The Myth of the American Meritocracy
Lately, I have been reflecting on my place in America’s socioeconomic landscape. Specifically, I am pondering why it is that a college-educated tutor like me can earn more money than the average American worker while laboring fewer hours.
The undercurrent of human nature desires to believe that one’s success comes from one’s talent, perseverance, intelligence, and overall “merit”. We consistently have a bias to overestimate the value of our own contributions. For example, if you ask the members of a research team to each estimate what percentage of the group work they did, the sum of everyone’s answers is around 140%.
As individuals, it is healthy (and indeed psychologically vital) to be proud of the work we do, the things we build, and the way we conduct ourselves in daily interactions. In my life, I am indeed proud of my achievements in the field of education at a young age. But I also modestly reckon with the fact that I was very fortunate to attend elite schools debt-free and to have connections to help build a clientele for my small business.
Deconstructing the Meritocratic Myth
The difficult truth we must face is that our society is not meritocratic. This is particularly true when it comes to wealth.
A comprehensive study of the Forbes 400 found that 40% of the ultra-rich people on the list grew up with family inheritances of over $1 million, and more than 20% made it on the list solely through inheritance. Another report indicated that those in the top 1% inherited an average of $4.8 million. By the lottery of birth, these people started with a level of privilege unthinkable for the vast majority of Americans.
Those with wealthy backgrounds can take risks that others cannot. To simply not have debt to pay off, the fear of becoming homeless, or the short-term need to save money for a possible emergency bill is an enormous luxury. This luxury enables risky investments, while still having a strong safety net to re-invest after failure.
Furthermore, many successful entrepreneurs began with easily accessible startup money and a Rolodex of connections. Studies have shown that “social capital” accounts for roughly 80% of job placements and startup funding. As such, the wealth of a young well-connected rich person is far more likely to compound than the wealth of a young paycheck-to-paycheck worker.
Sure — as Forbes and CNBC like to remind us — there are some Americans who truly are “rags to riches”. Yet even in those cases, there is a higher degree of luck than we are led to believe.
There are too many examples to cite, but one that comes to mind is the famed billionaire TV star Mark Cuban. Born into a working-class family, Cuban created a website for live streaming events (Broadcast.com) that was bought by Yahoo for $5.7 billion at the height of the dot-com bubble speculation in 1999. The broadcasting service was discontinued within a few years, and the deal is widely regarded as one of the worst acquisitions of all time. But Cuban’s fortune remains an ongoing symbol of American success.
A similar story exists for former businessman (now Colorado’s governor) Jared Polis. While in college, Polis parlayed his parents’ small greeting card company into an unprofitable but intriguing e-card website. During the dot-com boom, the business was bought out for nearly $800 million. Of course, it has nowhere near that value today.
For every one of these “success stories”, there are a thousand smart, creative, and hard-working entrepreneurs who will never be in the right place at the right time and thus will never be known by the American public. Stories like Cuban’s and Polis’ are also proof that one’s product does not have to benefit society in any meaningful way for one to become fabulously wealthy.
The Consequences of the Myth
It is shocking how many successful people don’t bother to reflect on the degree to which good fortune, in birth and in life, influenced their position. But it’s even more stunning how many working-class folks don’t see these patterns either.
A huge swath of middle-class America believes that they may not be rich or powerful, but someday they can reach the top through grit and self-improvement. Repeating the mantra “you can be anything you want to be” drives millions to labor extra hours, often for insincere employers.
Such aspiration is endemic to our country. When Alexis de Tocqueville came from France to observe America in 1831, he found much to laud in terms of our country’s free ideals, democratic institutions, and civil society. But Tocqueville feared that the citizenry’s obsession with wealth and status could drive a morally upright nation into materialistic futility. He wrote:
“I know of no country, indeed, where the love of money has taken stronger hold on the affections of men, and where the profounder contempt is expressed for the theory of the permanent equality of property.”
America’s stigma of poverty and its idolization of prodigious wealth are deeply ingrained sociological forces that contributed to the phenomenon of Donald Trump, a contradictory man who inherited his father’s real estate business but proudly flaunted his wealth as though it were entirely self-made.
Meanwhile, his Republican Party has masterfully branded policies that reinforce inequality such that they are more palatable to working people. For example, the federal estate tax — which applies only on assets above $11.4 million — has been cleverly named the “Death Tax” to scare voters. The GOP slashed taxes for the largest multinational corporations in 2017 but framed the policy as a way to protect workers from a confiscatory state. They cut welfare programs under the disingenuous pretense that they care about the national deficit. There is great irony in a political party glorifying the American Dream while making it harder for poor people to achieve upward mobility.
The pervasive myth of meritocracy creates a more difficult sell for progressive policies. When liberals demand that the U.S. adopt standards already prevalent in the industrial world (such as mandatory paid vacation time and a livable minimum wage), there is an implicit sense that to support these policies is to admit one’s own “failure” to become rich through some lack of merit. Many people view all forms of redistribution as “handouts” to those who are simply not working hard enough. In reality, redistribution (within reason) is essential to achieve equal opportunity.
Perhaps Americans should also pause to acknowledge that our unique obsession with work, wealth, and high status has not necessarily lifted our well-being. We work more hours than the people of other developed nations, but we rank poorly in life expectancy and mental health. We have the most entrepreneurs, but we also have one of the highest rates of child poverty.
Americans surely know this game is flawed, but we seem to tell ourselves that it will be all the sweeter if we become the winners. The truth is that most people, regardless of their level of ambition, will never reach the top because of systemic economic obstacles.
Or as the late George Carlin would say, “it’s called the American Dream, because you have to be asleep to believe it”.