Meritocracy in
Ever
higher society, ever harder to ascend
Dec
29th 2004 |
From The Economist print edition
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Whatever
happened to the belief that any American could get to the top?
THE
To be sure, America
has often betrayed its fine ideals. The Founding Fathers did not admit women or
blacks to their meritocratic republic. The country's elites have repeatedly
flirted with the aristocratic principle, whether among the brahmins of Boston
or, more flagrantly, the rural ruling class in the South. Yet America has
repeatedly succeeded in living up to its best self, and today most Americans
believe that their country still does a reasonable job of providing
opportunities for everybody, including blacks and women. In Europe, majorities
of people in every country except Britain, the Czech Republic and Slovakia
believe that forces beyond their personal control determine their success. In
America only 32% take such a fatalistic view.
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Click to buy from
Amazon.com: "The New Class Society",
by Early Wysong et al (Amazon.co.uk);
"The Promise of
American Life", by Herbert Croly (Amazon.co.uk).
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But are they right? A
growing body of evidence suggests that the meritocratic ideal is in trouble in
America. Income inequality is growing to levels not seen since the Gilded Age,
around the 1880s. But social mobility is not increasing at anything like the
same pace: would-be Horatio Algers are finding it no easier to climb from rags
to riches, while the children of the privileged have a greater chance of
staying at the top of the social heap. The United States risks calcifying into
a European-style class-based society.
The past couple of
decades have seen a huge increase in inequality in America. The Economic Policy
Institute, a Washington think-tank, argues that between 1979 and 2000 the real
income of households in the lowest fifth (the bottom 20% of earners) grew by
6.4%, while that of households in the top fifth grew by 70%. The family income
of the top 1% grew by 184%—and that of the top 0.1% or 0.01% grew even faster.
Back in 1979 the average income of the top 1% was 133 times that of the bottom
20%; by 2000 the income of the top 1% had risen to 189 times that of the bottom
fifth.
Thirty years ago the
average real annual compensation of the top 100 chief executives was $1.3m: 39
times the pay of the average worker. Today it is $37.5m: over 1,000 times the
pay of the average worker. In 2001 the top 1% of households earned 20% of all
income and held 33.4% of all net worth. Not since pre-Depression days has the
top 1% taken such a big whack.
Most Americans see
nothing wrong with inequality of income so long as it comes with plenty of
social mobility: it is simply the price paid for a dynamic economy. But the new
rise in inequality does not seem to have come with a commensurate rise in
mobility. There may even have been a fall.
The most vivid
evidence of social sclerosis comes from politics. A country where every child
is supposed to be able to dream of becoming president is beginning to produce a
self-perpetuating political elite. George Bush is the son of a president, the
grandson of a senator, and the sprig of America's business aristocracy. John
Kerry, thanks to a rich wife, is the richest man in a Senate full of
plutocrats. He is also a Boston brahmin, educated at St Paul's, a posh private
school, and Yale—where, like the Bushes, he belonged to the ultra-select Skull
and Bones society.
Mr Kerry's predecessor
as the Democrats' presidential nominee, Al Gore, was the son of a senator. Mr
Gore, too, was educated at a posh private school, St Albans, and then at
Harvard. And Mr Kerry's main challenger from the left of his party? Howard
Brush Dean was the product of the same blue-blooded world of private schools
and unchanging middle names as Mr Bush (one of Mr Bush's grandmothers was even
a bridesmaid to one of Mr Dean's). Mr Dean grew up in the Hamptons and on New
York's Park Avenue.
The most remarkable
feature of the continuing power of America's elite—and its growing grip on the
political system—is how little comment it arouses. Britain would be in high
dudgeon if its party leaders all came from Eton and Harrow. Perhaps one reason
why the rise of caste politics raises so little comment is that something
similar is happening throughout American society. Everywhere you look in modern
America—in the Hollywood Hills or the canyons of Wall Street, in the Nashville
recording studios or the clapboard houses of Cambridge, Massachusetts—you see
elites mastering the art of perpetuating themselves. America is increasingly
looking like imperial Britain, with dynastic ties proliferating, social circles
interlocking, mechanisms of social exclusion strengthening and a gap widening
between the people who make the decisions and shape the culture and the vast
majority of ordinary working stiffs.
All this may sound a
bit impressionistic. But more and more evidence from social scientists suggests
that American society is much “stickier” than most Americans assume. Some
researchers claim that social mobility is actually declining. A classic social
survey in 1978 found that 23% of adult men who had been born in the bottom
fifth of the population (as ranked by social and economic status) had made it
into the top fifth. Earl Wysong of Indiana University and two colleagues
recently decided to update the study. They compared the incomes of 2,749
father-and-son pairs from 1979 to 1998 and found that few sons had moved up the
class ladder. Nearly 70% of the sons in 1998 had remained either at the same
level or were doing worse than their fathers in 1979. The biggest increase in
mobility had been at the top of society, with affluent sons moving upwards more
often than their fathers had. They found that only 10% of the adult men born in
the bottom quarter had made it to the top quarter.
The Economic Policy
Institute also argues that social mobility has declined since the 1970s. In the
1990s 36% of those who started in the second-poorest 20% stayed put, compared
with 28% in the 1970s and 32% in the 1980s. In the 1970s 12% of the population
moved from the bottom fifth to either the fourth or the top fifth. In the 1980s
and 1990s the figures shrank to below 11% for both decades. The figure for
those who stayed in the top fifth increased slightly but steadily over the
three decades, reinforcing the sense of diminished social mobility.
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Liz, meet the royals |
Not all social
scientists accept the conclusion that mobility is declining. Gary Solon, of the
University of Michigan, argues that there is no evidence of any change in
social-mobility rates, down or up. But, at the least, most people agree that
the dramatic increase in income inequality over the past two decades has not
been accompanied by an equally dramatic increase in social mobility.
Take the study carried
out by Thomas Hertz, an economist at American University in Washington, DC, who
studied a representative sample of 6,273 American families (both black and
white) over 32 years or two generations. He found that 42% of those born into
the poorest fifth ended up where they started—at the bottom. Another 24% moved
up slightly to the next-to-bottom group. Only 6% made it to the top fifth.
Upward mobility was particularly low for black families. On the other hand, 37%
of those born into the top fifth remained there, whereas barely 7% of those
born into the top 20% ended up in the bottom fifth. A person born into the top
fifth is over five times as likely to end up at the top as a person born into the
bottom fifth.
Jonathan Fisher and
David Johnson, two economists at the Bureau of Labour Statistics, looked at
inequality and social mobility using measures of both income and consumption.
They found that mobility “slightly decreased” in the 1990s. In 1984-90, 56% and
54% of households changed their rankings in terms of income and consumption
respectively. In 1994-99, only 52% and 49% changed their rankings.
Two economists at the Federal
Reserve Bank of Boston analysed family incomes over three decades. They found
that 40% of families remained stuck in the same income bracket in the 1990s,
compared with 37% of families in the 1980s and 36% in the 1970s. Aaron
Bernstein of Business Week points out that, even though the 1990s boom
lifted pay rates for low-earners, it did not help them to get better jobs.
There is also growing
evidence that America is less socially mobile than many other rich countries.
Mr Solon finds that the correlation between the incomes of fathers and sons is
higher in the United States than in Germany, Sweden, Finland or Canada. Such
cross-national comparisons are rife with problems: different studies use
different methods and different definitions of social status. But Americans are
clearly mistaken if they believe they live in the world's most mobile society.
This is not the first
time that America has looked as if it was about to succumb to what might be
termed the British temptation. America witnessed a similar widening of the
income gap in the Gilded Age. It also witnessed the formation of a
British-style ruling class. The robber barons of the late 19th century sent
their children to private boarding schools and made sure that they married the
daughters of the old elite, preferably from across the Atlantic. Politics fell
into the hands of the members of a limited circle—so much so that the Senate
was known as the millionaires' club.
Yet the late 19th and
early 20th centuries saw a concerted attempt to prevent America from
degenerating into a class-based society. Progressive politicians improved state
education. Philanthropists—many of them the robber barons reborn in new
guise—tried to provide ladders to help the lads-o'-parts (Andrew Carnegie
poured millions into free libraries). Such reforms were motivated partly out of
a desire to do good works and partly out of a real fear of the implications of
class-based society. Teddy Roosevelt advocated an inheritance tax because he
thought that huge inherited fortunes would ruin the character of the republic.
James Conant, the president of Harvard in 1933-53, advocated radical
educational reform—particularly the transformation of his own university into a
meritocracy—in order to prevent America from producing an aristocracy.
The evils that
Roosevelt and Conant worried about are clearly beginning to reappear. But so
far there are few signs of a reform movement. Why not?
The main reason may be
a paradoxical one: because the meritocratic revolution of the first half of the
20th century has been at least half successful. Members of the American elite
live in an intensely competitive universe. As children, they are ferried from
piano lessons to ballet lessons to early-reading classes. As adolescents, they
cram in as much after-school coaching as possible. As students, they compete to
get into the best graduate schools. As young professionals, they burn the
midnight oil for their employers. And, as parents, they agonise about getting
their children into the best universities. It is hard for such people to
imagine that America is anything but a meritocracy: their lives are a perpetual
competition. Yet it is a competition among people very much like themselves—the
offspring of a tiny slither of society—rather than among the full range of
talents that the country has to offer.
The second reason is
that
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Roosevelt's warnings
go unheeded |
The education system
is increasingly stratified by social class, and poor children have a double
disadvantage. They attend schools with fewer resources than those of their
richer contemporaries (school finances are largely determined by local property
taxes). And they have to deal with the legacy of what Michael Barone, a
conservative commentator, has labelled “soft America”. Soft America is allergic
to introducing accountability and measurement in education, particularly if it
takes the form of merit pay for successful teachers or rewards for outstanding
pupils. Dumbed-down schools are particularly harmful to poor children, who are
unlikely to be able to compensate for them at home.
America's great
universities are increasingly reinforcing rather than reducing these
educational inequalities. Poorer students are at a huge disadvantage, both when
they try to get in and, if they are successful, in their ability to make the
most of what is on offer. This disadvantage is most marked in the elite
colleges that hold the keys to the best jobs. Three-quarters of the students at
the country's top 146 colleges come from the richest socio-economic fourth,
compared with just 3% who come from the poorest fourth (the median family
income at Harvard, for example, is $150,000). This means that, at an elite
university, you are 25 times as likely to run into a rich student as a poor
one.
One reason for this is
government money. The main federal programme supporting poorer students is the
Pell grant: 90% of such grants go to families with incomes below $41,000. But
the federal government has been shifting resources from Pell grants to other
forms of aid to higher education. Student loans are unrelated to family
resources. Federal tax breaks for higher education benefit the rich. State
subsidies for higher education benefit rich and poor alike. At the same time,
colleges are increasingly using financial aid to attract talented students away
from competitors rather than to help the poor.
Another reason may be
“affirmative action”—programmes designed to help members of racial minorities.
These are increasingly used by elite universities, in the belief that race is a
reasonable proxy for social disadvantage, which it may not be. Flawed as it may
be, however, this kind of affirmative action is much less pernicious than
another practised by many universities: “legacy preferences”, a programme for
the children of alumni—as if privileged children were not already doing well
enough out of the education system.
In most Ivy League
institutions, the eight supposedly most select universities of the north-east,
“legacies” make up between 10% and 15% of every class. At Harvard they are over
three times more likely to be admitted than others. The students in America's
places of higher education are increasingly becoming an oligarchy tempered by
racial preferences. This is sad in itself, but even sadder when you consider
the extraordinary role that the same universities—particularly Conant's
Harvard—played in promoting meritocracy in the first half of the 20th century.
America's great
companies are also becoming less successful agents of upward mobility. The
years from 1880 to 1960 were a period of great corporate behemoths. These
produced a new class of Americans—professional managers. They built elaborate
internal hierarchies, and also accepted their responsibilities to both their
workers and their local communities. But since the 1970s the pressure of
competition has forced these behemoths to become much leaner—to reduce their
layers, contract out some activities, and shift from full-time to part-time
employees. It has became harder for people to start at the bottom and rise up
the company hierarchy by dint of hard work and self-improvement. And it has
also become harder for managers to keep their jobs in a single company.
There are a few shafts
of sun on the horizon. George Bush's No Child Left Behind Act tries to use a
mixture of tests and punishments for lousy schools to improve the performance
of minority children. Senator Edward Kennedy bangs the drum against legacy
preferences. But the bad news outdoes the good. The Republicans, by getting rid
of inheritance tax, seem hell-bent on ignoring Teddy Roosevelt's warnings about
the dangers of a hereditary aristocracy. The Democrats are more interested in
preferment for minorities than building ladders of opportunity for all.
In his classic “The
Promise of American Life”, Herbert Croly noted that “a democracy, not less than
a monarchy or an aristocracy, must recognise political, economic, and social distinctions,
but it must also withdraw its consent whenever these discriminations show any
tendency to excessive endurance.” So far Americans have been fairly tolerant of
economic distinctions. But that tolerance may not last for ever, if the current
trend towards “excessive endurance” is not reversed.