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.”

Reckoning With Competitive Capitalism [2]

President Kennedy address at Yale

 “President John F. Kennedy explained to Yale’s graduating class of 1962 that ‘the great enemy of the truth is very often not the lie — deliberate, contrived, and dishonest —  but the myth — persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears…. We enjoy the comfort of opinion without the discomfort of thought.’”

The Founding Myth, by Andrew L. Seidel (2019)

Adverse outcomes often aren’t the result of dishonesty, fraud, or conspiracy; it’s just that things don’t go as projected. The trick is to notice and make adjustments, but often we don’t, especially when the expected outcome has become a cultural myth. In that case, belief makes us blind, conviction replaces vigilance, and contrary data avoids analysis, until one day we find ourselves living in a distressing new normal and wonder how we got here. Often, it takes a crisis to wake us up.

We’ve seen this dynamic before when economic policy morphed into socio-economic ideology. Communism began with an intent to champion the working man but became brutal and imperialistic; the Cold War was “normal” until one day the wall came crashing down and the Soviet Union and its progeny were thrown at the mercy of  capitalism, their ideological rival. The American Industrial Revolution begun by the Robber Barons roared through the 20’s but then crashed into the Great Depression; the era of legal monopolies, unregulated stock speculation, and vast economic inequality was recast into the social programs of the New Deal.

And now we’re seeing the cycle again:  post-Cold War free market capitalism blazed through the past three decades, morphed into its current hyper-competitive version, but now its unfulfilled promise of universal prosperity is becoming too obvious to ignore and there are signs its day of reckoning may not be far off, if not already at hand. That, at least, is the message of a Time Magazine cover story on economic reckoning that ran last month. It begins this way:

“History is the story of conditions that long seem reasonable until they begin to seem ridiculous. So it is with America’s present manic hyper-capitalism.

 “Until recently, it seemed normal that a technological revolution that began with promises of leveled playing fields had culminated in an age of platform monopolies. Normal that businesspeople should try to make as much money as possible by paying as little as possible in taxes and wages, then donate a fraction of the spoils to PR-friendly social causes. Normal that economic security for most Americans was becoming a relic of the past.,,. Normal that bankers could shatter the world economy with their speculating, and that they would be among the few to be made whole after the crisis.”

How the Elites Lost Their Grip: in 2019, America’s 1% behaved badly and helped bring about a reckoning with capitalism, Time Magazine , Dec. 2-9, 2019.[1]

These aspects of “normal” weren’t intended, but they are how things turned out. Along the way, various individuals and movements were vigilant enough to have seen the trends. but their attempts at dissent fell on deaf ears on both sides of the political aisle.[2]

“For years, there have been voices trying to denormalize this state. There were protests in Seattle in 1999, there was Occupy in 2011, there was the DSA [Democratic Socialists of America], there was the World Social Forum to rival the World Economic Forum, there was, eternally, Bernie Sanders saying the exact stuff he is still saying today, there were civic groups trying to organize workers and poor communities, there were outcasts in Silicon Valley warning that Mark Zuckerberg wasn’t really about human connection. But America was in the grips of the ideological consensus… Hyper-capitalism was the intellectual stadium in which the country played.”

Thus hyper-competitive, hyper-privatized, hyper-monetized capitalism became the cultural standard of the American Way as politicians and the public transferred their faith in Post-WWII neoliberal capitalism, which did indeed “float all boats,”  to the new Post-Cold War capitalism, which was supposed to have the same effect but didn’t. Instead of universal prosperity and opportunity, the new capitalism relegated the Public to the left behind, economic precarity and job insecurity took over the workplace, healthcare and other employment benefits were left up to consumers, upward mobility through higher education became the lifelong debtor of a newly nationalized student loan industry, incomprehensible wealth was increasingly concentrated in an incomprehensibly tiny percentage of capitalists, a new meritocratic social class arose… we’ve heard commentators recite the same litany of outcomes time and again in these blog posts.

But the days of complacency are over, the Time article declares:  the year 2019 brought us a wakeup call in the form of the one percenters “behaving badly” in such things as Amazon’s failed expansion in NYC, the college admissions scandal, and Facebook’s $5 Billion FTC fine.

“In response to these scandals and outrages, many in the business world declared themselves newly interested in reform. The most prominent and heralded instance this past year was a statement by the Business Roundtable, an umbrella organization whose members are the chief executives of many of America’s largest companies. For decades, the roundtable has clung to a particular interpretation of the purpose of a business—that it is solely to make money for shareholders. With its new statement, issued in August, the roundtable updated its view.”[3]

“It was inspiring, limited stuff,” the Time article says of these developments, but “what it really revealed was how hard it will be for the old-guard capitalists to change at all.” As JFK told the Yale Class of ’62, allegiance to cultural myths dies hard and, all evidence to the contrary, free market capitalism’s ideological lynchpin remains in place:  what Reaganomics called “trickle down” — the belief that free market capitalism is win-win, that’s what’s good for the elites will be good for the commons.[4]

“If a single cultural idea has upheld the disproportionate power of [capitalism’s winners], it has been the idea of the “win-win.” They could get rich and then “give back” to you: win-win. They could run a fund that made them sizable returns and offered you social returns too: win-win. They could sell sugary drinks to children in schools and work on public-private partnerships to improve children’s health: win-win. They could build cutthroat technology monopolies and get credit for serving to connect humanity and foster community: win-win.

“As this seductive idea fizzles out, it raises the possibility that this age of capital, in which money was the ultimate organizing principle of American life, could actually end.

“The choice facing Americans is whether we want to be a society organized around money’s thirsts, a playground for the whims of billionaires, or whether we wish to be a democracy. The second Gilded Age will end at some point. The question is what comes next.”

Just how that question will be answered remains to be seen.

[1] All quotes in this post are all taken from this article.

[2] Left and right are polarized on various social issues, but beginning with the Clinton administration have been united in their economic free market ideology.

[3] We’ve previously looked at the Business Roundtable’s “Statement of the Purpose of a Corporation” that promotes “an economy that serves all Americans.”

[4] See “Winners Take All” – a combative short video thank debunks the trickle down theory.