Markovitz is the author of The Meritocracy Trap. The interviewer is from Spectator Books. I listened on The Podcast Browser. This is the sort of essay I used to post to Medium, but I am now putting on the blog.
min 1 We now have an aristocracy based on schooling.
min 3-5 The economy creates unhappy winners and losers. Losers don’t get enough parental investment in their education, so they suffer from bad job prospects. Winners suffer because they have to work very hard for their wealth. It used to be if you inherited land or a factory, you didn’t have to work hard. Now, wealth consists of human capital, and you have to use it to profit from it.
min 6 a lot of income that looks like capital income is labor income; e.g. hedge fund carried interest. A reasonable guess is that the top 1 percent get 75% of income from labor. Rent-seeking is limited. Managers are not taking advantaged of dispersed shareholders because when shareholders become concentrated by private equity firms taking over, executive compensation does not fall.
min 10 in old days, top manager was lazy, middle managers ran firm; you can think of the management function in those days as dispersed among middle managers and workers.
min 11 management function is now concentrated in elite of executives, and consequently so is wealth.
min 11-12 The economy has been remade the economy around highly educated people. They have tasks involving a lot of abstraction.
Other workers are left with tasks that are more concrete–they might be done by robots.
min 14 This is not inevitable. The technology we invent is socially determined. We are inventing technology that empowers the highly-educated elite because that is the technology that the elite wants.
min 15 first generation of meritocrats got rid of old elite. Then it started to draw technology in its direction, in finance for example. Then they developed an insatiable taste for educating and training their children.
min 16 how much training can one person absorb? how much inequality can a society absorb?
min 17 why don’t the children of elites get off the treadmill? In part, the economy has not created any choices for them that fall somewhere in between investment banker and barista.
min 18 in part, younger meritocrats are conditioned to stay on the treadmill. Older meritocrats have hobbies, but younger ones are such workaholics that they don’t
21 Marx was in one way better than today’s left, because he doesn’t go around looking for villains. But what Marx gets wrong about today’s economy is that we have human capitalism–capital embodied in humans.
23 The liberal response to inequality is to double-down on equality of opportunity. But this is at best a fantasy, and we need to focus on equality of outcomes.
27 Markowitz makes the claim that academicians and journalists could have made it finance, but they chose a higher calling [me:
gag]
30 There is unsustainable growth in university endowments–they are on a path to end up with all wealth
My comments:
Markovitz is offering a theory of economic structure in which schooling determines earning ability. People who obtain a lot of schooling want to:
(a) tighten the connection between schooling and earnings by creating and deploying technology that is complementary with schooling;
(b) make sure that their own children get the best schooling, so that they inherit high social positions.
The result is a distribution of occupations that has high-end jobs that require lots of skill and effort and low-end jobs that offer little reward. He would prefer a distribution of occupations that includes more middle-level jobs that require less intensive training and effort but more reward than low-end jobs.
For (a), Markovitz assumes that schooling works through human capital. You might be able to tell a similar story with schooling working through signaling, but it probably would be harder to tell.
For (b), Markovitz assumes that the Null Hypothesis is false. That is, when parents put a lot of money into getting their children in to exclusive schools, this makes a big difference.
I am more inclined to see the distribution of outcomes as determined by the distribution of personality characteristics, including IQ. Unlike Markovitz, I think that a lot of highly-educated people would fail in the world of business and finance, because of personality shortcomings.
I think that the biggest shortcoming that keeps highly-educated people in narrow occupations is an inability to interact with a broad spectrum of people. I mean by that something more than just introversion. I would describe the problem I see in many academics is that they have a very limited comfort zone in terms of the people they can befriend or have as colleagues.
I am an introvert, but compared to most academics I know, I have a much wider comfort zone in terms of people. In my entrepreneurial days, my main business partner did not even graduate high school, and I don’t think there are many people with my education credentials that could have handled that.
So I do not fully agree with Markovitz. But I give him credit for shifting the focus away from the neoclassical thinking about income distribution between labor and capital. In that regard, his view of the world is much less distorted than neo-Marxists of the Piketty persuasion.
“The economy has been remade the economy around highly educated people. They have tasks involving a lot of abstraction. Other workers are left with tasks that are more concrete–they might be done by robots.”
This is widely believed but it is *wrong*. Most of the jobs that might be done by robots are already done by robots. And many low-wage workers do jobs that robots cannot begin to touch (housekeeping, lawn-care, home construction). Any job that requires flexible movement through the physical world, dexterity, tool use, hand-eye coordination, etc will not be done by robots in our lifetimes. On the other hand, some high-paid jobs involving abstraction are vulnerable to automation. Document translation and legal search for example. And AI systems may exceed the abilities of Radiologists (though legal barriers and political pull may stave off AI competition there). In general, I’d argue that if your job involves working with words and images, it is more, not less likely to face competition from automation than ‘dirty jobs’ in the physical world.
The second sentence should read, ‘Most of the *concrete* jobs that might be done by robots are already done by robots.’ (Which is not true of jobs involving abstraction)
That’s actually a good point. Innovation is happening most rapidly in the world of bits, not atoms. Much manufacturing has been automated, but that’s because factories are controlled, man-made environments that can be designed to accommodate robots and machines.
Strange to claim that there are no jobs between barista and investment bankers. What about nurses, accountants, teachers, police officers, physical therapists, plumbers, carpenters, etc., etc.
my son attends a well regarded private school in Los Angeles. Anecdotally, it seems that many anticipate future careers as film makers, music producers, etc.
These kids are definitely off the treadmill and looking at a future built around self-actualization
“how much inequality can a society absorb?”
Lots? Inequality is normal. Does anyone wake up and feel angry because some people the don’t know have way more money than them?
Throughout history, and now in Venezuela, there have been the “aristocrats” thru one process or another. The King and his court are always, and will always be “higher” than the slaves, serfs, plebes, (illegal) immigrants, and servants.
Parents want their children to be as successful, so meritocracies that look set to make the children less successful are gamed / subverted, by the currently powerful, to make it more likely their kids are very successful, with merit or not. See Hunter Biden, and most kids of the successful.
We now have an aristocracy based on schooling
This is true, and wrong.
And possibly not so difficult to correct: take away tax-exempt status for colleges which have more than 1% of their admitted students kids of the 1% richest households; more than 10% of the top 10%; more than 20% of the top 20%; so on thru 30%, 40%, 50%; and possibly even 60%, 70%, 80%.
I flatly don’t believe that Harvard, or Stanford, has many freshmen from the bottom 20% income families. Not 20%, 10%, nor even 5%. Such top colleges should lose all tax exemptions.
I’m becoming hugely anti-elite colleges, and wondering how best to correct the social problems from the sick college system.
Ya, unintended consequences: married folks get divorced so that their kids qualify at a lower income % bracket for a better college. All solutions have some problems.
People get angry at unfairness, which is subjective. Most normal people don’t generally care about inequality by itself.
Treadmill. Peloton. Anorexia. Something’s short-circuited somewhere. Workaholics and gym junkies don’t need an incentive to work or to work out. Even when they don’t have any flab to burn off, they’re addicted. What are they running from?
There’s a philosopher who says men shun nothing so much as rest: “Their error does not lie in seeking excitement, if they seek it only as a diversion; the evil is that they seek it as if the possession of the objects of their quest would make them really happy.” And there’s a novelist who says we recoil from the dull: “Maybe it’s because dullness is intrinsically painful; maybe that’s where phrases like ‘deadly dull’ or ‘excruciatingly dull’ come from. But there might be more to it. Maybe dullness is associated with psychic pain because something that’s dull or opaque fails to provide enough stimulation to distract people from some other, deeper type of pain that is always there, if only in an ambient low-level way, and which most of us spend nearly all our time and energy trying to distract ourselves from feeling, or at least feeling directly or with our full attention.” (“Walkmen, iPods, BlackBerries, cell phones that attach to your head. This terror of silence with nothing diverting to do. I can’t think anyone really believes today’s so-called ‘information society’ is just about information. Everyone knows it’s about something else, way down.”)
This inability to sit quietly in a room alone is why people keep working, isn’t it? Even into their thirties. It can’t be for money. There are millionaires who despise what they do. They keep working to avoid retirement. They go to work in the morning as a way of evading responsibility. Work is just their excuse.
Like the addict at the slot machine, they aren’t trying to win the jackpot and head home. Pascal says a lot about hunting and plays, about leisure and sport, but work should be top of the list. Nothing’s more distracting than work.
The irony is that nothing, with a capital N, is incomprehensible. Sit completely still, try as hard as you can to take the idea seriously, and you can’t because it can’t be done. Running from death is a waste of time. Running to death is the same in the end. The workaholics couldn’t frame the question itself. They didn’t read in school, and they’re not readers now. No hobbies. No history. Nothing before they were born and nothing after they’re gone.
The novelist assumes that God wants us to be happy, that unhappiness is unnatural, a sin against creation. But evolution does not want us to be happy; it only cares that we survive. Which involves a base level of dissatisfaction (call it psychic pain if you want).
This is way too pessimistic. I find the opposite argument more convincing that the world is better today for the masses than at any point in the past. There are still tons of problems to address, that are worth addressing, but take a step back, and today’s world is generally happier than at any point in the past. Look at how people vote with their feet. Why is the global population so desperate to live in the US and the UK if life is so terrible there? I suspect life is pretty good in the US and the UK compared to other nations or compared with the past.
Again, this is way too pessimistic and overlooks the choice that today’s society affords.
Particularly in regards to education, this is outrageous. Higher education is entirely intertwined with government. Most universities, even in the US + UK are 100% public, state owned, and even privately owned schools are tightly intertwined with government.
The interviewers cite Germany as having more public school and less elite/private school. Germany, is also one of the most desirable places to live on the planet along with UK/USA, but no one points to Germany as solving the ills of meritocracy discussed in relation to the UK/USA.
I’d suggest that the solution to many ills discussed is precisely more “unfettered neo-liberal capitalism” in education.