pm
Location: Stepford USA

Re: The 9.9 Percent Is the New American Aristocracy

Post by jennypenny » Sat May 19, 2018 11:03 am

I keep thinking back to Tyler Cowen's The Complacent Class and how we all tend to self-segregate (in the US at least). Cowen's take isn't nearly as nefarious sounding as Stewart's, even though both illuminate the negative consequences that can result from the tendency.

I wonder if the push towards solopreneurs and entrepreneurship in general will counterbalance that trend and create a new entrepreneur class that will compete with the professional class Steward described.

jacob
Site Admin
Posts: 9813
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: The 9.9 Percent Is the New American Aristocracy

Post by jacob » Sat May 19, 2018 3:12 pm

I'm an educational pessimist in the sense that I first and foremost believe that it's impossible to take a person on the left side of bell curve and via longer or better education transfer them into the cognitive elite on the right side. IOW, I think that politicians' calls for more education mostly result in longer education to the benefit of educational institutions and banks. This has unfortunate side-effects: More student debt + race to the bottom in terms of credentials, hence "must have bachelor degree + ability to lift 50pounds". This whole idea about sending everybody to college will ultimately turn out to be a stupid idea: it hurts individuals because they got into debt and it hurts society because it wasted resources.

Looking at the Gatsby curve, it's quite evident that you're better off pursuing the American Dream in Denmark or the Scandinavian countries in general as those have the lowest odds of children ending up in the same social class as their parents.

How are these countries different from the US?

They're different in that there's a lot of money and services being redistributed towards mothers and early/preschool childhood development (<5 years old) in terms of daycare, etc. Mothers (and fathers) get very generous parental leave. As far as the child is concerned, it does not matter if you're a single mother in Scandinavia. This ensures that all children start out on a fairly equal basis whereas in the US a rich parent can ensure that their stupid child gets a significant leg up by paying for private tutors, fancy preschools, ... and generally building their extracurricular resumes before the toddlers even know what a resume is. In Scandinavia, to a large degree ALL children get to eat the same cognitive diet until they're 12+ years old. Of course there are still mobility effects but they're the lowest in the world.

In a way, being born rich in the US in terms of success later in life is what being born in January is to success as an athlete: You'll always a bit stronger, taller, and bigger than those born in December. This is crucial for further development since teenage sports is idiosyncratically divided according to which year you were born in (say 2003) ... not how old you are (say 15). This translates into early wins for the rich/January crowd who is almost a year older than the December crowd. The Matthew effect takes care of the rest (on average).

There's a lot of potential talent being wasted in December or the poverty class. Those with athletic talents who end up being born in December give up their sports career in their teenage years because they can't beat the January guys in their respective age bracket. Being 50 weeks older matters a lot when you're a teenager in the beginning of your sports career. (This is also why some parents hold their children back ... so that the kids have 1 year of maturity on the other kids when it comes to competition. That doesn't work in sports unless you lie, but it does work in education.) Those with cognitive talents who end up being born to poor or unconnected or uneducated parents have the same problem. Having access to fancy tuition matters a lot when you're 5-10 years old.

So there's the policy suggestion. One answer that has been demonstrated to work is to heavily regulate resource allocation towards children below the age of 10 or so. Beyond that, there's not much money can do anymore. The price of that redistribution is that it costs money. Therefore countries where the influence of advantages and disadvantages is removed from the talent pool also end up with less inequality (the Gini index).

Ponder how much athletic or cognitive talent is lost when a society is inefficiently directing resources towards athletes who are born early in the year or towards cognitive workers who are born to rich parents and away from those who are born in December or to parents who can't afford fancy preschools.

Deregulating serves to make the "free market" create its own form of regulation in the form of cartel-like structures. This is essentially the situation that dominates the US more so that the countries at the other end of the Gatsby curve. You see this effect in education. You see this effect in health care(*). In the US, in practice, you get different health care depending on whether you have a full-time job or a part-time job. Ditto education.

(*) Those who have traveled to Europe (north and south) as well as the US might have noticed that you could plot people's height on the Gatsby curve as well. Average population height is epigenetic and relates to how healthy and well-fed a country was two generations ago. You find the tallest people (on average) in Northern Europe. Same place as where the social mobility is highest and the inequality is lowest. Americans are not very tall relative to the rest of the developed world. Not that healthy or educated either. As an individual, I'm average in NE... but I have a one-head advantage over the average person in the US as well as in countries below Germany. This benefits me in crowds, concerts, ... stand-offs. It's a great privilege and mostly thanks to my grandparents' government system.

This works as long as people can tell themselves great narratives cf. how the American Dream is least likely to happen in the US yet remains dominant as a cultural narrative in the US. This irony is lost on most Americans which is exactly why that meme works so well. The deeply ingrained belief helps propagate the system. Ditto "freedom".

You can see this as a country based thing, a state based thing, or a city based thing.

In the US its fun to see it on a county-based basis. It's astounding that counties that voted blue in 2016 represented 2/3 of US GDP but only slightly more than 50% of the population. IOW, blue counties are TWICE as productive as red counties. You can likely derive the same result by looking at urban/rural counties. Cities---where the cognitive elite lives---are simply more productive. Not just a bit more. Twice as much!

You can plot education along similar lines. The "educated" or cognitive people live in cities. If you're cognitively talented and got born in the countryside and you moved to the city for education...you'll probably stay in the city. Since this flow is not symmetric, there's a brain or rather cognitive drain effect from the country.

(Insofar that moving is hard, that compounds the issue. Think tech. AI. ...)

Interestingly, until recently, the US benefited from talented people born elsewhere emigrating to the US. If you're already born and talented, moving to a country with a high Gini index is a good move for you as a [talented] individual. Conversely, a country with a high Gini index is not a good place to get born. Conversely^2, being talented, leaving a country with a low Gini index is also a good move (for you as an individual). Scandinavia has long been frustrated about their brain drain.

Recent US politics have worked to reverse this with some success. Talented people from other countries are now less likely to want to go and live in the US because of #MAGA. Under the previous administration, talented immigrants were prevented from leaving again lest they suffer significant clawback in the form of an exit-tax. They still are.

Is this a good thing? It depends! Would you rather have a small piece of large pie than a large slice from a small pie. What if the former is larger than the latter? In terms of sheer amounts, the former should be more appealing ... but ordinary humans universally prefer the latter beyond the point where absolute necessities (clean water, warm home, ... about $10,000/year of consumption) are satisfied. People compare themselves to their neighbors, first and foremost.

This [innate psychological] effect creates the resulting politics, wherein the two-party system in the US (and the UK) exhibits the most extreme result of that effect.

Post Reply