Lately, most Americans, regardless of their political leanings, have been asking themselves some version of the same question: How did we get here? How did the world’s greatest democracy and economy become a land of crumbling roads, galloping income inequality, bitter polarization and dysfunctional government?
As I tried to find the answer over the past two years, I discovered a recurring irony. About five decades ago, the core values that make America great began to bring America down. The First Amendment became a tool for the wealthy to put a thumb on the scales of democracy. America’s rightly celebrated dedication to due process was used as an instrument to block government from enforcing job-safety rules, holding corporate criminals accountable and otherwise protecting the unprotected. Election reforms meant to enhance democracy wound up undercutting democracy. Ingenious financial and legal engineering turned our economy from an engine of long-term growth and shared prosperity into a casino with only a few big winners.These distinctly American ideas became the often unintended instruments for splitting the country into two classes: the protected and the unprotected. The protected overmatched, overran and paralyzed the government. The unprotected were left even further behind. And in many cases, the work was done by a generation of smart, hungry strivers who benefited from one of the most American values of all: meritocracy. (...)
I was one of those elite winners. In 1964, I was a bookworm growing up in Far Rockaway, a working-class section of Queens. One day, I read in a biography of John F. Kennedy that he had gone to something called a prep school. None of my teachers at Junior High School 198 had a clue what that meant, but I soon figured out that prep school was like college. You got to go to classes and live on a campus, only you got to go four years earlier, which seemed like a fine idea. It seemed even better when I discovered that some prep schools offered financial aid. I ended up at Deerfield Academy, in Western Massachusetts, where the headmaster, Frank Boyden, told my worried parents, who ran a perpetually struggling liquor store, that his financial-aid policy was that they should send him a check every year for whatever they could afford.
Three years later, in 1967, I found myself sitting in the headmaster’s office one day in the fall of my senior year with a man named R. Inslee Clark Jr., the dean of admissions at Yale. Clark looked over my record and asked me a bunch of questions, most of which were about where I had grown up and how I had ended up at Deerfield. Then he paused, looked me in the eye and asked if I really wanted to go to Yale – if it was my first choice. When I said yes, Clark’s reply was instant: “Then I can promise you that you are in. I will tell Mr. Boyden that you don’t have to apply anywhere else. Just kind of keep it to yourself.”
What I didn’t know then was that I was part of a revolution being led by Clark, whose nickname was Inky. I was about to become one of what would come to be known as Inky’s boys and, later, girls. We were part of a meritocracy infusion that flourished at Yale and other elite education institutions, law firms and investment banks in the mid-1960s and ’70s. It produced great progress in equalizing opportunity. But it had the unintended consequence of entrenching a new aristocracy of rich knowledge workers who were much smarter and more driven than the old-boy network of heirs born on third base–and much more able to enrich and protect the clients who could afford them. (...)
The Meritocracy’s ascent was about more than personal profit. As my generation of achievers graduated from elite universities and moved into the professional world, their personal successes often had serious societal consequences. They upended corporate America and Wall Street with inventions in law and finance that created an economy built on deals that moved assets around instead of building new ones. They created exotic, and risky, financial instruments, including derivatives and credit default swaps, that produced sugar highs of immediate profits but separated those taking the risk from those who would bear the consequences. They organized hedge funds that turned owning stock into a minute-by-minute bet rather than a long-term investment. They invented proxy fights, leveraged buyouts and stock buybacks that gave lawyers and bankers a bonanza of new fees and maximized short-term profits for increasingly unsentimental shareholders, but deadened incentives for the long-term growth of the rest of the economy.
Regulatory agencies were overwhelmed by battalions of lawyers who brilliantly weaponized the bedrock American value of due process so that, for example, an Occupational Safety and Health Administration rule protecting workers from a deadly chemical could be challenged and delayed for more than a decade and end up being hundreds of pages long. Lawyers then contested the meaning of every clause while racking up fees of hundreds of dollars per hour from clients who were saving millions of dollars on every clause they could water down. (...)
As government was disabled from delivering on vital issues, the protected were able to protect themselves still more. For them, it was all about building their own moats. Their money, their power, their lobbyists, their lawyers, their drive overwhelmed the institutions that were supposed to hold them accountable–government agencies, Congress, the courts.
There may be no more flagrant example of the achievers’ triumph than how they were able to avoid accountability when the banks they ran crashed the economy. The CEOs had been able to get the courts to treat their corporations like people when it came to protecting the corporation’s right to free speech. Yet after the crash, CEOs got prosecutors and judges to treat them like corporations when it came to personal responsibility. The corporate structures they had built were so massive and so complex that, the prosecutors decided, no senior executive could be proved to have known what was going on. (...)
When they created ways to package mortgages into securities that could be resold to investors, for example, it was initially celebrated as a way to get more money into the mortgage pool, thereby making more mortgages available to the middle class. But by 2007 it had become far too much of a good thing. As the financial engineers continued to push the envelope with ever-riskier versions of the original invention, they crashed the economy.
Thus, the breakdown came when their intelligence, daring, creativity and resources enabled them to push aside any effort to rein them in. They did what comes naturally – they kept winning. And they did it with the protection of an alluring, defensible narrative that shielded them from pushback, at least initially. They won not with the brazen corruption of the robber barons of old, but by drawing on the core values that have always defined American greatness.
They didn’t do it cynically, at least not at first. They simply got really, really good at taking advantage of what the American system gave them and doing the kinds of things that America treasures in the name of the values that America treasures.
And they have invested their winnings not only to preserve their bounty, but also to root themselves and their offspring in a new meritocracy-aristocracy that is more entrenched than the old-boy network. Forty-eight years after Inky Clark gave me my ticket on the meritocracy express in 1967, a professor at Yale Law School jarred the school’s graduation celebration. Daniel Markovits, who specializes in the intersection of law and behavioral economics, told the class of 2015 that their success getting accepted into, and getting a degree from, the country’s most selective law school actually marked their entry into a newly entrenched aristocracy that had been snuffing out the American Dream for almost everyone else. Elites, he explained, can spend what they need to in order to send their children to the best schools, provide tutors for standardized testing and otherwise ensure that their kids can outcompete their peers to secure the same spots at the top that their parents achieved.
“American meritocracy has thus become precisely what it was invented to combat,” Markovits concluded, “a mechanism for the dynastic transmission of wealth and privilege across generations. Meritocracy now constitutes a modern-day aristocracy.”
The frustrated, disillusioned Americans who voted for President Trump committed the ultimate act of rejecting the meritocrats – epitomized by the hardworking, always prepared, Yale Law – educated Hillary Clinton – in favor of an inexperienced, never-prepared, shoot-from-the-hip heir to a real estate fortune whose businesses had declared bankruptcy six times. He would “drain the swamp” in Washington, he promised. He would take the coal industry back to the greatness it had enjoyed 80 years before. He would rebuild the cities, block immigrants with a great wall, provide health care for all and make the country’s infrastructure the envy of the world, while cutting everyone’s taxes. Forty-six percent of those who voted figured that things were so bad, they might as well let him try.
by Steven Brill, Time | Read more:
Image: Ross MacDonald[ed. See also: The 9.9 Percent Is the New American Aristocracy. (Excerpt):
New forms of life necessarily give rise to new and distinct forms of consciousness. If you doubt this, you clearly haven’t been reading the “personal and household services” ads on Monster.com. At the time of this writing, the section for my town of Brookline, Massachusetts, featured one placed by a “busy professional couple” seeking a “Part Time Nanny.” The nanny (or manny—the ad scrupulously avoids committing to gender) is to be “bright, loving, and energetic”; “friendly, intelligent, and professional”; and “a very good communicator, both written and verbal.” She (on balance of probability) will “assist with the care and development” of two children and will be “responsible for all aspects of the children’s needs,” including bathing, dressing, feeding, and taking the young things to and from school and activities. That’s why a “college degree in early childhood education” is “a plus.”
In short, Nanny is to have every attribute one would want in a terrific, professional, college-educated parent. Except, of course, the part about being an actual professional, college-educated parent. There is no chance that Nanny will trade places with our busy 5G couple. She “must know the proper etiquette in a professionally run household” and be prepared to “accommodate changing circumstances.” She is required to have “5+ years experience as a Nanny,” which makes it unlikely that she’ll have had time to get the law degree that would put her on the other side of the bargain. All of Nanny’s skills, education, experience, and professionalism will land her a job that is “Part Time.” (...)
My 16-year-old daughter is sitting on a couch, talking with a stranger about her dreams for the future. We’re here, ominously enough, because, she says, “all my friends are doing it.” For a moment, I wonder whether we have unintentionally signed up for some kind of therapy. The professional woman in the smart-casual suit throws me a pointed glance and says, “It’s normal to be anxious at a time like this.” She really does see herself as a therapist of sorts. But she does not yet seem to know that the source of my anxiety is the idea of shelling out for a $12,000 “base package” of college-counseling services whose chief purpose is apparently to reduce my anxiety. Determined to get something out of this trial counseling session, I push for recommendations on summer activities. We leave with a tip on a 10-day “cultural tour” of France for high schoolers. In the college-application business, that’s what’s known as an “enrichment experience.” When we get home, I look it up. The price of enrichment: $11,000 for the 10 days.]
