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.