Pedaling Downhill with the Wind

US citizens like to think of the US as a meritocracy meaning people’s success is a result of their initiative, ability, and work ethic as opposed to their family background, gender, or ethnicity. According to psychologists, people that think they control their own destiny have an internal locus of control. In contrast, skeptics who believe that institutional racism, sexism, and classism make it more difficult for people of color, women, and the poor to succeed have more of an external locus of control.

The meritocracy/internal locus of control crowd believes strongly that there is equal opportunity in the US. In their thinking, all the children born today in the US start “the race of life” with similar prospects.

The external locus of control crowd is skeptical that there is equal opportunity. They argue that all the children born in the US today begin the “race of life” with a staggered start. Those children whose mothers received excellent prenatal care, those that lucked into stable, well-educated, financially secure families begin life with a clear head start. Those children whose mothers didn’t receive quality prenatal care, those born into undereducated, poor, dysfunctional situations begin life several yards behind the starting line.

These contrasting orientations are ends on a continuum and most everyone’s locus of control falls somewhere in between completely internal or external.

Twenty years ago, Peggy Mcintosh, published a widely read and discussed essay titled “White Privilege: Unpacking the Invisible Knapsack.” A feminist Woman’s Studies professor, McIntosh wrote the essay after reflecting on how different her day-to-day experiences were compared to her African-American female colleagues. The bulk of her essay is a list of the specific ways she experiences privilege in her day-to-day life as a result of being white.

I can’t speak for Mcintosh, but I’m guessing she’d acknowledge we’ve made progress in race relations in the last twenty years, but at the same time, she’d argue many of her examples, are unfortunately, still relevant.

After using Mcintosh’s essay to prompt discussion in a class lately, I began thinking about the ways wealth contributes to privilege in American society. I believe the affluent enjoy several advantages over the less well-to-do, advantages that make it relatively easier for the wealthy to increase their wealth.

I do not believe life in the US is the level playing field my Republican conservative friends would have me believe it is. Rather, to use springtime metaphors, I believe the wealthy are pedaling downhill with the wind.

Does that mean self-discipline and initiative are irrelevant? Of course not. Also, there are always examples of extraordinarily resilient people who accomplish far more than one would expect given the circumstances of their childhood. We should reflect on and learn from these anomalies, but they don’t disprove my thesis. It’s important to distinguish between patterns and themes, and occasional, individual exceptions to those aggregate totals. Put differently, it’s important to think sociologically.

In the spirit of Mcintosh’s essay, I’ve started a list of specific ways the affluent are pedaling downhill with the wind. I’ll share those sometime soon.

For now, I have to highlight one glaring example from the Wall Street Journal website from a few weeks ago. And I quote:

“It is no longer enough to be a millionaire to enjoy the best perks on Wall Street. These days, one has to have at least $10 million to afford the best that retail brokerage firms can offer to clients.

Take the case of Smith Barney, which will cut bank deposit rates to some of its wealthy customers in June when the Citigroup Inc. unit rolls out a “tiering” rate system on bank deposits. After the change, mere millionaires won’t earn as high an interest rate on their deposits as investors with accounts of $10 million and up.

Clients with $1 million or more in assets at Smith Barney currently earn the highest interest rate on deposits in the program. In the new program, the interest rate they receive will be reduced; clients will need $10 million and up in their accounts to receive the premium rate.
The move is part of most Wall Street firms’ strategy to distinguish among different client segments and focus more on the richest of the rich.

Under the program, besides tiers at $10 million in assets and $1 million, other tiers are $500,000 to less than $1 million; $250,000 to under $500,000; $50,000 to less than $250,000; and those with less than $50,000 in assets.

An illustration based on Feb. 20 interest rates circulated to Smith Barney financial advisors indicates that those with $1 million to $10 million in assets will be most adversely hit. From previously receiving yields of 3.81% on their deposits (as of Feb. 20), their annual percentage yield would drop to 2.76, a fall of 27.5%.”

There you have it, relative advantage. Smith Barney definitely has the right to run it’s business any way it likes, but stories like this one, that I doubt many equal opportunity believing, internally-oriented readers take much time to deconstruct, make the notion of meritocracy a joke.

To assist readers in reading between the lines, I’d like to see the WSJ include a truth in advertising-type disclosure at the beginning of articles like the Smith Barney one. Here’s a possibility, “The following story makes any argument that the US is a meritocracy laughable.”

Smith Barney has me fired up enough to take it a step further. I hereby enlist any of you also moved by this example to help me identify potential recipients of the inaugural 2008 MBA—Meritocracy Bullshit Award, that I will hand out once there are enough nominations to choose from. And to any graphic artists out there that want to design the award, may I suggest a person riding their bike down hill with the wind at their back.

Until you light up the comment section with your recommendations, Smith Barney will remain the 2008 MBA leader in the clubhouse.


5 thoughts on “Pedaling Downhill with the Wind

  1. Can I nominate the current administration for this award? Or would winning “helping the wealthy ride downhill with the wind at their back” for eight straight years in a row disqualify them?
    Does Haliburton have a logo? Just another suggestion for the graphic artist.

  2. How about SAT prep classes and hired-out college consulting to “brand” an already rich kid so that they can get into Harvard and make more money?

  3. Ron how are you doing, I’ve been busy getting caught up reading your blogs. On the Smith Barney isssue of interest rates, how do you think their interst rate matrix should look? Hope you and your family is doing well. Rick

  4. While I inherently do not believe in the premise of a meritocracy (being a determinist) I fail to see a valid case for tiered bank interest rates supporting the notion that a meritocracy does not exist in this country.

    According to Merrium-Webster’s most current definition a meritocracy is “a system in which the talented are chosen and moved ahead on the basis of their achievement”. In this case Smith Barney will limit it’s own achievement by failing to attract capital over it’s rivals, and since we live in a capitalist country with each player looking after their own interests, we are left with one entity to set the bar of wealth equal for all individuals – the government.

    It’s government tax policy in the last 50 years under both political persuasions that has presented the number one obstacle to meritocracy in this country. Of course just as there are no perfectly capitalist countries there are also no perfect meritocracies either.

  5. Pingback: Chelsea Clinton and the Meritocracy Myth « Pressing Pause

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