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You Don't Deserve to Be Rich
The sooner we shed our illusion that people end up financially where they deserve to, the faster we’ll fix the economy.
Yes, it should have been obvious before, but now that a seemingly endless parade of bankers have made fortunes while gutting their institutions and sinking the economy, we’re finally having our eureka moment.
Wealth in America increasingly comes not as the proverbial reward of the “free market,” but from rigged compensation systems that reward mediocrity or outright failure. This is causing a brain burp among many professionals — a group I call the Lower Upper Class – because it’s an affront to an idea they’ve cherished since they first started bringing home A’s from school and acing their SATs.
The best-performing gerbils on the treadmill are learning that working hard and succeeding in their chosen profession is no longer the path to the topmost ranks of wealth and influence.
American capitalism is a meritocracy, they’ve always been told, a place where people basically end up economically where they deserve to. Yet you can’t open the paper nowadays without seeing screaming evidence that this notion is a fraud. Does former CEO Kerry Killinger deserve to retire to an island with $100 million after destroying Washington Mutual? Did Bob Rubin deserve his $115 million for making Citigroup a ward of the state? And what about the several thousand less-prominent geniuses across Wall Street who made off with less loot (but tens of millions nonetheless) peddling mortgage-related securities that produced illusory profits?
At about this point in the resentment-anger-outrage cycle, a quieter question naturally occurs. What if this is the way of the world, and that stuff about capitalism being a meritocracy was always baloney?And what if to fix our economy right now we actually have to get over the idea that people end up where they deserve to? Admitting that “merit” is less connected to economic destiny in an age of crisis and globalization can liberate us from old bromides and inspire fresh approaches to assuring opportunity and security in a global era.
As it turns out, the notion of a close link between economic standing and moral dignity or overall status is relatively new. As Alain de Botton points out in his wonderful book, Status Anxiety, from the time of Christ up to the twentieth century, there were credible and soothing narratives on offer – from the Bible to Marx -- that assured the poor or otherwise humble that they were no “worse” in an ultimate sense than anybody else.
Yet very different stories gained ground after the eighteenth century to alter people’s sense of their place in the world. Adam Smith argued that the spending of the wealthy was actually an engine of economic activity and employment. Next came the narrative that economic status did have moral connotations. Napoleon, this idea’s exemplar, loathed his era’s “imbeciles and hereditary asses.” And in Britain and the United States, these new impulses combined with Charles Darwin’s theories to yield the ugly (but for rich people, quite gratifying) philosophy of economic survival of the fittest.
In the United States, this harsh philosophy of Social Darwinism eventually yielded to a subtler, more pervasive and institutionally administered belief in meritocracy, via the rise of intelligence testing, the SAT, and the all-consuming college admissions craze. Over time, it became an article of faith that those with “merit” in these narrow terms would deservedly enjoy the best of society’s material rewards.
All of which makes the psychic blow now being delivered by Wall Street’s undeserving ultra-rich particularly maddening. The glorification of merit, it turns out, has a profoundly threatening downside. In the old days, if you didn’t end up on top, it didn’t say anything about you personally. It was God’s will; you were playing your role in the great chain of being; you’d get your reward in the next life. But now, if you’re merely a corporate lawyer or a senior vice president of marketing in a world where your former classmates have private planes, something has to be wrong with you. And if they got the plane by engaging in activity that wrecked the national economy, the insult is even more galling – and the world itself more perverse.
The sociology of this brewing phenomenon is potentially explosive. The best-performing gerbils on the treadmill are learning that working hard, acing every test, attending top colleges, and succeeding in their chosen profession is no longer the path to the topmost ranks of wealth and influence.
At the same time, Lower Uppers see that their “betters” routinely behave in ways that are startlingly selfish and corrupt, disqualifying them from playing any credible leadership role in society, and leaving a vacuum increasingly filled by cynicism. Which brings us to a provocative question: If looking above now makes Lower Uppers bridle at the extent to which merit no longer seems to determine where people end up, to what degree will that arouse empathy for those below who are truly struggling in this economy, and whose fates are shaped by similar degrees of luck or structural disadvantage? As it dawns on this elite class that people do not end up economically where they deserve to, the political implications could be striking.
“I’ve seen it in my research,” says Doug Schoen, a pollster who has counseled Mike Bloomberg and Hillary Clinton, among others. “If you look at the lower part of the upper class, or the upper part of the upper middle class, there’s a great deal of frustration. These are people who assumed that their hard work and conventional ‘success’ would leave them without worries over the quality of their lives. It’s opening their eyes to things that are wrong with the economy more broadly. It’s the type of rumbling that could lead to political volatility.”
What might that mean exactly? The move by Washington’s Lower Uppers to cap compensation at bailed-out banks is only the earliest manifestation of a cultural nerve that’s been struck. Lower Upper pique, plus the realization among professionals that they’re not as economically secure as they thought they would or should be, may well provide the spark for a “comeuppance” agenda aimed at the ultra-rich (via higher taxes at the very top, say) that helps fund an opportunity and security agenda (on schools, health care, and pensions) for everyone else. While the press seems obsessed in the current meltdown with parallels to the Great Depression, there’s a period that in this regard is more relevant. After all, this isn’t the first time professionals have been gripped by this kind of status anxiety and outrage. The result of Lower Upper grumblings last time – when the poster boys for excess were named Vanderbilt and Rockefeller, not Rubin and Killinger – was known as the Progressive Era.
Matt Miller, a senior fellow at the Center for American Progress, is the author of The Tyranny Of Dead Ideas: Letting Go Of The Old Ways Of Thinking To Unleash A New Prosperity. He hosts “Left, Right & Center,” public radio’s popular weekly political roundtable, and blogs at mattmilleronline.com.
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SakeHotdog
Isn't the whole idea that wealth is somehow merited kind of a Ponzi schemer's wet dream to begin with? After all, who merits 2,10,100 billion dollars? But the illusion is a willful one as it still justifies the reaping of gross wealth. The lower uppers' gripe is less that they have been duped as it is that they realize the limits of their own wealth-making. No one's innocent here.
Those guys are not rich because they are better than us. They are better because they are richer than us.
So let's invest!
Madoff's "genius' is that he understood this. Look at Sanford. Rubin et al set up the system like Henry Gondorf in "The Sting" and let the players do the rest.
Money is the real illusion. All it takes is our willingness to believe in it and what ensues is either magic or tragedy.
sophia5
"You Don't Deserve to Be Rich"
What a frightening statement.
. . . and Public Radio
doesn't deserve to be subsidized by taxpayers.
Wall Street Execs do NOT deserve to be bailed out,
but who will determine who "deserves" to be rich?
A government that's more wasteful and incompetent than private industry?
It's not just Wall Street at the heart of this economic mess, was it not some in Congress who forced the hand of banks to give home loans to people who couldn't afford those homes, creating the crash that precipitated the lack of lending, which extended out to the car industry and the business sector?
Are the hearings in Washington backwards?
Rather than Congress grilling corporate CEO's, shouldn't private industry be grilling Congress?
RobTaylor
"As Alain de Botton points out in his wonderful book, Status Anxiety, from the time of Christ up to the twentieth century, there were credible and soothing narratives on offer - from the Bible to Marx -- that assured the poor or otherwise humble that they were no "worse" in an ultimate sense than anybody else."-
Only a person who hasn't read either could link the messages of the two but surely even the author would see that the Bible's message to the por was that through piety and Christ-like behavior they would be "made rich in heaven" while Marxism, basically, tells the poor that they are the victim of a conspiracy to which class war and ultimately violence is the solution.
No matter how asinine the other points (aren't you one of the undeserving rich Matt Miller?) the flagrant ignorance this sort of analysis should clue people in on the real reason Western Civilization is on the decline and con artist were bale to take investors for all they had. We live in a culture of where actual knowledge is ignored and populist drivel is considered brilliant.
BernieO
Claiming our country is a meritocracy is a smokescreen created by conservatives to decry things like affirmative action which help the unwashed masses get a shot at success. The same conservatives have no problem with affirmative action for the rich.
How else did George Bush II become the most powerful man on earth? His repeated failures as a student and businessman never held him back because of his family's wealthy friends who were more than willing to bail him out repeatedly. (Each time he bankrupted his companies, he managed to get even more financial help.) Bush got a plum assignment in the National Guard the same way. He even managed to escape legitimate charges of insider trading at Harken Energy. Yet this incompetent man was the guy that the monied interests in the Republican Party PERSONALLY hand-selected to become president.
Bush - and his family - are some of the more visible examples of the way our system really works. People with little or no talent frequently rise to the top due to their powerful, wealthy connections. Once there, they work hard to make sure truly talented, unconnected people are kept out of the inner circle.
estcruzer
no one forced the banks to loan to insolvent borrowers.
This author may have something here. What if the bulk of the very rich don't deserve it.
Why not tax the very wealthy like they don't deserve the bulk of the money they are getting (say at the 80% to 90% level), unless they put the money back into the society that made them wealthy? That might help the deficit and take some pressure off of the middle class.
Who knows?
bkenner
What? Matt, you must not have ever run a business. Ten percent of any organization brings ninety percent of the value--unfortunately. Sure, there are crooks, but to assert that we all bring the same to any situation is just plain foolish. Have you ever been to a sporting event? Are all players equally contributing? The lack of competition (capitalism) in business and Wall Street is why there are more bums in Corporate America than in the NFL or MLB. We are now protecting those big businesses with immoral managers from destruction. When you advocate this, you are protecting them. This protection allows the thieves and bums to flourish. If you want to protect employees and shareholders this way, you will provide cover for the crooks.
kilroy
"How do you run a government when the voters are smarter than you?"
http://tinyurl.com/cfqbm6
Kilgore1313
Having CEOs grilling congress wouldn't alleviate the pervasive feeling that the system's rigged, a feeling that I share. Does sophia5 think the leaders of the banks etc are the best, most talented people and therefore the most deserving of the VAST sums of money paid to them?
BTW how is it that congress forced banks to loan money to people who couldn't afford them?
leonfreilich
Obama seeks to raise taxes on wealthy to cut deficit.
--news item
OH, NO!
Our most productive people
Are under fierce attack;
The country might just lose them--
What if they move to Iraq?
flyoverland
I created a company from a desk and a phone and built it into a billion dollar market cap. My salary was always modest, among the lower ten percent of my field. My board told me I should make my money on the stock. Make the stockholders rich, you will get rich. When we sold the company, the banker made more in three months than I made in salary in ten years. It is clear that in order for the outrageous salaries that were the norm on Wall Street that they would have to create something more than normal services. They "made" smoke and mirror investment products. Fortunes should go to those who "produce", not those who shuffle paper.
MRKWONG
I'm not convinced this is news, we've always had robber barons. What may be news - at least in this country's history - is the degree to which we've institutionalized such behavior, the extent to which we've accepted that they will escape the consequences of their actions. As Queen Victoria said when the Boers strung up Leander Starr Jamieson, 'Buccaneers should expect to rough it'.
ElRonaldo
I don't like what they did, but Killenger and Rubin did what many other capitalist would do: they sought profit based on the environment that the regime created for them to operate in.
The robber barons did the same thing and created the railroads and helped build a powerful country that expanded west. The little guy got 40 acres and a mule. (obviously, the metaphor breaks down at this point).
If BOFA and Citi had not been pressured to make sub-prime loans so that their applications to acquire other banks would be regarded favorably, then they would not have done that. Congress created the environment.
I agree, you don't deserve to be rich but you can't fool Adam Smith's invisible hand - the markets will always prevail. If Congress creates artificial 'opportunities' then capital will follow.
exploora
It is the pricing system that moves the economy, or sales.
I think that is what started this, was the price of oil-gas, it went sky high.
Then everyone's costs changed, and prices went up to pay for rising costs, people stopped buying things first, not gas.
Workers are usually paid fixed incomes without bonuses. The bonus is not a bad idea, within reason, it gives you incentive to work towards profits.
If prices are too high, people may still value what have you to sell but can not buy it, if prices are too low, to create demand for product, the revenue doesn't cover costs. So when there is friendly competition, the costs don't go too high, and don't have to be lowered too. That is why monopolies can do such damage.
Of course what we see is the attribution bias at work in this article. Blame the owners when things go bad, threaten nationalization even.
To a degree, the worker who produces the products doesn't get what he is generating in profit when products are making a surplus of wealth, and owners of production get that surplus, the risk, which the managers are paid a bonus out of to be controlling get a a bonus for controlling it, supposedly. Another attribution bias at work.
It seems like the oil prices are controlling prices o. everything. Oil is the lubrication of industry and sold in an area where many people hate us due to our perceived war mongering.
The middle East issues were big in the 70's too during the energy crisis. In many they caused the energy crises.
exploora
Those people are not making money shuffling paper, they might be making money by manipulating prices, which has been my theory for a long time, and they are using paper to design their scheme, and then they will shred the paper. Do you Enron, all the tons of paper being shredded at Anderson's?
Why do they keep saying this speed short selling is good for the economy? If someone is not making a lot of money manipulating prices? Then the attribution bias can kick in and be used as smoke and mirrors.
Spreading rumors is another big one, which can devalue stock, the other issue is diluting stock, all these calculations are done on paper, and make and break businesses. Paper work is not done just to create smoke and mirrors effect. Paperwork can be used to slow down production even.
Pricing is everything, and I think is being manipulated, big time. Class warfare is at work via the attribution bias, and is distracting people.
All people have to do is look at their own behaviour, when gas went up, what did most people stop doing first, spending loose change in their pocket on coffee possibly at Starbucks, now look what happened to Starbucks.
Teens were given less pocket money, so they bought less designer things.
That is what built my business in the 80's was people's desire for a high end product, that before no one would have thought of buying.
The big one was the "no fear fad" that was something, I couldn't keep enough of that stuff in stock, people stopped each other in the street asking where they got that no fear shirt or whatever, cause they were sold out at many stores. Those were great days.
We thought they would never end.
gardengirl
aaah...the illusion of control.
that if we do this, we'll get that.
lulled into believing we deserved the good life.
conned by it all, we bought it all.
we do not control life.
we do not know what's ahead.
it's random. it's a crapshot.
even a slumdog gets his day.
Thank you.
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