Horatio Alger is Dead, America Has a New Class Structure, and it’s Not Your Fault

horatio alger

January 23, 2020

The member of the month at the gym where I work out is a guy who looks like he’s in his early 20’s. One of the “get to know me” questions asks “Who motivates you the most?” His answer: “My dad, who taught me that hard work can give you anything, as long as you can dedicate time and effort.”

The answer is predictably, utterly American. “Hard work can give you anything” — yes of course, everybody knows that. Parents tell it to their kids, and the kids believe it. America is the Land of Opportunity; it gives you every chance for success, and now it’s up to you. “Anything you want” is yours for the taking – and if you don’t take it, that’s your problem, not America’s.

Except it’s not true, and we know that, too. We know that you can work really, really hard and dedicate lots and lots of time and effort (and money), and still not get what you want.

Why do we keep saying and believing something that isn’t true? Why don’t we admit that things don’t actually work that way? Because that would be un-American. So instead we elevate the boast: America doesn’t just offer opportunity, it gives everybody equal opportunity — like Teddy Roosevelt said:

“I know perfectly well that men in a race run at unequal rates of speed.
I don’t want the prize given to the man who is not fast enough to win it on his merits, but I want them to start fair.”

Equal opportunity means everybody starts together. No, not everybody wins, but still… no matter who you are or where you’re from, everybody has the same odds. None of that landed gentry/inherited wealth class system here.

Except that’s not true either, and we know that, too.

But we love the equal opportunity myth. We love the feeling of personal power – agency, self-efficacy – it gives us. It’s been grooved into our American neural circuits since the beginning:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the .pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”[1]

We’re all equals here in America, divinely ordained to pursue the good life. That’s our creed, and we – “the governed” — declare that we believe it.

Even if it’s not true.

Equal opportunity is a foundational American cultural belief. Cultural myths are sacred – they’re afforded a special status that makes them off limits to examination. And national Founding Myths get the highest hands-off status there is.

Never mind that the Sacred doesn’t seem to mind being doubted – it’s the people who believe something is sacred you have to watch out for. And never mind that history and hindsight have a way of eventually outing cultural myths – exposing them as belief systems, not absolute truths. But it’s too late by the time history has its say: the fraud is perpetrated in the meantime, and attempts to expose it are shunned and punished as disloyal, unpatriotic, treasonous.

If we can’t out the myth, what do we do instead? We blame ourselves. If we don’t get “anything you want,” then we confess that we didn’t work hard enough, didn’t “dedicate the time and effort,” or maybe we did all that but in the wrong way or at the wrong time. Guilt, shame, embarrassment, frustration, depression… we take them all on as personal failings, in the name of preserving the myth.

You may have seen the Indeed commercial. (Go ahead, click it – it’s only 30 seconds.)

Indeed advert

It brilliantly taps the emotional power of the equal opportunity myth.

“With no choice but to move back home after college, they thought he’d be a little more motivated to find a job.”

The kid is glued to his phone, and it’s driving his parents crazy. He’s obviously a slacker, a freeloader. Household tensions mount. The phone dings at the dinner table. Dad snatches it up.

“Turns out, they were right.”

He’s using it to find a job! Faith and family harmony restored! That’s our hard-working boy!

Heartwarming, but still untrue.

But What About the Strong Job Numbers?

Yes, unemployment is low. But consider this analysis of those numbers[2], just out this month:

“Each month, the Bureau of Labor Statistics releases its Employment Situation report (better known as the ‘jobs report’) to outline the latest state of the nation’s economy. And with it, of late, have been plenty of positive headlines—with unemployment hovering around 3.5%, a decade of job growth, and recent upticks in wages, the report’s numbers have mostly been good news.

“But those numbers don’t tell the whole story. Are these jobs any good? How much do they pay? Do workers make enough to live on?

“Here, the story is less rosy.

“In a recent analysis, we found that 53 million workers ages 18 to 64—or 44% of all workers—earn barely enough to live on. Their median earnings are $10.22 per hour, and about $18,000 per year. These low-wage workers are concentrated in a relatively small number of occupations, including retail sales, cooks, food and beverage servers, janitors and housekeepers, personal care and service workers (such as child care workers and patient care assistants), and various administrative positions.

“Just how concerning are these figures? Some will say that not all low-wage workers are in dire economic straits or reliant on their earnings to support themselves, and that’s true. But as the following data points show, it would be a mistake to assume that most low-wage workers are young people just getting started, or students, or secondary earners, or otherwise financially secure:

      • Two-thirds (64%) of low-wage workers are in their prime working years of 25 to 54.
      • More than half (57%) work full-time year-round, the customary schedule for employment intended to provide financial security.
      • About half (51%) are primary earners or contribute substantially to family living expenses.
      • Thirty-seven percent have children. Of this group, 23% live below the federal poverty line.
      • Less than half (45%) of low-wage workers ages 18 to 24 are in school or already have a college degree.

“These statistics tell an important story: Millions of hardworking American adults struggle to eke out a living and support their families on very low wages.”

When the kid got a text at the dinner table, it was about one of these jobs. Mom and Dad better get used to the idea that he’ll be around for awhile. Even if he gets that job, it won’t offer benefits, could end at any moment, and won’t pay him enough to be self-sustaining. That’s not how Mom and Dad were raised or how things went for them, but that’s how the economy works nowadays.

Economics Begets Social Structure

The even bigger issue is that the equal opportunity myth has become a social norm: uber-competitive free market economics controls the collective American mindset about how adult life works, to the point that it’s become a nationalist doctrine.

The Chicago School of Economics – the Vatican of free marketism — believed so ardently in its on doctrines that its instructional approach took on the dynamics of fundamentalist indoctrination:

“Frank Knight, one of the founders of Chicago School economics, thought professors should ‘inculcate’ in their students the belief that economic belief is ‘a sacred feature of the system,’ not a debatable hypothesis.’”[3]

Free market ideology preaches that capitalism promotes both economic and social opportunity. It has had the past four decades to prove that claim, and has failed as spectacularly as Soviet-style communism failed to benefit the workers it was supposed to redeem. Instead, free market ideology has given America what it wasn’t ever supposed to have: a stratified socio-economic class system that skews rewards to the top 10% and leaves the rest in the grip of the dismal statistics listed above.

But we don’t see that – or if we do, we don’t say anything about it, we just keep reciting the “trickle down” mantra. Member of the month and his Dad and the parents in the Indeed commercial and most Americans still believe the myth. Ironically the ones who see through it are the top 10% members who got in before they closed the gates. Meanwhile, the lower 90% — the decimated middle class, the new poor, the hard-working wage-earners – keep blaming themselves.

Even though it’s not their fault. If the kid in the commercial can’t find a job to support himself, it’s not his fault.

“I can’t pay my bills, afford a house, a car, a family. I can’t afford healthcare, I have no savings. Retirement is a joke. I don’t know how I’ll ever pay off my student loans. I live paycheck to paycheck. I’m poor. But it’s not my fault.”

Try saying that to Dad at the dinner table.

But unlike “anything you want,” “it’s not your fault” is true: current economic policy and its companion social norms do not deliver equal opportunity. Horatio Alger is dead, but the equal opportunity myth lives on life support as we teach it to our children and elect politicians who perpetuate it, while all of us ignore the data.

Horatio Alger is Dead

There’s no more enduring version of the upward mobility ideal than the rags-to-riches story codified into the American Dream by Horatio Alger, Jr. during the Gilded Age of Andrew Mellon, John D. Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, and the rest of the 19th Century Robber Barons. If they can do it, so can the rest of us, given enough vision, determination, hard work, and moral virtue — that was Alger’s message. Except it never worked that way, especially for the Robber Barons – opportunists aided by collusion and chronyism carried out in the absence of the antitrust and securities laws that would be enacted under the New Deal after history revealed the fraud.[4]

But never mind that — according to Roughrider Teddy and politicians like him, government’s job is to guarantee equal opportunity for all, then get out of the way and let the race to riches begin. Thanks to our devotion to that philosophy, a fair start has become is a thing of the past — so says Richard V. Reeves in his book Dream Hoarders.

Reeves begins by confessing that his disenchantment over the demise of the Horatio Alger ideal will no doubt seem disingenuous because he didn’t grow up American and is now a member of the economic elite himself:

“As a Brookings senior fellow and a resident of an affluent neighborhood in Montgomery County, Maryland, just outside of DC, I am, after all, writing about my own class.

“I am British by birth, but I have lived in the United States since 2012 and became a citizen in late 2016. (Also, I was born on the Fourth of July.) There are lots of reasons I have made America my home. But one of them is the American ideal of opportunity. I always hated the walls created by social class distinctions in the United Kingdom. The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top.

“My new country was founded on anti-hereditary principles. But while the inheritance of titles or positions remains forbidden, the persistence of class status across generations in the United States is very strong. Too strong, in fact, for a society that prides itself on social mobility.”

Reeves also wrote a Brookings Institute monograph called Saving Horatio Alger: Equality, Opportunity, and the American Dream, in which he said the following:

“Vivid stories of those who overcome the obstacles of poverty to achieve success are all the more impressive because they are so much the exceptions to the rule. Contrary to the Horatio Alger myth, social mobility rates in the United States are lower than in most of Europe. There are forces at work in America now — forces related not just to income and wealth but also to family structure and education – that put the country at risk of creating an ossified, self-perpetuating class structure, with disastrous implications for opportunity and, by extension, for the very idea of America.

“The moral claim that each individual has the right to succeed is implicit in our ‘creed,’ the Declaration of Independence, when it proclaims ‘All men are created equal.’

“There is a simple formula here — equality plus independence adds up to the promise of upward mobility — which creates an appealing image: the nation’s social, political, and economic landscape as a vast, level playing field upon which all individuals can exercise their freedom to succeed.

“Many countries support the idea of meritocracy, but only in America is equality of opportunity a virtual national religion, reconciling individual liberty — the freedom to get ahead and “make something of yourself” — with societal equality. It is a philosophy of egalitarian individualism. The measure of American equality is not the income gap between the poor and the rich, but the chance to trade places.

“The problem is not that the United States is failing to live up to European egalitarian principles, which use income as a measure of equality. It is that America is failing to live up to American egalitarian principles, measured by the promise of equal opportunity for all, the idea that every child born into poverty can rise to the top.”

There’s a lot of data to back up what Reeves is saying. See, e.g., this study from Stanford, which included these findings:

“Parents often expect that their kids will have a good shot at making more money than they ever did…. But young people entering the workforce today are far less likely to earn more than their parents when compared to children born two generations before them, according to a new study by Stanford researchers.”

The New American Meritocracy

Along with Richard Reeves, philosopher Matthew Stewart and entrepreneur Steven Brill cite the same economic and related social data to support their conclusion that the new meritocrat socio-economic class has barred the way for the rest of us. I’ll let Matthew Stewart speak for the others[5]:

“I’ve joined a new aristocracy now, even if we still call ourselves meritocratic winners. To be sure, there is a lot to admire about my new group, which I’ll call—for reasons you’ll soon see—the 9.9 percent. We’ve dropped the old dress codes, put our faith in facts, and are (somewhat) more varied in skin tone and ethnicity. People like me, who have waning memories of life in an earlier ruling caste, are the exception, not the rule.

“By any sociological or financial measure, it’s good to be us. It’s even better to be our kids. In our health, family life, friendship networks, and level of education, not to mention money, we are crushing the competition below.

“The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children. We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy. Our delusions of merit now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims of our success are just the people excluded from the club. But history shows quite clearly that, in the kind of game we’re playing, everybody loses badly in the end.

“So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We’re a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals—the kind of people you might invite to dinner. In fact, we’re so self-effacing, we deny our own existence. We keep insisting that we’re ‘middle class.’

“One of the hazards of life in the 9.9 percent is that our necks get stuck in the upward position. We gaze upon the 0.1 percent with a mixture of awe, envy, and eagerness to obey. As a consequence, we are missing the other big story of our time. We have left the 90 percent in the dust—and we’ve been quietly tossing down roadblocks behind us to make sure that they never catch up.”

Two Stories, One Man

In a remarkable display of self-awareness and historical-cultural insight, Stanford professor David Labaree admits that his own upward mobility story can be told two ways — one that illustrates the myth and one that doesn’t, depending on your point of view.[6]

“Occupants of the American meritocracy are accustomed to telling stirring stories about their lives. The standard one is a comforting tale about grit in the face of adversity – overcoming obstacles, honing skills, working hard – which then inevitably affords entry to the Promised Land. Once you have established yourself in the upper reaches of the occupational pyramid, this story of virtue rewarded rolls easily off the tongue. It makes you feel good (I got what I deserved) and it reassures others (the system really works).

“But you can also tell a different story, which is more about luck than pluck, and whose driving forces are less your own skill and motivation, and more the happy circumstances you emerged from and the accommodating structure you traversed. As an example, here I’ll tell my own story about my career negotiating the hierarchy in the highly stratified system of higher education in the United States. I ended up in a cushy job as a professor at Stanford University.

“Is there a moral to be drawn from these two stories of life in the meritocracy? The most obvious one is that this life is not fair. The fix is in. Children of parents who have already succeeded in the meritocracy have a big advantage over other children whose parents have not. They know how the game is played, and they have the cultural capital, the connections and the money to increase their children’s chances for success in this game.

“In fact, the only thing that’s less fair than the meritocracy is the system it displaced, in which people’s futures were determined strictly by the lottery of birth. Lords begat lords, and peasants begat peasants. In contrast, the meritocracy is sufficiently open that some children of the lower classes can prove themselves in school and win a place higher up the scale.

“The probability of doing so is markedly lower than the chances of success enjoyed by the offspring of the credentialed elite, but the possibility of upward mobility is nonetheless real. And this possibility is part of what motivates privileged parents to work so frantically to pull every string and milk every opportunity for their children.”

Pause for a moment and wonder, as I did, why would the new meritocrats write books and articles like these? Is it a case of Thriver (Survivor) Guilt? Maybe, but I think it’s because they’re dismayed that their success signals the end of the American equal opportunity ideology. You don’t trample on something sacred. They didn’t mean to. They’re sorry. But now that they have, maybe it wasn’t so sacred after all.

The new socio-economic class system was never supposed to happen in America. We weren’t supposed to be like the Old World our founders left behind. But now we are, although most of us don’t seem to know it, and only a few brave souls will admit it. Meanwhile the Horatio Alger mansions are all sold out, and the gate to the community is locked and guarded. That kind of thing just doesn’t happen in America.

Until it did.

[1] The Declaration of Independence.

[2] Low Employment Isn’t Worth Much if the Jobs Barely Pay, The Brookings Institute, Jan. 8, 2020.

[3] The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein (2017).

[4] The best source I’ve found for the American history we never learned is Americana: A 400-Year History of American Capitalism, Bhu Srinivasan (2017).

[5] Matthew Stewart is the author of numerous books and a recent article for The Atlantic called The 9.9 Percent is the New American Meritocracy. Steven Brill is the founder of The American Lawyer and Court TV, and is the author of the book Tailspin: The People and Forces Behind America’s Fifty-Year Fall–and Those Fighting to Reverse It and also the writer of a Time Magazine feature called How Baby Boomers Broke America. The quoted text is from Stewart’s Atlantic article.

[6] Pluck Versus Luck, Aeon Magazine (Dec. 4. 2019) –“Meritocracy emphasises the power of the individual to overcome obstacles, but the real story is quite a different one.”

The Zero-Sum Economy [2]  Meet the Winners

The House Always Wins

We met the zero-sum economy losers last time. Let’s meet the winners this week.

The winners are the best of the best and have the best of the best in cultural, logistical, financial, and other kinds of support. They were tapped for economic competition before preschool. They’ve been groomed for it all their lives. But they pay a ridiculous price — the stress of training and competing is unreal. And when it’s time for college and beyond, only a handful stand on the podium. No wonder their ascent has been tainted with scandal

They’re the children of the new Meritocrats — the economic top 1%. They complete in the X Games of economic competition, and it’s killing them. That description is from Yale law professor Daniel Markovits — a Meritocrat himself, and the author of The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite (just out, on Sept. 10, 2019).  Prof. Markovits previewed his book in a recent article that begins as follows:

“Two decades ago, when I started writing about economic inequality, meritocracy seemed more likely a cure than a cause. Meritocracy’s early advocates championed social mobility. In the 1960s, for instance, Yale President Kingman Brewster brought meritocratic admissions to the university with the express aim of breaking a hereditary elite. Alumni had long believed that their sons had a birthright to follow them to Yale; now prospective students would gain admission based on achievement rather than breeding. Meritocracy—for a time—replaced complacent insiders with talented and hardworking outsiders.

“Today’s meritocrats still claim to get ahead through talent and effort, using means open to anyone. In practice, however, meritocracy now excludes everyone outside of a narrow elite. Harvard, Princeton, Stanford, and Yale collectively enroll more students from households in the top 1 percent of the income distribution than from households in the bottom 60 percent. Legacy preferences, nepotism, and outright fraud continue to give rich applicants corrupt advantages. But the dominant causes of this skew toward wealth can be traced to meritocracy. On average, children whose parents make more than $200,000 a year score about 250 points higher on the SAT than children whose parents make $40,000 to $60,000. Only about one in 200 children from the poorest third of households achieves SAT scores at Yale’s median. Meanwhile, the top banks and law firms, along with other high-paying employers, recruit almost exclusively from a few elite colleges.

“Hardworking outsiders no longer enjoy genuine opportunity. According to one study, only one out of every 100 children born into the poorest fifth of households, and fewer than one out of every 50 children born into the middle fifth, will join the top 5 percent. Absolute economic mobility is also declining—the odds that a middle-class child will outearn his parents have fallen by more than half since mid-century—and the drop is greater among the middle class than among the poor. Meritocracy frames this exclusion as a failure to measure up, adding a moral insult to economic injury.

“Public anger over economic inequality frequently targets meritocratic institutions. Nearly three-fifths of Republicans believe that colleges and universities are bad for America, according to the Pew Research Center. The intense and widespread fury generated by the college-admissions scandal early this year tapped into a deep and broad well of resentment. This anger is warranted but also distorting. Outrage at nepotism and other disgraceful forms of elite advantage-taking implicitly valorizes meritocratic ideals. Yet meritocracy itself is the bigger problem, and it is crippling the American dream. Meritocracy has created a competition that, even when everyone plays by the rules, only the rich can win.

“But what, exactly, have the rich won? Even meritocracy’s beneficiaries now suffer on account of its demands. It ensnares the rich just as surely as it excludes the rest, as those who manage to claw their way to the top must work with crushing intensity, ruthlessly exploiting their expensive education in order to extract a return.

“No one should weep for the wealthy. But the harms that meritocracy imposes on them are both real and important. Diagnosing how meritocracy hurts elites kindles hope for a cure. We are accustomed to thinking that reducing inequality requires burdening the rich. But because meritocratic inequality does not in fact serve anyone well, escaping meritocracy’s trap would benefit virtually everyone.”

How Life Became an Endless, Terrible Competition:  Meritocracy prizes achievement above all else, making everyone—even the rich—miserable. Maybe there’s a way out (The Atlantic, Sept. 2019).

The rest of the article details the lives of the winners, and is well worth reading. (For a long and thoughtful critique of the book, see this NewYorker article.)

Next time, we’ll look further into “escaping the meritocracy trap.”

Ambition: Promised Land or Wasteland?

A heap of broken images, where the sun beats,
And the dead tree gives no shelter, the cricket no relief,
And the dry stone no sound of water. Only
There is shadow under this red rock,
(Come in under the shadow of this red rock),
And I will show you something different from either
Your shadow at morning striding behind you
Or your shadow at evening rising to meet you;
I will show you fear in a handful of dust.”

T.S. Eliot, The Wasteland

We’re exploring how inspiration, motivation, and ambition can help create meaningful work. We found that inspiration is essential, but has a dark side that includes mania and delusional risk taking, and that motivation is a ManagementSpeak relic and a brain stressor.  As for ambition, much current commentary focuses on my kids’ generation, but there’s plenty here for the rest of us if we view it in the larger economic context.

Here’s a quick summary:  Our parents came of age in the glory years of The Job and a Fair Income for the Middle Class. We Baby Boomers were born into that economic model, customized with our own iconoclastic and utopian social visions. The model weakened in the 70’s and 80’s, but we were too busy with kids and careers to notice. The Gen Xers got in early enough to ride the upward mobility escalator, but now that the Millennials are  young adults the model is bankrupt, leaving them to face a whole new gig — as in “gig economy.”

All that happened while most of us didn’t know it. Along with our policymakers, we were and still are stuck in the cognitive and cultural bias of the jobs heyday. Back in the day, we showered the Millennials with self-esteem-building, be-all-you-can-be positive thinking, and told them to follow their dreams. But when they came of age the economy wasn’t set up to support them. Maybe that’s why some parents habitually hedged their advice, urging the kids to have a Plan B and for crying out loud quit with all the cold filtering and get a real job.

(For a remarkable look at the current state of economic opportunity, see “I’m a Millionaire Who Creates Zero Jobs. Why Do I Pay Less Tax Than You?” by Morris Pearl, a career Wall Street One Percenter who is now chairman of the Patriotic Millionaires.)

No wonder people write books like Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitled–and More Miserable Than Ever Before , by psychology professor Jean M. Twenge. This is from the flyleaf:

Generation Me“In this provocative and newly revised book, headline-making psychologist Dr. Jean Twenge explores why the young people she calls “Generation Me” are tolerant, confident, open-minded, and ambitious but also disengaged, narcissistic, distrustful, and anxious.

“Born in the ’80s, and ’90s… the children of the Baby Boomers are … feeling the effects of the recession and the changing job market.

“Her often humorous, eyebrow-raising stories about real people vividly bring to life the hopes, disappointments, and challenges of Generation Me.  Engaging, controversial, prescriptive, and funny, Generation Me gives Boomers and GenX’ers new and fascinating insights into their offspring, and helps those in their teens, twenties, and thirties find their road to happiness.”

I was okay with the blurb until it got to “happiness.” I’m more in tune with the article we looked at last time — You Can Do It, Baby! Our Culture Is Rich With Esteem-Boosting Platitudes For Young Dreamers, But The Assurances Are Dishonest And Dangerous,” Aeon Magazine (July 17, 2015):

“Roman Krznaric, founding faculty member of The School of Life in London, says that .. we’ve seen ‘rising expectations among everybody for work that’s more than just a salary… You see this among people who are highly educated… and that helps explain why job dissatisfaction tends to rise over the past couple of decades, because people are asking … to use their talents or passions in their work.’

“The shift in expectation has resulted in tremendous anxiety over achieving these goals and, paradoxically, sheer delusion. Point out to parents or teens just how difficult it can be to achieve such a high-level career and you’ll likely be treated to a catalogue of all the people who bucked the odds. Not just the Oprahs or the Steve Jobses who achieved super-status but the friend of a friend who just bought a modern all-glass home overlooking San Francisco Bay with his signing bonus, or the daughter of a work colleague who was cast in a new TV show, or the neighbour’s son who got a scholarship to Harvard.

“If it’s possible for them, we want to believe that it’s possible for our children too. Besides, who wants to be the killjoy who has to remind the struggling math student that medicine likely isn’t an option? … Besides, technically it is possible. At what point do we abandon possible for probable, and encourage our children to do the same?

“‘This links to the cult of positive thinking,’ says Krznaric, ‘where we’re always wanting to feel up and good and send positive messages… and so we feel that we should only be sending good messages and positive messages to our children and to young people. That it’s somehow wrong or bad or inappropriate to tell them: actually, it isn’t possible.’”

Ambition says it’s possible. Current economics says it’s not. Now what? Back for more next week.