Daniel Markovits on the (De)Merits of Meritocracy
2019-11-23 · Guest: Daniel Markovits (Yale Law Professor) · 52:00
The Meritocracy Trap and its social impact
Bob Zadek interviews Yale Law Professor Daniel Markovits about his book, The Meritocracy Trap. They discuss how the shift toward merit-based advancement has paradoxically harmed both the middle class, by hollowing out traditional jobs, and the elite, who are subjected to extreme work pressures and hyper-specialization.
Topics: Meritocracy, Income Inequality, Education Reform, Labor Markets, Legal Profession, Economic Policy, The Meritocracy Trap
Speakers: Bob Zadek, Daniel Markovits
The False Promise of Meritocracy [00:17]
Bob Zadek: Hello, everyone. Welcome to The Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio. The show which is always the show of ideas, never ever once the show of attitude. This morning, I am bristling with enthusiasm and excitement to get into this subject matter. The subject this morning is what one would imagine to be a universal good: meritocracy. Don’t we all aspire to live in a world where everything we get, we earn because we deserve it? Don’t we like an environment where nobody is cooking the books, where nobody is getting more than they “deserve,” that is, they have earned through their own hard work?
Isn’t that what we all desire? Isn’t the fight about college entrance and getting into the best college, joining the elite in society—isn’t that about people should get there on the merits? No affirmative action, perhaps even no legacy admissions. Isn’t that what we all believe? That’s a universal positive good. Our guest this morning takes issue with that core belief. Daniel Markovits, this morning’s guest, will help us understand why that is a false belief, why a meritocratic system is actually causing us economic, social, and perhaps political harm. He questions something we all have taken so long for granted. His book, The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite. Wow. All that from what we all believe to be a public good: meritocracy. Daniel, welcome to the show this morning.
Daniel Markovits: Hi. Thank you so much for having me on. It’s a real pleasure to be here.
Bob Zadek: Now, Daniel, you have now caused me to question a core and passionately held belief, and you’ve done so very effectively. It makes me worry: what other beliefs of mine do I have to rethink? Oh my god, that’s a lot of work to start rethinking all one’s core beliefs. So help the audience catch up with me and help us understand what is the, if you will, the core thesis of your book, and what’s wrong with meritocracy that seems to be so universally good?
Daniel Markovits: Great. So let’s start where you started, which is this idea that meritocracy is common sense. That the thought that people should get ahead based on their own accomplishments and not, say, their parents’ social class just seems right in a very basic way. It seems like it gives everybody a fair shot at success.
There are two problems with that idea. One problem with that idea is that because the people who have gotten ahead in that way now have enormous amounts of income and wealth and enormous skill, they can devote that to training their children in a way that nobody else can afford to do. So rich kids get a kind of education in this country today that middle-class kids just can’t match. And that means that when it comes time, for example, on college admissions, to test people and to admit people based on, so to speak, the merits, the rich kids are going to do the best on the tests because they’ve had the most preparation and the most training. And that means that testing people and admitting them on the merits in fact excludes almost everybody but the rich. So if you look at the Ivy Plus colleges in America today, there are more students at those colleges from households in the top 1% of the income distribution than the entire bottom half. So that’s one really big problem that meritocracy causes.
The other really big problem is in the world of work. When you have these super-educated people come into the workplace, they change the way companies operate, the way we make things, the way we deliver services, in ways that favor the very rare, particular training that these people have. And so what they do is they capture all of the productivity for themselves and reduce the job opportunities for everybody else. So what meritocracy is doing is it’s privileging one set of people and excluding almost everybody else from the prizes of income and status in our society.
The Transformation of Finance and Labor [03:31]
Bob Zadek: I’d like to—a comment or two as you—as you’ve been speaking, I’ve been taking notes. I have a couple of comments, one pretty major. Implicit in what you said in describing the elite—and we’ll get into a bit how it’s almost an aristocracy; it is not by structure, but it ends up being that way, and you’ll explain that because you do it quite well. But implicit in your presentation is the assumption that everybody would aspire to have, as a young child, to have a life where you start in kindergarten and you are groomed—groomed from kindergarten on to replace Jamie Dimon as chairman of JPMorgan. And you are on a life trajectory where you work hard, study hard, focus only on one thing: becoming chairman of JPMorgan or similar jobs. And you get there. And after a lifetime of hard work and privileged education and working long hours, you get there. And you call that the elite. I call that—and I’m just being a little bit harsh for the purpose of radio—kind of pathetic. Who in the world would want that? Well, and maybe the children of the elite don’t want it, but their parents don’t give them a choice. So there’s a—there’s a social concept here where the children are forced into a life that their parents think is good for them, but the rest of the country says, “Those poor sons of guns, those poor kids, they have to live a life I would never want to live.” So by calling it elite gives it universal desirability that I don’t know that it’s true.
Daniel Markovits: Yeah, so I actually agree with you completely about that. You know, the part of the subtitle of the book about “devouring the elite” is exactly this idea that that kind of a life in which you’re groomed but also sort of twisted and pressured and demanded from your whole life to get something that may not be that great to have is not a way to live well. I agree with that entirely.
But I also think that this system is really not good for the middle class. And let me take finance as an example, and let’s just take a part of finance that probably all of us have some experience with, which is home mortgage finance. So the central figure in home mortgage finance 50 or 60 years ago was the loan officer. This was somebody who worked for a local bank, and this was a middle-class person. This was somebody who had some college education, and his job was to evaluate individual borrowers, homeowners, and houses to make sure that loans were prudently made, that the borrowers could repay the loan. And the loans were issued by banks, and the banks would issue the loan, they would hold the loan, and they would service it for the whole life of the loan. And so you had somebody who was a loan officer who was a respected person who exercised judgment and got a wage for being a loan officer that he could raise a family on.
Today, the loan officer pretty much doesn’t exist in that form anymore. Loan officers in banks today are form-fill-in-ers. They help borrowers fill in computer forms. And the reason that’s possible is the banks no longer service the loans that they originate. Instead, the loans get chopped up into securities and they get traded on Wall Street, and they get traded maybe not by Jamie Dimon, but by Jamie Dimon types, by super-educated traders who work on Wall Street, make huge sums of money. And as they make all that money, they’ve changed the way mortgage finance works in such a way as to make the middle-class loan officer no longer relevant or possible. And so it’s not just that Jamie Dimon or that the kind of work that elite Wall Street bankers do maybe isn’t so great for them, although they get very rich. It’s also that when we run finance by putting them at the center of finance, nobody else has a good middle-class job anymore. They transform finance into a field that doesn’t support middle-class workers. And that’s happened across our economy. And so it’s the sort of explosion of effort and industry at the top that also deprives the rest of our society of good jobs. And that’s a real problem, and that’s also connected to meritocracy.
Bob Zadek: Aren’t you really saying that the nature of the middle-class workforce is changing? Yes, the loan officer—an occupation that I interacted with because I’ve been doing finance my whole life, so I know exactly the person you’re talking about, and he kind of looks like Jimmy Stewart a little bit in my brain. So we have that mythical loan officer who no longer exists, and of course they do not. But on the other hand, we have coders who do exist, which didn’t exist a long time ago. And coder is very much in demand. It is a middle-class job. It is kind of interesting work. And aren’t you really talking about something that has happened throughout all of civilization? Jobs come and go—elevator operators, things like that—they come and they go, and they’re replaced by other jobs. And but that has—it simply is a question when jobs become no longer useful, it is the job of an individual to figure out a way to make an hour of his or her time valuable. That’s a task we all have, just like if you’re selling something, your job is to sell something that somebody else wants to buy, or you will not make a sale.
Daniel Markovits: So I think that’s fair enough. Jobs come and go, and at some point it’s the responsibility of the individual to do something that’s useful for society. But it’s also important to ask which jobs are going and which jobs are replacing them. And if you look across our economy, what we’ve seen over the past 30 years is a massive increase in the pay for people who have the most education, for jobs that require the most skill at the very top. And actually, a decent, not great, but non-trivial increase in wages for jobs at the bottom of the skill distribution. And middle-class jobs are disappearing. And it’s not that they’re being replaced by other middle-class jobs. You’re right that loan officers are going and coders are coming. But there aren’t as many coders as there used to be loan officers, or at least those categories of jobs. So the middle of the labor distribution is being destroyed by the kinds of technologies that we’re now embracing. And that means that you can’t retrain yourself because there aren’t as many jobs in the new category as there used to be in the ones that are disappearing. And that’s a huge problem for our society.
The Evolution of Elite Education [06:01]
Bob Zadek: Now, you—in your book, you write most persuasively about how the—in the ’50s and in the ’60s—you describe in great detail and with great accuracy, because I was there then—about how the elite college admission system was anti-merit in that—in those decades and in the decades that preceded it, and how social pressure and perhaps economic pressure forced the admissions policies to focus much more on merit. And that process, which seems like, “Wow, we finally got there,” was in fact in many ways a step backward. Your book does a wonderful job, and you do a wonderful job explaining that dynamic. Help us understand why the pressure to force universities to become more merit-based in their admissions, why that in fact has caused considerable damage to economic and social life in America.
Daniel Markovits: I think you’ve sort of got the trend exactly right. So in 1950, elite college admissions were totally unmeritocratic. Elite colleges basically had alliances with prep schools and in that way with more or less aristocratic families. And the sons of alumni just got in. In fact, if you were from a fancy enough family, the language of the day wasn’t that you applied for college; it was that you put yourself down for the college of your choice, because you knew you were going to get in. Your dad got in, your dad was a Yale man, you were going to be a Yale man. And that was correctly, in my mind, and I suspect also correctly in your mind, viewed as not right. As unfair and also as kind of inefficient because it meant that all kinds of people who weren’t very smart or weren’t very hard-working or weren’t very ambitious got into these colleges, and that wasn’t good for society either.
And so the colleges remade admissions over the course of about a 30-year period. It came to different colleges at different times, in which they started emphasizing academic accomplishment. And they transformed their classes. So at Yale, where I teach, the average kid in the class of 1970 would have been in the top 10% of the class of 1960. And the reason that meritocratic admissions were so good at breaking the old elite is precisely that the old elite was, to be blunt, not very smart and not very hard-working. And so if you started advancing people based on accomplishment, you would cut out their kids.
The problem is that the new elite, the elite that was made by this system—well, it is smart and hard-working, and it has an almost infinite taste and an enormous capacity for training its children. And the new elite invests in training its children. You gestured to this earlier when you talk about going to a fancy preschool where you’re starting to get taught in preschool and prepared, you know, in preschool you get prepared to get into elementary school, in elementary school you get prepared to get into middle school, in middle school you get prepared to get into high school, and in high school it’s college. And these schools, these elite schools today, spend sometimes as much as $75,000 per child per year on educating their students, compared to a national public school average of maybe about $15,000 a year. And all that education, directed by skilled people who are trying to get as much training into kids as possible, creates these hyper-educated kids. And as you say, it’s not good for the kids. I’m not a fan of it even just for the kids. But it also means that if you don’t have that training, you can’t compete. And then because we believe in meritocracy and we say people get ahead based on their own accomplishments, then if you’re in the middle class and you don’t get ahead, society tells you the reason you didn’t get ahead is it’s your own fault. You didn’t measure up. When in fact the reason you didn’t get ahead is that the system was rigged against you because the rich were training their children so much more than your parents could afford to train you. And that’s unfair, it’s inefficient, and it’s socially and politically destructive.
The High Cost of Elite Success [08:31]
Bob Zadek: What’s interesting about what you say—and I made this point a second ago, and I’m going to make it again because it’s relevant to what you just said—that unless you get into an elite school, you’re at a profound competitive disadvantage. That’s the assumption. And therefore only those who get into elite schools have the advantage they need, and they propagate the statistics as you point out in your book, and they’re widely publicized anyway, that we are in a society now where the elite marries more elite, and therefore it’s all this inbred kind of an aristocracy. It behaves like an aristocracy. They marry within their class, and therefore it becomes a pretty much of a closed loop. But there’s an implication that if you don’t go to a—let’s take law, you and I are in that profession—if you don’t go to an elite law school, you don’t get a job at Wachtell Lipton or Cravath or one of the premier law firms, you are stuck. You don’t get into those law firms. Implicit in that is that those—the lawyers who do get into those law firms—and I’m just picking law because I know it—are somehow better off. And I will say, I interact with lawyers—I’m just taking lawyers again as representative—I interact with lawyers all the time. And I pay attention to my profession. I find that the lawyers who are not in the elite seem to have richer, fuller lives. They are blissfully happy. Their needs are being met. Their children are being fed and clothed and educated. And they live pretty gosh-darn good lives. You point out in your book that in fact this is detrimental to the elites as well. So the premise is that elite is kind of the wrong label. That suggests somehow better. I would say they sure are different, and the lifestyle is different, but I challenge that it’s better and a lifestyle people should necessarily aspire to.
Daniel Markovits: I think I agree with you about that, actually. First of all, you know, if you—so the most profitable law firm in America right now is Wachtell Lipton.
Bob Zadek: Wachtell. Yeah. Herb Wachtell was my New York practice professor at NYU.
Daniel Markovits: Okay, excellent, excellent. So, you know, they have profits per partner now, I think in excess of $5 million a year. Something like—I have the actual data in the book, but something like 80% of the partners at Wachtell graduated from law schools that are conventionally ranked in the top five. So basically the only way to get into Wachtell is to go to a very fancy law school. They work all the time, enormous billable hours.
Bob Zadek: Yuck.
Daniel Markovits: I don’t think they’re very well. I agree with that completely. This is not a form of flourishing. And actually, if you ask people in those firms, “Would you rather work less and get paid less?” they say yes. Now, they don’t do it, but they say yes. And if you look at the details of life in these firms, it really is tough. So I—another firm I have inside information—the firm maintains a database which keeps track of all of the revenues collected attributable to every partner in the firm. There is an app you can put on your smartphone that allows you to check that database from anywhere in the world. The database gets updated every 20 minutes. So every partner can check in real time every other partner’s contribution to the firm’s profits.
Bob Zadek: Oh my god.
Daniel Markovits: Imagine what that does to the pressure to bill hours and make money. So I agree with you, this is not a good life. And I also agree with you that there are lots of lawyers out there who are not working at places like that, who do pretty well and have satisfying professional lives and, you know, make a perfectly respectable living, can provide for their families. The worry I have is this: first of all, I don’t know that law is that representative. Even lawyers outside Wachtell are going to be, because they’ve graduated from professional school, in the top 5% of the education distribution. And there are fewer and fewer jobs that give you control over your work and a decent income in the rest of the economy.
But even within law, one of the things that’s happening is that the way in which lawyers work is changing so that fewer and fewer lawyers are going to be able to be paid well. We’re getting things like algorithmic document review, LegalZoom, outsourced lawyering—there are lots of outsourcing of lawyers now to common law-educated lawyers in India. And these are ways that are going to make it much, much harder for lawyers outside of the very top echelons to compete. And it’s going to be harder and harder in the next generations down to have the kind of career in law that you’re describing. And that’s partly because the lawyers at the very top are inventing new ways of doing legal practice that make their own skills incredibly valuable and mean that if you’re not at the very top firms, your skills are a lot less valuable. And again, you have this problem that this system devours the people at Wachtell, who get really rich but do not have lives that are to be envied, and at the same time excludes the rest of the profession from enough meaningful work and enough income to live the kind of lives that they’d like to live. And that’s a microcosm of what’s happening throughout the economy.
The Hollowing Out of the Middle Class [11:41]
Bob Zadek: Now, you have done a lot of work, and indeed the subtext of your book is the phenomenon you describe, which is the meritocracy kind of creates an inbred closed-loop—an expression I used earlier—society where the elites—I question the word—the elites capture more and more of the economy. There is a concentration of wealth at the top. A lower percentage of the population controls a higher percentage of the wealth. And that, of course, is in your book assumed to be very bad, and there are lots of bad qualities to it, and it damages the social fabric. I want to examine that, because I wonder—well, it’s very interesting, and I’d like to look into that a little bit when we come back from our break. This is Bob Zadek. I’m speaking with Daniel Markovits, and frankly having a wonderful time. We are talking about Daniel’s book, The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite. We’ll be back in thirty short seconds to examine income inequality and how it is damaging, if it is, society. Please stay tuned.
[Commercial Break]
Bob Zadek: Welcome back to The Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio. We have outlasted all of the others. We are always the show of ideas, never once the show of attitude. This morning, we are examining, questioning a core American belief: that people should succeed or fail on the merits. There should be no rigged system. We’ve heard complaints from Bernie Sanders and Elizabeth Warren that the system is rigged. And frankly, I kind of agree. However, where I disagree—and Professor Markovits will share with us his opinion—I say the system is rigged, but I say it is rigged against the elites, and we are all smugly enjoying the benefits of how the elites got sucked into a lifestyle which benefits us by producing higher quality goods and services at lower and lower prices. They do all the work, and we, the non-elites, get all the benefit. How’s that for starting the half-hour, Daniel?
Daniel Markovits: That’s a great way to start. And I’m going to push back pretty directly on that thought.
Bob Zadek: I thought you would.
Daniel Markovits: The kind of economy we have now is really good for most Americans as consumers. Prices are low, lots of quality and variety to buy from. But it’s not very good for most Americans as workers. And that’s a problem. So let’s look at retail as just a very concrete example. Retail used to be a middle-class industry in America. Most sales were made in small stores, not chains. Often they were owner-operated, one or two branches. And working in one of those stores gave you a fair amount of responsibility. It was not an easy job. It was an interesting job, and you got paid a middle-class wage because, you know, you had to be the stockist, you had to be the salesperson, you had to do some accounts. And so you were working at a pretty varied, pretty skilled set of tasks if you were a retail worker in America in 1950, 1960, even 1970, even the early ’80s. Today, retail is dominated by Walmart and Amazon. These are places that are incredibly cheap. But working as a Walmart worker or working as an Amazon warehouse worker is not a well-paid job. It’s not a job that gives you a lot of control over your work. It’s not a job that gives you a lot of discretion. And it’s a job that doesn’t pay enough to raise a family. So that this is a sector of the American economy that is really good for consumers and really bad for workers. And my—this is now a question of a value judgment. What I just stated were facts, but now these are values. I would prefer a society in which everybody paid a little more for what they bought at the store, but also had jobs that paid higher wages, gave them control over their work, and gave them dignified and interesting tasks to do in their days. That’s a trade-off that I would take given my values, and the system that we have is pushing in the opposite direction.
Government Distortion of the Market [13:31]
Bob Zadek: But of course, we live in more or less a democracy, and the marketplace is simply another form of democracy. People can vote at least three different ways. They can vote in a ballot box—the least effective way to have your will be followed. You can vote with your feet—leave one state whose policies you disagree with to another state whose policies you are more comfortable with. Or you can vote with your dollars. Every time you make a purchase, you make a vote. And Daniel, unless you reject the concept of freedom, of doing what you want, if Americans collectively thought that was an important—that that situation needed to be changed, then there would be stores and service providers who say, “We charge more because we want to create a good middle-class life for our employees. And the only way to do that is to charge more. So you Americans buy our clothing and our food because in doing so, you are voting for a middle-class life for our workers.” But people don’t vote that way with their dollars. So it is a principle that people have shown they reject by not buying those kinds of products.
Daniel Markovits: I guess I have two kinds of responses to that. One of which involves certain claims about the facts and one of them involves certain claims about values. The one about values is, you know, there can be all kinds of collective action problems in which each of us individually will always go for the cheapest good because we know that whatever we do individually isn’t going to affect the system that we face. But if we could get together, we might all prefer a world in which we coordinate so that stores pay their workers more and charge us a little bit more. It’s just we can’t do it one at a time. And that’s why I think government is important. But that’s different from the libertarian position on this, I understand.
The second is a claim about facts. And here I think we probably can agree, which is that in fact what’s happened is that there are a whole series of government policies, regulations in effect, that make life hard for small stores and massively privilege big stores, and massively privilege big stores that don’t pay their workers very well. There are various kinds of tax regulations, both state sales tax, there are data regulations which allow big stores to exploit data that they’re never taxed on. There are supply chain and trade rules. All of these favor enormous companies. And so I think in fact one of the reasons why we’ve moved from the smaller stores to the Amazons of the world is not that the market has worked as some natural or inevitable or uncoordinated libertarian institution. It’s that our government has favored the big stores in ways that libertarians should object to, and the result is an inequality that people on the left should also object to. So this is a place where I think the left and right can actually come together.
Bob Zadek: Daniel, if I were sitting next to you, we’d be hugging right now, and I’d be welcoming you into the program. You’re exactly right. When government often interferes with the market and rejects the democracy of people spending their own money the way they want, you’re exactly right. And you kind of mentioned a few of them in your book and in some of your public appearances. You somewhat in the margins, but it was clear, you reject, as I do, occupational licensing, which is a barrier to entry into many occupations. My show has often railed against occupational licensing. You reject, I would presume, communities that impose certificates of need that don’t allow a competitor to come in and open up a moving company because the existing moving companies don’t want the competition. So you’re exactly right. Government has grotesquely distorted the marketplace. You and I couldn’t agree more.
And one of the points you really make that really got me thinking in your book was how you pointed out that the elites, in going to the elite schools, get an enormous government subsidy. So government does an inverse wealth transfer from the middle class to the wealthy through tax deductions on your contributions to colleges and the like. So you point out that the government has stacked the deck against the middle class, and I might ask you to expand upon that and help our listeners understand your observations about how the government has been somewhat of a demon—and I don’t mean to use a dramatic word—but the government has contributed to the problem in their policies.
Daniel Markovits: Yeah, look, I think one place at which we’re probably going to disagree is I think it’s inevitable for government to get involved in regulating markets. And so the question for me is, should government regulate markets in a way that favors most people and favors equality and favors the middle class, or should government regulate markets in ways that favors the rich? But I think the point at which we’ll agree is that the government as it happens now is intervening in lots and lots of ways that favor the rich. So, for example, our tax system right now makes middle-class labor the highest taxed factor of production. You know, our income tax is not very progressive. It’s progressive, but it’s not very progressive, especially when you take into account the fact that lots of the highest-paid people can structure their income so they get capital gains treatment, which working people can’t do. Our wage tax system is not progressive at all. Our wage tax system taxes the first $130,000 roughly of income at a very high rate, and after that it goes almost to zero. Our tax system is a real thumb on the scale against the middle class.
Bob Zadek: Totally agree. And that’s so irrational because neither political party is taking the position that that regressive tax system ought to get the attention it—it just too many people benefit from the existing system. So you’re exactly right. And if you—
Daniel Markovits: I mean, it should be said the people in our politics right now who are taking that position are Elizabeth Warren and Bernie Sanders. And you may not like things about what they’re saying, but they want to tax wealth and they want to tax top incomes and they want to reduce taxes on the middle class. And there may be good reasons for a libertarian or even a centrist liberal to be skeptical of them, but that’s part of their program.
Inequality and Social Stability [15:31]
Bob Zadek: One of the important points you make in the book that I want to cover is income inequality and why income inequality per se, why it is per se bad for there to be a concentration of wealth in the upper classes. Because I don’t necessarily agree that the fact that a few people have a lot of wealth and power is bad for society as a whole. But you make some pretty compelling reasons why it is, and please share your views on that issue.
Daniel Markovits: So I think that this is a really hard question. Why should the rest of us care as long as we’re doing okay if somebody else is doing better? Exactly. That’s a really hard question. I think that there are two kinds of answer. One is just historical. If you look at societies that have concentrated wealth and income at the very top across all of human history, starting from ancient Rome, going to Tsarist Russia, going to the British Empire, going to the United States in the 1920s, societies that concentrate income at the top turn out not to end very well. Too much income concentrated at the top produces revolution or social weakness and then failure in international competition by losing wars, effectively. The one exception to that rule really actually is the United States in the 1920s. We managed to unwind our income inequality or wealth inequality in a relatively peaceful way. But so that’s just like a historical trend, and if you’re worried about social stability and decay and revolution, you should worry about concentrated wealth.
The other place at which we may disagree because there’s a value involved is that I view concentrated income and wealth when they get big enough as forms of political power. So if I’m a billionaire, I have enormous control over the state. Partly because I can make political contributions, I can lobby, but partly also just because a billion dollars in a regime of private property lets me kind of draft the government in my service, because when I deploy that money, what I’m doing is I’m deploying public force which will protect my property. And that’s a form of political injustice that is—if you have my values—a problem. And so that’s another reason to worry about enormous concentrated wealth.
Bob Zadek: Just a thought. You mentioned America in the ’20s and earlier than that, Tsarist Russia. Yes, there was a concentration of wealth. The problem wasn’t the concentration of wealth at the top, in my opinion. The problem was the poverty at the bottom. The fact that so many people were subsistence or below, and that foments, of course, anger, dissent, revolution. But today’s society, that doesn’t describe today’s society. While there’s a concentration of wealth at the top, the people who are in the 99% are not doing so badly between the income they do earn and the benefits that they get under the existing system. Don Boudreaux, a brilliant economist at Mercatus, always likes to point out that the average lower-middle-class person lives a life that Cornelius Vanderbilt only could dream about but didn’t live. So an American middle-class or below person today lives better than Vanderbilt did on absolute terms. So we are doing pretty gosh-darn well. And therefore, if we have—the rest of us have enough and upward mobility more or less, then why does it matter that somebody has a lot more? And I dare say, as I said earlier, I don’t think there’s very many people who would trade in the middle class who would per se trade their life for the life you describe with passion and accuracy in your book of the life of the elite, with long hours, strained family life and the like, and the pressures that come with it, even the pressures to maintain what you have. So I don’t know that the middle class, even given the gap, which is a relative term—the gap doesn’t mean that the middle class is in need of a lot of help.
Deaths of Despair and the Elite Trap [17:31]
Daniel Markovits: I think I have a kind of a three-part response to that. The first is to agree in a way. It’s a striking fact about our current situation that right now, you know, the Bureau of the Census just released data two months ago which suggests on the one hand that income concentration at the top has never been greater than it is now. And on the other hand, that the poverty rate is pretty near historic lows. And that’s a striking sort of dual phenomenon. And that matters for the history because you’re quite right that all the previous societies in which concentrated wealth and income ended up in catastrophe also had a lot of poverty. And maybe now is different. And maybe now really is different, and that’s something to take into account and to give us some comfort.
On the other hand, is that a bet that you want to take and have a lot of confidence in, especially given the following fact: life expectancy in the middle class in the United States is starting to go down in substantial pockets of the population.
Bob Zadek: For the first time.
Daniel Markovits: For the first time. And in an unprecedented way. That is, if you look across all of human experience, life expectancy does not go down in situations where there’s no war, there’s no plague, there’s no famine, there’s no economic collapse. But in the United States right now, life expectancy is starting to go down for pockets of the middle class. And it’s starting to go down in significant measure because of what the economists Anne Case and Angus Deaton call “deaths of despair.” These are deaths caused by addiction, alcoholism, suicide, obesity, various forms of direct and indirect self-harm. And the US is not alone in this. A similar thing is happening in Great Britain now, a little bit lags, but it’s starting to happen there too. And my diagnosis is that one reason why that’s happening—it’s obviously hard to know exactly why or what’s going on—but one reason why that’s happening is that we live in a system which concentrates wealth and status and privilege at the top, and then our meritocratic ideology tells people that if you can’t get into the top, you’re not measuring up, and so it’s your fault, and so you’re a failure. And that set of ideas, with the effect on life expectancy that I’ve just described, is a real reason to worry for the well-being and stability of our society, even if poverty is not as rampant as it used to be. And that’s a source of at least, sort of, if we admit that we’re not sure about what’s happening and why, those facts should make us worry.
Policy Prescriptions for a Better Future [21:31]
Bob Zadek: In reading, in understanding the principles governing your book, I had a thought that I was looking forward to sharing with you. It kind of is an area where we agree and it may be where we disagree. In understanding the thesis of your book, I said to myself that America has played a cruel joke on the elite. And they are the victims. And now you point out they are victims of their own success in your book, and you do so—it’s one of the most interesting parts of your book, one that I hadn’t thought about very much. But I equate that to how we—I think—how we give glory to soldiers, first responders. We elevate their social standing because if we can persuade people to become first responders and soldiers and protect the rest of us, we get a profound benefit by giving them that lofty social standing. We benefit, we’re protected. Well, when we can persuade the elites to work really long hours and to aspire to have all the material benefit of their hard work, we get enormous benefits. We get Amazon, we get new drugs, we get lower cost of goods. The joke is on the elites. So I don’t—I don’t find, and many Americans are aware of this, I think the victims in your book—and I’m making your point, but I’m emphasizing it—the victims in your book are not those who were “left behind,” but those who were persuaded to sell their souls to the devil and take that system for the benefit of all of us.
Daniel Markovits: You know, there’s an old line about the difference between medical ethics and legal ethics, which is that in medical ethics there isn’t a doctor on the other side trying to kill the patient. And the thing that I disagree with in your characterization, while I agree that this system is not good for the elite—part of the argument of the book and part of the discussion we’ve been having today is that when the elite monopolize all this productivity and all this effort and all this income, I think that they also deprive the rest of America of meaningful jobs and productive work and income and status. So it’s not just that they’re making inventions that make everybody’s life better. It’s also that they’re taking away possibilities and opportunities from everybody else. And if that’s true, it’s not that the rest of America should envy the elite or should wish that they could work like this or so on, but it’s also the case that the elite is harming people. And that’s part of what our public policy needs to address.
Bob Zadek: We have about a minute left, Daniel, regretfully. I may call you and keep you on the phone the rest of the day after the show is over. But in the one minute we have left, tell us what your bullet-point prescription would be for society. What’s the major thing you wish could be or should be changed? We have about a minute.
Daniel Markovits: Two things we should do. First, we should enormously open up education. We should have across the educational system the best schools and universities take two or three times as many students as they do now, and so train many more people and give many more opportunities for middle-class kids. And second, we should restructure our tax policy and our broader labor market policy to favor middle-class, middle-income, mid-skill jobs. We should get rid of the penalty on middle-income workers through the wage tax, we should provide wage subsidies where needed, and we should favor technology that middle-class workers can employ.
Bob Zadek: Daniel, thanks so much for your book. I commend it to every listener we have. It’s a great read, it’s an eye-opener, you will think about that—it’s a provocative book, it’ll change how you view society. Daniel, thanks so much for joining us and thanks for your scholarship in the book.
Daniel Markovits: Enormous pleasure to be on and great to meet you. Take care.
Bob Zadek: Thank you, Daniel. Bye-bye.