Propagandists of the State

Why Do Intellectuals Oppose Capitalism?

Noting that “wordsmith intellectuals” are disproportionately likely to lean left, Nozick attributes their animosity towards capitalism to the difference in value judgments and reward structure between formal schools and capitalist society at large.

By R. Nozick

It is surprising that intellectuals oppose capitalism so. Other groups of comparable socio-economic status do not show the same degree of opposition in the same proportions. Statistically, then, intellectuals are an anomaly.

Not all intellectuals are on the “left.” Like other groups, their opinions are spread along a curve. But in their case, the curve is shifted and skewed to the political left.

By intellectuals, I do not mean all people of intelligence or of a certain level of education, but those who, in their vocation, deal with ideas as expressed in words, shaping the word flow others receive. These wordsmiths include poets, novelists, literary critics, newspaper and magazine journalists, and many professors. It does not include those who primarily produce and transmit quantitatively or mathematically formulated information (the numbersmiths) or those working in visual media, painters, sculptors, cameramen. Unlike the wordsmiths, people in these occupations do not disproportionately oppose capitalism. The wordsmiths are concentrated in certain occupational sites: academia, the media, government bureaucracy.

Wordsmith intellectuals fare well in capitalist society; there they have great freedom to formulate, encounter, and propagate new ideas, to read and discuss them. Their occupational skills are in demand, their income much above average. Why then do they disproportionately oppose capitalism? Indeed, some data suggest that the more prosperous and successful the intellectual, the more likely he is to oppose capitalism. This opposition to capitalism is mainly “from the left” but not solely so. Yeats, Eliot, and Pound opposed market society from the right.

The opposition of wordsmith intellectuals to capitalism is a fact of social significance. They shape our ideas and images of society; they state the policy alternatives bureaucracies consider. From treatises to slogans, they give us the sentences to express ourselves. Their opposition matters, especially in a society that depends increasingly upon the explicit formulation and dissemination of information.

We can distinguish two types of explanation for the relatively high proportion of intellectuals in opposition to capitalism. One type finds a factor unique to the anti-capitalist intellectuals. The second type of explanation identifies a factor applying to all intellectuals, a force propelling them toward anti-capitalist views. Whether it pushes any particular intellectual over into anti-capitalism will depend upon the other forces acting upon him. In the aggregate, though, since it makes anti-capitalism more likely for each intellectual, such a factor will produce a larger proportion of anti-capitalist intellectuals. Our explanation will be of this second type. We will identify a factor which tilts intellectuals toward anti-capitalist attitudes but does not guarantee it in any particular case.

THE VALUE OF INTELLECTUALS

Intellectuals now expect to be the most highly valued people in a society, those with the most prestige and power, those with the greatest rewards. Intellectuals feel entitled to this. But, by and large, a capitalist society does not honor its intellectuals. Ludwig von Mises explains the special resentment of intellectuals, in contrast to workers, by saying they mix socially with successful capitalists and so have them as a salient comparison group and are humiliated by their lesser status. However, even those intellectuals who do not mix socially are similarly resentful, while merely mixing is not enough—the sports and dancing instructors who cater to the rich and have affairs with them are not noticeably anti-capitalist.

Why then do contemporary intellectuals feel entitled to the highest rewards their society has to offer and resentful when they do not receive this? Intellectuals feel they are the most valuable people, the ones with the highest merit, and that society should reward people in accordance with their value and merit. But a capitalist society does not satisfy the principle of distribution “to each according to his merit or value.” Apart from the gifts, inheritances, and gambling winnings that occur in a free society, the market distributes to those who satisfy the perceived market-expressed demands of others, and how much it so distributes depends on how much is demanded and how great the alternative supply is. Unsuccessful businessmen and workers do not have the same animus against the capitalist system as do the wordsmith intellectuals. Only the sense of unrecognized superiority, of entitlement betrayed, produces that animus.

Why do wordsmith intellectuals think they are most valuable, and why do they think distribution should be in accordance with value? Note that this latter principle is not a necessary one. Other distributional patterns have been proposed, including equal distribution, distribution according to moral merit, distribution according to need. Indeed, there need not be any pattern of distribution a society is aiming to achieve, even a society concerned with justice. The justice of a distribution may reside in its arising from a just process of voluntary exchange of justly acquired property and services. Whatever outcome is produced by that process will be just, but there is no particular pattern the outcome must fit. Why, then, do wordsmiths view themselves as most valuable and accept the principle of distribution in accordance with value?

From the beginnings of recorded thought, intellectuals have told us their activity is most valuable. Plato valued the rational faculty above courage and the appetites and deemed that philosophers should rule; Aristotle held that intellectual contemplation was the highest activity. It is not surprising that surviving texts record this high evaluation of intellectual activity. The people who formulated evaluations, who wrote them down with reasons to back them up, were intellectuals, after all. They were praising themselves. Those who valued other things more than thinking things through with words, whether hunting or power or uninterrupted sensual pleasure, did not bother to leave enduring written records. Only the intellectual worked out a theory of who was best.

THE SCHOOLING OF INTELLECTUALS

What factor produced feelings of superior value on the part of intellectuals? I want to focus on one institution in particular: schools. As book knowledge became increasingly important, schooling—the education together in classes of young people in reading and book knowledge—spread. Schools became the major institution outside of the family to shape the attitudes of young people, and almost all those who later became intellectuals went through schools. There they were successful. They were judged against others and deemed superior. They were praised and rewarded, the teacher’s favorites. How could they fail to see themselves as superior? Daily, they experienced differences in facility with ideas, in quick-wittedness. The schools told them, and showed them, they were better.

The schools, too, exhibited and thereby taught the principle of reward in accordance with (intellectual) merit. To the intellectually meritorious went the praise, the teacher’s smiles, and the highest grades. In the currency the schools had to offer, the smartest constituted the upper class. Though not part of the official curricula, in the schools the intellectuals learned the lessons of their own greater value in comparison with the others, and of how this greater value entitled them to greater rewards.

The wider market society, however, taught a different lesson. There the greatest rewards did not go to the verbally brightest. There the intellectual skills were not most highly valued. Schooled in the lesson that they were most valuable, the most deserving of reward, the most entitled to reward, how could the intellectuals, by and large, fail to resent the capitalist society which deprived them of the just deserts to which their superiority “entitled” them? Is it surprising that what the schooled intellectuals felt for capitalist society was a deep and sullen animus that, although clothed with various publicly appropriate reasons, continued even when those particular reasons were shown to be inadequate?

Government against the people, as usual

Man vs. Beetle

 

The Puritan tiger beetle has better lawyers than homeowners at Maryland's Chesapeake Bay Estates.

By MARK HYMAN 

Chesapeake Ranch Estates is a bayside community of about 4,000 homes located in southern Maryland overlooking the mouth of the Chesapeake Bay. It is filled with spectacular views and abundant wildlife. Residents believe they enjoy the best of both worlds. It is about a 90-minute commute to Washington, D.C. and yet, the region is distinctly rural.

Unfortunately, about 100 Chesapeake Ranch homeowners are currently living a nightmare. Their homes are located along Golden West Way, a small two-lane road that snakes along cliffs that rise about one hundred feet above the Chesapeake Bay. Today, about one-quarter mile of Golden West is closed as it is deemed no longer to be safe for vehicle travel as the cliff edge is now too close to the road; in some places, a mere 25 feet. Concrete barriers block vehicles from accessing the stretch of road.

It is not just the inconvenience of having to circumnavigate much of the community in order to travel a mere half-mile down the road that irks local residents. Homeowners along Golden West have watched helplessly as their properties have collapsed into the bay. In 1996, 12-year Wendy Miller who was walking along the beach with her familyperished when she was crushed under falling earth. Her death caused the beach to be closed.

The problem with the eroding cliffs could be solved with a relatively straightforward undertaking. The homeowners could shore up the cliffs with riprap or revetments in order to stabilize their properties. Unfortunately, they are prohibited from doing so by enforcement of the Endangered Species Act because the cliffs are the natural habitat of the Puritan tiger beetle.

The Puritan tiger beetle (Cicindela puritana) is one of the 1,967 species worldwide that is on the endangered species list. It was addedto the list as a "threatened" species in 1990. According to entomologists, the beetle's preferred habitat is sandy beaches with adjoining cliff faces that are devoid of vegetation. The continuous erosion of the cliffs precludes vegetation from growing and thereby provides the very soil in which the female beetles burrow and lay the eggs. At least 6,500 and as many as 10,000 tiger beetles are estimated to live in the cliffs along the Chesapeake Bay.

For two decades, homeowners in Chesapeake Ranch and elsewhere along 26 miles of the western shore of the Chesapeake have been prevented from taking any reasonable action to shore up the cliffs and slow the erosion as it could result in vegetation growing along the cliff face. There is no resale market for their homes as it is only a matter of time before the properties collapse into the bay.

A detailed study completed in late 2010 found 234 homes are located within 100 feet of the cliff, 43 are within 20 feet, 20 are within 10 feet and 19 homes are within five feet. One home is overhanging a cliff. The homeowners' predicament could not be more dire in spite of the fact the Puritan tiger beetle is present in only half of the endangered properties.

Federal and state officials have allowed few efforts to stop the erosion. A $200,000 plan undertaken by four families to deploy nearly 600 two-ton hollow concrete domes off-shore as a man-made reef to slow the waves crashing on the beach yielded few results. Another family's proposal to build a breakwater about a hundred feet into the bay to slow the cliff erosion was disapproved because it might harm the local crab habitat. The Maryland blue crab -- whilepricey to the consumer -- is neither endangered nor threatened.

In recent weeks, a combined federal-state mitigation plan has been in the works. Homeowners may apply for an "incidental take permit"that allows "private parties undertaking otherwise lawful projects that might result in the take of an endangered or threatened species." In concert with the application, homeowners would be assessed a fee that paid into a fund that would finance an existing tiger beetle habitat elsewhere or would finance a relocation effort.

Complicating matters is that a comprehensive, community-wide plan -- which would be the most sensible approach -- has been discouraged. Instead, federal and state officials are encouraging a piecemeal approach by requesting homeowners to submit individual plans.

Earlier this year, the U.S. Fish and Wildlife Service issued a $2.4 million grant to purchase about 225 acres of shorefront property as an easement (and 230 acres for a similar easement on the Sassafras River on Maryland's eastern shore) for a protected tiger beetle habitat. There are not any known efforts underway to reintroduce captive-reared or relocated tiger beetles into the preserve.

No permits have yet been issued to any homeowners under the mitigation plan. The large number of federal and state agencies involved in the approval process (U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers, and three Maryland agencies: Natural Resources, Environment, and Emergency) virtually ensure approval will be a long and drawn-out affair. Further, a source involved with current permit discussions has reported that an unofficial limit has been set at 15 percent of the affected properties. If true, then five out of six property owners will eventually lose their homes. To a beetle.

The Great Transition ?

What If Middle-Class Jobs Disappear?

Structural change is an important factor in the current rate of high unemployment. The economy is in a state of transition, in which the middle-class jobs that emerged after World War II have begun to decline.

By Arnold Kling

The most recent recession in the United States began in December of 2007 and ended in June of 2009, according to the official arbiter of recession dating, the National Bureau of Economic Research.  However, two years after the official end of the recession, few Americans would say that economic troubles are behind us. The unemployment rate, in particular, remains above 9 percent. Some labor market indicators, such as the proportion of long-term unemployed, are worse now than for any postwar recession.

There are two widely circulated narratives to explain what is going on. The Keynesian narrative is that there has been a major drop in aggregate demand. According to this narrative, the slump can be largely cured by using monetary and fiscal stimulus.

The main anti-Keynesian narrative is that businesses are suffering from uncertainty and over-regulation. According to this narrative, the slump can be cured by having the government commit to and follow a more hands-off approach.

I want to suggest a third interpretation. Without ruling out a role for aggregate demand or for the regulatory environment, I wish to suggest that structural change is an important factor in the current rate of high unemployment. The economy is in a state of transition, in which the middle-class jobs that emerged after World War II have begun to decline.

As Erik Brynjolfsson and Andrew McAfee put it in a recent e-book Race Against the Machine:

The root of our problems is not that we're in a Great Recession, or a Great Stagnation, but rather that we are in the early throes of a Great Restructuring.

In fact, I believe that the Great Depression of the 1930s can also be interpreted in part as an economic transition. The impact of the internal combustion engine and the small electric motor on farming and manufacturing reduced the value of uneducated laborers. Instead, by the 1950s, a middle class of largely clerical workers was the most significant part of the labor force.

The Great Transition from 1930 to 1950

Between 1930 and 1950, the United States economy underwent a Great Transition. Demand fell for human effort such as lifting, squeezing, and hammering. Demand increased for workers who could read and follow directions. The evolutionary process eventually changed us from a nation of laborers to a nation of clerks.

The proportion of employment classified as “clerical and kindred workers” grew from 5.2 percent in 1910 to a peak of 19.3 percent in 1980. (However, by 2000 this proportion had edged down to 17.4 percent.)¹ Overall, workers classified as clerical, professional workers, technical workers, managers, officials, and proprietors exceeded 50 percent of the labor force by 2000.

Corresponding declines took place in the manual occupations. Workers classified as laborers, other than farm or mine, peaked at 11.4 percent of the labor force in 1920 but were barely 6 percent by 1950 and less than 4 percent by 2000. Farmers and farm laborers fell from 33 percent of the labor force in 1910 to less than 15 percent by 1950 and only 1.2 percent in 2000.

The advent of the tractor and improvements in the factory rapidly reduced the demand for uneducated workers. By the 1930s, a marginal farm hand could not produce enough to justify his employment. Sharecropping, never much better than a subsistence occupation, was no longer viable. Meanwhile, machines were replacing manufacturing occupations like cigar rolling and glass blowing for light bulbs.²

World War II also demonstrated the increase in the relative importance of white-collar workers and machines. With all due respect to GI Joe and Rosie the Riveter, it could be that Cynthia the Clerk is a more appropriate symbol of the war effort, as logistics and communications came to be dominant factors. Although Winston Churchill famously praised “the few” who flew airplanes during the Battle of Britain, historians emphasize the role played by the communications and control systems on the ground, staffed to a considerable extent by women, in making the British victory possible. Female clerks also played a crucial role in the process of decoding German messages—the famous Enigma intercepts.

The structural-transition interpretation of the unemployment problem of the 1930s would be that the demand for uneducated workers in the United States had fallen, but the supply remained high. The high school graduation rate was only 8.8 percent in 1912 and still just 29 percent in 1931. By 1950, it had reached 59 percent.³ With a new generation of workers who had completed high school, the mismatch between skills and jobs had been greatly reduced.

What took place after the Second World War was not the revival of a 1920s economy, with its small farming units, urban manufacturing, and plurality of laborers. Instead, the 1950s saw the creation of a new suburban economy, with a plurality of white-collar workers. With an expanded transportation and communications infrastructure, businesses needed telephone operators, shipping clerks, and similar occupations. If you could read, follow simple instructions, and settle into a routine, you could find a job in the post-war economy.

The trend away from manual labor has continued. Even within the manufacturing sector, the share of production and non-supervisory workers in manufacturing employment went from over 85 percent just after the Second World War to less than 70 percent in more recent years. To put this another way, the proportion of white-collar work in manufacturing has doubled over the past 50 years. On the factory floor itself, work has become less physically demanding. Instead, it requires more cognitive skills and the ability to understand and carry out well-defined procedures.

The Current Transition

As noted earlier, the proportion of clerical workers in the economy peaked in 1980. By that date, computers and advanced communications equipment had already begun to affect telephone operations and banking. The rise of the personal computer and the Internet has widened the impact of these technologies to include nearly every business and industry.

The economy today differs from that of a generation ago. Mortgage and consumer loan underwriters have been replaced by credit scoring. Record stores have been replaced by music downloads. Book stores are closing, while sales of books on electronic readers have increased. Data entry has been moved off shore. Routine customer support also has been outsourced overseas.

These trends serve to limit the availability of well-defined jobs. If a job can be characterized by a precise set of instructions, then that job is a candidate to be automated or outsourced to modestly educated workers in developing countries.

The result is what David Autor calls the polarization of the American job market. Autor and various research collaborators have documented a number of findings that reflect this polarization:⁴

•    In recent decades, wage and employment growth have both been lowest at the middle segment of the skill distribution. Wage improvements have tended to be concentrated at the high end, and employment gains have tended to be largest at the low end of the skill distribution.

•    This particular symptom of polarization is also prevalent in OECD countries other than the United States.

•    In the United States, this polarization was exacerbated by the economic downturn. While both high- and low-skill jobs have held steady, the brunt of the recession has been borne by mid-skill workers. For example, growth in employment in sales was 54 percent from 1979 to 1989, 14 percent from 1989 to 1999, 4 percent from 1999 to 2007, and -7 percent from 2007 to 2009. Employment in sales was a key component of upward economic mobility after World War II, but technological change and globalization appear to have stalled or perhaps reversed this engine of middle-class affluence.

•    From 1980 to 2007, real wages for male workers with only a high school degree fell by 12 percent, real wages of male workers with only a college degree rose by 10 percent, and real wages of males with post-graduate degrees increased by 26 percent. Female workers show a similar pattern, although wage gains were generally higher for females over this period.

Using the latest Census Bureau data, Matthew Slaughter found that from 2000 to 2010 the real earnings of college graduates (with no advanced degree) fell by more in percentage terms than the earnings of high school graduates. In fact, over this period the only education category to show an increase in earnings was those with advanced degrees.⁵

The spilled milk of the American empire

Wall Street protesters share the Tea Party’s illusions

By John Payne

As I walked toward One Liberty Plaza on the first Friday in October, I thought about the Arcade Fire song “Rococo,” in which lead singer Win Butler lambastes “the modern kids” who use “great big words that they don’t understand” and build up an institution “just to burn it back down.” At the time it seemed an apt description of the Occupy Wall Street protesters who had seized the plaza—mostly young kids who enjoyed the fruits of American capitalism but now talked of tearing down the system that weaned them.

After walking around the protest for a half hour or so, I felt secure in that prejudice. A dozen or so drummers pounded away in a corner, their ceaseless rhythm rumbling through the canyons of lower Manhattan for at least a quarter mile in any direction. In the middle of the protesters’ impromptu shantytown, four people sat at a marble table busily rolling cigarettes behind a donation bucket and sign reading “Free Cigarettes: Nick@Nite.” The atmosphere led one of my friends to remark that it was “all the worst aspects of a hippie festival with none of the drugs.”

With the exception of a smattering of Ron Paul signs, the protesters’ placards and literature showed an almost universal hostility to a market economy. A young man in a suit handed out a semi-official pamphlet welcoming me to the occupation. It advised me to visit the food bar where I could dine on granola and “Occu-pie” and suggested that after eating I should “feel free to refresh [myself] in the restrooms of neighboring businesses like Burger King and McDonalds without feeling obligated to buy anything.”

The pamphlet listed only one political demand: “Stop Corporate Personhood.” This was a relatively common theme on the signs, but for all that talk, many protesters also advocated an increase in corporate taxes, evidently failing to realize that the one policy precludes the other. Near the People’s Library, a piece of paper hung on the wall urging adoption of a mandatory four-day work week because it “keeps all the efficiencies of capitalism” but forces employers to hire the currently jobless to make up for the 20 percent reduction in labor hours.

As my group began walking uptown on Broadway, we ran into another throng of protesters marching down to the main demonstration. I stepped back and started snapping pictures just in time to capture a handsome young man with spiky blond hair dressed smartly in a black collared shirt and matching jeans. He carried a sign urging us to “Occupy Everything” because “we already know that we own everything.” With his square jaw and the steely resolve in his eyes he looked like a Bizzaro John Galt, ready to throw himself on the gears of modern capitalism and grind them to a halt.

I left that night convinced that the protest was little more than the latest banshee cry of the radical left. Over the weekend, however, hundreds of protesters were arrested on the Brooklyn Bridge and similar occupations sprang up across the country. These developments prompted me to return to One Liberty Plaza the next Tuesday.

I arrived just in time for the General Assembly, where the plaza’s occupants attempt to build consensus about how their community should be run. Protesters are prohibited from using amplification, so to ensure that everyone can hear the proceedings they use what they call the “human mic,” whereby all participants repeat what the person who has the floor just said. Periclean Athens this wasn’t. Still, it struck me as a genuine attempt by the protesters to build something real.

As I interviewed some of the protesters that night, I discovered that many of them were not driven by a blind rage against capitalism but were simply trying to assert some modicum of control over institutions they believe are running over them roughshod. Carey Tan, an event planner with a nonprofit, told me she wanted the Glass-Steagall Act put back into place “to make sure my money isn’t being used to buy … sub-prime mortgages and lots of risky investments.” She also wanted to see the revolving door between business and government closed but was unsure how that could be accomplished.

Joe Therrien, a teacher in Brooklyn, echoed Tan’s argument about Glass-Steagall and also called for higher taxes on the rich and corporations. But he was not opposed to corporations as such, saying that he “want[s] there to be rich companies in America” and thinks they should pay more in taxes because they benefit from government services. Therrien was refreshingly humble about the limits of his own knowledge and put his faith in the ability of Americans to solve our problems through civil discourse. He said that although “there are individuals who claim to have the answers … as a group, we’re trying to figure it out together.”

You can disagree with Tan’s policy proposals or call Therrien’s trust in participatory democracy naïve, but these were not bomb-throwing radicals. They are relatively ordinary Americans who looked around one day, saw obviously dysfunctional political and economic systems, and decided to do something about them. And although the media portrays them as the Wall Street protesters’ polar opposites, the same can be said of most Tea Partiers. The Tea Party is older and more conservative, while the Occupiers are younger and more left-wing, but both are attempting to come to terms with American decline. They are both sincere and well-meaning in their own ways, but our problems are much more severe than either group dares admit.

[1]It’s easy to scapegoat earmark spending (never mind that middle-class entitlements such as Social Security and Medicare are the real driving forces of government spending) or the 1 percent on Wall Street who are supposedly exploiting the rest of us poor bastards (never mind that most of us own stocks and bonds), but these are lies. Comforting lies, but lies nonetheless.

On Tuesday night, I stumbled across Jimmy McMillan—the Rent Is Too Damn High Party guy—standing on the edge of the plaza with a small crowd around him. “Go home,” he roared to the mostly uninterested protesters. “Make love to your girl.” When I asked him for an explanation of the comment, he told me that all Americans are responsible for our current predicament because they have perpetuated a corrupted political system. Now “the diehard Democrat is dying real hard.”

McMillan’s comments give away his political self-interest, of course, but they at least confronted the fact that we largely brought our woes upon ourselves by living beyond our means. The 1 percent in government and business may have made our bed, but we slept in it, happily dreaming the impossible, and now we refuse to shake off our delusional slumber. The Federal Reserve and the lending institutions sold us houses at 3 percent interest and no money down, but we bought them.

American exceptionalism and privilege are crashing down around us, but these protest groups—like the vast majority of Americans—refuse to reconcile themselves to this new, hostile reality. The world will move on without us; we are no longer the indispensable nation. Once we accept that fact, we can get down to the difficult business of becoming a normal country. Until then, Occupiers and Tea Partiers will remain little more than petulant children crying over the spilled milk of the American empire.

Arrivederci, Roma

Will popular democracy bring down the New World Order?

 

By Patrick J. Buchanan

A fair question. For Western peoples are growing increasingly reluctant to accept the sacrifices that the elites are imposing upon them to preserve that New World Order.

Political support for TARP, to rescue the financial system after the Lehman Brothers collapse, is being held against any Republican candidate who backed it. Germans and Northern Europeans are balking at any more bailouts of Club Med deadbeats.

Eighty-one members of David Cameron’s party voted against him to demand a referendum on whether Britain should leave the European Union altogether, the worst Tory revolt ever against the EU.

Greek Prime Minister George Papandreou imperiled the grand bargain to save the eurozone by announcing a popular vote on whether to accept the austerity imposed on Greece, or default, and let the bank dominoes begin to fall. The threat faded only when Papandreou cancelled the referendum.

But the real peril is Italy, No. 3 economy in the eurozone, with a national debt at 120 percent of gross domestic product.

After the plan to save the eurozone was announced, interest rates on new Italian debt surged above 6 percent, with 6.5 regarded as unsustainable.

When Papandreou announced his referendum, the cost of Italian debt surged again. Should buyers of Italy’s debt go on strike, fearing a Rome default or write-down, that is the end of the eurozone and potentially the end of the EU.

But an even larger question hangs over Rome.

Will Italy survive as one nation and one people?

For the austerity demanded of Italy to deal with its debt crisis is adding kindling to secessionist fires in the north, where the Lega Nord of Umberto Bossi, third largest party in Italy, seeks to lead Lombardy, Piedmont and Veneto, with the cities of Turin, Milan and Venice, out of Italy into a new nation — Padania.

The north has long resented Rome, Naples and Sicily, seeing them as lazier and less industrious. Bossi, who calls himself “Braveheart,” after the Scottish hero of the Mel Gibson movie, sees northern people as Celts who are ethnically different and separate from the rest of Italy.

The Northern League belief that people of Southern Italy caused their debt crisis, bringing on austerity, mirrors the belief of much of Northern Europe that Italy and Greece do not deserve to be bailed out.

As the north is also home to 60 percent of the immigrants who have poured into Italy — Gypsies from Romania, Arabs from the Mahgreb and Middle East — Bossi’s party is aggressively anti-immigrant, as are the other surging populist parties of Europe.

Americans who deplore the tough laws against illegal immigration in Arizona and Alabama might look to Italy, where the Northern League managed to have illegal entry into the country declared a felony.

The League was also behind a new law calling for sending back tens of thousands of Arab Spring migrants who arrived on the tiny Italian island of Lampedusa, which is closer to Africa than Italy.

But while resentment against the south for alleged freeloading and causing the debt crisis is bringing the secession issue to a boil, demography may be the greater threat to the national future.

Italy, says Cardinal Angelo Bagnasco, president of the Italian Bishops Conference, is heading for “demographical suicide,” and the reason is a low birth rate caused by its “cultural and moral distress.”

According to Italy’s National Office of Statistics, in 2009 the fertility rate of Italian women was 1.41 children per woman. This is only two-thirds of what is needed simply to replace Italy’s existing population.

Italy’s fertility rate has been below replacement levels for 35 years. By mid-century, Italy will be a nation with a birth rate that will have been below, at times far below, zero population growth for 75 years.

Italy’s birth rate in 1950 was almost twice its death rate. But the death rate equaled the birth rate in 1985, exceeds it today and will be approaching twice the birth rate by 2050.

Italy is not only aging, with the median age of its population going from 43 today to 50 at midcentury, Italy is dying. If this does not change, what the world knows as Italy will not exist at the end of this century.

Like other European nations, Italy faces an existential crisis.

Her national debt is twice what the EU says is tolerable. She must undergo years of painful austerity to pay back what she has borrowed and spent. Yet a shrinking population of working age young and an expanding pool of seniors and aged to care for will make that increasingly difficult, and default on her debts increasing attractive, as it is today to the Greeks.

The Northern League, seeing the south as the source of its troubles, will grow in appeal, as those troubles grow.

If your debts are larger than your economy, your death rate exceeds your birth rate and every new generation will be one-third smaller than the previous one, what kind of future does your country have?

The kind of future Italy faces.

Tough principles

Who Killed Horatio Alger?

 

The decline of the meritocratic ideal

By Luigi Zingales

The title character of Horatio Alger’s 1867 novel Ragged Dick is an illiterate New York bootblack who, bolstered by his optimism, honesty, industriousness, and desire to “grow up ’spectable,” raises himself into the middle class. Alger’s novels are frequently misunderstood as mere rags-to-riches tales. In fact, they recount their protagonists’ journeys from rags to respectability, celebrating American capitalism and suggesting that the American dream is within everyone’s reach. The novels were idealized, of course; even in America, virtue alone never guaranteed success, and American capitalism during Alger’s time was far from perfect. Nevertheless, the stories were close enough to the truth that they became bestsellers, while America became known as a land of opportunity—a place whose capitalist system benefited the hardworking and the virtuous. In a word, it was a meritocracy.

To this day, Americans are unusually supportive of meritocracy, and their support goes a long way toward explaining their embrace of American-style capitalism. According to one recent study, just 40 percent of Americans attribute higher incomes primarily to luck rather than hard work—compared with 54 percent of Germans, 66 percent of Danes, and 75 percent of Brazilians. But perception cannot survive for long when it is distant from reality, and recent trends seem to indicate that America is drifting away from its meritocratic ideals. If the drifting continues, the result could be a breakdown of popular support for free markets and the demise of America’s unique version of capitalism.

The fundamental role of an economic system, even an extremely primitive one, is to assign responsibility and reward. In animal packs, the responsibility of leadership and the reward of mating opportunities are generally assigned to the strongest. In human societies, responsibility tends to take the form of employment, and the rewards are money and prestige. Because physical strength has long since lost its importance, economic systems determine in various ways who receives the responsibilities and the rewards. The dominant criterion in traditional society was birth: the king’s firstborn son was the next king; the landowner’s firstborn son, the new landowner; and the son of the company’s owner, the next chief executive. Most modern societies, by contrast, try to select and reward according to merit. Indeed, surveys show that in the abstract, most people in developed countries agree with the idea that merit should be rewarded.

It isn’t easy to decide what constitutes merit, of course. Consider an environment with which I’m familiar: American academia. Let’s say you want to determine who the best professors are. How do you rank publications? Do you value the number of papers that someone has written, or their impact? How do you measure that impact—is it merely the number of times that a paper has been cited, or should citations be weighted by the importance of the journal that makes the citation? Do you value good citations (“This is a seminal paper”) and bad citations (“This paper is fundamentally flawed”) equally? What about teaching? How do you evaluate that? Should it be measured by students’ satisfaction, or should other criteria come into the picture? If so, which? And what about other dimensions, such as collegiality and “service” to the school? Any system of determining merit must assign various weights to each of these dimensions, a process that is inevitably somewhat arbitrary, and the arbitrariness can create the presumption of unfairness and favoritism.

As that example suggests, a system of measuring merit should be efficient and difficult to manipulate, and above all, it should be deemed fair—or at least not too unfair—by most of the people subject to it. We can now begin to understand why support for meritocracy translates so neatly into support for the market system. Markets are far harder to manipulate than, say, a list of tenure requirements that an academic committee has created, or—to take a broader example—the decisions of statist regimes determining which lucky citizens get which consumer products. The market system has the reputation, too, of producing efficient results. And it doesn’t violate the prevailing notion of fairness too much.

Naturally, not everyone embraces the market system. Probably the reason that intellectuals tend to reject it is that it doesn’t reward what they think is meritorious: Lady Gaga makes a lot more money than Nobel laureates do. But in America, people largely accept the system—not merely because they think that it will deliver a reasonably efficient outcome, but also because they consider it mostly fair. As in Horatio Alger’s stories, they believe, such virtues as honesty, frugality, and hard work will be rewarded.

But this rosy picture obscures a hard fact: meritocracy is a difficult principle to sustain in a democracy. Any system that allocates rewards on the basis of merit inevitably gives higher compensation to the few, leaving the majority potentially envious. In a democracy, the majority generally rules. Why should that majority agree to grant a minority disproportionate power and rewards?

To understand the difficulty, consider the University of Chicago, an institution that still attracts market-oriented people, thanks to its association with the great free-market economist Milton Friedman. Who could be more merit-minded than MBA students who attend such a place, investing tens of thousands of dollars and two years of their lives to reap the rewards of a meritocratic system? Nevertheless, in a move that contradicted the meritocratic spirit, Chicago MBA students voted in 2000 not to reveal their grades to recruiters. The reason was clear: allowing recruiters to distinguish among them based on merit would benefit a minority of them at the expense of a majority. Even the most meritocratic people, then, can vote against meritocracy when it damages their own prospects. No wonder meritocracy is so politically fragile.

However, two factors help sustain a meritocratic system in the face of this challenge: a culture that considers it legitimate to reward effort with higher compensation; and benefits large enough, and spread widely enough through the system, to counter popular discontent with inequality. The cultural factor is easy to spot in America, which encouraged meritocracy from its inception. In the eighteenth century, the social order throughout the world was based on birthrights: nobles ruled Europe and Japan, the caste system prevailed in India, and even in England, where merchants were gaining economic and political strength, the aristocracy wielded most of the political power. The American Revolution was a revolt against aristocracy and the immobility of European society, but unlike the French Revolution, which emphasized the principle of equality, it championed the freedom to pursue happiness. In other words, America was founded on equality of opportunities, not of outcomes. The subsequent economic success of the new country cemented in the collective perception the benefits of assigning rewards and responsibilities according to merit.

This historical heritage is reflected in American attitudes today. Income inequality in the United States is among the largest in the developed world. Yet in a recent survey of 27 developed countries by the Pew Charitable Trusts, only one-third of Americans agreed that it was the government’s responsibility to reduce income inequality; the country with the next smallest fraction to agree was Canada, with 44 percent, and the responses rose as high as Portugal’s 89 percent. Americans do not want to redistribute income, but they do want the government to provide a level playing field: over 70 percent of Americans said that the role of government was “to ensure everyone has a fair chance of improving their economic standing.”

This belief in equality of opportunity is supported by another belief: that the system is actually fair. Sixty-nine percent of Americans in the same survey agreed with the statement “People are rewarded for intelligence and skill,” a far larger percentage than in any other country. At the same time, only 19 percent of Americans thought that coming from a wealthy family was important for getting ahead, versus 39 percent in Chile, 53 percent in Spain, and a median response across all nations of 28 percent.

In America, the legitimacy of rewarding hard work is so pervasive that even undergraduates in the country’s leftmost precinct, Berkeley, apparently endorse it. Economists have created an experiment called the “dictator game,” in which a subject is given a sum of money and asked to divide it however he likes between himself and an anonymous player. The experiment has been run thousands of times, and on average, people give 20 percent of their money to the anonymous players, presumably out of altruism or compassion. Recently, however, economist Pamela Jakiela changed the conditions of the experiment. In one treatment, the subjects—Berkeley undergrads—were told that the anonymous players had worked hard; in another treatment, they were told that they had done nothing. The students, it turned out, were much more willing to reward the hard workers than the slackers. In still another experiment, in which the person allocating the money had to work hard to gain it (by sorting beans, as it happened), she was much less willing to give it away.

Don’t suppose that the culture of meritocracy is universal. When the same experiment was conducted in Kenya, it yielded opposite results, with the subjects more willing to reward luck than hard work. But in America, from Berkeley to Boston, people believe in greater reward for greater effort, and that belief helps protect meritocratic capitalism from the forces that threaten to undermine it.

A meritocracy can’t survive on a supportive culture alone, however; it must also confer benefits large enough for people to recognize them. It’s no accident that meritocratic systems emerge when their potential benefits are the most sharply felt. At the national level, that tends to occur in wartime, especially when the survival of a country is at stake. In 1793, when the French Revolution was threatened by the invading armies of other European powers, the Jacobin government started to promote talented soldiers, rather than well-bred ones. This simple innovation allowed the Revolution to beat back Europe’s better-armed and better-trained forces. A similar effect was demonstrated by a friend of mine who felt sick one day. His wife offered to call their doctor friend. “No, I’m really sick,” he said. “I need a real doctor.” When life is in danger, there’s an enormous benefit to choosing according to merit, not loyalty.

So a meritocratic system, to engender a broad consensus, must confer relatively sizable benefits, even if they aren’t necessarily so enormous as saving a country from defeat. That isn’t an easy task. In politics, for example—a field in which value is mostly redistributed rather than created—the benefits conferred by meritocracy are relatively small compared with the benefits conferred by cronyism. If I appoint my friends to office, even when they aren’t terribly competent, I lose relatively little efficiency and gain quite a lot of power. Hence meritocracy is difficult to sustain in government.