The Meritocracy Trap

by Daniel Markovits

  Applying Harrington’s exhortation to focus on concrete details rather than abstract statistics reveals the massive improvements that these changes have made to the lived experience of the poor. The poor can afford to buy, on average, perhaps a quarter more than they could at midcentury, and their buying power for certain essentials—most notably, food—has grown more rapidly still. (A typical poor family spends half the share of its income on keeping itself nourished as it did at midcentury.) Consumer durables also dramatically improve the well-being of the poor. In 1960, the poor had effectively no access at all to air conditioners, dishwashers, or clothes dryers, and half had no access to a car. By 2009, over 80 percent of the poorest quintile of American households had air conditioners, 68 percent had clothes dryers, 40 percent had dishwashers, and three-quarters owned cars.

  Moreover, even as they consume more, the poor yield less labor in exchange. American men with less than a high school education enjoyed over fifteen more hours of “leisure” per week in 2010 than they did in 1965, and American women with less than a high school education gained over ten hours of “leisure” per week during the same period. The scare quotes indicate that this is a mixed blessing, as it principally reflects involuntary unemployment and its attendant harms. But although enforced idleness imposes important burdens, rising consumption coupled with falling labor demonstrates a decline in absolute, material poverty.

  These seemingly banal increases in consumption transform lives. Anyone who has washed clothes by hand knows that “wash day” really did involve a full day of hard labor, every week. And between 1960 and 2004, the spread of home air-conditioning reduced premature heat-related deaths by as much as 75 percent. Broader markers of physical health extend this trend. The mortality rate for American children under the age of five has fallen from 30.1 per thousand live births in 1960 to 6.8 per thousand in 2015. The United Nations’ Human Development Index for the United States has increased by about 10 percent. And the life expectancy of the poor has increased (although by much less than the increase enjoyed by richer Americans).

  None of this shows that poverty has been eradicated or that the lives of the remaining poor have become easy. The War on Poverty is not yet won, and a final victory remains distressingly far off. But the early gains made by the Johnson administration have not been reversed. Even after the backlash against the Great Society that began in the Reagan Revolution and has continued through the present day, and even following the economic collapse of the Great Recession, poverty remains—depending on how it is measured—at between half and a sixth of its midcentury levels.

  Whatever its vices, and even as it ushers in massive new economic inequality, the American economic and political system today provides for the basic material needs of a virtually unprecedented share of citizens. The pervasive, grinding, absolute deprivation that drove the quest for economic justice at midcentury no longer dominates the American scene. Legitimate outrage at the poverty that remains does not erase and should not obscure this progress.

  Our America is no longer Michael Harrington’s. This is a good thing.

  A NEW RUPTURE

  A second and more familiar development coincides with poverty’s decline. Once again, wealth has advanced even as poverty has receded: and the top 1 percent’s share of national income now more than doubles its midcentury levels. High-end inequality has increased even as low-end inequality has declined. These joint developments give economic inequality a new and unprecedented face.

  Income ratios introduce these effects.* In 1964, a typical middle-class household’s income (the median income) was about four times the income of a typical poor household (the average income in the poorest quintile); a half century later, it is only about three times as large. And in 1964, a typical rich household’s income (the average in the top 1 percent) was about thirteen times the income of a typical middle-class household; a half century later, it has grown to about twenty-three times as large. In other words, the poor/middle-class income gap has narrowed by about a quarter since midcentury, while the middle-class/rich income gap has nearly doubled.

  Put a little differently, the poor and the middle class have converged, even as the rich have left the middle class increasingly far behind. These pressures squeeze the middle class from both ends, undoing the middle-class version of affluence, in St. Clair Shores and across the country, and steadily deflating what increasingly appears, looking backward, to have been a middle-class bubble. Indeed, 2015 was the first year since Galbraith wrote in which the majority of Americans were not middle class, and the middle class that remains is no longer the richest in the world.

  An overall measure of inequality—called the Gini index—drives the revolution home. The Gini represents inequality through a single number, between 0 and 1. An index of 0 reflects perfect equality, in which all households have identical incomes. An index of 1 reflects maximal inequality, in which one household captures all of the economy’s income and every other household gets nothing.

  The Gini index for the American economy has risen sharply over the past fifty years, from as low as 0.38 at midcentury to as high as 0.49 today. This increase captures the commonplace sense that inequality overall has shown a stark increase, from levels that resembled Norway then to levels that resemble India now.

  Two other trends are less familiar but vividly display the transformation in economic inequality’s center of gravity. First, the Gini index for the bottom 70 percent of the U.S. income distribution—constructed not by redistributing any income but simply by discarding all income from the top 30 percent of households—has fallen (by about 10 percent) since midcentury. (Indeed, the Gini for the bottom 90 percent has remained effectively flat over this period, so that there has been no dramatic increase in inequality across the bottom nine-tenths of the U.S. income distribution.) And second, the Gini for the top 5 percent of the income distribution—now constructed by discarding all the income from the bottom 95 percent—has skyrocketed, from as low as 0.33 at midcentury to as high as 0.5 today.*

  Economic inequality has fallen modestly across the bottom seven-tenths of the U.S. income distribution, and inequality has risen dramatically within the top twentieth. Indeed, for some recent years, inequality within this narrow elite now exceeds inequality in the economy overall. In other words, the income gap between the merely rich and the exceptionally rich has become so large that eliminating the poor and the middle class from the distribution would actually increase inequality. (Alternatively, the relatively stable inequality across the bottom parts of the distribution now serves as a ballast against exploding inequality within the very top.)

  This result would have been unimaginable at midcentury. Then, the central economic divide separated the desperate poor from the affluent middle class, and low-end inequality dominated maldistribution. Now the central economic divide separates the super-rich from everyone else, and high-end inequality dominates. Rising inequality at the top has been accompanied not just by falling poverty but also by steady or even falling inequality at the bottom.

  Finally, high-end inequality has grown faster than low-end inequality has fallen, which is why the Gini for the complete distribution has risen.

  CHANGING THE SUBJECT

  These developments are not just technical curiosities, confined to national accounts and distributional tables, and interesting to economists and statisticians only. Instead, the rise of the working rich transforms the lived experience and social meaning of economic inequality. Meritocracy fundamentally changes the subject of economic justice.

  Once, indolent wealth alongside widespread poverty gave inequality’s critics a soft target. Aristocratic wastrels were easy to condemn, and the abject poor pulled at the heartstrings. Now, the rise of the working rich and the decline in poverty have hardened meritocratic inequality against the arguments that dismantled the leisure class. Superordinate workers seem almost admirable, and the middle class (even when it strug
gles) neither seeks nor elicits charity. The meritocratic turn frustrates equality’s champions, and this gives the meritocracy trap a moral dimension.

  Superordinate workers earn their income and status industriously, by exploiting their own effort and skill. This creates a powerful impression that meritocrats are entitled to their advantages, as under Mankiw’s principle of “just deserts.” Moreover, while it is obvious that nobody deserves to inherit an estate or a factory, as aristocratic rentiers used to do, meritocrats can credibly claim to deserve the skills and work ethic that drive their incomes. A progressive might look at a landowner or factory owner from the old elite and, channeling Elizabeth Warren or Barack Obama, reasonably say, “You didn’t build that.” But it is hard to say the same to the superordinate worker from the new elite, who (whatever her initial advantages) owes her immense income to skill that she has cultivated through her own diligence and effort. To deny that meritocrats earn and deserve their incomes seems to require denying that anyone ever earns or deserves anything.

  The shift from low- to high-end inequality further hardens meritocratic inequality against conventional progressive arguments. Poverty endures, of course, and relief remains a moral imperative. But the War on Poverty (even if never completed) has transformed the political landscape. The politics of equality now focus on the growing relative gap between the top and the middle rather than on absolute need at the bottom—on frustration among the middle class rather than wretchedness among the poor. (Progressive nostalgia for the midcentury economy, when the middle class thrived while the poor suffered, symbolizes this shift.)

  Meritocratic inequality makes the new focus natural. Middle-class life is hard, and the contrast between middle-class stagnation and the elite’s extravagant growth and conspicuous opulence makes it harder. But the middle class cannot credibly command the intense, visceral sympathy that the poor did in Harrington’s day. Then, low-end inequality was a humanitarian catastrophe. Now, high-end inequality is a political injustice. Once again, the meritocratic transformation weakens the hand of equality’s champions.

  Received moral principles simply do not suit new economic realities. The arguments that defeated aristocratic inequality stand at a skew angle to the political battle lines of today, and they illuminate meritocratic inequality with at most a glancing light. The meritocratic ideal that income should track industry rather than birth, which gave midcentury progressives a powerful tool for fighting aristocratic inequality, is now itself the root of a new disease and, moreover, a moral hostage that redistribution must avoid harming.

  AN EMBOLDENED ADVERSARY

  From the beginnings of democracy in ancient Greece through the invention of mass democracy at the American founding, political thinkers have uniformly assumed that democratic politics enables the masses to band together and plunder the wealth of outnumbered elites.

  Economic inequality’s recent career confounds this assumption. Even as rising inequality concentrates more and more income in a smaller and smaller elite, government has dramatically retreated from economic redistribution. The income shares of the top 1 percent, the top 0.1 percent, and the top 0.01 percent have roughly doubled, tripled, and quadrupled in recent decades. Over the same period, the top marginal tax rate has fallen by more than half, from over 90 percent throughout the 1950s and early 1960s, to 70 percent when Ronald Reagan assumed the presidency in 1981, to below 40 percent today. Even as elites get richer and richer, government takes smaller and smaller shares of their income and wealth.

  The biggest losers from these developments, moreover, are not the poor, who (even in a democracy) face obstacles to concerted political action. Instead, the biggest losers—who have simultaneously suffered a declining income share and a rising share of the tax burden—have been the broad middle class. This group includes journalists, teachers and professors, middle managers, government workers, engineers, and even doctors in general practice. It is neither ill-educated nor disempowered but, to the contrary, can influence and possibly control the nation’s medical and scientific establishment, its press, its universities, and even its most important bureaucracies.

  The middle class possesses political skills and enjoys political access that together make it well placed to protect its interests through democratic action. Why, then, did middle-class Americans not mobilize long ago to stop economic and political transformations that so signally burden them? What enabled a narrowing elite, operating in a democracy, effectively to plunder a massive middle class and even a large near-elite?

  A frustrated commentator recently observed that even as “significant advances in recent centuries on other fronts of injustice” make “slavery, racial exclusion, gender domination, or the denial of citizenship” easy to condemn, “massive personal wealth . . . remain[s] ideologically constructed as unjust to correct.” Why, during decades in which virtually every other marginalized group has progressed toward equality in spite of being in the minority, did the massively most populous disadvantaged group, the 99 percent, allow itself to be increasingly dispossessed? This unprecedented development defies millennia of received wisdom and embarrasses almost every familiar account of political economy in mass democracies. It is in a way an even deeper puzzle than why the middle-class eruption, when it finally came, took the nativist and populist form that it did.

  Meritocracy’s charisma dissolves the puzzle, by causing the middle class to accept, and even affirm, its own increasing disadvantage. When inequality was aristocratic, ideals concerning both sympathy and right sustained the social welfare state and the War on Poverty. But today, meritocracy justifies rising economic inequality. People who feel that they have worked on productive tasks claim greater entitlement to rewards than those who feel that they have not worked, and where wealth is perceived as legitimate, support for economic redistribution declines. Mankiw sums this up when he observes, “When people can see with their own eyes that a talented person made a great fortune fair and square, they tend not to resent it.” The rich insist on lower top tax rates, and the rest accept them, because both groups agree that meritocratic inequality tracks desert and that redistribution would unjustly abuse industrious workers.

  The meritocratic turn even emboldens equality’s enemies to attack redistribution, charging that it merely serves the ressentiment that the indolent feel at the rewards that meritocracy accords to the industrious. A Cold War–era joke imagined a Russian communist who is granted one wish and asks, “My neighbor has a cow, I do not. I wish that you should kill that cow.” Today, Arthur C. Brooks, the president of the American Enterprise Institute, emphasizes that many of the concrete programs that progressives champion (including Social Security, Medicare, and subsidized college loans) distribute substantial portions of their benefits not to the poor but rather to the middle class. More pointedly still, Brooks casts the programs as simple resource grabs by a numerous and hence powerful—but unsavory—interest group. He asks, as a rhetorical thrust, whether redistributive social programs should simply grow and grow until middle-class envy is exhausted. Even egalitarians worry that their sentiments, laid bare, will reveal themselves as grasping rather than magnanimous. Where inequality is meritocratic, these arguments suggest, demands for economic justice merely launder the currency of middle-class desire.

  Sometimes all these sentiments come together and the working rich shout their meritocratic entitlement and their disdain for the middle class confidently from the rooftops. An email circulated widely among finance workers at the height of the Occupy Wall Street movement, as President Obama proposed a millionaire’s tax, stated the case clearly.

  “We are Wall Street,” the email announced. “We get up at 5 a.m. and work till 10 p.m. or later. We’re used to not getting up to pee when we have a position. We don’t take an hour or more for a lunch break. We don’t demand a union. We don’t retire at 50 with a pension. We eat what we kill.”

  Meritocracy empowers the working rich to lay down
a moral marker, which equality’s champions cannot wish away or otherwise ignore.

  Instead, they must challenge meritocracy head-on.

  FIVE

  THE MERITOCRATIC INHERITANCE

  For the class of nineteenfiftysomething at the elite prep school Groton, “Getting admitted to college brought with it no element of insecurity or nervousness; the boy and his family simply decided where he wanted to go and that was that. Every member of the class got into his first-choice college except one, who was thought to be brain-damaged.” Groton’s graduates were not exceptional among prep school products in this respect. Yale, for example, admitted fully 90 percent of applicants in the years before World War II and still admitted 60 percent in the mid-1950s. Even into the 1940s and 1950s, elite universities retained, as quasi-official policy, the principle that the sons of alumni would be admitted as long as they were minimally able to do their schoolwork. Inherited privilege and the success rates that it gave applicants suffused the very language of college admissions, as the sons of the best families “put themselves down for” rather than “applied to” the school of their choice. Alumni, moreover, believed “that the admission of their sons was a right.”

  Colleges shared these attitudes toward hereditary privilege and considered other admissions criteria wrong. Yale’s faculty responded to the “disorderliness” and “sloppiness” of the “ill-bred” veterans who came to the university under the GI Bill by adopting, for the first time in the school’s history, a mandatory coat-and-tie dress code. And in the 1950s, Yale’s president, A. Whitney Griswold, “zestfully attacked mass education” and refused to enlarge the college better to serve the coming wave of baby boomers, saying that he would not allow the Yale man to become “a beetle-browed, highly specialized intellectual.” Harvard’s admissions office still openly advertised to prep school counselors and high-caste applicants that it sought to fill a “happy bottom quarter” of its class with athletes, mediocre prep school graduates, and alumni sons. Undergraduates from the best families and poshest schools remained embarrassingly absent from the academic honor rolls; at Yale, these students were underrepresented in Phi Beta Kappa by a factor of more than three to one.