The argument that the poor should return to school comes from those who believe that America should be more of a meritocracy. Let's look at schools first, and meritocracies next.

First, it usually takes tens of thousands of dollars to go to college (or start a business, the other method of "bootstrapping"), so there is something disingenuous in recommending this option to the poor. Student grants and loans are designed to overcome this obstacle, but they are not enough. In the 1993-94 school year, it cost a resident an average of $8,562 to attend a public university, and $17,846 to attend a private one.¹ (This includes just the basics: tuition, fees, room, board, books and transportation.) Here are the average payments of the major student assistance programs:²

Pell Grant     $1,418
SEO Grant         730
Perkins Loan    1,261
Work-Study      1,000
Stafford Loan   2,959
Total           7,368

So even full participation in these programs does not cover the cost of college. And college crowds out the time that most people normally reserve for work. Not surprisingly, most students tend to be starving students; having money increases the likelihood of surviving to graduation. Unfortunately, this means that the poor have much weaker bootstraps to pull themselves up with.

But more importantly, the job market can bear only a limited share of knowledge-workers and professionals. As ideal as it would be to send everyone to college and then on to higher paying careers, this is utterly impossible: the job market can use only so many doctors, astronomers and marine biologists; it will always demand mechanics, farmers and waitresses. In fact, so many Americans have tried to get ahead by returning to school that there is a glut of college graduates in most fields. One third of all 1991 and 1992 college graduates hold jobs that do not require a college degree.³ As a result, competition to enter graduate school has reached a fever pitch.

The percentage of managerial and professional jobs can grow in the long run, of course, but this growth is extremely slow. The 80s were a period of tremendous turbulence in the job market, with entire industries rising and falling. But between 1983 and 1993, managerial and professional jobs rose only slightly, from 23.4 to 27.1 percent of the job market.⁴

This means that the job market is dominated by the mathematics of displacement. More than 99 percent of the time, a person who lands a managerial or professional job displaces someone else. Could better jobs come from just job growth alone? Unfortunately, no; between 1970 and 1989, job growth averaged only 2.5 percent a year, and besides, each professional job sees three non-professional ones created also.⁵ This is hardly a solution to increasing the percentage of better paying jobs.

The mathematics of displacement also refute the argument that everyone can get ahead by starting his or her own business. Once the market has reached its saturation point of construction companies, for example, any new entries are bound to fail. So if individuals are to get ahead in a job market based on displacement, they must compete and progress on their merit. Which raises the subject of meritocracies.

Meritocracies

One of the oldest debates in society is that of equality vs. merit. Many believe that there is a trade-off between these two considerations. When a society rewards merit, competition becomes supreme, the fittest survive, and people get what they deserve. When society makes people more equal, they may become more civilized to one another, but they also lose their individual initiative and desire to excel, since it doesn't achieve as much. Most societies try to strike a balance between these two considerations.

Meritocracies come in two forms: unrestricted and moderated. The natural tendency of an unrestricted meritocracy is for power to concentrate in the hands of an ever smaller group. We have several adages that describe this principle: "Nothing succeeds like success," "It takes money to make money," "The rich get richer and the poor get poorer." Ross Perot described the dynamics of this process well. To paraphrase: "When you first start a business, you should turn whatever profits you make back into the business. And if you keep doing that, soon your money starts making money for you. I call this a money-making machine."⁶ Unfortunately, it is that machine -- and not the person -- which makes most of the money in the latter stages of fortune-building.

In an unrestricted meritocracy, slight differences in talent between two people will result in enormous differences of power and wealth over time. A good analogy is that of two boxers fighting for the world heavyweight title. Although almost evenly matched, the final result -- one getting knocked out, the other left standing -- bears no resemblance to their original talent. Obviously, there is not a one-on-one relationship between talent and reward here. In one sense, the victor did indeed earn the knock-out, but in another sense, the final result does not do justice to the defeated boxer's talents. While we might find this sort of meritocracy acceptable in games and sports, there is a real objection to applying this sort of destructive contest to an interdependent economy or society.

In a moderated meritocracy, those with the most merit advance to the highest positions, but the system redistributes a percentage of their money or power back to the lower classes. The advantages of this system is that it still provides individuals with an incentive to achieve, but also keeps the rest of society in the game. This is important because the talent pool from which merit is drawn should be kept as large and healthy as possible; it's the only way to ensure the maximum use of maximum talent. The alternative is serfdom, where 99 percent of the population barely survive, their labor going to enrich an educated and affluent 1 percent. It is not difficult to see that serfdom does not unlock the full potential of a society, and that the wealthy 1 percent might be even richer if they allowed the entire economy to thrive.

The history of empires bears out this point. When the empires of Spain, Holland and Britain reached their zenith, they had broad and thriving middle classes. In fact, scholars consider the shrinking of the middle class to be one of the historical symptoms of an empire in decline.⁷

Since 1980, conservatives have been increasingly advocating an unrestricted meritocracy. Observations that the richest 1 percent own 40 percent of America's wealth are met with one common response: "Well, they earned it." There are several rejoinders to this mindset, in addition to the ones outlined above. They are:

• Merit is only one of many reasons why people become rich. Other reasons include inheritance, nepotism, social and political connections, lobbying Congress, economic trends, fads, inventions, wars, speculation, insider trading, unfair trading practices, and, last but not least, dumb luck -- being at the right place at the right time. John D. Rockefeller once described becoming rich as a 3-step process: "1. Go to work early. 2. Stay late. 3. Find oil."

• Power corrupts, and absolute power corrupts absolutely. The emergence of what Newsweek calls an "overclass" is a departure from the normal system of checks and balances which keeps any society or organization healthy.

• Many justify the overclass on the basis of individual rights. To wit, individuals should be free to make their money however they want, without the government coercively redistributing their money. Actually, the evocation of individual rights in defense of the overclass is confused. Suppose the top 1 percent own 50, 60, even 70 percent of America's wealth. Next comes serfdom. Then slavery. Certainly, defenders of individual rights would raise their voices against slavery -- but such a state of affairs would be acceptable to a pure Social Darwinist to whom survival of the fittest is its own law. Therefore, it is impossible to be an absolutist in both individual rights and Social Darwinism.

• The "money-making machine" that Ross Perot mentioned has a name: the company workforce. If this machine is responsible for creating enormous wealth, then any true meritocracy should fairly compensate the machine. Many defenders of unrestricted meritocracy claim that Bill Gates deserves to be the richest man in America because he manages a company that greatly benefits society. However, Bill Gates did not personally produce Windows 95 - in fact, Gates has never written an operating system in his life. Instead, he has always assigned the task to an army of software programmers, researchers and developers, technicians and producers. All the innovations, all the improvements in subsequent versions, are theirs. Although they are well-compensated, they are not compensated in direct proportion to their contribution to society, and definitely not as well-compensated as Gates. Gates' good fortune largely stems from a single shrewd deal he made with IBM at the beginning of his career, which made him a quick billionaire. But he has depended almost completely on the expertise of his staff and workers ever since.

• Greater equality may stifle initiative in those individuals who would excel the most, but it would actually create initiative in those who would normally be shut out of prosperity. Workers at dead-end jobs have no motivation to improve their workplace, to identify with the company's goals, to display company loyalty, to go the extra mile, to establish teamwork, to care about the product or customer service. Rewarding workers accomplishes all those things. As the previous point shows, most suggestions to improve company performance come from employees who are personally acquainted with the problem and are the experts of their local work sites. So when some claim that equality stifles individual initiative, one should ask, "Which individuals?"

• Competition in its extreme form becomes destructive. The Cold War is a good example. During times of peace, two nations can devote their productivity to creating a high standard of living. But when two nations enter into a competition for national security, productivity is not devoted to a higher standard of living, but to mere survival. At a time when public investment was underfunded in America, the Reagan Administration poured billions of dollars into the Federal Emergency Management Agency, which tried to create a command and control system that would survive a nuclear war. The image of a president in control of a nuclear wasteland clearly depicts the irony of unrestrained competition. Economic equivalents are numerous. When the airline industry was deregulated in 1978, proponents declared that it would increase competition and serve the customer. This turned out to be true... but only for a short while. Competition turned keen, then destructive. Airlines began cutting so many corners to reduce costs that many feared for passenger safety. Since 1978, a dozen airlines have gone out of business, and 50,000 workers have lost their jobs. The minors have been gobbled up by a few majors, raising the specter of a new economic ill: the monopoly (or oligopoly). And the effects of growing monopolization can already be seen: since deregulation, about 130 small communities have been dropped from scheduled air service, and prices have soared. In 1977, a round trip from Philadelphia to Pittsburgh cost $86. By 1992, it cost $460. The story is the same almost everywhere.⁸

Return to Overview

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¹ The College Board, New York, NY, Annual Survey of Colleges, 1993.
² U.S. Department of Education, Office of Postsecondary Education, unpublished data. Figures are estimates for 1993.
³ Michigan State University's Collegiate Employment Research Institute, 1993.
⁴ U.S. Bureau of Labor Statistics, Employment and Earnings, January issues, 1983 and 1993.
⁵ Calculated from a 1970 civilian labor force of 82.771 million and a 1989 force of 123.869 million. Source: U.S. Bureau of Labor Statistics, Bulletin 2307.
⁶ Personal recollection of a Ross Perot promotional video explaining his secrets for excelling in business.
⁷ A superb history and explanation of this point can be found in Kevin Phillips' Boiling Point, (New York: Random House, 1993), pp. 193-222.
⁸ For the harm caused to airlines and other industries by deregulation, see Donald Barlett and James Steele, America: What Went Wrong? (Kansas City: Andrews and McMeel, 1992), pp. 105-123.