#205 with Daniel Markovits

I absolutely LOVED this episode. It covers one of the most pressing issues that, for me, loom as the one that may ultimately destroy America: the incipient American oligarchy.

My enjoyment was exponentially increased by the problem that I, as a resident of Silicon Valley, am increasingly concerned with: the myth of the meritocracy.

Here are some random observations during the course of this conversation that struck me as noteworthy:

The elite pay 15 times as much on pre-college education than the middle class. This creates an enormous obstacle to equality.

Poverty is falling, but we conversely have a growing gap between the merely rich and the super rich.

Most kids born in 1940 had an excellent chance of being richer than their parents. Most middle class kids born in 1980 have only a small chance of being richer than their parents. Only the 1% and those below poverty are likely to do better.

There is a moral insult to the erstwhile middle class that the reason you aren’t keeping up is because you aren’t good enough. So their life expectancy is actually decreasing... and it's happening overwhelmingly through their own self-harm: overeating, smoking, drugs and alcoholism.

I don’t understand why Daniel tries to make a distinction between the cost of living in San Francisco or New York versus--I don't know, say, Duluth--and pretend that some things are cheaper in San Francisco. Nothing is cheaper in San Francisco.

Daniel brings up a fascinating point that the elitist educational system helps train the meritocracy to invent things which only to further their socioeconomic class--open heart surgery for the super rich, and not a simple exercise device that the masses can consume. Or mortgage back derivatives for the upper 1% to invest in, and not a public financing device that might lift all boats.

Daniel points out the the tax break Princeton gets per student is $100k per student per year, whereas community college tax breaks is a tiny fraction of that.

Daniel suggests that Ivy League schools could double their enrollment and give opportunities to a wider spectrum of kids. However, my personal suspicion is that if Ivy League colleges doubled their enrollment tomorrow, the level of accepted applicants wouldn't drop by any noticeable level. My experience as the dad of a college freshman is that the extremely competitive level of kids on the waiting list were for all intents and purposes completely equal to those who made it in.

Daniel makes an interesting point that not all government services are so much less efficient in private industry. Consider, he says, the benefits to the average American household from paying $10,000 per year in taxes: they get police, fire, ambulance, roads, garbage, water, sewer, city planning, emergency care for indigenous, etc. etc. Now compare that to the cost of subscription to Comcast: $2000 per year, and they don’t even get a single TV show they like, plus crappy customer service.

I object to one flaw in this argument: the question isn’t how much some particular household pays into the tax roll, but rather how much is the total cost of government services per household. Even if they don't pay proportionately as much taxes per dollar earned, the wealthy do still pay more in taxes. They are subsidizing the rest of us by some amount. So maybe the true number is $20-$30k per houshold is what our government services cost. But it's still a valid arguement. As a businessman, I see ungodly tons of private money being flushed down drains every day.

Daniel thinks the lifelong rat race the super elite live might provide an incentive to change the system.

Ok, after that disconnected jumble of thoughts, here's my attempt at a Recap: The meritocracy system is working so well that it is very efficiently focusing wealth within the rich and super rich. If we don’t soon fix this, we will be soon be in a feudalistic society that will make 10th century China or Europe to look positively egalitarian in comparison. Even though we currently think nothing could be more egalitarian than a meritocracy.