The Comedy Cellar: Live from the Table - Daniel Markovits

Episode Date: June 8, 2020

Daniel Markovits, Meritocracy and the State of America

musician okay good evening everybody welcome to the comedy social here uh on raw dog channel 99 on sirius radio my name is no i'm dormant i'm the owner of the comedy seller i'm here as always with my friend daniel natterman world famous comedian uh semi-finalist on a board but okay um and perry elash and brand our producer who's looking very nice this evening. She doesn't usually dial up, but I think she must have read some of Mr. Markovits' columns and she wanted to impress him. Anyway, we have a guest tonight that interests me very much. He's a Guido Calabresi professor of law at Yale Law School and founding director of the Center for the Study of Private Law. Markovits publishes weekly and widely. I'm sorry. Markovits publishes widely in a range of disciplines, including in science, the American Economic Review and the Yale Law Journal. His current book, The Meritocracy Trap, develops a sustained attack on the American meritocracy.

Good evening, sir. By the way, Guido Calabresi, the guy who is Jewish but has an Italian last name? So he is, I believe, a practicing Catholic, but he does have Jewish ancestors. I don't know why that stuck in my head. I guess that's a very Jewish thing to remember but he does have Jewish ancestors. I don't know why that stuck in my head. I guess that's a very Jewish thing to remember. He does have Jewish ancestors.

All right. Fiela Rola LaGuardia also is in that category. Fiela Rola LaGuardia and Christopher Columbus, right? That's unknown. So let's start. So you have a theory about how the meritocracy has changed, how at one time there actually was a meritocracy, and now it's more of an elite group entrenching itself in the plum positions in life. Can you give us like a rundown of your theory about that?

Yeah. So look, meritocracy seems like a pretty good idea. It's hard to argue with the idea that people should get ahead based on their own accomplishments and not say their parents' class or their race or their religion. And in the early years of American meritocracy, which was in the period right after the Second World War, that's how it worked. And partly it worked because the old American elite, to be blunt, was not that smart and was not that hardworking. And so if you gave people an opportunity to pull themselves up by working hard and performing, it turns out that the elite people didn't do so well. And the people who came from outside the elite, who were sort of hard workers, smart, hardscrabble people, did really well. So at Yale, for example, in the 50s, if you went to a fancy prep school, you were like one third as likely to be in an academic honor society than if you went to a

public school. All the smartest kids were public school kids. And then what happened is the group that got ahead by being meritocrats, they were different from the old elite. They had an almost endless appetite for educating their children. And they know how to train better than anything. You ask any fancy professional parent in America today, how do you train your kids? And they will know. And so the rich now just out-educate, out-train their kids. They spend millions of dollars literally on educating their kids. And that means that middle-class kids, working-class kids can't keep up. And it's not

because they don't try. And it's not because they're not capable of it. It's because they don't have this massive investment made in them. And education works. And so now what we have is that the very idea of meritocracy is the way in which the elite perpetuates itself. And what year did this, did we turn the corner on this? Well, the decade of the 60s was the decade when meritocracy really got going. And I would say the decade of the 80s is the decade when the elite really started to entrench itself. Yeah, because, okay, I graduated high school in 1980. Dan's a little bit after. What year were you, Dan? 87. 87, and I remember I didn't come from rich parents at all. My father

was, I'm first generation. My father came from Israel. He'd driven a cab, and then he opened a restaurant in a nightclub. The comedy cellar that I owned didn't even exist when I was in high school. I never studied for my SATs, nor did my friends. And yet many of them wound up in Ivy League schools, wound up at Ivy League graduate schools, danced a little bit later. He went to University of Pennsylvania. So I didn't feel, it's just anecdotal in terms of myself, I didn't get that kind of skilled parenting to guide me towards the elite. But yet I did find myself achieving in those circles. So was I just right around the corner?

So I'd say that, so I'm almost exactly your age. I graduated high school in 1987 also. Went to a public high school in Texas. Would now, I guess, be called an urban public high school. So it wasn't a fancy suburban school. It was a straight up city public high school. Yeah, I went to public high school, I should say. Go ahead.

Sorry. Yeah. And when I got, I went to public school, I should say, but sorry. Yeah. And when I got, I went to Yale College there and my parents were professionals. So I had certain advantages. So I guess I'd say two things. First of all, a lot of kids I went to high school with seemed to me to be obviously just as smart and hardworking as I was. And, you know, you can tell if you're in school with somebody,

they get the answer right on the test, you don't. That's pretty clear that they know what they're doing and you don't. But they didn't get into as fancy colleges as I did. And I think a significant part of the difference was that my parents gave me various kinds of enrichment, that their families, they didn't have as much money in them or as much education, and their families found hard to give them. So I would say that you and I were at the generation where it was still possible, but there were real advantages. But fast forward 15 years or 20 years.

In 1995, I want to say, the University of Chicago accepted 71% of its applicants. Last year, the University of Chicago accepted 71% of its applicants. Last year, the University of Chicago accepted 6% of its applicants. How much of that is due to population growth and how much of that is due to whatever? It's due to a bunch of things. More people are applying. More people from overseas are applying. It is a striking fact about America that if you look at the 10 most prestigious colleges, pretty much all of them existed 100 years ago, and pretty much all of

them had the same number of students 100 years ago, even as the country has two or three times as many people in the world, many, many more. So it's just gotten harder, harder and harder. And it's now, you know, at 6% admissions, if you ever made a mistake, you know, if you fell in love and didn't study for finals, if your family had a financial setback and you couldn't work right, and you get a bunch of C's once a month, you're not getting into Stanford. And so the kids who get in are the kids who never made a mistake. And in order never to make a mistake, you need so much support as a child. How much difference if you don't get into Stanford, but you get into UCLA, or I'm from Connecticut, you get into UConn, and you work hard there, how much are you fucked because you didn't get into Stanford?

Well, so I'd say two things. First of all, if you get into UConn, it's a good school, you're going to do okay. On the other hand, just to give you an idea, if you look at the fanciest investment banks, and these are places that pay people, first year people, 100,000 senior people, millions, they recruit only at five or six places. They don't even recruit at UConn. If you look at the law firm in New York, which has the highest profits per partner, that's a law firm called Wachtell Lipton. They have profits per partner over $5 million. I think 96% of their partners went to six law schools. Wow. So let's go through a few.

Go ahead, Dan, you want to follow up? No, so basically, you go to a pretty good college, you're going to do okay, but you're going to have a real problem if you want to break into the jobs that make millions. So let's go through a few of the things which just come to mind. I'm sure they come to other people's minds. How many spots are no longer available because of legacy admission? Is that a constant or is that mushroomed? So the irony is that legacy admissions are less powerful today than they used to be. But at the best schools? Yeah. So, first of all, my personal view, and now I'm speaking as a citizen, not as a scholar,

is that the way in which some of the best schools effectively, I believe, have quotas for Asians is immoral. I'm with you. So that's my view. And I say that as somebody who also is in favor of affirmative action. Right, they're not in conflict. I think they're not in conflict, properly understood. That's my view. But I speak now as a citizen, not as a scholar.

What I can say as a scholar is that the kind of meritocracy we're talking about is really complicated because compared to categorical exclusion based on race, it's a real way for people to get opportunity so that, you know, exceptional people even now can get ahead in a way in which they couldn't if you had to have the right parents or the right ethnic background to get good jobs. At the same time, most of us are not exceptional. We're average. And if you want to have a fair and well-functioning society, you want a society that functions fairly and well for average people. And average people need a lot of training to do really well. So interestingly, for example, if college admissions were based exclusively on the SAT, elite colleges would be whiter and less Asian, not more Asian.

I didn't know that. So what is it that's putting pressure? I thought the Asians were doing very, very well standardized tests. It is true that some groups of the Asian population do well and do well enough that the Ivy League has quotas or has some push against them. But it's also true that overall, the effect of wealth swamps that effect. And if you look just at the size of the group of people, there's a study by a guy named Carnival out of Georgetown that cranks the numbers. Okay. And as a scholar, you have to account for this. How do you control for genetics? The idea that the smartest people have married each other, you know, right. So, so that's a deep question. I am on the side of nurture, not nature. Thousands of scholarly articles have been written about this.

And it's an interminable debate. And I'm not going to be able to settle it to the satisfaction of a skeptic. But here are, I think, three kinds of thoughts that are relevant. The first is that the correlation between parents and children's IQs has not been going up. But the correlation between parents and children's academic performance has been going up. Maybe you should explain that.

Yeah. So if you test infants or two-year-olds and you try to figure out, like, you know, there are these tests of infant or young person's intelligence. I'm a little skeptical of them, but let's say we believe them. And you ask, what's the relationship between the kids' performance on these tests and parents' performance on these tests? in which as meritocracy gets going, people with intelligence genes start marrying each other. You would expect that over time, the performance of the young kids would be more nearly like the performance of the parents. And that's not been happening. And so that's evidence against the genetic story. Right. I'm not leaning towards genetics explaining the elite. I'm not leaning towards genetics explaining the elite. I'm not saying that.

But just as a parent and from what I've read, and not just with intelligence, but with musical ability and any other discernible talent that I've been able to see in my kids, it really seems like it's genetic. It really does to me. I don't know if you're a parent, but the differences from birth just seemed stark. You know, so that's totally fascinating. I am a parent and I have exactly the opposite experience. That's why I think it's going to be very hard. You know, people of good faith can disagree about this. Yes. My experience with my children and in my own life is anything that I was taught and whatever my kids are good at they were taught now i guess that's not you know like i have a daughter who has a beautiful singing

voice that probably not you know if you're tall you weren't taught that i mean it would you know we all know that basketball but um other things i see musical ability as a neurological function, just like mathematical ability certainly must be. And I just can't believe that that's not significantly passed down. But, you know, we're not going to settle that. We're not going to settle that. That's right. But here's one thing that's really important that I think we can probably agree on. And this is an important part about this debate. Whatever is the case about the genetic component, the genetic distribution of natural talent is going to be sort of symmetrical. And it's going to be kind of compressed. You know, the difference between the genetic natural talent of somebody at the very top

and somebody at the middle is going to be kind of small. We see that everywhere. But the income distribution is incredibly skewed. And so if you want to explain the income distribution, you need to have something more than just the genetics. Well, let's get to wealth inequality. Let me just say one other thing about that. I've always likened all this stuff, and I think it is a helpful analogy to the idea of planting a tree. And I always feel like if you plant a tree or plant a seed and you give it the requisite amount of sunlight and nourishment, you really can't affect what kind of tree it's going to be. But when you deal in deprivation, that's when you begin to see or trauma. That's when you begin to see something really not reaching its potential. And I think they can both be true. I'm skeptical that intensive tutoring of me would have gotten me to perform that much better because I had a pretty rich life to begin with. But I

think there are communities out there that are so deprived of richness day to day that the amount of effect that tutoring and prep courses and whatever it is could have on them could be enormous without undermining the argument that their basic intelligence is genetic. You follow what I'm saying? Yeah, I see that. So let me say three things about that. The first is I think you're right that deprivation and particular trauma, are extremely damaging to childhood development. And especially trauma that goes untreated. And wealth, family wealth, makes a big difference there. There's a sociologist at Stanford who did a fantastic study in which she looked at pregnant mothers who were caught up in the Chilean earthquake, but not physically injured. So the mothers experienced trauma while pregnant, but they

weren't physically injured. And she looked at what happened to the kids. And the story is that the kids struggled a lot just because their mothers had undergone trauma while they were in the womb. But the children whose mothers were rich overcame their struggles because the rich parents paid for care, tutors, psychologists, whereas the children whose mothers were not rich struggled their whole lives. So trauma is a big deal. That's one thing that i think is important yeah um go on keep going i'd say it's kind of like the law of diminishing returns like i i've known times i've really something i'm not that good at and i've really really day i've tried to get better at it and i can really only move the needle a little bit i notice and then if i put it down for a month, I go right back to where I was, you know? So I'm like, well, this, I'm, I'm, I've hit the wall in terms of my own innate ability at this.

Yeah, but go ahead. Some things are like that. But, but here are a couple of things that aren't like that. And here's a way in which the rich get their children ahead through meritocracy. Larry Summers, when he was president of Harvard, told the following story. There was a kid who was just on the bubble. Should he get in? Shouldn't he get in? In the end, I think he got in. And one of the reasons he got off the bubble is that he was totally fluent in Chinese.

Now, why was he totally fluent in Chinese? He was totally fluent in Chinese because in addition to his school, from age 12 or 13 through 18, he had had three or four private Chinese tutor sessions a week which will make you fluent in Chinese even if you're not a language genius now that's the funny thing about it is it's a real accomplishment it's it's not like alumni preference it's hard you have to work. You have to try. You have a skill. This skill is valuable. But if your parents don't have twenty five to thirty thousand dollars a year to spend on Chinese tutoring, you're not gonna get that skill. I want to just chime in briefly. Four to five hours a week of

Mandarin will get you conversational. I have of mandarin will get you conversational i have grave doubts it will get you anywhere near native level fluency yeah that's right i think that's right but it'll get you something that's pretty impressive when you play to college dan taught himself french alone in a room with a book and he's fluent and he actually performs this is true in french books videos you know movies over 15 years and i'm not native level fluent, but I'm pretty good. Yeah. That's why I have some in and that's French, which is 80 billion times easier than Chinese. So I just said, that's why I say that. And I just, I get that. I get that. So let me give you one other kind of story. Cause this is institutionalized. Um, if you look at fancy prep schools in America today, almost none of them have a cheerleading squad. Almost all of them have women's sports teams

at the sports that Ivy League colleges field varsity women's teams in. Yeah, well, they game crew, field hockey, fencing, squash. So what happens is if you go to those schools, you get trained in a sport that then the colleges you're going to apply to value. And again, you have to work hard. You can actually play the sport. You're not lying about it. But at the same time, if you go to the public high school I went to, especially as a woman, you're in the drill team or the cheerleading squad, and Harvard is not admitting somebody because they're a cheerleader, but they are admitting somebody if they do women's lightweight crew. Well, that's a

totally legit point. And I would hope that the universities would address that, because that's just not fair to some extent. So how does this all translate into wealth inequality, which you regard as a very serious problem, correct? Yeah. So the top 1%, let's talk about income first rather than wealth. The top 1% by income today has about 20% of all the income in the country. Top 1% has 20% of the income, okay. And 1% is what income range? Where does that start, Dino? It varies year to year, $400,000 a year and above.

Households, households. So that's a fifth of all the income. That's two to two and a half times as big a share of income as the top 1% had in 1960. Can I just stop you there? Because 400,000 is so low. It's got to be a pretty big, steep curve between the top 1% up to ridiculous wealth. 400,000 is not that much more than 100,000, right? I mean, you know.

Well, try living on 100,000 if you were living on 400,000. It's way, way closer to 100100,000 than it is to the super wealthy. $100,000, you're still saving for college and worrying. I have three kids, $400,000 and a house. I want to take a big car and save for three colleges. I'm not on easy street there, right? Yeah, no, a lot of people experience it that way. And I think on the one hand, that's totally true to experience. But on the other hand, if you want to understand our politics today, median household income, so this is halfway up the distribution in America, is $60,000.

Wow. Okay, so $400,000 is over six times the median household income. 150 million people approximately are living on $60,000 or less households household households so yeah household income of 60 000 and how is that compared compared to uh 1975 or something so how median household income has been more or less flat flat in constant dollars right in constant dollars not quite? In constant dollars. Not quite flat, but like, you know, economists disagree. It depends on how you count, but not steeply up. Now, what I've never understood is, and I mean, that bothers me, what I've never understood is why I should worry about wealth inequality.

And I think to myself the following. There's like, I should Google it, but I'm sure there's like, you know, let's just make up some numbers. 500 of the world's billionaires are American, right? Let's say 300 or something, or it is something like that, are Chinese. If those 300 Chinese billionaires were to decide to emigrate to the United States of America, and now they exacerbated wealth inequality, would we be worse off all of a sudden as a nation because of that? I think we'd be better off. So I'd say that there'd be some advantages. There's no doubt about that. But there'd be at least two kinds of disadvantages,

which I think are very great. The first is concentrated wealth of that magnitude completely distorts democracy and democratic politics. How? First of all- Didn't help Bloomberg. Yeah. Most obvious, well, no, that's not true. Or Tom Steyer. That's not true. Soberg became mayor of the most important

city in new york which he would not have done if his personal fortune had been a hundred thousand dollars fair enough it didn't get him the presidency yeah and when he became i'm not actually disagreeing with you but the bang for the political buck in uh 2001 or whatever it was, 2000, is way different than the world of free bandwidth. Yeah. Although I think what those stories show is that you can't buy the presidency, but you can buy an enormous amount of influence. I mean, I don't know if AOC could have done what she did back in the bloom. I totally agree with you. I totally agree with you. And there's an outsider route in. But if you look at who donates to early candidates in the primaries, it's overwhelmingly very rich people. And those donations make candidates viable. And people get something for that. If you look at who donates to the campaigns and

the PACs of committee chairs, it's overwhelmingly very rich people. So that's one part of it. Another part, which people don't pay enough attention to, is that if you're really, really rich, you can hire accountants and bankers and lawyers to structure your affairs in such a way that the government can't regulate you. So, you know, I'm a middle class, upper middle class guy, whatever. My town raises my real estate taxes, what do I do? I pay them, right? But if I'm a billionaire, what do I do? I hire bankers and lawyers to structure my affairs in such a way that everything is held in certain kinds of offshore accounts with generation skipping trusts and family trusts to diminish the valuation. And I don't pay the taxes and I'm not breaking the law. What I'm

doing is I'm using the skill of elite professionals to make me unregulable. And that's also undemocratic. Are you sure about that? I mean, you know, I know rich people, and maybe you're talking about not income taxes, but income is income. How do you hide income? No, no. Labor income, wage income is almost unhideable. Capital income is almost untaxable. But how are the wealthiest making their money? They're making it partly through labor. I argue more through labor than people on the left want to acknowledge. But they're also often getting paid in ways that are very easy to shield from taxation.

So carried interest of hedge fund people. This is taxes, capital gains. Yeah. I guess what I'm saying is that I get all this, but I'm saying to me, it's like it's such a small number of people. Some of the people I know who are this wealthy, like Bezos or Bill Gates or Steve Jobs,

or, you know, I don't know who these people are. It's like, I don't know how they could not be that wealthy given the fact that markets are global now. And no matter what, I mean, no matter what you say about Jeff Bezos, every time a book is sold on Amazon, he is entitled to a penny of it. And even at that rate, he's going to get tremendously wealthy. So what can you do about it, you know? Well, look, it's complicated. But there are a lot of things that could be done about Amazon. So Amazon, as... I love Amazon. But there are a lot of things that could be done about Amazon. So Amazon, as...

I love Amazon. Don't touch my Amazon. It's gotten me through the pandemic. Like, don't mess with my Amazon. I get it. You know, Amazon, here's the thing. This is really important. And this is a fundamental trade-off that we as a country have to think about.

Amazon is great for the American consumer. Right. It is terrible for the American worker. In 1965, retail was a middle-class job. It was dominated by small-scale stores where the people who worked sometimes had ownership stakes. They were managers. They had discretion. They controlled the circumstances of their work. They had to learn skills and they were paid middle-class wages. Amazon warehouse workers today are unbelievably badly treated. I don't know how much time you spent looking into this, but Amazon, do you know about their wristband with the haptic feedback?

No, but I know the story about the peeing in bottles. Yeah. They have a patent on a system where they'll be able to tell that within like two feet where you're moving, and they're going to buzz your wrist if you scratch your head too often because you're not filling boxes often enough, and you're not getting paid a lot. And this is a terrible thing for workers.

And also... Yeah. No, no, finish. No, I was just going to say, the question is, you know, we can have a society where everybody gets paid more and things cost more. I mean, also, I know... Wait, can I just tell you, I know you don't care what I think, but, you know, during...

While we're... What? Of course I care what you think. During the. I'm in front of the company, Perry. Go ahead, go ahead. Right, exactly. While we're heralding them, you know, these heroes and on the front lines of the coronavirus,

these guys are protesting and striking because they have no protection. They're getting paid like bullshit wages. I mean, it's unconscionable. I got to tell you this. In my experience as a boss, in terms of working conditions, some of what you're describing seems like there should be legislation about that. And maybe you're right because baseless spread so much money around, it's tough to get the legislation. So I'm going to say that that sounds right to me. However, the real horror

stories that I've heard from people at work have been much, much more often in mom and pop, small places, off the book works, off the book jobs, where it's under the radar where there is no worry about a worker tweeting out i mean amazon no matter what they do have a tremendous pr concern all the time and they can't keep it a secret how they're treating workers and i would i would wonder if you broke amazon up if you would see anything change in terms of the way workers are treated. And I also wonder if there isn't, like, if you want to raise workers' wages, maybe we do need to reconsider immigration. I mean, Paul Krugman even used to talk about, you flood the country with, with low-skilled workers, you, you suck wages down. You know, that does make sense to me. I'm sorry to keep talking about it. I have a restaurant. And of course, if there was a shortage of labor, I would have to pay more. It may put me

out of business, but I would have to pay more. So on the immigration front, this is again, like a totally contested area. I think the best modern economics actually has the other view. That's right. It is true that when more workers come in, they increase the supply of workers and they reduce wages. But it is also true that when more workers come in, they increase the demand for goods. They increase the wealth of the economy and that drives wages up. I think it's both. I'm sorry to interrupt you, but I've always thought that this can both be happening at the same time.

You can aggregate it into wages going up. Right. But it still may be responsible for Amazon wages going down. You know what I'm saying? Yeah. It could, look, it could be, it could be. My, you know, my read of the economics and, you know, I'm not going to cite you papers on this show, but if we wanted to communicate offline, I could send you some papers. My read is that the net effect is positive for American workers.

Net effect, yes. But if we've learned anything over the last few years, I'm sorry, Daniel Natterman, you're both Dan, so. I'm Danny Daniel. That aggregate measures tend to really mask some really serious problems going on. We thought people are getting hurt. Yeah, we didn't know about the white working middle class, the white working class suffering because aggregate measures were all positive. No, I'm not. I'm not. I'm not denying that some people are getting hurt.

And go ahead. Daniel. I believe you said that wealth inequality, there are two bad effects, one of which was concentration of political power, but I don't know that you got to the second one. I didn't get to the second one. Sorry, go ahead. The second one, I can't tell you the mechanism. I can tell you a historical

regularity. In the past few years, a bunch of economists, historians, political scientists have published these massive comparative studies of concentrated wealth across all of human experience, across all space and time, all societies. And the lesson of those studies is that in all of history, there is only one society that has suffered as great a concentration of wealth as the United States has today, in as narrow an elite as we have today, that didn't end up- What do you want to guess? What?

I just wonder if we could play a guessing game to make it fun. Let me finish what they're doing, and then you can guess. That didn't end up losing a war or succumbing to a revolution. There's only one example. What do you think the example is? It did not succumb to a war or lose a war. Every other society that had this kind of concentrated wealth got overrun by

enemies or overrun by its own population. There's only one that didn't. There's only one that did not. Yeah. No, many guesses. No, I don't have a guess. Go ahead Dan, I thought you had something in mind. I thought maybe you'd have something in mind. No, I'm not... It's an optimistic story. That's a hint. It's a what? It's an optimistic answer. Give it to us, I don't know. It's us in 1929. Oh. That's a trick question. That's a trick question.

My son is here. I'll come back in a few minutes. I'm almost there. So we're in bad shape, but we've proved able to get out of such bad shape before. Well, I mean, a sample size of very few and different sizes. I don't know. Okay. Well, how many sample size are very few and different size? I, I don't know. But you, okay. So you, and in order to counteract this, because I just want to say,

I think that the idea that people can now sell whatever it is, is selling to a billion people or 3 billion people that changes everything. And you're, it's never going to be like it was in terms of the inability to, to get wealthy. And, and I, I don't, I'm yet to be convinced that is our serious problem. I don't mean it's no problem. I don't mean that, but I'm, I'm, I just haven't yet been convinced of it.

You want to have a one-time wealth tax, correct? Well, I want to have a one-time wealth tax on account of the pandemic. So that's a separate idea. So you don't want a wealth tax to counteract wealth inequality in general? I would probably favor a wealth tax to counteract inequality in general, but that's more controversial. The one-time wealth tax I argued for in the Times was connected specifically to the pandemic and to this idea that although anybody can get sick, it turns out that the people who are bearing the costs of this disease are working people. And the rich are sitting at home, keeping their jobs, staying healthy.

And if we're being attacked, as it were, which is what we are by a terrible, terrible malady, everybody should be doing their part. And so the richest people should be carrying the weight of paying for the pandemic. That's the idea there. I like that idea. I don't think that that seems reasonable to me. No, no. What would the wealth tax be? Two out of three is pretty good. What would the wealth tax be? The wealth tax, and at least somebody's got to pay for it. What are the terms? Nobody has to pay for it. Nobody pays for anything.

What are the terms? What would I propose? I would propose 5% of all household wealth in excess of $2.5 million. On $2.6 million, you pay $50,000 or something like that? You pay $2.6 million. No, on $2.6 million, you pay $50,000 or something like that? You pay $2.6 million. No, on $2.6 million, you pay $5,000. $5,000. Yeah. Oh, $5,000, yeah.

If I made that math mistake, you would remit. Yeah, I was thinking of a million. I meant three. Instead of a wealth tax, why not just bump up the income tax this year as a one-time thing? You could do that. I think the reason, the thought I had behind this is that this is kind of an exceptional event and we should pay for it out of the store of our accumulated good fortune. The thing about the income tax is, you know, some people make a lot of money one year, they don't make a lot of money another year.

I don't know how to think about those people, but any household that has two and a half million dollars in assets is doing pretty well. And so that was the thought. That was the thought behind this. So you're going to assess somebody's property and then force them to come up with the money to pay it and borrow it? Well, so there'd be ways of dealing with that. There'd be ways of dealing with that. First of all, the $2.5 million exclusion means that not a lot ofals are made to pay the tax, so there's no penalty. There are a bunch of things you could do like that. You could also allow people, if you wanted to, to spread their payments out over time. There are lots of ways to administer this. And those are details we could talk about, but it can be done in a way that's not disruptive. And now we're going to go pay for the deficit spending that we've done during the pandemic. Is that the idea? Or it's just to make people feel that they have skin in the game?

It turns out if there were 100% compliance, which of course there wouldn't be, but just round numbers, 5% of household wealth in excess of $2.5 million is $2 trillion, which is almost exactly what we've spent so far. All right. I mean, you know, my biggest fear of that is, I hate to say this, I hate to say this vulgar thing, but I, but I, it's the thing that keeps coming to my mind when my father used to tell me about when a bartender was stealing, why he didn't want to give them a second chance. He would say that stealing is like masturbating. It's very hard to do it only once. I think I'd have a one-time wealth tax is very wishful thinking. Once you get that, hooks in it.

It could be. It could be. But the fact that it would be triggered. Look, here's a counter. We just had a $2 trillion stimulus that passed the Republican Senate almost unanimously. These are exceptional times where things are possible that ordinarily would not be. I would argue that the choice of word stimulus almost betrays your politics there because it's not a stimulus. The government shut everybody down and it's sustenance it was it the government shut everybody down and it's it's it's sustenance is

what it is i mean you know two trillion sustenance could you believe that the republican senate yeah yes i just spending i do because i think that from their point of view some of which i share some which i don't they don't this doesn't fit their supply side trickle down theorems this is people are we're taking we are taking away their right to make a living. It's more like a taking, like a government taking. Yeah, I can see that. I can see that. I can see that.

But again, that same kind of exceptionalism might mean that the wealth tax would be exceptional. That's the point. It wouldn't happen again because it took something extraordinary to get it to be possible. All right. I think we covered it. I don't know what else. It's also interesting. I mean, I want to know what he wants to do about wealth inequality in general, not just in the COVID

crisis. Yeah, answer that. And then also tell us what we do about the elite problem in the Ivy Leagues and stuff. What do we do about there? So I think, you know, this is a long story and these two are related, but here's the way to think about it. Private education, not just in the, not just at college, private preschool, private elementary, private middle school, private high school is an enormous expense that rich people devote almost exclusively to their kids. Median public high school in America spends 1212,000 to $15,000 a year on every student.

A really rich public high school like Scarsdale spends maybe $30,000. I live right next town over, Ardsley. So, yeah. Right. Yeah. So notice $30,000. That's almost three times

as much as the median. A really rich private school spends $75,000. Now, all these private schools, $75,000 per kid per year, all these private schools are taxed as nonprofits. The universities are also. That means that there's a huge public subsidy to them because alumni donations are tax deductible, their endowments can grow without tax. At Princeton University, somebody recently calculated the public subsidy amounted to $100,000 per Princeton student per year and lost tax revenues. Wow. Compare that to the public subsidy at Rutgers, State University of New Jersey, $12,500 per student per year. The public subsidy at Essex County Community College,

$2,500 per student per year. So the Princeton kids are getting a bigger public subsidy than the community college kids by a factor of 40. Wow. And there are more kids at Princeton whose parents are in the top 1% of the income distribution than the entire bottom half. So no more tax deductibility for these institutions. So all these institutions, not just the universities, my view is unless they dramatically expand enrollments and start taking a lot more working class and middle class kids, they should not be taxed as charities. They should be taxed as clubs. Why are they being taxed as charities? I don't have a problem with that.

What's that, Terrell? Why are they taxed as charities to begin with? That doesn't even make any sense. Why would a private- Well, yeah, because they're incorporated as not-for-profit corporations that pursue the public good of education and research and learning. But what would you tax? Well, you could tax the return of the endowment. You could tax the real estate that they own. Now, these are not small sums, by the way. A nonprofit doesn't pay property taxes?

They do not pay real estate taxes. Wow, I didn't know that. Okay, that's weird. But the endowment's a much bigger deal. So just to give you a sense of the size of this, the 10 richest universities in America have a combined endowment of roughly 200 billion dollars. Wow. All right, now if you let those endowments keep growing in the future at the rate they've grown in the past 30 years, and you let U.S. household wealth keep growing at the rate it's been growing in the past 30 years, and you let U.S. household wealth keep growing at the rate it's been growing in the past 30 years, sometime between 2100 and 2200,

those 10 universities will own all of America. Well, the trees all grow out of the sky, but yeah, that's still... Not going to happen. No, no. Not going to happen. So the question is, how is it not going to happen? And it should not happen in a way that's consistent with the value of education and which spreads education across more people.

So that's one thing I do to sort of break up this elite, which is not break it up, but open it up. Well, I started kind of as a skeptic of yours. How are you? That's my son, Manny. He's a member of the elite. He goes, but a lot of what you're saying makes a lot of sense to me, I have to say. You did say one other thing. I heard a little bit of your- Manny has a question. Manny has his hand up. I heard a little bit of your-

Let him ask a question. You really have a question? Manny- What are you talking about? All right. You know what's funny, Manny? I took my kids when they were five to the tax class I teach at Yale Law School. And six minutes in, my son Carl raised his hand and looked at me angrily and said, what are you talking about?

So you said, I heard a little bit of your Sam Harris podcast. And you said something that you teach your class on day one, comparing government to the private sector. Oh, I talk to my tax class about this sometimes. Yeah. It was a fun example. What did you say? Oh, you know, a lot of people say that the government is terribly wasteful and inefficient. But if you're a typical middle class American family making $60,000 a year, you probably pay $10,000 a year taxes. And for that you get roads, schools, the police, the fire department, national defense, clean air, environmental regulation. I pay several hundred dollars a month to my cable company for which I get, you know,

nothing I want to watch and internet breaks down all the time. So I don't know why government is such a bad deal. Well, I mean, I like that example. I don't know that it's a fair, I mean, you chose the people making 60,000. Why not choose people paying zero taxes and compare that to Comcast? Yeah, I chose, because I chose the average person. That's why. But I mean, I will say that government is horrible. And I mean, in my career as a businessman, I've accomplished a lot just by counting on the fact that government would be incompetent and not notice whatever it was that the law was supposed to do in terms of applying for things or whatever it is. The example that one of the comedians always gives, Jim Norton, is that government ran off track betting, which is, you know, and went bankrupt, you know, so who can go bankrupt

doing gambling? And there's a million examples and even the post office and i would have to tell you as someone who lives in the private sector uh government really really can't do anything right which is not to say that we can have no government because some things only government can do and so we're gonna have to do them extremely inefficiently because we still need them but i guess what I want to push back a little bit, look, government is really annoying to deal with. Because they're a monopoly, and they can boss you around. And, and a lot of the things they tell you to do don't make sense. And they abuse their power in 100 ways small, and as we're seeing now large. Yeah, the police. At the same time, at the same time, the social infrastructure and physical infrastructure and environmental protections

and just the quality of life the government manages to supply is pretty impressive. And it does that because there are a lot of people who are smart and well-meaning who work for the government. And so I guess what I want to say is both things are true. Yeah, I agree that there are certain, I've given some thought to this at various times. Well, how did NASA happen? I mean, NASA is government, right? And I think what it is that when your government is hiring people who are self-motivated for whatever reason, they're getting paid by the government, but the government is not their taskmaster. They're doing what they really believe in and really want to do. Then the government can produce very good results. But when they're hiring clerks at motor vehicles or a program or bureaucrats, they're terrible.

And unions make the problem a million times worse. But look, so here's a much less highfalutin version of this. Years ago, when my kids were your age, one of them ate some berries in our garden. And I didn't know what these berries were. So what did I do? I grabbed the plant. I ran a couple blocks away to the Connecticut Agricultural Station, ran in off the street, found some guy and said, my kid just ate these. What do I do? And lo and behold, oh, you go ask Jack over in that office. And I went over to Jack's office and Jack looked at it and told me completely confidently and accurately, that's what this plant is. Don't worry about it. They didn't charge me they didn't id me they didn't

test me they knew what they were doing and they told me the answer so that's kind of good it's great uh right and that's not nasa that's like some person working for the connecticut department of agriculture how is this kid turned out ultimately well you know they're doing all right i would have to say that government is a disaster. And also, I mean, we're way off. We're going to wrap it up, but we've talked about this before. We've gone wrong in some other way where, you know,

the Empire State Building was built in, who remembers, 13 months. It was built in 13 months in 1929 or something. And we can't build a building in 10, 11, yeah. It was built in 13 months in 1929 or something, yeah. And we can't build a building in 10, 11 years now.

You know, whenever I think about PPE and ventilators, I think in World War II, we built an aircraft carrier a week. Yeah, yeah. But I have to say, and now I'm revealing my politics, at this moment, we have a federal government that is run by people who don't believe in government. Well, not the CDC, but yeah. But the CDC is getting defunded. It's getting shut out.

I think that's not true. What CDC? Center for Disease Control. I don't think what we're seeing is the results of defunding. I know there's been some factual debunking of that, but I just think things don't happen that quickly. But I will acknowledge

that we do have a government of people who don't really believe in government. That's for sure. I don't, whatever, we're getting way off. You know, you should come on another time and just talk,

shoot the shit about general issues in the world because I think you have an interesting point of view. I'd love to talk and I'm really really glad you had me on thank you so much thank you really a pleasure uh most grateful you have a good night y'all have a good weekend listen everybody stay safe you're in new york so you're very much out of my mind you again by the way what's going on with tweed airport you guys getting a real airport or not

i don't think so. This is local interest, but if you wanted a story of dysfunctional government, we'd be here for a week. Daniel, where can everybody find you and follow your work if they'd like to? Probably the best thing is at DS Markovitz on Twitter. Thank you so much. Thank you so very much.

Listen, everybody have a great night. Take care. And Manny, where can we find you? In front of the PlayStation. Tell everybody. Playing on Xbox One. All right. It is cute, ladies and gentlemen.

All right. Good night, everybody. Good night. So once again podcast at comedyseller.com if you enjoy hearing about this kind of stuff let us know if you prefer to hear comedy related stuff

let us know if you prefer a mix if you want more Manny and I think you probably do so we'll see you next time and you can follow us on Instagram If you want more Manny, and I think you probably do. More Manny. So we'll see you next time. And you can follow us on Instagram, at live from the table. By the way, Dan, are you buying that if the richest people in China emigrated to the United States, it wouldn't be awesome for the United States

to have all that wealth come back to this country and have all those businesses be American business? You know, I was never a big believer in the inherent negative effects of income inequality, as long as everybody has enough at the bottom. But, you know, I could be convinced. Yeah, I could be convinced, too. We all want what's best for the country, right? I mean, if you don't have enough, that's the problem, isn't it? That's a separate issue. If everybody has enough, does it matter if one, if 100 people or 1000 people have ridiculous amounts? He acknowledged what it is that I think is really disordinary is that the 1% is not the problem.

It's the 0.1%. The difference between the 1% and the average person is minuscule compared to the difference between the 1% and the top 1%. I mean, the curve is ridiculous. You have people having billions of dollars comparing, he's talking about a group of people that goes from $400,000 to hundreds of millions of dollars. I mean, that's crazy. Man, he's got the best smile. That is a beautiful face. You know what, though? You know why I liked him is because he seems to agree with everything I think, except he can actually back it up with facts. Fair enough.

Fair enough. He probably does agree with most of what you think. And he is a smart guy, and I like his manner, too. All right. See you next time. Bye-bye, Manny. Bye, Manny. Bye. Bye-bye. see you next time bye bye Manny bye