The illusion of meritocracy

Scott Galloway has a great post on the illusion of meritocracy. He points to the ovarian lottery that puts some people three steps ahead in a four-step race. 

My parents got me to first base before I was born, immigrating to the US... In Europe I’d make much less money being an entrepreneur and challenging institutions. In China I’d likely be in jail. Having one of my companies fail would have bankrupted me in Europe, as the tolerance for risk or failure is scant. I have no idea what would have happened in China...

I have some talent and have worked really hard, but mostly my success is due to being born in the right place at the right time, and being a white heterosexual male. Coming of professional age as a white male in the nineties was the greatest economic arbitrage in history. Today’s 54-to-70-year-olds saw the Dow Jones increase an average of 445% from 25-40, their prime working years. For other ages, it doubles at most. Economic liberalization (globalization, technology, market deregulation) coupled with social norms that clung to the past meant 31% of America (white males) were given license over a lion’s share of the spoils. In nineties San Francisco, I raised over $100 million for my start-ups. I didn’t know a single woman under 40 who raised more than a million...

Rich, fabulous people are the ideal billboards for luxury brands. Our nation’s best universities have adopted the same strategy. Universities are no longer nonprofits, but the highest-gross-margin luxury brands in the world. Another trait of a luxury brand is the illusion of scarcity. Over the last 30 years, the number of applicants to Stanford has tripled, while the size of the freshman class has remained static. Harvard and Stanford have become finishing school for the global wealthy. In the class of 2013 in the Ivy League, five of the eight colleges (Dartmouth, Princeton, Yale, Penn, and Brown) had more students from the top 1% of the income scale than the bottom 60%.

Its consequence,

Not recognizing your blessings feeds into the dark side of capitalism and meritocracy: the notion that success is a choice, and that those who haven’t achieved success are not unlucky, but unworthy. This leads to regressive policies that further reward the perceived winners and punish the perceived losers based on income level.

It also leads to this vulgar inequality outcome,

There is so much that’s jarring about American exceptionalism... We idolize the founder of Amazon, who has added the GDP of Estonia to his wealth (all tax-free/deferred) during this pandemic, as we discover 25% of New Yorkers are at risk for becoming food insecure. This isn’t a United States, it’s The Hunger Games. This country was built by titans of industry even wealthier than billionaires today — Vanderbilt, Rockefeller, Carnegie, and J.P. Morgan. But 1 in 11 steel workers didn’t need to die for bridges and skyscrapers to happen. We are a country that rewards genius. Yet no one person needs to hold enough cash to end homelessness ($20 billion), eradicate malaria worldwide ($90 billion), and have enough left over for 700,000 teachers’ salaries. Bezos makes the average Amazon employee’s salary in 10 seconds. This paints us as a feudal state and not a democracy. Our lack of empathy for fellow Americans is vulgar and un-American. We can and should replace the hollow tributes with federally mandated $20/hour minimum wage. This “outrageous” lift in minimum wage would vault us from the 1960s to the present. As of 2018, the federal minimum wage was worth 29% less than in 1968.

Tell these things to economists who split hairs about r > g when Thomas Piketty writes a book to highlight the reality of widening inequality, or others who divert attention away from the problem of low and stagnant wages at the lower end of the occupational ladder by arguing that any kind of minimum wages reduce hiring!

Update 1 (06.09.2020)

Michael Sandel makes the point about how the ovarian lottery matters,

Sandel notes that in the US the chance of students from households with more than $200,000 in income scoring above 1,400 on the SAT college admission test is one in five. For those from families that make less than $20,000 it is only one in 50.