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Rich-People Problems?

It’s somewhere between poignant and pitiable that educated overachievers seem only lately to be realizing that they (we — who am I kidding?) aren’t guaranteed happiness or esteem. But the real problem today isn’t that things are stressful for the most affluent and credentialed 20% or 10% or 1%; it’s that for the rest of the country social mobility has all but disappeared. Meritocracy may be a grind, but for those outside the upper-middle class, it’s simply ground to a halt.

Consider that in the U.S. today the strongest predictor of a child’s future wealth is now the wealth of his or her parents. Forty percent of people in the bottom quintile — and the top quintile — are destined to stay there, a level of class stickiness that feels un-American. The ability to do better than one’s parents is now lower here than in class-bound Britain and other industrialized nations.

Mobility in a literal sense has also slowed. People are moving less, and those who do tend to be more affluent. They are moving to cities of the so-called creative class and to clustered neighborhoods of similarly educated people. The net result is that segregation by privilege is taking root in countless insidious ways.

Some might ask what the problem is. After all, the meritocracy we have today, which centers on test scores and college degrees while being attentive to diversity, is more fair and inclusive than the WASP old boys’ club. But here’s the reality. Today’s system has created a constant scramble to get into the preschool/high school/college/dating pool. And as Hayes astutely notes, once people think they’ve made it, their tendency is to ensure their heirs and allies do too — by deploying accrued advantages on their behalf or by rigging the game outright. Call it the cultural contradiction of meritocracy: hard work and fair play lead to privilege, which then undermines hard work and fair play.

The deeper problem is that merit itself is misunderstood. Merit — that is, talent plus hard work — is meaningless without opportunity. And opportunity is now more concentrated and monopolized than ever. Today it remains the case that a star can come from anywhere. See President Obama. But it is not the case that talent is rewarded wherever it comes from. See your local high-poverty school.

We’ve got to do three things to reverse this. Invest more in opportunity, with a front-loaded focus on early learning and life-skills mentoring initiatives like Year Up. Recycle opportunity, through progressive and estate taxation, so that opportunity monopolies can’t metastasize. And create more shared experiences — like national service — where we have the opportunity to be equal citizens.

The opportunity gap doesn’t have to be a partisan issue. Opportunity Nation, a coalition that includes senior Republicans and Democrats, proves that. But the issue has to matter to the elite more than their own afflictions or short-term interests. Ultimately, there’d be no better proof that meritocracy works than if today’s meritocrats gave themselves more competition.

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The Pew Foundation discovered in a recent poll that tensions over inequality in wealth now outrank tensions over race and immigration. But income inequality isn’t really the problem. A new upper class is the problem. And their wealth isn’t what sets them apart or creates so much animosity toward them.

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The New Upper Class and the Real Reason We Dislike Them

Read more: http://ideas.time.com/2012/02/07/the-new-upper-class-and-the-real-reas
on-we-dislike-them/#ixzz21ZF1r7ws
Let’s take a guy — call him Hank — who built a successful auto-repair business and expanded it to 30 locations, and now his stake in the business is worth $100 million. He is not just in the 1%; he’s in the top fraction of the 1% — but he’s not part of the new upper class. He went to a second-tier state university, or maybe he didn’t complete college at all. He grew up in a working-class or middle-class home and married a woman who didn’t complete college. He now lives in a neighborhood with other rich people, but they’re mostly other people who got rich the same way he did. (The new upper class considers the glitzy mansions in his suburb to be déclassé.) He has a lot of money, but he doesn’t have power or influence over national culture, politics or economy, nor does he even have any particular influence over the culture, politics or economy of the city where he lives. He’s just rich.

The new upper class is different. It consists of the people who run the country. By “the people who run the country,” I mean two sets of people. The first is the small set of people — well under 100,000, by a rigorous definition — who are responsible for the films and television shows you watch, the news you see and read, the success (or failure) of the nation’s leading corporations and financial institutions and the jurisprudence, legislation and regulations produced by government. The second is the broader set, numbering a few million people, who hold comparable positions of influence in the nation’s major cities.

What makes the new upper class new is that its members not only have power and influence but also increasingly share a common culture that separates them from the rest of the country. Fifty years ago, the people who rose to the most influential positions overwhelmingly had Hank’s kind of background, thoroughly grounded in the American mainstream. Today, people of influence are characterized by college education, often from elite colleges. The men are married not to the girl next door but to highly educated women socialized at the same elite schools who are often as professionally successful as their husbands. They were admitted to this path by a combination of high IQ and personality strengths. They are often the children — and, increasingly, grandchildren — of the upper-middle class and have never known any other kind of life.

As adults, they have distinctive tastes and preferences and seek out enclaves of others who share them. Their culture incorporates little of the lifestyle or the popular culture of the rest of the nation; in fact, members of the new upper class increasingly look down on that mainstream lifestyle and culture. Meanwhile, their children are so sheltered from the rest of the nation that they barely know what life is like outside Georgetown, Scarsdale, Kenilworth or Atherton. If this divide continues to widen, it will completely destroy what has made America’s national civic culture exceptional: a fluid, mobile society where people from different backgrounds live side by side and come together for the common good.

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What Ever Happened To Upward Mobility?

America's story, our national mythology, is built on the idea of being an opportunity society. From the tales of Horatio Alger to the real lives of Henry Ford and Mark Zuckerberg, we have defined our country as a place where everyone, if he or she works hard enough, can get ahead. As Alexis de Tocqueville argued more than 150 years ago, it's this dream that enables Americans to tolerate much social inequality--this coming from a French aristocrat--in exchange for what we perceive as great dynamism and opportunity in our society. Modern surveys confirm what Tocqueville sensed back then: Americans care much more about being able to move up the socioeconomic ladder than where we stand on it. We may be poor today, but as long as there's a chance that we can be rich tomorrow, things are O.K.

But does America still work like that? The suspicion that the answer is no inspires not only the Occupy Wall Street (OWS) protests that have spread across the nation but also a movement as seemingly divergent as the Tea Party. While OWS may focus its anger on rapacious bankers and the Tea Party on spendthrift politicians, both would probably agree that there's a cabal of entitled elites on Wall Street and in Washington who have somehow loaded the dice and made it impossible for average people to get ahead. The American Dream, like the rest of our economy, has become bifurcated.

Certainly the numbers support the idea that for most people, it's harder to get ahead than it's ever been in the postwar era. Inequality in the U.S., always high compared with that in other developed countries, is rising. The 1% decried by OWS takes home 21% of the country's income and accounts for 35% of its wealth. Wages, which have stagnated in real terms since the 1970s, have been falling for much of the past year, in part because of pervasively high unemployment. For the first time in 20 years, the percentage of the population employed in the U.S. is lower than in the U.K., Germany and the Netherlands. "We like to think of America as the workingest nation on earth. But that's no longer the case," says Ron Haskins, a co-director, along with Isabel Sawhill, of the Brookings Institution's Center on Children and Families.

Nor are we the world's greatest opportunity society. The Pew Charitable Trusts' Economic Mobility Project has found that if you were born in 1970 in the bottom one-fifth of the socioeconomic spectrum in the U.S., you had only about a 17% chance of making it into the upper two-fifths. That's not good by international standards. A spate of new reports from groups such as Brookings, Pew and the Organisation for Economic Co-operation and Development show that it's easier to climb the socioeconomic ladder in many parts of Europe than it is in the U.S. It's hard to imagine a bigger hit to the American Dream than that: you'd have an easier time getting a leg up in many parts of sclerotic, debt-ridden, class-riven old Europe than you would in the U.S.A. "The simple truth," says Sawhill, "is that we have a belief system about ourselves that no longer aligns with the facts."

The obvious question is, What happened? The answers, like social mobility itself, are nuanced and complex. You can argue about what kind of mobility really matters. Many conservatives, for example, would be inclined to focus on absolute mobility, which means the extent to which people are better off than their parents were at the same age. That's a measure that focuses mostly on how much economic growth has occurred, and by that measure, the U.S. does fine. Two-thirds of 40-year-old Americans live in households with larger incomes, adjusted for inflation, than their parents had at the same age (though the gains are smaller than they were in the previous generation).

But just as we don't feel grateful to have indoor plumbing or multichannel digital cable television, we don't necessarily feel grateful that we earn more than our parents did. That's because we don't peg ourselves to our parents; we peg ourselves to the Joneses. Behavioral economics tells us that our sense of well-being is tied not to the past but to how we are doing compared with our peers. Relative mobility matters. By that standard, we aren't doing very well at all. Having the right parents increases your chances of ending up middle to upper middle class by a factor of three or four. It's very different in many other countries, including Canada, Australia, the Nordic nations and, to a lesser extent, Germany and France. While 42% of American men with fathers in the bottom fifth of the earning curve remain there, only a quarter of Danes and Swedes and only 30% of Britons do.

Europe does more to encourage equality. That's a key point because high inequality--meaning a large gap between the richest and poorest in society--has a strong correlation to lower mobility. As Sawhill puts it, "When the rungs on the ladder are further apart, it's harder to climb up them." Indeed, in order to understand why social mobility in the U.S. is falling, it's important to understand why inequality is rising, now reaching levels not seen since the Gilded Age.

There are many reasons for the huge and growing wealth divide in our country. The rise of the money culture and bank deregulation in the 1980s and '90s certainly contributed to it. As the financial sector grew in relation to the rest of the economy (it's now at historic highs of about 8%), a winner-take-all economy emerged. Wall Street was less about creating new businesses--entrepreneurship has stalled as finance has become a bigger industry--but it did help set a new pay band for top talent. In the 1970s, corporate chiefs earned about 40 times as much as their lowest-paid worker (still closer to the norm in many parts of Europe). Now they earn more than 400 times as much.

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