But another part of it is status anxiety. Not just conspicuous consumption, though there is plenty of that. Rather, it’s the terror that their kids will fall behind. That if they don’t get their toddler into the right preschool, they’ll blow any chance of getting them into Harvard. So they spend ungodly sums on tuition, tutors, and enrichment activities to try to keep up with the other 1 percenters in the college admissions arms race. There’s a perverse logic to it all: the richer the 1 percent get, the higher the cost of falling out. And that’s why the “bottom of the 1 percent” in particular aren’t getting wealthier. They’re making more, but they’re also spending more on their kids.
Economic Historian of Inequality
Some people claim that the takeoff at the very top reflects the emergence of a new class of “superstars”—entrepreneurs, entertainers, sports stars, authors, and the like—who have exploited new technologies, such as the Internet, to enlarge their earnings at the expense of others in their field. If this is true, high rates of inequality may reflect a harsh and unalterable reality: outsized spoils are going to go to Roger Federer, James Patterson, and the WhatsApp guys. Piketty rejects this account. The main factor, he insists, is that major companies are giving their top executives outlandish pay packages.
.. Piketty calls the tendency for inequality to rise during periods when the rate of return on capital is higher than the economy’s rate of growth “the central contradiction of capitalism.”
You keep using that word
The IQ tests evolve to predict the intelligence of a couple’s children, heralding a kind of merit-based eugenics. Meanwhile, the lower classes turn out not to be the contented idiots the elite hoped they would be. They protest their status, and the indignities accorded to it. Many smartly point out that only a narrow concept of intelligence could be so easily ranked. A manifesto appears, arguing for a classless society in which people are evaluated “not only according to their intelligence and their education, their occupation, and their power, but according to their kindliness and their courage, their sympathy and generosity.” It asks, “Who would be able to say that the scientist was superior to the porter with admirable qualities as a father, the civil servant with unusual skill at gaining prizes superior to the lorry-driver with unusual skill at growing roses?”
The book’s message is clear: not only is a purely merit-based system unachievable, it is also undesirable. It’s a mechanism not for expanding opportunity but for cementing inequality. It believes that some humans are more valuable than others, and naively proposes that we can measure the difference. It rests on the foundation that those declared less equal will accept their inferiority without resentment. It is thus both unsustainable and morally bankrupt.
The Rise of the Meritocracy concludes with its fall. We should be so lucky.
The Middle Class Is Steadily Eroding. Just Ask the Business World.
If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.
.. Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
.. Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.