Spreading the Wealth

A recent article in the Atlantic warns of the ‘Birth of a New American Aristocracy’.  The author defines a new 9.9 percent group, just below the formerly villainized 1 or 0.1 %ers, as the more dangerous, soon-to-be-entrenched aristocracy.  Riding just under the radar, this group has privileges that they glibly pass on to their progeny without realizing the implicit unfairness.  The so-called meritocracy of our society is a sham when examined closely, as merit can to a great extent be bought or ensured by the relative advantages of birth, neighborhood, school system, marriage, race and other factors outside the reach of human striving.

The article is well written and thought provoking.  However, it offers little in the way of antidotes to the poison of an entrenched aristocracy.  It seems to suggest that the best way to avoid a long-term disaster of radical income inequality and associated class resentment is to appeal to the individual consciences of the 9.9 percenters and hope that they will in some as-yet-to-be-defined fashion relinquish some of their many advantages. 

This is seriously naïve.  Who gives up their good fortune willingly?  What father will not ask a friend to give an interview to his daughter?  What mother will not seek out the best possible education for her son?  What aspiring professional will not seek out other aspiring professionals as life partners?  These are not criminal acts or even ethical lapses.  They are as natural as breathing and they will only be surrendered by a tiny minority of the most idealistic who have the strength of their convictions.

I advocate another means to achieve some measure of egalitarianism – spreading the wealth.  The number of capable, well-educated young people continues to grow ever higher.  In 1940 only 3.5% of the population had college degrees. Today over 35% do.  Any elite college can tell you that they receive almost identically impressive applications from many times the number of students they can enroll.  The jobs of the 9.9%ers – management consulting, physicians, law firm partners, accounting firm partners, financial firm partners, high tech executives, etc. – are a form of lottery that bestow high degrees of wealth on only a small portion of the population that could effectively occupy those positions.

The problem with today’s job and income marketplace is not that a small number of candidates achieve the ‘merit’ necessary to be successful by entrenched privileges, but rather that the highly compensated labor marketplace is too small and getting smaller!  Can anyone argue with a straight face that a law school graduate from Yale is worth the $250k/yr they are paid as an associate?  Or more importantly, that they deserve the ten-fold ratio of pay over the law school applicant who missed out on the Yale law school lottery and had to settle for a lesser school? 

There are complex and intricate reasons why our marketplace has evolved into a rich-get-richer and poor-get-poorer scenario.  But with the rapidly approaching end-of-life of so many job functions and the ever-increasing expectations of a burgeoning educated class, we must begin to analyze this trend and work to unravel the Gordian knot of wage disparity and job cartels before chaos and revolution descend upon us. 

Perhaps the first step is to encourage a much smaller work week – say 20 or 30 hours – for highly paid professionals.  This would have the effect of expanding the job market in those areas.  Of course the free market would not bend in that direction without some significant encouragement.  That must come in the form of very high marginal taxes on the upper incomes.  Would this be such a hardship?  The law firm partner who formerly made $500k and now makes $250k/yr and works 20 hours a week might just grow to appreciate this new quality of life over the rat race of his formerly lucrative but drone-like professional career.

It may seem the height of naivete to suggest such a radical change in our job market, but what other meaningful choice is there?  If, as many predict, and we are already observing, the number of well—paying jobs is decreasing, then the only real solution is to share these jobs and the associated wealth.  And the only way to do that is by some fairly potent social engineering in the form of taxation and other incentives.