The recession has caused a significant economic adjustment, including a realignment of assets and the demand and supply of talent. Along with these adjustments has been renewed debate over issues such as the distribution of wealth, the disappearing middle class and the belief in meritocracy. Some recent experts have reaffirmed a perception that both the belief in the “self-made man” and the benefits of meritocracy are largely myths and don’t serve society well.
Movies, TV shows and popular media, and many politicians are reinforcing these myths by arguing and promoting the notion that anyone can be wealthy or make it to the top by virtue of their hard work and positive attitude and that’s how successful people did it in the past. If this were true, we wouldn’t see a virtual explosion of people buying lottery tickets, and governments using lotteries as a significant source of revenue.
Some of the wealthiest entrepreneurs in North America say there is no such thing as the “self-made man.” With more millionaires making, rather than inheriting, their wealth, there is a false belief that they made it on their own without help, a new report published by the Boston-based non-profit United For a Fair Economy, states. The group has signed more than 2,200 millionaires and billionaires to a petition to reform and keep the U.S. inheritance tax. The report says the myth of “self-made wealth is potentially destructive to the very infrastructure that enables wealth creation.”
The individuals profiled in the report believed they prospered in large part to things beyond their control and because of the support of others. Warren Buffet, the second richest man in the world said, “I personally think that society is responsible for a very significant percentage of what I’ve earned.” Erick Schmidt,of Google says, “Lots of people who are smart and work hard and play by the rules don’t have a fraction of what I have. I realize that I don’t have my wealth because I’m so brilliant.”
Malcolm Gladwell, in his book, The Outliers, attacks America’s myth of the self-made man. Gladwell’s meticulous research has shown that enormously successful people like Bill Gates, The Beatles, and professional athletes, scientists and artists, all had people in their lives that helped them get there.
Similar to the self-made myth, the belief in meritocracy is a myth.
The term meritocracy is defined as a society that rewards those who show talent and competence as demonstrated by past actions or competitive performance. The term was first used in Michael Young’s 1958 satirical book, Rise of Meritocracy, which describes a dystopian future in which one’s social place was determined by IQ and effort.
Proponents of meritocracy argue that it is more just and productive, allowing for distinctions to be made on the basis of performance. When meritocracy is implemented in organizations, though, it invariably results in hierarchical structures. Meritocracy has been criticized as a myth which only serves to justify the status quo; merit can always be defined as whatever results in success. Thus whoever is successful can be portrayed as deserving success, rather than success being in fact predicted by criteria for merit. The book by
Nigel Nicholson, professor of organizational behavior at London Business School, argues in an article in The Harvard Business Review, that it is a damaging myth that meritocracy in organizations is based on the proposition that it equals quality and efficiency. Nicholson says “in the kind of meritocracy that companies try to implement, people progress linearly: The very best alpha sits on high, with a team of betas reporting to him (occasionally her), all the way down to the omegas working the machines and dealing with the customers.” He says that this approach does not work for 3 reasons: It allow for no scope for learning because people can’t change their grades; it ignores the fact that peoples’ value or talent depends on circumstances–everyone has unique capabilities that have to be constantly reassessed; and you can’t reduce a person’s value to a single letter or number on a scale of merit.
Nicholson argues that meritocracy has too many managers looking over their shoulders, striving to improve themselves instead of trying to bring out the best in others. He observes that a rigid hierarchical model has held sway in human society for more than 10,000 years. He says that our love affair with corporate hierarchy plays right into the hands of our ancestral primate instincts for contest, dominance and pecking orders–traditional obsessions and addictions of men in a patriarchal order.
What does Nicholson suggest as solutions? He says a true meritocracy would acknowledge all workers’ multiple talents. It would recognize that we live in a dynamic and uncertain world, and structures would be fluid and changing, citing Google, Opticon, Chapparal Steel and others who have experimented successfully with team based cultures, fuzzy hierarchies and spontaneous self-organizing projects.
Stephen McNamee and Robert Miller of the University of North Carolina, argue in their book, The Meritocracy Myth that there is a serious gap between how people think our economic system works and how it actually works. The authors cite data which shows that 20% of American households receive 50% of all available income and the lowest 20% of households receive less than 4%; the top 5% of households receive 22% of all available income; the richest 1% of households account for 30% of all available net worth. Economic inequality in the U.S. is the highest among all industrial countries.
McNamee and Miller say that despite the popular view that the U.S. is a middle class society, it is not because most wealth is concentrated at the top. They also argue that the case for merit would assume wealth to be distributed according to the bell-shaped curve, which it is not.
Similarly, working hard is often seen as a part of the merit formula. But what do we mean by working hard? The number of hours we spend to reach a goal? Energy spent? There is no correlation between hard work and economic success. In fact, those people who work the most hours and spend the most energy are usually the poorest, the authors argue. And really big money doesn’t come from working, it comes from owning assets.
McNamee and Miller also challenge the idea that moral character and integrity are important for economic success. There is little evidence that being honest results in economic success. In fact, the reverse is true, as seen in the examples of Enron, WorldCom, Arthur Anderson and the Wall Street debacle. White collar crime in the form of insider trading, embezzlement, tax and insurance fraud is hardly a reflection of integrity and honesty. Playing by the rules probably works to suppress prospects for economic success, compared to those who ignore the rules.
In looking at jobs, we tend to focus on the “supply” side of the labor markets–the pool of available talent. Much less attention is spent on the demand side. For the past 20 years the “growth jobs” have been disproportionately in the low wage sector in entry-level jobs. At the same time, increasing numbers of people are getting advanced education, with insufficient numbers of high-powered jobs to accommodate them.
McNamee and Miller say, in conclusion, that our belief in a meritocracy is sustaining a myth that disguises economic inequality in North America and prevents progressive government initiatives to address the issue.
Part of the problem of people clinging to the self-made man and meritocracy myths lies in the inherent and growing problem of income inequality in North America, but particularly in the U.S.
Income inequality has increased significantly in the U.S. during the current recession, perhaps more than at any time in recent history, a trend that may have significant damaging effects on the economy and social fabric.
The BBC reported startling economic equality figures in a recent documentary: the top 200 wealthiest people in the world control more wealth than the bottom 4 billion. But what is more striking to many is a close look at the economic inequality in the homeland of the “American Dream.” The United States is the most economically stratified society in the western world. As The Wall Street Journal reported, a recent study found that the top .01% or 14,000 American families hold 22.2% of wealth, and the bottom 90%, or over 133 million families, just 4% of the nation’s wealth.
The U.S. Census Bureau and the World Wealth Report 2010 both report increases for the top 5% of households even during the current recession. Based on Internal Revenue Service figures, the richest 1% have tripled their cut of America’s income pie in one generation. In 1980 the richest 1% of America took 1 of every 15 income dollars. Now they take 3 of every 15 income dollars.
The Pew Foundation study, reported in the New York Times, concluded, “The chance that children of the poor or middle class will climb up the income ladder, has not changed significantly over the last three decades.” The Economist’s special report, “Inequality in America,” concluded, “The fruits of productivity gains have been skewed towards the highest earners and towards companies whose profits have reached record levels as a share of GDP.”
British epidemiologists Richard Wilkinson and Kate Pickett, authors ofThe Spirit Level: Why Greater Equality Makes Societies Stronger, argue that almost every indicator of social health in wealthy societies is related to its level of economic equality. The authors, using data from the U.S. and other developed nations, contend that GDP and overall wealth are less significant that the gap between the rich and the poor, which is the worst in the U.S. among developed nations. “In more unequal societies, people are more out for themselves, their involvement in community life drops away,” Wilkinson says. If you live in a state or country where level of income is more equal, “you will be less likely to have mental illness and other social problems,” he argues.
A University of Leicester psychologist, Adrian White, has produced the first ever “world map of happiness,” based on over 100 studies of more than 80,000 people and by analyzing data from the CIA, UNESCO, The New Economics Foundation, the World Health Organization and European databases. The well being index that was produced was based on the prediction variables of health, wealth and education. According to this study, Denmark was ranked first, Switzerland second, Canada 10thand the U.S. 23rd.
A study published in Psychological Science by Mike Morrison, Louis Tay and Ed Diener, which is based on the Gallup World Poll of 128 countries and 130,000 people, found that the more satisfied people are with their country, the better the feel about themselves. Recent surveys in the U.S. show a significant percentage of Americans who are unhappy about their country. According to the World Values Survey of over 80 countries, the U.S. ranks only 16th, behind such countries such as Switzerland, the Netherlands, Sweden and Canada, with Denmark ranked first.
In my work as a leadership trainer and executive coach, I have been struck by how many people blindly follow the images portrayed by the media that try to convince the masses that “you too” can be the next athletic, singing, acting or business star regardless of your background, when the odds are astronomical that it will happen. Also, so many self-help gurus help to perpetuate the myths discussed here by convincing their clients that anyone can make it to the top with hard work and a few positive affirmations. These naive and damaging practices–particularly for young people–just reinforce and sustain the myth of the self-made man and meritocracy, and avoid dealing with the real problem of income inequality.