. And today, his publishers have released the first excerpt. I urge you to read the whole thing, but I’ve pulled a couple of paragraphs I think are particularly important: One Percent Pathologies
Nearly all of the commentary on America’s growing inequality focuses on the ways in which skewed distribution of income and wealth is bad for those on the bottom of the pyramid: the way it leads to stagnating wages and competition for scarce positional goods; the way it alienates the middle and working classes and the poor. But we largely ignore the effect of extreme inequality that is, in the long run, the most destructive: the way it makes those at the top of the social pyramid worse. Desmond Tutu, the heroic archbishop who helped lead the triumphant battle
against South African apartheid, made a similar observation about the effects of the apartheid system on the white ruling class. “[E]ven the supporters of apartheid were victims of the vicious system which they implemented and which they supported so enthusiastically,” he wrote in his book No Future Without Forgiveness. “In the process of dehumanizing another, in inflicting untold harm and suffering, inexorably the perpetrator was being dehumanized as well.”What Tutu was referring to was the moral and spiritual damage that extreme inequality wrought on even those who presided over and dominated the apartheid system. But there are actual cognitive, organizational, and social costs to such systems as well. The slave economy of the antebellum South conferred massive material gains on a very small number of extremely wealthy white plantation owners. But it also severely stunted the development of the region.
With a steady supply of low-cost human labor, there was no incentive to invent and industrialize, so that by the time of the Civil War the North was far richer than the South, though the South contained far more of the nation’s richest men. The kind of inequality in twenty-first-century America is a far, far cry from slavery or apartheid, of course. The lowest rungs are nowhere near as degraded and immiserated as those of previous eras.
But extreme inequality of the particular kind that we have produces its own particular kind of elite pathology: it makes elites less accountable, more prone to corruption and selfdealing, more status-obsessed and less empathic, more blinkered and removed from informational feedback crucial to effective decision making. For this reason, extreme inequality produces elites that are less competent and more corrupt than a more egalitarian social order would. This is the fundamental paradoxical outcome that several decades of failed meritocratic production have revealed: As American society grows more elitist, it produces a lesser caliber of elites.
Is that true or what? In fact, this is one of the most startling insights of the past couple of years, although it actually goes back a couple of decades. (See, the below post.)
In terms of the economic meltdown, the fact that the elites were willing to trade insanely complicated financial instruments which they obviously did not understand, while crossing their fingers and hoping against hope they were able to ride the wave long enough to make their own millions before the whole thing crashed to the shore was astonishing. It turns out that most of those guys weren’t all that smart after all — they were thrill seekers, not rational investors. And they thought nothing of the long term consequences of their actions because, like children, they couldn’t think beyond the moment. These people shouldn’t have the power they have.
I’m greatly looking forward to reading Hayes’ book. This thesis is absolutely fundamental to understanding the central problem of our time — and perhaps forming the basis for how we figure out what to do about it.