The Sum of Small Things: A Theory of the Aspirational Class
Elizabeth Currid-Halkett, the James Irvine Chair in Urban and Regional Planning and a professor of public policy at the University of Southern California, recently published a book called The Sum of Small Things: A Theory of the Aspirational Class. In some ways, it is similar to another book we discussed several years ago called The New Elite: A Look Inside the Minds of the Truly Wealthy in that it seeks to understand how expenditure patterns have differed over time for the top members of American society. Where this text stands out is that it also 1.) examines how how those expenditure pattern differences have compared to differences in other classes such as the working poor and 2.) looks at a somewhat radical shift that has occurred, and which we have been discussing for a long time on this site, as society splits apart into two distinct groups. Currid-Halkett argues that the new elite is defined by cultural capital rather than by income bracket, though there is obviously a major correlation.
She describes, in real world data, the very things that Peter Drucker predicted a generation ago and about which Professor Charles Murray of Harvard University has been warning; that there is a “coming apart” of the social fabric of this country as the successful now devote their time, energy, and resources to behaviors and activities that make them, and their children, more likely to succeed in a winner-take-all economy. These positive decisions, which are now much more popular ways of displaying status as compared to things like sterling silver flatware and fine china, setoff feedback loops that create a sort of lollapalooza effect in areas encompassing, but not necessarily limited to, “education, health, parenting, and retirement”. As those who practice these behaviors and make these investments do better and better, they surround themselves with other people like them and ultimately have nothing in common with the rest of the population they’ve left behind.
This presents several major challenges. One of these challenges is that the forces described amplify one another in ways that cause upward mobility to become more difficult. As the author puts it, “The accrual of particular types of knowledge and the sharing of cultural capital means that the new elites use this information to buy particular things and act in particular ways to further solidify their position. Or, as [Shamus Kahn, sociologist at Columbia University] writes, ‘Culture is a resource used by elites to recognize one another and distribute opportunities on the basis of the display of appropriate attributes.'” The author has an excellent passage that relates to one of my favorite mental models, which I decided to call “signaling theory” and have talked about for the past few years as I am now convinced that it is subordinate largely to only social proof in terms of power of implications for day-to-day outcomes. This passage explores the role of a specific shade of nail polish worn by certain women in the uppermost classes of England and the United States; how, despite not being any more expensive than most other nail polishes, it gets picked up as a code, an acceptable way to present oneself. Whether consciously or subconsciously, those who do not display this behavior are recognized as outsiders. This pattern repeats itself in everything from the type of cookware one has in one’s kitchen to the way a child is parented. (One of the things that I find interesting, something that is on my “too hard” pile at the moment as it seems to intersect with some interesting findings in evolutionary biology worth exploring further whenever I have the time, is that not all, but nearly all, of the examples the author provides are a form of social dominance and conformity developed, and enforced, by women against other women. It’s not accurate to call it violence but it does seem to be some sort of coercion. There is a particularly enlightening passage about the social pressures women face regarding breast feeding their infant and how the discussion has now become detached from scientific evidence to the point that it’s almost a spiritual belief taken as a matter of faith and against which any counter-claim is immediately rejected on feeling alone; that it serves as a type of virtue signaling that says, “I am a better, more fit mother than you and thus rank higher in our social hierarchy”.) Children are exposed to these patterns of behavior earlier than many folks imagine as parents try to prepare them for success as best they know how. The author discusses the work of sociologist Annette Lareau and her famous book Unequal Childhoods. As Laraeu points out in that work (using Currid-Halkett’s summation), “…children of upper-middle-class families are encouraged to question authority, engage in constant negotiation with their parents and, through their various engagements, become socially adept. Contrast this type of parenting with ‘accomplishment of natural growth’, which Laraeu argues is the dominant style of parenting among poor and working-class parents. This type of parenting emphasizes respect for authority, more parental directives (i.e., ‘go wash your hands’ rather than extensive discussion on the origins of germ theory), and far less structured activity (e.g., fewer music classes, play dates, and gymnastics). These aspirational class children are reared to feel empowered, and tend to have larger vocabularies and greater social aptitude (but are criticized for being entitled) while the working-class kids, often more independent, learn the skills of following orders that are thought to be important in their future work in more rote jobs (but also limiting for upward mobility).”
Another of these challenges is that, often, due to the discipline, hard work, intellect, and all-around wiser life decisions the affluent and upper class group now makes, they become contemptuous or, at the very least dismissive, of those who don’t live up to their standards. In a lot of ways, it becomes harder to address structural inequality because there is no leisure class, anymore. Or, perhaps, it is more accurate to say not one of any size worth discussing in a serious analysis of economic resource allocation. In the United States, at least, gone are the days of inept inheritors living off of their parents’ life work being the embodiment of the upperclass. In fact, at this moment in time, the upper class is more likely than it has ever been at any point in human history to consist of a meritocracy in which largely self-made men and women accumulated their net worth. Furthermore, these self-made individuals then provide an “accumulation of advantages” to their children by undertaking a process of purposeful cultivation so their children have a wide range of knowledge, opportunities, experiences, and access. For example, intelligent, successful parents who accumulate a lot of net worth are likely to purposely arrange their lives so their children attend a good school. This, in turn, helps to maximize the probabilities of success in their children, creating a positive feedback loop. It also keeps property values elevated, improving the odds of further net worth accumulation. The author quotes Columbia University sociologist Shamus Kahn and NYU sociologist Colin Jerolmack in talking about how meritocracy is really “‘a rhetorical cover’ to make what is actually privilege.”: “It is those students from advantaged backgrounds who are most likely to succeed because throughout their lives, before even crossing the threshold of these spaces, they have developed the dispositions and cultural capital that give them an advantage over others. They feel at home within the institutions that reward them for exactly the type of behavior that is ‘native’ to them.” (On a related note, when Drucker addressed this decades ago, he pointed out that there were all sorts of potential responses, each with its own perils. One was that the disadvantaged group, ever more disenchanted, disenfranchised, and bitter, would call for confiscatory tax rates. This would be met with fierce resistance because the self-made would see it as an attack on their life’s work due to the enormous struggle and personal sacrifice they had to make in achieving what they did regardless of the advantages they received – the 15+ hour work days, the seemingly endless years at medical school, the decades spent building a successful accounting or legal practice, the tireless nights preparing a doctoral thesis, the hustling while trying to manage cash flow on a low-capital start-up. If the disadvantaged groups are successful, a blunt-force approach could drag society down into another socialistic or communistic hell; well intentioned but catastrophic in implementation and execution. Another was to implement some sort of universal basic income, or a citizen dividend, that entitled every member of a society to a poverty-level wage that at least guaranteed they wouldn’t go hungry. How humanity navigates this change will likely be as important, and potentially as violent, as the shift from an agrarian-based economy to an industrial-based economy. It most likely will not be smooth or easy.)
When Individual-Outcome and Group-Outcome Rationality Collide
I see this accumulation of advantages, and its perpetuation of its own exclusivity, in my own life and social circles. It arises, in part, because what makes sense on a microeconomic scale doesn’t make sense on a macroeconomic scale; that maximizing individual outcomes can result in fewer successful individuals but how this doesn’t matter because, the reality is, you aren’t as likely to care about a stranger’s kid, or society as a whole, as much as you do your own kid. It’s human nature. Something seemingly-magical happens to a substantial majority of people when they become a mother or father. An instinct arises that causes you to put the child ahead of not only your own self-interest but, at times, even the good of the community; that makes you instantly love this tiny person more than anything you could ever imagine to the point that, when push comes to shove, everyone else is secondary. One illustration: recently, Aaron and I were having lunch with some old friends we’ve known for most of our lives. One of them, a mother who definitely falls more toward the classical liberal side of the political spectrum, talked about how she and her husband, both well-educated, found themselves completely violating their principles when they were looking for a new home because they decided to base the decision around the quality of the school district and the socioeconomic characteristics of the community to maximize their children’s chance of success even though it was exacerbating the very inequality and divide she had so passionately fought against most of her life and career; that no matter how much they valued diversity and opportunity, at the end of the day, they wanted to do what they could for their offspring so they had the advantages necessary to give them the chance to build a great life for themselves.
What makes this particularly complex is that it is only half the story. Even if you were to somehow forcefully integrate the schools alongside socioeconomic lines, all sorts of other benefits would still accrue to the children of the wealthy and successful that their disadvantaged classmates wouldn’t enjoy. For example, if you really want to be shocked, look at the difference in vocabulary exposure by socioeconomic group before a child even enters kindergarten. A teacher cannot fill the role of a parent. If one student has great nutrition and a home life where they are secure and proactively engaged in activities that improve their skill set, they’re going to be able to excel far more easily than their peers. No amount of money thrown at this problem will solve it because advantage arises from both culture and structure. Historically, a counterbalance to this was that there existed center spheres of what you might call cultural indoctrination, such as as religious institutions, which provided a means of standardizing and solidifying behaviors that led to better success, even when those methods were seen by later generations as immoral (e.g., shaming couples to get married when a pregnancy occurred prior to matrimony). As a counterbalance, they sometimes led to a lot of injustice and misery on the microeconomic level but sometimes better macroeconomic or systematic consequences. (Here the specifics of the religious beliefs were important; e.g., contrast the Protestant work-ethic, which helped turn the United States into a global superpower even if it did result in us prioritizing things like GDP over well-being with the practice of burning widows when their husbands died for an easy, if not extreme, comparison. One can hardly say the latter is worthy of respect.)
Related to this point is something that concerns me, and which the book largely sidesteps; a force that is potentially important to sociology, behavioral economics, and futurology. Namely, as we’ve discussed in the past, we are undergoing a type of eugenic experiment due to increased personal freedoms and assortative mating but the consequences of this are overlooked for fear of offending people. There can be absolutely no doubt, objectively looking at the scientific consensus and the available data, that raw intelligence is almost entirely genetically driven. You can make a smart person dumber by having them grow up in sub-optimal conditions, but you cannot make a dumb person smarter than their natural limits. In recent generations, there has been a staggering amount of so-called “brain drain” from smaller communities as the best and brightest students leave town to go off to university, never returning. At university, they tend to meet their spouse, also intelligent and educated, then move to communities surrounded by other people like them. On a population-level, if that goes on for an extended period of time, you could end up with entire groups of people who are “left behind” – again, individuals within the left behind group could very well be super-intelligent due to genetic variation even while the rate of those individuals arising declines within that same group – and totally unsuited for the full ramifications of the knowledge economy. Add to this the likelihood of gene editing in the future, and the financial barriers and social proof reinforcement that this behavior is desirable among those who can afford it, and you’re looking at near-permanent structural inequality (or, at least, the seeds being sewn). If this goes on for generations, the risk that poverty is viewed always as a moral choice, and thus deserving, skyrockets. A tremendous amount of human suffering can result from such ingrained beliefs; e.g., look at certain classical Buddhist societies where a widespread belief in reincarnation effectively justified structural stratification based upon the position of one’s birth.
This is not just a massive moral and ethical question, it is a pragmatic one, as well; one that must be answered before the condition grows too dire. What is the nature of justice? What do we owe our fellow man? As a civilization, we have a long way to go. Consider that somewhere around 1 in 12 people have an intellectual capacity – again, almost entirely genetically determined – that makes them non-suited to any sort of work involving more than basic, repetitive tasks that have been carefully designed for them. That is a not-insignificant percentage of souls. No matter how much training, or opportunity, they are given, this group is going to face a massive disadvantage in an ever more cognitive-based economic system, where ideas and execution are the source of value. As we’ve done away with jobs that could have provided them with a good standard of living, nothing has filled the void. To put the question bluntly, what do we do with these people? How should they spend their time everyday? They are actual men and women with hopes, dreams, desires, friendships; who feel love, fear, empathy. It’s dangerous to see them as “less than”. It is also dangerous to refuse to acknowledge the nature of the problem. For example, a substantial real risk is that the members of this group demand a form of hidden welfare through the subsidization of outdated or inefficient industries to the detriment of the rest of society. Consider coal. In the most recent election, workers in the coal industry who were voting to bring back coal jobs insisted they didn’t want a government handout but that is exactly what they were demanding – unearned, undesirable welfare based on tribalism. They just wanted the emotional delusion that by working in a mine all day; to be able to lie to themselves and say that they had somehow earned their keep when, in reality, they were taking from everyone else because they somehow felt entitled to earn a living from an activity that has a much-reduced role in the modern world.
Individual Identity vs. National Identity
Related to everything we’ve been discussing is the fact that upper middle class and upper class people are more likely to identify with those who are like them, regardless of nationality, than they are members of their own country who are not similar. In a highly mobile and interconnected world, when the well-educated and affluent travel, meet, and interact with other well-educated and affluent people, alliances and personal relationships form that can be deeper and more powerful than some nebulous concept of your generic fellow citizen to the point that I’ve heard borders referred to as “imaginary lines”. It’s not hard to understand, on the whole, how an upper middle class, university educated, software programer living in San Francisco or New York is likely to feel more connection to a similar upper middle class, university educated, software programmer living in London, Berlin, Vancouver, Paris, or Tokyo than he or she would a non-educated, lower class American living in a trailer park in a rural part of the country. In many cases, their interests and skill sets are aligned. Their economic incentives are aligned. Their standards of living are aligned. Their life goals and dreams are aligned. They probably read the same types of books, watch the same types of films, have friends with diverse backgrounds, and are used to problem solving and complexity. What are the long-term consequences of that? Economically? Politically? Militarily?
Other questions remain. What does all of this mean and where does it leave us? The book doesn’t really offer any solutions, nor did it promise it would. Rather, it serves as a sort of high-level overview of some of the areas and patterns in which successful individuals and families are entrenching their advantages; behaving rationally on a household level and, through largely (but not always) non-intended consequences, keeping everyone else outside of the gate. Given the top-shelf characteristics of the community, many of you will recognize yourself in the descriptions and behaviors; see things that you think are perfectly normal but that a large percentage of the country doesn’t even consider. For example, many of you likely own a musical instrument, play an instrument, or have your children enrolled in music lessons. As a group on an inflation-adjusted basis in 2015 dollars, the top 1% is spending slightly more on musical instruments than it did in 1996. For the bottom 89% of society that number has collapsed by a staggering percentage. What are the lifetime consequences of that? You look at all of the advantages playing a musical instrument offers, even in terms of seemingly non-related fields like mathematical ability, and that’s a somewhat terrifying thought. In the same inflation-adjusted dollars, the top 1% has increased its investment in education by 3.5x compared to 1996 with a major portion of this increase going to early childhood development, tutors, and other out-of-school sources of knowledge accumulation. When a parent decides to buy a musical instrument and invest in his or her child’s development, it’s like a signaling theory billboard. It tells you a tremendous amount about the parent, as well as the likelihood of how the kid is going to turn out in life. What makes it tricky is that it isn’t the instrument itself, it’s the interconnected manner in which the instrument finds its way into the child’s life and then becomes a part of it.
The Soft Bigotry of Low Expectations
My biggest criticism of the book is that I feel it often engages – without any sense of self-awareness – in something that Oprah Winfrey once called “the soft bigotry of low expectations”; a behavior pattern that seems to be most common in well-educated, affluent people who tend to have high empathy. While often motivated by kindness and good intentions, this deeply offensive way of thinking and behaving is not only demoralizing, but tends to exacerbate the very poverty and inequality they are trying to fight because it ignores how humans respond to attention and incentives. You see it in wealthy bleeding heart parents saying we shouldn’t criticize low income parents who smoke and give their children a diet entirely of “sweetened drinks and Doritos” because they can’t do any better. Which, of course, is really a patronizing way of saying, “You’re too dumb to take care of yourself and your family so we’re going to let you continue destroying your child’s life because we don’t want to hurt your feelings. Being agreeable is more important than fixing the issue.” You see it in school administrators lowering standards for black and hispanic students, demonstrating in action that no matter what they say, when push comes to shove, they don’t actually believe those students are as capable or as intelligent as their Caucasian or Asian peers. This is an insidious and hateful worldview that ends up permeating institutions and leads to both individual bias and structural discrimination. Consider just one consequence: I’ve personally had successful medical professionals – people I have otherwise never known to harbor prejudice or racism and who would have no problem marrying, or having their children marry, a person of another race – point-blank admit to me that they have to fight the initial professional bias that a black doctor is inferior to a doctor of any other race because they find themselves assuming, due to their own first-hand experience during their days as a student, that the doctor probably was admitted to medical school based upon lowered standards to meet a quota as part of a diversity effort. Yet, they also admit that if they were to try to address this, knowing they feel this way, it would be the end of their career. This results in the bias being taboo. It ends up doing tremendous damage, harming real people, but everyone is too scared to confront it so it is allowed to thrive. This isn’t limited to medicine, either. In the legal field, Supreme Court Justice Clarence Thomas famously has a 15¢ price tag attached to his Yale law degree because he found that, after graduating from one of the most prestigious universities in the world, “[m]any [potential employers] asked pointed questions unsubtly suggesting that they doubted I was as smart as my grades indicated”. It’s all one, big, interconnected mess. It gets into the Kantian Fairness mental model, the reciprocity mental model… The perverse outcome of all of this is that members of the majority group who happen to make it through to the point of success end up being more privileged, not less. This force, particularly the Cobra Effect mental model, happens a lot in nature. Well-meaning but idiotic political solutions such as rent control come to mind. Liberal and conservative economists are in near total agreement about the stupidity of politicians who vote for rent control because it ends up causing a city to become even more expensive, harming the poor and benefiting the rich, but people too often think only about solving the problem in front of them and not the second and third order consequences of their actions.
Equally as bad, this type of sugar-coated discrimination – the soft bigotry of low expectations – poses a very real danger of triggering a mental model known as Stereotype Threat, in which individuals who are part of a group viewed less-than-capable end up experiencing lower real-world performance whether or not they agree with the stereotype because being aware of it exerts a neurological influence. The exact mechanism still isn’t fully understood but it is powerful. Fascinatingly, the opposite is true in a mental model known as Stereotype Boost but, here again, the individual must be aware that the stereotype exists for the effect to manifest as it otherwise has no power.
This interconnects with some fascinating areas of behavioral economics – namely, the power of free will and how it influences personal opportunity cost decisions. At the risk of grossly oversimplifying the current state of the research, it is fair to say that a person who believes he or she is in control of his or her own destiny – that their decisions matter and the outcome of their life is determined by their own actions – ends up enjoying wildly superior life outcomes compared to a person who believes their life is the result of structural privilege or discrimination even if the latter does exist. In other words, having faith that you are in control of your life ends up drastically improving the probability that your life ends up materially better than it otherwise would have – that you have more money, that you complete more education, that you make good long-term decisions that result in better life expectancy. That faith is the key. There is some sort of power in it. Possessing, protecting, and growing that faith, even through adversity, changes life outcomes. It transforms the individual’s world in ways that are often hard to imagine. It shows up over and over again in all sorts of data sets but, strangely, it isn’t popular to say. In fact, people who lack this faith often grow angry or offended at the mere suggestion they have control over the outcome of their life (I suspect it is because it would make them responsible for their current situation). It’s far easier to blame your parents, your employer, your friends, your neighbors, your coworkers, your elected officials. Just as strangely, when someone has grown up in an environment hearing that everything is beyond their control, then they realize they have been taught a lie their entire life, it can ignite a spark that causes them to launch into an upward trajectory. Personal responsibility is empowering. It feels good. There is a wonderful freedom in knowing that your life is a reflection of your past choices; what you do with your time, how you invest your money, the people with whom you associate, the food you eat, the activity you engage in, your behavior towards others.
Signaling Theory, Immigrant Entrepreneurship, and Quality vs. Quantity
In any event, this goes way beyond the content of the book. It relates to some other things I’ve been studying. One of these is a powerful mental model that I’ve grouped under a heading that I have begun calling “signaling theory”. The name will need to change because, while it is related to the concept of “Signalling Theory” from evolutionary biology, as I see them they are distinct. Maybe Broadcast Theory? I don’t know. Regardless, when I’ve finally feel like I have a comprehensive grasp on the totality of the subject, I plan on writing about it. In summary, the premise of what I see as signaling theory is that each of us is constantly broadcasting tremendous amounts of data out into the world, almost always without realizing it; like a radio or television station sending signals out into the ether. These signals are encoded in different ways – how we speak, how we dress, the company we keep, the way we eat at a restaurant, the way we lace our shoes, the types of movies we watch, the type of coffee we drink. We respond to others based on these signals. One of the ways upward mobility has been restricted, both historically and today, is that people who grow up in environments of affluence and success are inculcated with these signals, or patterns, until they become a part of who they are. They then recognize others like them and due to a variety of other mental models, build networks that exclude those who are different. One countermeasure is a related concept called “code switching”, where a person who grew up in one community instantaneously adapts his or her language patterns and accent, body language, and topics of conversation based on who is in the room. Given the natural inclination of a lot of people to avoid feeling uncomfortable – a dangerous, stupid seduction that has cost countless men and women their dreams – this means staying where they feel they belong, not where the opportunities are.
The other is how we can use the experience of first-generation immigrants to the United States to understand capital formation, entrepreneurship, and cultural identity. On that front, one of the most useful books I’ve found, particularly as a nexus for further research, is called On My Own: Korean Businesses and Race Relations in America by In-Jin Yoon. Though the data is now out of date, it ties to the work of the late Dr. Thomas J. Stanley of The Millionaire Next Door fame, in examining why certain groups, particularly Korean American immigrants, were self-employed, and thus enjoyed higher net income and wealth accumulation, than other racial, ethnic, or social groups. More specifically, it looks at the role discrimination played, if any, in incentivizing self-employment, while tangentially touching on the outsized success of other highly successful identity groups; e.g., Russian, Israeli, and Palestinian immigrants. It goes through different theories from sociology to try and see if they fit the real-world conditions that can offer a framework for why this happened. This is then viewed through the lens of the race riots of the 1990s in which Korean Americans suffered catastrophic losses at the hands of black and hispanic looters rioting in response to the acquittal of four white police officers accused of beating a black man named Rodney King after King was said to have resisted arrest. It’s a fascinating journey. It looks at motivations for immigration, sources of resource accumulation and how those change over time as a family is able to build an economic engine (often the engine pays for the children to become well-educated and the children then go off to university, becoming white collar professionals rather than returning to the family business). That’s another post for another time.
Again, if you’re interested in reading the original book mentioned, it’s called The Sum of Small Things and it was written by Elizabeth Currid-Halkett. Don’t get me wrong – it is not a must-read for most of you. I found it useful because it was connected to several other intersecting topics, particularly in behavioral economics and sociology, that have been on my mind. To that extent, it was a bridge that helped bring a few things together in terms of understanding how cultural identity among the upper classes is shifting as the signals used to signify in-group behavior have changed; e.g., minimalism, breast feeding, learning to cook, migrating to high-opportunity urban areas, spending more on clothes. (The last one was uniquely interesting. In one material respect, America’s new elite behaves differently from the Millionaire Next Door-type families the late Dr. Thomas Stanley discovered a quarter-century ago when he began looking at prodigious accumulators of wealth. Namely, members of the aspirational class are now shoving far more money into their retirement accounts and pensions than they were in the past but they also became much more willing to spend a lot of money on high-quality clothing despite not holding its value. While we should be careful of using personal anecdotes to reach conclusions, even here, Aaron and I see a reflection of our own lives. Looking at our household expenditures in this category, I have a working theory it is because the quality of mass-produced merchandise declined by an extraordinary degree over the past ten or fifteen years, leading people to either go up or down the value chain as part of what has come to be known as “Consumer Hourglass Theory”; something we’ve discussed many times in the past. When we were younger, you could walk into a Banana Republic and spend $120 on a pair of pants that would last a decade, still looking as new as the day you bought them. The trade-off felt good as a consumer. Even the niche retailers, such as American Eagle, had great quality denim jeans. Today, everything seems significantly thinner and rips more easily. It even has a name: throw-away fashion. I can’t stand it. Aaron can’t stand it. The last time we needed to buy blue jeans, we had grown so irritated with the shoddy quality available at most apparel stores, we knew had to find a solution. That solution ended up being the Burberry Japanese denim, which cost $325 per pair but has been some of the best money we’ve ever spent in terms of quality, experience, and cost-per-wear. They’re just better. They feel right. The manufacturer didn’t cut any corners. There were no compromises. The original dye concentration was so high that we had to avoid sitting on white leather for months because it would bleed off onto the material. I’ll be shocked if these things don’t last the next ten years if we take care of them. Whether it’s power tools, appliances, cars, or blue jeans, we’d rather pay more upfront for things that last longer and do what we want them to do. This is now a defining ethos among America’s successful. I have no idea how many pairs of blue jeans we’ll end up saving by not having to replace them as often but it will likely be considerable.)