How has wealth inequality changed in the US?

While poverty has decreased since 1960, wealth has become increasingly concentrated at the top. The richest 1% now earn a much larger share of national income than they did then. Inequality has also increased within the top 5%, with the gap between the merely rich and the super-rich widening significantly.

Is the wealth of the richest primarily from capital or labor?

Markovits argues that for the top 1%, a significant majority (two-thirds to three-quarters) of their income now comes from labor (high-skilled work, executive positions, finance) rather than capital gains or investments, a shift from historical trends.

What is happening to the American middle class?

The middle class is experiencing a decline in economic mobility, with fewer children able to become richer than their parents. This is exacerbated by the increasing stratification of Consumption, culture, and opportunities, leading to a sense of social and psychological demotion.

What are 'deaths of despair' and how are they related to inequality?

Deaths of despair, including suicides, drug overdoses, and alcohol-related diseases, are rising particularly among the middle class. Markovits links this to how meritocracy frames structural exclusion as individual failure, leading to profound moral insults on top of economic hardship.

What is the argument for a one-time wealth tax?

Markovits proposed a one-time wealth tax to foster social solidarity during the COVID-19 pandemic. The idea is that those who have benefited most from rising inequality should contribute to societal recovery, especially when the pandemic has disproportionately harmed the less privileged.

How does Markovits' wealth tax differ from those proposed by Warren and Sanders?

Markovits' proposed one-time wealth tax is intended as a measure of shared sacrifice during a crisis, exempting the first $2.5 million in wealth. In contrast, the ongoing wealth taxes proposed by Warren and Sanders were designed as anti-oligarchy measures to rebalance society and strengthen the social safety net.

Key Moments

The Failure of Meritocracy: A Conversation with Daniel Markovits (Episode #205)

Sam Harris

News & Politics3 min read60 min video

Jun 4, 2020|140,967 views|2,085|512

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Key Moments

TL;DR

Meritocracy traps elites, intensifies inequality, and causes societal harm like 'deaths of despair'.

Key Insights

Meritocracy, intended to promote equality, has become a mechanism for perpetuating elite advantage by concentrating educational resources.

Inequality in the US has shifted from a focus on poverty to extreme wealth concentration, with the rich working longer hours.

The 'working rich' derive income primarily from labor, not just capital, challenging traditional economic analyses.

The middle class faces declining intergenerational mobility and increased stratification in lifestyle and culture.

The harms of meritocratic exclusion lead to 'deaths of despair' (addiction, suicide, etc.) as structural disadvantages are cast as individual failures.

A one-time wealth tax on the wealthiest 5% is proposed as a solidarity measure to address pandemic-related economic disparities.

THE IRONIC FAILURE OF MERITOCRACY

Meritocracy, initially conceived as a system where advancement is based on individual accomplishment rather than birth, has evolved into a self-perpetuating cycle of elite advantage. While intended to break down caste systems, it has inadvertently created new ones. The elite, having succeeded through this system, became exceptionally skilled at cultivating their children's success, primarily through education. This intense investment means that today's high achievers are often the offspring of yesterday's elite, effectively rigging the system against broader opportunity.

DUAL TRENDS OF INEQUALITY IN THE US

The United States exhibits a unique form of inequality characterized by two simultaneous trends: decreasing poverty and rising wealth concentration at the very top. While poverty rates have fallen significantly since 1960, the share of national income captured by the richest 1% has doubled. This upward shift means inequality is now more pronounced among the affluent, with a widening gap between the merely rich and the super-rich, creating a starker economic divide than in many other developed nations.

THE RISE OF THE WORKING RICH AND THE TIME DIVIDE

Contrary to the idea of a stagnant leisure class, the modern wealthy are often characterized as the 'working rich,' dedicating significantly more hours to their labor than in previous decades. Between 1940 and 2010, the top 1% added considerable hours to their work week, while the bottom 60% saw a decrease. This shift, where labor, not just capital, drives extreme wealth, contrasts with older economic models and suggests that the source of elite income is increasingly tied to intense professional effort, not passive investment alone.

THE EROSION OF MIDDLE-CLASS PROSPECTS

The middle class has experienced a significant decline in intergenerational economic mobility, meaning children are less likely to become richer than their parents compared to previous generations. This demographic shift is particularly acute for those in the middle percentiles of the income distribution. Furthermore, life has become increasingly stratified, with the cost of goods and services essential to an upper-middle-class lifestyle skyrocketing, creating a cultural and social divide that marginalizes the middle class.

DEATHS OF DESPAIR AND THE PSYCHOLOGICAL TOLL

The structural disadvantages and the re-characterization of economic exclusion as individual failure have profound psychological consequences, leading to 'deaths of despair'—increases in mortality due to suicide, drug overdose, and chronic diseases linked to stress and self-harm. While material consumption has improved for many, with access to better consumer goods, this cannot compensate for the social and psychological damage caused by systemic exclusion, the feeling of being left behind, and the moral insult of being told one's struggles are personal failings.

THE SOCIAL FABRIC AND THE CALL FOR SOLIDARITY

The growing stratification impacts social norms and family structures, with elites adopting conservative domestic practices to support their children's competitive upbringing, while non-elite families grapple with the breakdown of traditional structures partly due to economic pressures on men's earning potential. In response to the COVID-19 pandemic exacerbating these divides, a one-time wealth tax on the wealthiest 5% is proposed. This aims to foster social solidarity by asking those who have benefited most from rising inequality to contribute to shared national recovery efforts, acknowledging that even among the wealthy, collective sacrifice is necessary during crises.

Mentioned in This Episode

●Products

●Companies

●Organizations

●Books

●Concepts

●People Referenced

Common Questions

A meritocracy is a system where individuals advance based on their accomplishments rather than factors like social class or race. While seemingly fair, Markovits argues it has evolved into a system where existing elites excessively train their children, creating an insurmountable barrier to opportunity for others, thus becoming an obstacle rather than a facilitator of equality.

Topics

Mindset & Self-Improvement Economics & Markets Society & Philosophy Social Mobility Wealth Tax Wealth Inequality Political Psychology Elite Culture Economic Justice

Mentioned in this video

Organizations

New York Times

Publication where Daniel Markovits wrote an op-ed proposing a one-time wealth tax in response to the COVID-19 pandemic.

Companies

Safeway

Mentioned as a supermarket that used to be common, contrasting with current bifurcated shopping options like Whole Foods and Walmart.

Taco Bell

A fast-food chain used alongside The French Laundry to illustrate the vast gap in consumption and quality between the rich and others.

French Laundry

A high-end restaurant used alongside Taco Bell to illustrate the vast gap in consumption and quality between the rich and others.

Walmart

Mentioned as an example of a low-cost supermarket, contrasting with high-end options like Whole Foods and illustrating consumption divides.

People

Daniel Markovits

Professor of Law at Yale and author of 'The Meritocracy Trap', the guest on the podcast.

Mark Zuckerberg

Used as an example of a 'self-made' wealthy individual who works long hours, embodying the meritocratic ideal but also contributing to its consolidation of elite advantage.

Angus Deaton

Cited for his demographic work on rising mortality and falling life expectancy among middle-class Americans.

Koch brothers

Mentioned as an example of individuals whose wealth is inherited, contrasting with 'self-made' fortunes.

Sam Harris

Host of the Making Sense podcast, discussing wealth inequality and meritocracy.

Bernie Sanders

Mentioned along with Elizabeth Warren for their proposals for ongoing wealth taxes, contrasted with Markovits' one-time wealth tax proposal.

Thomas Piketty

Author whose thesis on capital gains driving inequality is contrasted with Markovits' focus on labor income and working elites.

Elizabeth Warren

Mentioned along with Bernie Sanders for their proposals for ongoing wealth taxes, contrasted with Markovits' one-time wealth tax proposal.

Locations

India

Used as a comparative country for inequality, suggesting the US has inequality more akin to India than France.

France

Used as a comparative country for inequality, suggesting the US has inequality more akin to India than France.

Concepts

Self-made

The idea that individuals have earned their advantages through hard work, challenged by Markovits as a myth that masks systemic advantages and contributes to inequality.

whole foods

Mentioned as an example of a high-end supermarket, illustrating the stratification of consumption practices along income divides.

Working Rich

Markovits' term for the wealthy who increasingly derive their income from labor rather than capital, working longer hours than in previous generations.

Piketty's R > g

Refers to Thomas Piketty's thesis that the rate of return on capital (r) historically exceeds the rate of economic growth (g), driving wealth inequality.

Labor

Markovits argues that income from labor, particularly highly skilled labor, has become the primary driver of income for the top 1%, challenging traditional views.

Deaths of Despair

Markovits links these to the structural exclusion and moral insult of meritocracy, contributing to rising mortality rates (overdose, suicide, heart disease) in the middle class.

The American Elite

Markovits argues that the elite, who have benefited from meritocracy, are now deeply invested in maintaining the system and are resistant to redistribution.

Books

The Meritocracy Trap

Markovits' book which argues that the pursuit of meritocracy has become an obstacle to opportunity and fuels inequality.

Products

Chrysler K-car

Mentioned as an example of a poor-quality car from the 1980s, used to highlight the improvement in consumer goods over time.

Toyota Corolla

Used as an example of how familiar goods have become significantly better over time, even for non-luxury items.