Making Sense with Sam Harris - #205 — The Failure of Meritocracy

Episode Date: May 22, 2020

Sam Harris speaks with Daniel Markovits about the problems with meritocracy. They discuss the nature of inequality in the United States, the disappearance of the leisure class, the difference between labor and capital as sources of inequality, the way the education system amplifies inequality, the shrinking middle class, deaths of despair, differing social norms among the elite and the working class, the ethics of taxation, scales of philanthropy, universal basic income, the need for a wealth tax, the relationship between meritocracy and political polarization, the illusion of earned advantages, and other topics. If the Making Sense podcast logo in your player is BLACK, you can SUBSCRIBE to gain access to all full-length episodes at samharris.org/subscribe.

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and we grant 100% of those requests, no questions asked. Okay, well, today is a deep dive into wealth inequality and the underlying problem of our notion of meritocracy. Wealth inequality is something that I've been worried about for quite some time. I think I first started speaking and writing about it in 2010, about a year or so after the financial crisis. I wrote a couple of blog posts. I think the first was a New Year's resolution for the rich, and then how rich is too rich, and it's come up a few times on the podcast before. I never really questioned the norm of meritocracy, however, and I haven't really thought much about the way our system of higher education has become a perpetual motion

machine of inequality, but my guest today on the podcast has. Today I'm speaking with Daniel Markovits, and his book is The Meritocracy Trap, How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite. And Daniel is a professor of law at Yale, and as you'll hear, he's thought a lot about these issues. We talk about the nature of inequality in the U.S., the disappearance of the leisure class, the way the rich now tend to work harder, at least as measured by time,

than anyone else, the difference between labor and capital as sources of inequality. We talk about the shrinking middle class, the attendant deaths of despair in the U.S. We talk about the different social norms among the elites and the working class. Things like out-of-wedlock birth, divorce, etc. We talk about the flawed notion of being self-made and the illusion that anyone has earned their advantages. And we consider Daniel's proposal for a one-time wealth tax as a way of responding to the COVID-19 pandemic and its attendant economic calamity.

There's a lot here. You might find it a little dense, certainly in the beginning, but I thought the conversation was fascinating. I learned a lot. Looking back on my old blog posts of 10 years ago, and I noticed that in talking about the consequences of automation and growing wealth inequality and people's resistance to redistribution, I asked the rhetorical question, would anyone want to live in a country that has just minted its first trillionaire and there's 30% unemployment? Well, at the time, that was a cartoon example. At the moment, that outcome is absolutely foreseeable. We've certainly been pushed within range of that possibility by this pandemic.

So, that's just to say this is a conversation whose time has come. And now I bring you Daniel Markovits. I'm here with Daniel Markovits. Daniel, thanks for joining me. Thank you so much for having me on. It's a pleasure to be here. So you've written this fairly incendiary book, The Meritocracy Trap, and you also wrote an op-ed in the New York Times recently that I want to talk about that is especially pitched to this moment. But I really want to run through your entire argument here because it has the virtues of being both quite consequential, whether right or wrong, whatever we decide about your argument,

the consequences are enormous. And it's highly counterintuitive. And so I'll let you lay it out here. But you've written a book really against this notion of meritocracy. And it's interesting, this word was originally coined in a somewhat ironic or derogatory vein, but it was very soon thereafter rechristened as an obvious norm. And so when we hear about meritocracy, you know, really for my entire lifetime, there's never been a problem with it. It's just that the problem has always been that we haven't actually achieved it. And the problem is that there are people who are every bit as talented as the people who succeed, but they don't succeed because they weren't given the right opportunities. But you're arguing that the very norm of achieving a meritocracy is somehow

flawed, and that any socioeconomic reward that's based on this notion of merit is itself unjust and is leading to a kind of new caste system. So perhaps let's just start with this core claim. In what sense is meritocracy itself and the notion of merit itself the problem? Sure. So let's start just by giving a quick and intuitive definition of what a meritocracy is. It's when people get ahead based on their own accomplishments rather than on, say, their parents' social class or their race or their gender. And as you suggested a moment ago, it's very hard to object to that idea. It seems like that idea would give a society a capable and competent and engaged elite, and it seems like that idea would give everybody a fair shot at success. And the early meritocrats, especially in the United States in the 1960s,

and we can talk about them in a little more detail later, very much embraced that thought. They thought that meritocracy was a way of breaking established caste orders surrounding heredity, breeding, race, gender, religion. And for a while, meritocracy did function in that way, because natural talent is not the property of any one race or gender or caste. But then what happened is that the elite that was made by meritocracy, the people who themselves got ahead by being really good at tests, really good at school, really hardworking, accomplishing a lot, turned out to be incredibly good at training their children and to have an immense appetite for investing in their children's education. And they now so dramatically out-train and out-educate everybody

else in society that not just poor families but middle-class families can't keep up. And because education works, it now turns out that the people who in this technical sense accomplish the most, who have the highest test scores, the best grades, are the same as the children of the rich meritocrats of the previous generation. And so in this way, what meritocracy has done is it was invented as the handmaiden of equality of opportunity, but it's become an enormous obstacle to opportunity in the United States today. I want to get into the problem specific to higher education and then the process by which people seek to get into elite institutions, because that really is at the center of the problem, at least on your account. But before we get there, let's just talk about the nature of inequality. I mean, just what is the status quo at this point? And perhaps we should focus on the U.S.

I mean, I know this is a global problem, but within the U.S., you point out that we have a kind of inequality that more resembles that found in a country like India than in a country like France. So give us a picture of what inequality is like at this point. Yeah. So we have two trends happening in the U.S. at the same time. And I think one of the things that made the book controversial is that it emphasizes both of these trends. So one trend is falling poverty. There's a lot of poverty in the U.S. and if you have my private politics,

it's morally unconscionable how much poverty there is. There's more poverty than in other rich countries. But although I think it's perfectly reasonable to think that poverty is the most morally pressing economic issue of the age, it's not the distinctive one. So the poverty rate in the United States today, depending on how you measure it, is between a half and a fifth of what it was in 1960. And 1960 is thought of by the left and the right both as a period of shared prosperity, but poverty then was much, much deeper and wider than it is today. At the same time as we have falling poverty in this country, we also have rising concentrated wealth. And the richest 1% of households were, up the income scale so that there is now more economic inequality within the richest 5% of the population than in the population as a whole.

That is to say, the shrinking gap between the middle class and the poor dampens overall inequality compared to the massively rising gap between the merely rich and the super rich. And then there's one other thing that's going on that is also controversial or that I claim is going on that's controversial, which is that the sources of the very top incomes have changed. So that by my calculation today, between two-thirds and three-quarters of the total income of the top 1% doesn't come from capital, but rather comes from labor, so that the rich have become the working rich or a superordinate working class. Whereas for most of human history, if you wanted to know how poor a person was, you would ask how hard or how long they work. Whereas today, if you want to know

how rich a person is, you ask how hard or how long they work. And that's also transformed the ideology of inequality in, I think, very damaging ways. Yeah, there are many interesting distinctions in there. So let's just take this one piece of the issue between disparities in work and in capital. So your claim here is somewhat at odds with the much-celebrated thesis of Thomas Piketty, right, that he published this book that everyone bought and I imagine few read a few years ago, where he was arguing that because the gains that accrue to capital increase at a greater rate than those that accrue to labor. The real driver of wealth inequality in first world societies, he wasn't focused exclusively on the US, is the distinction between people who have capital, right, who have investments and, you know,

therefore, you know, making money on their stock portfolio, say, and everyone else who has to work for a living at any salary. But you're saying that the truly rich here, first of all, they're not merely a leisure class. I mean, this is not an episode of Downton Abbey we're living through. They work harder as measured in just time than basically anyone else. And that is the source of the most excruciating inequality, in this case, in the top, essentially the Gini coefficient of the top 10%. Right, right. So let's talk just separately briefly about labor hours and then about the sources of income. So in 1979, if you were in the top fifth of the hourly wage distribution, you were about two-thirds as likely as someone in the bottom fifth to work over 50 hours a week. By 2006, if you were in the top fifth, you were more than twice as likely as someone in the bottom fifth to work over 50 hours a week.

So in the roughly 30 years at the end of the last millennium, the relationship between high wages and long hours reversed. It used to be the low paid worked the long hours, and by 2006, the high paid worked the long hours. And if you look at finer slices, between about 1940 and about 2010, the top 1% added, roughly speaking, six to eight hours a week to its average work week, whereas the bottom 60% lost maybe eight hours a week from its average work week. So that's a shift of hours worked away from the bottom 60% to the top 1% of 16 hours a week, which is two regulation work days a week. And I want to be clear, and I hope we come back to this, the reason why the middle and working class aren't working such long hours is not that they're lazy and don't want to work, it's that the labor market has been restructured so that there aren't enough jobs.

And even during our recent period of very low unemployment, we've also had very low labor force participation. So that it's true that not many people have been seeking work and not getting it, but many people haven't been seeking work. So that's the story of hours worked. It's what sociologists of work call the time divide. Then there's a separate story about where the rich get their income from. And this is the point at which, as you suggested, Piketty's and my analyses depart. Now, it's important to understand that both his effect and my effect could be going on at the same time, and that they'd compete only, as it were, on the margin of explanation. So it could both be that those with capital are getting richer, and also that those with super skills and super labor are getting richer. And the question is just which of these effects

dominates the other in explaining the overall rise of top incomes. And it's important actually to read Piketty's book because Piketty himself makes quite clear that in the United States, in contradistinction to Western Europe, until 2000, top incomes were driven by rising labor income. So Piketty and I agree about that. And the only place at which we disagree is what happened since 2000. And we disagree there for two reasons, principally. And I'm going to try to put the disagreement in a way that tries to be fair as between us. And if we want to get into it, we can get into it. But one question is, how should one categorize the income of the very highest paid workers in management and finance? So these are CEOs, top executives, hedge fund people,

investment bankers. Piketty inclines to categorize some portion of their income as capital rather than labor. I view their income as labor income. The reason why Piketty views their income as capital income is that he thinks, in effect, that nobody's work could be worth that much. And it's important to understand how much income there is here. So in a recent year, the five highest paid employees of the S&P 1500, so 7,500 workers overall, captured income equal to 10% of the total profits of the S&P 1500. So these people are capturing quantities of income that matter macroeconomically. I think of it as labor income because these are people who bring nothing but their own labor to their employment contract. They don't own the companies they manage. The hedge fund people don't

own the assets that they invest. Instead, what they do is they sell their skills. And I have a story about technological change that tries to explain why it is that counterintuitively, we've created an economy in which those skills could be incredibly valuable. So that's one source of difference. The other big source of difference is that I treat certain categories of pass-through income, so this is income earned by people who own their own businesses, and certain categories of capital gains, this is income captured by people who invent things, start big companies and have founder shares as labor income, whereas Piketty treats it as capital income.

I again believe it's labor income because I think, once again, what these people are contributing to the economic value of their ventures is their own ideas, their own work, their own labor. And depending on how you look at the balance of these things, you get from Piketty's number, which is that the top 1% get roughly half of their, little under half of their income from labor, to my number, which is the top 1% get between two-thirds and three-quarters of their income from labor to my number, which is the top 1% get between two-thirds and three-quarters of their income from labor. That's a material difference, but just to close this out, the most striking difference is between either Piketty's estimate and mine, so either half or three-quarters, and what was true in, say, 1910, when the top 1% would have gotten a sixth or an eighth of its income from labor, or even 1960, the top 1% would have gotten a quarter of its income from labor.

Right. Well, maybe it's a distinction without a real difference because the different norms around work and time spent working are unaffected by how you class the source of income. You take somebody like, I don't know, Mark Zuckerberg. I don't know Mark. I've never met him. I know many people who know him, but I have no inside knowledge of his work habits. But I would bet a fair amount of money that he works considerably more than a 40-hour work week. money that he works considerably more than a 40-hour work week. And also his wealth is born not principally of his salary, whatever it is. I would assume his salary is nominal. It's a lot, but it's not $100 billion.

Yeah, it is nominal compared to his actual wealth. And so he's making money based on the fact that he owns whatever it is, 20% of Facebook. And so that's, you know, you could call it capital or you could call that the returns on labor. But the reality is he's almost certainly a workaholic and therefore very likely believes that he deserves everything he's gotten. You know, he didn't inherit this wealth. He built it. He created, whatever you think of Facebook, an enormously influential piece of technology that has attracted the attention of half of humanity. And he's rewarded for that. And part of the system you're describing in terms of the advantages accruing to an educated elite to some degree. I mean, he stepped off that hamster wheel pretty early. He got to Harvard and then dropped out to start Facebook.

I guess you would probably view much of the success we see in Silicon Valley to be a bit of a sideshow to your main thesis, right? Because you're more talking about people who go the whole route through the academy and come out and work for Goldman Sachs or in some context like that, where they're not reaping these outside rewards based on their winner-take-all, one-off, brilliant idea. They're actually part of a much larger system of credentialing and social signaling that becomes this so-called meritocracy, where people are grinding away for, again, very long hours. But I would imagine in the case of someone like Zuckerberg or any other founder like him who's getting very rich, they may wish they didn't feel the need to work as much as they

do. But many of these people are doing what they love or what they're addicted to. They're not, you know, somebody who's several rungs from the top at a place like Goldman Sachs, just being ground down by 90-hour work weeks because that's the way the machine runs. So is there a distinction to make there, or is this basically that these are the same group of people we're talking about? Yeah, no, I think there is a distinction to make there. Now, of course, there are lots of people now who go to work at Google or Facebook or Apple or venture capital firms in Silicon Valley who are also working on other people's projects rather than their own. But your underlying suggestion about someone like Zuckerberg

does generalize so that in 1984, for example, purely inherited fortunes outweighed self-made fortunes in the Forbes 400 by 10 to 1, but today self-made fortunes outnumber the inherited ones, so that we've reversed even there who thinks of themselves. Now, self-made is a term of art, obviously, but it's different from being Zuckerberg, from being, say, one of the Koch brothers who inherited from their parents. I do think that there is an important political, psychological difference between my view and Piketty's, and this, I think, also accounts for some of the controversy surrounding the meritocracy trap, which is this. The capital-intensive account of rising inequality focuses the blame for an inequality that most people

think is a bad idea at a group of people and a threshold wealth and a social position that is different from the group of people who are the book's natural audience. So the people who read Piketty are university professors, elite journalists, management consultants, lawyers, doctors, the broad reading elite. And Piketty's story absolves them of responsibility for inequality. Whereas my story says that them, namely me, us, and the institutions that we serve and that have made us are at the very core of the machine that is producing more and more inequality and blocking middle and working class people from opportunity. And I don't know if that's a virtue or not of the theory, but it does explain why there's a way in which a story like the Capitol story is quite comfortable for the elite left, whereas a story like my story is quite uncomfortable for the elite left. for the elite left. Yeah, that's interesting. And it's interesting to consider where these various tiers economically should be drawn. I guess they could also be region-specific. I mean,

what do you consider middle class? What does the field consider middle class in general? And then how do you think about middle class in a city like Manhattan or San Francisco? Yeah, I think that's a good question. And it actually is a complicated sort of conceptual question, and actually turns out to be a very complicated, flat empirical question. So that often people think of people as middle class as those between something like the 40th and the 80th percentile of the income distribution. But of course, that varies by city and by region, and what it takes to lead a certain kind of lifestyle varies very much by city. The practical or data complication there is that there are lots of things in a city like New York

or San Francisco that are obviously much, much more expensive than elsewhere. Housing is a big example, of course. Private schools are another big example. But then there are other features of elite or even upper middle class life that are actually cheaper in New York City than elsewhere. So certain kinds of foods, certain kinds of entertainment, certain kinds of restaurants are actually cheaper or easier to get in New York than elsewhere. So it becomes quite complicated to figure out exactly what lifestyle bundle and at what price it takes to be in the middle class or above the middle class socioeconomically. I tend to focus on the top 1% and then the 4% that surrounds them in the sense that these are the 4% or the group that credibly can claim it might one day be in the 1%. And so that's the

group that I'm focusing the analysis on. And that's partly driven by the fact that that's where almost all of the income growth in America has happened over the past 30 years. So it makes sense to look at this narrow slice, although in year and somebody who's making $85,000 a year. Both are above median household income, but they're in very different positions, and neither of them is close to the 1%. Right, right. I think we should at some point drill down on the difference between the merely rich and the super rich, because those orders of magnitude are counterintuitive for people. And it's just interesting to think about the significance of that kind of wealth stratification. It's odd to be focused merely on the top 1%, but it's, you know, the difference between the 0.01% and the merely 1% is so enormous at this point that you're not at all talking about the same thing. Maybe we'll save that for when we talk about your op-ed in the New York Times calling

for a one-time wealth tax, because that's interesting. So is there more to say about the middle class here? From hearing your argument, it seems that the middle class is in some ways the hardest hit here. And I guess in the context of the COVID-19 pandemic, there's additional concern that when we surface from all of this, the middle class might scarcely even exist. What are your thoughts about the middle class before we focus on the problems of wealth? Yeah, so there's a sort of a straight empirical economic phenomenon, which is very striking, which is if you ask about children's odds of becoming richer than their parents, so this idea of sort of economic growth within the family lineage, that each generation is better off than the one before. For the kids that were born in 1940, basically all of them were going to end up richer than their parents. 95th percentile of the income distribution before children were not almost certain to

become richer than their parents. But for the group born in 1980, really only the poorest were certain to be richer than their parents. And if you look at the drop in the chance of getting richer than your parents, so by how much did that chance fall between 1940 and 1980? It fell by the most between the 30th and the 90th percentile of the income distribution. So the broad middle class, if you think of people below the 30th percentile as roughly speaking the poor, and people above the 90th as roughly speaking the rich, the broad middle class had the biggest drop-off in its odds of becoming richer than its parents, so that the sort of future-looking hope

of the economy moved away from the middle class. And at the same time, the charismatic center of the economy and the culture moved away from the middle class. And this is not a flat economic phenomenon. This has to do with how much housing costs. It used to be that a house in a really, really fancy neighborhood would cost maybe two or three times what an average house would cost. Now it costs 20 or 30 times what an average house costs. It used to be that in America, the most expensive car you could buy was a Cadillac. It cost twice what a Chevy cost. now there are lots of cars that cost 10 or 20 times what the median car costs the same is true for kitchen appliances the same is true for meals out for bottles of wine for which supermarket you shop at it used to be everybody shopped at Safeway now you can shop at Whole Foods or you can shop at Walmart. And they have very different feels, looks, and products. One thing I looked into, the French Laundry, the California fancy restaurant, and Taco Bell don't have a single ingredient in common. That's hilarious.

Not even the salt. Right. Not even the salt. Right. Not even the salt. And so what you're getting is a stratification of all parts of life around this income divide, and the part of life that captures the attention of the culture, of the media, is the rich part, whereas it used to be the part of life that captured the attention of the culture was the middle class part. And so that's another kind of demotion, now a sort of sociological, cultural, psychological demotion for the same group that has taken the biggest hit in its economic opportunities.

And that's extremely damaging to flourishing and to politics. Well, much of this is relative, of course, because as you point out, there's less poverty than there's ever been, right? And when you look at what the average lower middle class or even slightly below that person has access to compared to what previous generations had. I mean, just take something like a smartphone, right? Well, it's just, this is a piece of magic if you brought it back to even the late 20th century, right? I mean, it's just, you're walking around with something in your pocket that not even the President of the United States had access to in the 80s or even 90s. And I'm sure there are some technocrats or techno-utopians who would say there's nothing wrong with growing inequality per se as long as the floor is rising for everyone. And there's some sign that the floor is rising for everyone. What would you say to that? Well, I think the first thing I'd say is that there's a sense in which what you say is even more true than your example suggests, like the smartphone. I don't

know, did you ever drive a Chrysler K car? No, I have not. No. So, you know, a car in the 1980s, those were terrible cars. Whereas a Toyota Corolla today is a great car. Right. It's safe. It's quiet. It's powerful. It's comfortable in a way in which almost no consumer good from 40, 50 years ago was. And so it's not just new inventions.

It's familiar things have become a lot better. On the other hand, even though it is true that poverty is down and that middle-class consumption has continued to rise, it's also true that other forms or markers of human flourishing have not been rising. So if you think of Anne Case's and Angus Deaton's demographic work on the fact that there is rising mortality and falling life expectancy in middle-class Americans, this is astonishing. We have falling life expectancy in a group, a large group of the population, without war, without economic collapse, and until six weeks ago, without epidemic disease. And yet, life expectancies are falling. And the causes of the falling life expectancy are overwhelmingly overdose, addiction, suicide, smoking, heart disease, and other diseases associated with overeating. They're forms of direct or indirect self-harm, really.

And the reason for that, I think, is that this goes back to the meritocracy point that we started with. We've constructed a social and economic order with massive structural exclusion. The reason it's hard to get ahead as a middle-class child or adult in America today is that the system is rigged against you. The education system is rigged against you as a child and rigged against your children. The labor market requires you to have fancy training and fancy degrees that you can't afford to get. And then meritocracy recharacterizes this structural exclusion as an individual failure to measure up. It then says, and by the way, the reason you haven't gotten ahead is that you weren't good enough, you didn't work hard enough, you weren't virtuous enough. And so the layering of this sort of profound moral insult on top of an economic injury

produces then the forms of self-harm that reduce life expectancy. And the reduced life expectancy, which really is demographically unprecedented, it just doesn't happen that you have lower life expectancy without war, disease, economic collapse. It shows just how damaging this form of exclusion and inequality really is. And no amount of stories of better consumer goods or cell phones or even more square feet per person in housing can make up for the harms done by that set of structural exclusions and moral insults. Yeah, there are many differences in, just take this health distinction between the wealthy and even the middle class. I think at some point you say that the life expectancy difference between the 1% and the middle class exceeds what would

be true if we cured cancer, which is a fairly arresting idea. And there's so many other sociological differences in these cohorts. I mean, you look at the rate of divorce or having children out of wedlock. All of those things have enormous consequences, too. I mean, divorce and having a child out of wedlock, these are variables that are almost synonymous with economic hardship, at minimum a serious economic penalty and also an opportunity penalty with respect to the kids and their ability to go to good schools and all the rest. How else do you think about the difference in, there's a kind of a non-virtuous or virtuous, depending on whether

you're benefiting from it, cycle here. Once things are going well, you know, everything tends to be going better. How else do you think about the difference between the elites, as I think you tend to call them, and everyone else? Yeah, let me just say, first of all, the effects that you're describing are sort of so enormous that if you don't look twice, you don't believe they're real. So, you know, in 1970, out-of-marriage births accounted for less than 10% of the births to women at all levels of education. Today, women with a high school education or less, so without college degrees, that's two-thirds of women, have over 50% of their children outside of marriage, whereas women with a college education or more have only 3% of their children outside of marriage.

So this is not a small effect or phenomenon. And I think the way I think about it is that life in capitalism, and particularly life in a meritocracy, is hard. It's a constant struggle in competition with others. No institution or person gives you the basic things that you need to flourish without your fighting to get them. And that means that success under those circumstances requires enormous amounts of support early in life and deep into adulthood, and that support is incredibly expensive. It's expensive in time, it's expensive in money, it's expensive in expertise, and that means that grown-ups who are struggling themselves are not in a good position to provide the advantages for their children that the children will need to compete in the

next generation, whereas grown-ups who have abundance themselves are in a much, much better position to do it. And that explains how inequality that in some sense looks like it's narrowly economic based on income or wealth can become comprehensive, can reach into family structure, childbearing. It reaches into religious practices. It reaches into consumption practices. It reaches into exercise. You know, 80 years ago, prosperous was a euphemism for comfortably overweight, whereas today the rich are almost exclusively extremely fit because they pay trainers and gyms to exercise, whereas the obesity epidemic that this country faces is overwhelmingly concentrated in the middle and working classes. Again, expensive food is expensive, and cheap, tasty food is cheap. And so this is a way in which economic inequality can inscribe

itself even in the bodies of the rich and the poor. And it's extremely damaging to our broader social order. Yeah, so on some level, there are changing norms here, which are also part of the problem. It just takes something like fitness. It once was the case that you could be obese and smoke a cigar, and you're the caricature of a rich guy. Now, if your midlife crisis entails training for an Ironman competition, you're the caricature of the super-driven CEO, i.e. rich guy. But the money can be constant there. We're talking about a new social norm. So I'm wondering what you think explains that. And also, I guess, I don't know the explanation for the change in out-of-wedlock birth. But again, that's also another kind of norm here around sexuality, which it seems to me could at least be orthogonal to changes in

objective economic circumstance and opportunity. Yeah, I think it could be. I think, in fact, they're not in the following sense. If you live in an aristocratic system in which breeding itself birthright is sufficient to secure the success of children and keep the family dynasty going, it doesn't matter very much how the aristocratic adults raise their children or spend their time, because their children will be privileged. But in a meritocracy, one of the most important productive activities is training children. And so one of the reasons why elite families live these hyper-conservative lives, although their official ideology around sex is one of great liberalism, is that they realize that the success of their children depends on an orderly, work-driven, training-driven domestic space. And so they produce it,

and it has actually very bad gender effects within the rich families, which is that rich women earn much, much less than their rich male partners, even though the official gender ideology of the elite is one of economic equality between men and women. On the other hand, the jobs that have been most attacked, most aggressively destroyed by the transformations in the labor market that accompany this kind of inequality are the jobs that traditionally middle-class and working-class men did. And so working-class and middle-class men have had their earning power most harmed and their social status most harmed by these transformations in work and labor. So that now if you survey working-class families and

households, they say that it is important that husbands out-earn wives or that men out-earn women, but in fact, in the bottom third of the income distribution, women out-earn men in households. And this dramatically undermines the sort of ideology of marriage and domestic life, because again, in a gender-hierarchical society, this makes it hard to find marriageable men. It makes men uncomfortable in households with wives who earn more. And so when you overlay the form of inequality that we're seeing, the economic inequality that we're seeing, on a gender hierarchy, you get both extreme conservatism in the elite and the breakdown of the traditional family outside of the elite. And obviously, a lot of other things are going on at the same time,

and it would be crazy to try to reduce so complicated phenomena to this one line of explanation. But it's not that the economic story has nothing to say about these wide social ramifications. Yeah, that's really interesting. So it seems to me we have a growing problem of social solidarity here, and this has political implications that are increasingly painful. And for me, just in private conversations in response to your recent op-ed on a wealth tax, this was born home. Because as you say in several places throughout your book, the elite think of themselves as self-made, right? I mean, now they're not, by and large, they're not people who just inherited their wealth from their grandfather,

who was a captain of industry. These are people who got really busy very early and have stayed busy up until about 30 seconds ago, and they're being rewarded for it. And they have had lives, in many cases, even most, that by any measure have to be objectively granted as stressful, but they've succeeded. And so they are more resistant to redistribution and any kind of ethical argument about its necessity or basic decency than perhaps anyone. And so I remember, so you wrote this op-ed in the New York Times in response to the COVID pandemic, and you argued that we need a one-time wealth tax. Maybe just give me the potted version of that argument, and then I can tell you what it was like to try to represent that in my world. Sure. So, you know, the pandemic is a

systemic attack on our economic and social life, but it obviously hasn't hit everybody equally. And unsurprisingly, the richest and most educated people are best able to socially isolate, and in fact, best able to keep working and to keep their jobs in the face of social isolation. So if I think about my own situation, I'm a university professor. I've taught online. I keep writing. I keep working, I keep getting paid just as I always would. You know, it's a little stressful and it's not so nice to be at home all the time, but basically, this has not harmed me personally at all. At the same time, we have 30 million people newly out of work. We have workers who were

previously called low-skilled now turn out to be recognized to be essential, still working, in some cases being economically forced to keep working in the face of the risk of getting sick. And so what we've got is a systemic attack on our whole society that only the least privileged are bearing the cost of. And the thought behind the wealth tax is that social solidarity requires that everyone bears the cost, and in particular, that those who have most benefited from this enormous run of rising inequality should now give some back. And it just so happens that if you take 5% of the household wealth of the richest 5% of households, you get about $2 trillion, which is just about what's been spent on pandemic relief so far. So these are round numbers, and one should mistrust round numbers, but there's a nice match between a way

of raising the money and who credibly should be paying the money out of a solidarity with the whole society in the face of this really terrible thing. And what's the significance of it being one time as opposed to what was proposed by the Warren and Sanders campaigns to have an ongoing wealth tax, which many people looked at as either entirely unworkable or still fairly onerous to implement and the kind of thing that would incentivize the offshoring of wealth and just elaborate machinations to evade it. Right. So I think the logic behind it is different and the implementation is different. And you could favor both of them, but you could favor them independently, or you could oppose either of them without opposing the other. The logic behind this is shared sacrifice in the face of a shared threat

or a collective threat. And the logic of the Sanders-Warren taxes were anti-oligarchy taxes to rebalance our society and increase the social safety net in a steady state. And so those are very different kinds of principles. And I may actually privately in my politics favor both of them, but as I say, the argument for one doesn't turn on the argument for the other. The different logic means the taxes look very different. The Sanders-Warren taxes kick in in the top 0.1%. Households whose aggregate wealth was in one case $32 million and in another case over $50 million. These are very rich people and they're ongoing taxes. The tax I propose

would hit the whole of the top 5%. So these are households with household wealth over $2.5 million, although it would exclude the first $2.5 million. So if your wealth were $2.6 million, you'd pay the tax on only the last $100,000. That means that the tax that I'm proposing raises a lot more revenue, is a lot harder to avoid, and because it's only one time, you can't plan your affairs to avoid it, so it's much easier to implement. And as I say, it solves a pressing current politico-social problem of solidarity in the face of this, which is, again, very different from the logic of the ongoing taxes. logic of the ongoing taxes. Okay, so there are a few things that one encounters in trying to shill for your noble thesis here. I didn't workshop this among many people, but there are a

couple of fairly well-off people I pitched this to because I immediately took a liking to this idea for two reasons. One, it's somebody's going to have to pay for this bailout eventually. I mean, it can't be all a matter of printing money. But two, this notion of shared sacrifice, and I'm acutely aware of the disparities here, but one thing you encounter in recommending a one-time wealth tax is that these disparities are fairly galling even among wealthy people because just by sheer accident, some wealthy people or even not-so-wealthy people are entirely spared by the pandemic just because they happen to be in a business that is either untouched or even improved by it, right, in some cases. And then there are other people who are

are or were quite wealthy who are just getting crushed because there's no possibility of working from home in their industry, right? If they're making cars or airplanes or whatever it is, you can't do any of that from home and everything is ground to a halt. Or if you're, you know, Disney is a fantastically wealthy company and its top executives are extremely wealthy, but they have way more exposure to the pandemic given their reliance on their theme parks and other real-world venues, right? And so you have some analogous company that has none of those exposures and is doing fine. And so there's a story to be told about good and bad luck, even among the wealthy,

and to try to implement a wealth tax. I mean, you start the clock ticking eight weeks ago and you say, who was wealthy eight weeks ago? Okay, now give us 5% of your money. That is something from which at least some of these wealthy people recoil. How do you think about that? I think that you raise two good points and they're two different points, and I want to respond to them differently. The second point is that there may be some people who appeared wealthy eight weeks ago, but in fact are no longer so wealthy. And those are people who've already borne a real cost from this pandemic. And on my view... Although if I can sharpen it up, Daniel, I would add that some of these people are certainly still wealthy right now on paper,

but they are right to believe that they're in a circumstance of far greater uncertainty than some other wealthy person for whom the prospects of an ongoing pandemic don't spell any analogous doom. Yeah, sure. No, I get that. The answer I want to give, though, still remains that the exemption of $2.5 million of household wealth means that from the perspective of the average American, everybody who pays the tax is really rich. And that matters, I think. And it's true that some people are not as rich as they were, and some people are suffering real setbacks, but yet they remain really rich from the perspective of the average American. Now, that doesn't go to the first thing you said, which is that there is tremendous inequality, differential luck, and even deep unfairness within the group of the rich.

And some people, as you say, have benefited from this. Some people have been burdened by it. it. Some people are merely rich, some people are super-duper rich, and this tax doesn't really distinguish between them as aggressively as it might. And there, I really have sort of a piece of political psychology or political ethics as an answer, and people will either find it moving or not. But one of the things it means for us all to be in this together as a society and a country is that we don't look on each other one at a time and ask who has more. Rather, we ask, do we have more than is fair for us to have? And I think the answer to that question for the broad group of people that this tax would raise its revenue from, again, these are households with wealth over $2.5 million,

is yes, all of us in that group have more than is fair for us to have. And maybe some of us have even more more than others, and maybe there are unfairnesses within our group. But in the face of a national calamity, we shouldn't focus on those. And maybe there's an analogy here actually to war, which is that we try to have a fair kind of draft in an existential war. And then we understand that once you're drafted, some people get bad luck and have an unfair assignment, but that doesn't give them a complaint against those who got a luckier assignment,

as long as the basic system is fair. And that's what this tax is trying to do, is to say those who are most privileged as a group owe something to society, and we shouldn't quibble amongst ourselves about which ones of us owe the most. And that's another way in a way which this is different from the Sanders-Warren taxes, which are trying to get the fairness right all the way up the scale at every moment, rather than trying to express meaningful solidarity in a moment of crisis. I don't know if you find that persuasive or not, but that's the kind of thinking that I have in mind. Yeah, I think many people, certainly many rich people, and even many people who merely aspire to be rich, will grow worried over this notion of just how much wealth it's fair for a person to have. Because, I mean, first of all, you're being agnostic as to how they came by that wealth. I mean, there's certainly a libertarian fantasy that it's impossible to get truly wealthy

without creating commensurate value for people, that the wealth that a person accrues is merely synonymous with the degree to which they have benefited other people very directly in their lives. And the metric of that is all these people, in the cases of the truly wealthy, people by the millions, have literally opened their wallets to them because they found so much value in what they produced. We can certainly find examples of rent-seeking and parasitic economic behavior that doesn't seem to be creating much value for anyone. Or if it is creating value, it's very hard to discern what that value is or how it touches the life of any individual. And these people are growing

fantastically wealthy. So I think there are people who would fall outside that analysis. But in the case of someone who has just created a brilliant product that everyone on earth wants, I think most people's, certainly most Americans' core ethical intuition here is, you know, that person deserves, he or she deserves to get as wealthy as they possibly can based on having created that value. The sky's the limit, and it doesn't even matter. It's something. It's something. If you'd like to continue listening to this podcast,

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