12/18/2023: All We Have is Money
where is the public infrastructure for education and healthcare?
I recently read The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture by Mathew Stewart. I have become more conservative over the years ever since I started my own business ventures. I believe fundamentally people are responsible for taking care of themselves but I do acknowledge that we need to remove barriers from the system so it’s not too hard for people to realize their American dream. When I was running a restaurant, I needed people who would show up at the work on-time sober and perform simple duties without staring at their phone. But it was hard to find people who could do that. I simply could not have employees who are on my payroll but do not want to lift a finger at work while at the same time complaining that life is unfair to them.
But I do want to understand perspectives from the liberal side. The author of this book is definitely a liberal and I appreciate his many points while disagreeing on a couple of critical points. The main point of this book is that the top 10% income earners of America are pulling up the ladder so they stay rich while the rest 90% suffer and get left behind. America has all the money but its public infrastructure in education and healthcare is non-existent. Education and healthcare is mostly privatized and extremely expensive. This doesn’t affect the price insensitive 0.1% but the next 9.9% works for the top 0.1% and are anxious to secure their spots. This professional class believes in the delusional *merit* system and think their hard work and talent is the main reason for their success. At the same time, this *merit* belief rationalized the suffering of the bottom 90%, whose income actually shrunk in the past 30 years while the top 10% grew their income substantially. In essence, the 9.9% think the bottom 90% just need to work harder and be smarter to join them.
The author thinks this merit belief is a cruel excuse for the unjust system. He points out wealth creation doesn’t have a very strong correlation with merit. I agree with that. He believes wealth creation is mainly a collective effort and the fruit should be more evenly distributed. I disagree with that. I believe a big part of wealth creation is entrepreneurial risk taking. Entrepreneurial risk taking requires the skin in the game , high opportunity cost and a high chance of failure. People who quit a prestigious corporate job to start their own business using their own money mostly fail at business. But if they do succeed after many grueling years, I believe they deserve a large percentage of the outcome. While employees can share some success, the amount of risk employees take is miniscule compared to the owners. I came from a small business family and my family has started almost a dozen businesses over the decades. Half of them failed while the other half were successful. ~50% hit rate is considered pretty good in the business world. At one time, our family finances were on the brink and my family had a net worth of negative one million. At the same time, the employees were still collecting their paychecks uninterrupted. In my opinion, the courage to take entrepreneurial risks and enduring the business ups and downs is an essential element of wealth creation. The author didn’t mention it at all with regard to wealth creation. I think it’s a critical flaw of his thesis.
But I fully agree the merit belief for the professional class is a big problem and perpetuates injustice. One great point the author made is that many of the talented kids who were music prodigies or star athletes and later attended elite colleges ended up working at big tech, consulting firms, investment banks and hedge funds wasting away making useless powerpoint presentations, optimizing digital ads and trading options. They have very high merit and make a lot of money but what is their contribution to the society exactly and why do these jobs require merit? Also, may I add what’s their skin in the game exactly? It seems these executive level employees get paid extremely really well even if they bankrupt the company or put our entire financial system in danger. All they have is the permit to work for the top 0.1% but they feel they deserve the success and money because they are smart and hardworking. This entitlement is a problem and they pretend to care about the suffering of the bottom 90% who are sinking further and further. But seeing the fate of the bottom 90% causes anxiety for the 9.9% and they want to make sure themselves and their kids stay in the top 10%. To achieve that, they collectively pull up the ladder for self-preservation and the result is the difference between the top 10% and the bottom 90% just keeps getting bigger.
This inequality plus overpriced housing, education and healthcare in America is making life hard for the bottom 90% . It also causes political polarization and radicalizes people. In the author’s opinion, republicans are hopeless. But the liberal left is also intellectually and morally bankrupt. They want to secure their spots in the top 10% by having a successful career. Intellectual honesty is not essential to a successful career. Instead, the key to success is to serve the top 0.1% well. Basically, the liberal left becomes flunkies to the top 0.1% and abdicates their responsibility as morally sound intellectuals. Wow! That’s some harsh criticism coming from a liberal.
This is an interesting book to read. The author didn’t really offer a good solution but I understand. America is a very rich country but all we have is money concentrated on the top 10%. We don’t have good public infrastructure for education and healthcare for all of us. The top 0.1% has no incentive to solve the problem of inequality, the next 9.9% is busy with self-preservation and the bottom 90% is powerless. But if history is a mirror, this cannot go on forever and our democracy is in danger. I personally think education and healthcare reform is a must for this country. I am taking some actions on the higher education front. It’s an uphill battle but the best time to plant a tree is twenty years ago and the second best time is now. I don’t know if it will work but I must try. I will share more details early next year.
Love this. Thanks for such a detailed write-up and for sharing some of your own personal insights and examples. It really made this post jump out. I believe you and I are of the same thought camp. Looking forward to your higher ed efforts. Let me know if I can help.