OT: The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite

“The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite,” by Daniel Markovits, Penguin, NY, 2019. This 418-page hardback addresses the excesses of America’s elites, especially eastern elites. The author is a graduate of Yale Law School, the number one law school in the US. Other leaders are Stanford, Harvard, Chicago, and Columbia.

In days gone by, the best universities in the US, usually the Ivy League, served mostly the wealthy. Admission was based on breeding rather than merit. Over time they began to admit some middle class students. It was noted that the wealthy students failed to achieve honors. In the ‘50s, Harvard, Princeton, Yale, et al adopted SAT scores as part of admissions requirements. That increased competition for limited openings.

Markovits notes that in spite of thousands of students admitted to the top law schools in the US each year, only a handful did not come from the top ten universities. Entry to those schools usually required admission to a prestigious prep school. Most Americans are excluded.

Graduates of top law schools or top MBA programs can expect to make big bucks, say $5MM/yr as partner, but that requires hard work and long hours. No more 9 to 3 bankers hours. Often 12-hr days six days a week is expected. Lawyers are now asked to bill 2400 hrs/yr up from 1300 years ago. He defines wealthy as $30MM investable assets.

His statement that the middle class is locked out of most professional and graduate schools (because only one in 10 Americans holds an advanced degree) overlooks the impact of Sputnik in the 1960s. Federal grants flowed to universities who supported their graduate students usually as research assistants. In the sciences anyone with a 3.0 gpa could expect to be accepted. Many middle class individuals earned PhDs this way.

The stiff competition for top grades even in high schools increases pressure. In Palo Alto, CA one result is a student suicide rate four to five times the national average. College students are now twice as likely to be diagnosed with depression as they were at the millennium.

Middle class is defined as the 90% who bought their cars from Ford, Chrysler, or General Motors, half of their appliances from Sears, and one third of their watches from Timex. Slowing economy pushed the rich into the middle class, resulting in the Great Compression. And there are religious distinctions. High Church Protestants, Jews, and Hindus are unusually rich and educated; Low Church Protestants usually poor and uneducated; Catholics across the spectrum.

The wealthy maintain their advantages with the assistance of tax loopholes from government. In 2016 158 families provided half of the presidential campaign contributions. The top 1% contribute more than the bottom 75% combined. Walmart’s Walton Foundation is a heavy contributor to laws that favor charter schools. Politicians spend most of their time with donors and lobbyists.

The swinging door is an additional link. A retiring congress person can increase income by 10 fold to perhaps $2MM as a lobbyist. A law clerk to the Supreme Court can expect a $400k signing bonus to join a law firm. The Justice Department failed to prosecute the financiers who caused the 2008 financial crisis in part because prosecutors left for private sector jobs. Meritocracy reached its zenith during the Obama presidency. Rural, southern, and fly over persons were discounted. The result is a concentration of wealth, privilege, and caste across generations.

Eight of the ten richest Americans owes his wealth not to inheritance but to entrepreneurial or managerial labor often from founder stock or partnership shares.

Worldwide 170 billionaires have signed Warren Buffett’s and Bill Gates’ pledge to donate the majority of their fortunes to philanthropy.

Once major corporations planned to keep new hires for life. They had training programs to develop staff. Few companies still have training programs. Many instead send their best to MBA programs. McDonald’s famous Hamburger University still exists but no longer trains new franchise operators. Instead it trains managers and executives.

After hundreds of pages Markovits gives us his solution to the problem–

  1. Education must be open and inclusive with admissions less competitive.
  2. Industry must be dispersed across a broad middle class.
  3. Private schools and universities should lose their tax exempt status if they fail to enroll at least half of their students from the bottom two thirds of the income distribution.

A broad spectrum description of a complex problem. Extensive references. Charts. Index.