NOVEMBER 13, 2020
There is a new elite on the rise. Unlike the old traditional elite, America’s new elite lives no longer from inheritance and breeding but on achievement. The old elite was based on land, property, and factories. The new elite is very different. This elite has gone through a rigorous training regime – all the way up to elite universities in the Ivy League – to arrive at highly selective elite jobs.
The old elite was defined by what Thorstein Veblen called leisure and conspicuous consumption (1899). The new elite is a working elite. It has to work – mostly in elite professions – to earn money. The new elite’s employment is located in a relatively narrow spectrum of occupations separating the new elite from non-elite, i.e. white-collar workers in middle-class employment. The new elite finds employment mainly in three main categories: in management – CEOs (cf. JPMorgan’s CEO Jamie Dimon got $31.5 million in 2020), CFOs, top-management, etc.; in finance (hedge fund managers such as Jim Simons with a net worth of $23.5bn – not million – billion!); and in elite law firms like Wachtell, for example.
Having gone to elite day-care centres, elite kindergartens, elite pre-schools, elite primary schools and elite high-schools, the new elite arrives at elite colleges as a jumping-board to elite postgraduate universities. For example, at Harvard and Yale, more students come from households in the top 1% of the income distribution than from the entire bottom half, writes Daniel Markovitsin The Meritocracy Trap. Markovits also sees the new elite as being trapped because of its constant exposure to elite training, prep-schools, private tutors, etc.; the relentlessness of examinations and assessments; and eventually, the harshness of stressful burn-out jobs at the top of the income pyramid.
In sharp contrast to 18th and 19th century Satanic Mills run by the old elite, the new elite works in what might be called elite white-collar salt mines creating unbearable levels of workplace stress, anxiety, cocaine use, alcoholism, and rafts of other work-related stressors. These are symptoms and illnesses of high-pressure jobs. In other words, from birth to death, the new elite is trapped in a gold cage.
Semantically, it creates an elite language that denies ordinary workers a language through which they can understand and articulate the pathologies of contemporary capitalism. Linguistically, it cements the increasing exclusion of middle-class and the working class. Perhaps more importantly, workers have become victims without a language of victimhood. This is a significant achievement of corporate capitalism.
Simultaneously, media capitalism adds more gloss on glossy jobs for the new elite while simultaneously justifying joblessness, wage stagnation, and precarious employment in gloomy jobs. Increasingly, it also creates mass unemployment for workers and the middle-class. The increased alienation and exclusion of workers and the middle-class paralleled by the concentration of power in the hands of the new elite means precisely what Supreme Court Judge Louis Brandeis once noted,
We can have a democratic society or
We can have concentrated wealth in the hands of a few.
We cannot have both
The new elite is about concentrating wealth and power in the hands of a few. And those few – the new elite – justify the system for which they have been trained and worked so hard for many long hours. What was once known as standard office hours – 9am-5pm – has muted for the new elite into a work regime that begins at 9am or earlier on one day and runs through to 5am on the next day with email checking during breakfast and late-night conference calls.
Exemplifying such work regimes is Amazon’s turbocharged corporate Darwinism with unreasonably high expectations on its elite staff as well as its underpaid and harshly exploited warehouse workers. It is as Amazon boss Bezos once said, you can work long, hard or smart, but at Amazon.com you can’t choose just two out of three. Implementing his relentless work regime, Amazon runs a continual performance improvement algorithm on its own staff. It is a remote-control super-surveillance panopticon relentlessly scrutinising and always ready to get rid of workers deemed unproductive.
In many areas, the rise of the new elite is a zero-sum game – I win you lose. It clearly identifies the so-called “losers”. Overall, the share of national income of workers has fallen. It came as predicted by those who understand neoliberalism. Shifting wealth away from workers and towards capital during the last decades was paralleled by the rise of neoliberalism, around the middle of the last century. Simultaneously, stock prices which can be roughly seen as capturing the income made by capital have far outstripped the wages of ordinary workers. In other words, neoliberalism and the rise of the new elite have vacuumed wealth upwards. To camouflage this neoliberal propaganda, corporate media invented the infamous trickle-down economics. In short, the rich are made richer, while the poor are made poorer.
Not surprisingly, somewhere in the range of 40 to 50 million Americans suffer from material deprivation. Of course, this has been purposefully engineered through a neoliberal tax policy, for example. In the USA, the top tax rate has fallen by more than half. It has cut taxes for the rich that was over 90% throughout the 1950s and early 1960s. Neoliberal politicians reduced top tax rates to 70% starting when Ronald Reagan assumed the presidency in 1981. Today it is below 40%, and in some cases, it is way below that.
The new elite can hire creative tax lawyers and accountants who know the deliberately installed loopholes so that the new elite can reduce their taxes further. As a consequence, someone like Donald Trump, who Forbes estimates to have $2.5bn – $2,500,000,000 – paid a meagre $750.- in taxes. Trump pays less taxes than those voting for him! As the new elite is made richer and richer, the government takes a smaller and smaller share of their wealth.
Worse, the annual probability that a middle-class family who has suffered a significant financial reversal, defined as a decline in income, drop by more than 50% doubled between 1970 and 2000. For those children born into such families, it does not get better when they enter underprivileged schools. A poor child, in a poor school district, in a poor state, receives about $8,000 worth of schooling annually.
Compared to a middle-class child, in a middle-income school district receives about $12,000. At the same time, a middle-class child in a wealthy school district receives $18,000. A rich child in a wealthy school district receives $27,000. And now to the new elite. The very affluent children attending an elite private school receive $75,000 worth of schooling per year. The poor kid has lost before the race begins. There is no level playing field. Such stark disadvantages are cloaked through rafts of ideologies pretending that everyone has the same opportunities and the same chance in life.
Of course, the inequality in schooling is further exacerbated through private tutoring needed to pass entry exams into elite schools and elite universities. One test preparation tutoring company, for example, catering to elite students in New York City charges $1,500 for a ninety-minute Skype tutoring session. With a father on $15/hr – minimum wage, for example, it takes him 100 hours of work to pay for the 90 minutes training. The poor simply have no chance. The “$1,500-for-90-minute-tutoring” elite child in New York is not alone. Globally the private tutoring market has exceeded $100bn. This is what the new elite spends to get their children into elite schools, elite universities, and eventually into elite professions.
These are very serious numbers – $100bn. The new elite wants, pays for, and gets real education rather than gimmicks, ploys, exam tactics, and cheap trickery. Instead of teaching elite students how to simply take entry exams, they are tutored to become better at what the test measures. They develop superior abilities to read comprehensively, think coherently, process numbers, and use their brains most effectively under exam conditions.
Elite tutoring delivers results. Elite children who are consistently involved in extracurricular tutoring are 70% more likely to go to high-quality colleges compared to children who are only occasionally involved in tutoring. Even more critical is the staggering 400% higher likelihood of getting into elite colleges/universities compared to children who do not engage in such activities. In addition to elite tutoring, the income and achievement gap measured by SAT (Scholastic Aptitude Test) is staggering. Here are two examples:
- students from families earning over $200,000 per year – top 5% – score 388 points higher than students from families earning less than $20,000 per year – the bottom 20%; and
- students whose parents hold graduate degrees (top 10%) score 395 points higher than students whose parents have not completed high school – the bottom 15%.
Education stratifies. It does not unify, nor does it create equality. The new elite simply out-educates the middle-class by more and more, year after year after year. The outcomes of this system systematically favour the new elite in many ways. The top twenty private high schools as ranked by Forbes send 30% of their graduates to the Ivy League, Stanford, and MIT alone. These schools also send two-thirds of their graduates to colleges and universities ranked in the top 25 in their categories.
Of course, the entire system is tilted toward the elite as 37% of all college students now come from households in the top 25% of the income distribution. In short, a college education is no longer for the working class and the poor – if it ever was. The share of all bachelor’s degrees handed out to students from that bottom quarter was just 10% in 2014 – down from a meagre 12% in 1970. There is no school-to-college pipeline for the poor – just a school-to-prison pipeline.
The new elite will not go to prison. Prison is for the poor. Instead, the rich attend the most selective private universities. At elite universities, more freshmen have fathers who are medical doctors than those with fathers that are hourly workers, teachers, clergy, farmers, and soldiers combined. Top universities are increasingly closed off to the middle-class. Across the Ivy League, Chicago, Stanford, MIT, and Duke, more students come from families in the top 1% of the income distribution bracket than from the entire bottom half. The clear-cut “wealth elite university” link is mind-numbing.
Once in an elite university, it gets even better for the already privileged students. Elite colleges spend much more on training their wealthy students than non-elite colleges spend on training for their less rich students. Additionally, for many middle-class students, an undergraduate education is as good as it gets. However, for the new elite, their elite undergraduate degree is merely an intermediate step towards attending another elite university for their postgraduate education. That is, elite universities, for most elite students, only serves as a tool obtain a postgraduate degree needed to gain top employment as a CEO, CFO or hedge fund manager.
At the same time, education becomes removed from a civil, if not, a human right. It is no longer a civic duty of the state — hyper-individualism reigns. Education is individualised and moved onto the individual person. Even companies and corporations ride the trend towards individualisation of education and training as the average US company invests less than 2% of its payroll budget on workplace training.
Moving workplace training for elite jobs out of the workplace and into elite universities alters the socioeconomic composition of people receiving such training. Training and education become a factor for the elite rather than the working class and increasing less for the middle-class. Increasingly the focus is on training rather than education. The difference between training and education is that you can train a dog, but you cannot educate a dog. It moves elite education towards the wealthy.
Much of this creates a cycle in which the new elite reproduces itself by sending their children to the elite school, colleges, and universities that they themselves have attended. Elite students attending elite professional schools (business and law schools, etc.) received their BAs at elite colleges. Their pipeline is somewhat different from the poor’s school-to-prison pipeline.
These self-reproducing elite’s make up the engine that sustains the privileged. It excludes poor and middle-class children from future income and status. The system no longer promotes equality of social and economic opportunity. As training and education become exclusive rather than inclusive, elite children systematically outperform middle-class children. They outperform not just the poor, but the middle class and they do so at each stage of their education.
In short, poor and middle-class students face more social, educational, and financial obstacles to graduate from college than students from elite families don’t. Such an unfair education system means there are no longer enough high-achieving high school graduates from outside the elite to make a positive impact at elite colleges. The elite has effectively insulated itself. Non-elite students can no longer compete with the thousands of hours and millions of dollars invested in elite children by their elite parents.
Increasingly, monetary wealth and educational achievement work together. In that way, the wealthy and highest performing students are now overwhelmingly one and the same. Unlike the traditional elite’s, land, factories, and inheritance, for the new elite, education assumes the role breeding played in aristocratic regimes. Now, there is a new monopoly that elite families exercise over pathways into income and status. As any monopoly demands, their monopoly increasing excludes others – poor and middle-class children are barred from elite training and entry into high-paying work.
With their educational monopoly in place, the new elite can flaunt the ideology of “equal opportunity” because it no longer exists. Equal opportunity has become a mere ideology that sustains the elite. With next to no chance in rigorous entrance examinations, the middle-class is increasingly excluded. All the while, it is told there is an equal opportunity, and hard work will pay off. Yet, these entry examinations systematically favour well-prepared candidates. The majority of admitted students now engage in so-called “test preparation services” to help improve their scores. It comes at a price the middle-class hardly, and the poor cannot afford.
Today’s elite children are exposed to a rather, relentless, merciless, and harsh system. They diligently study and doggedly train. They are under constant stress to measure up to the next test, the next admission competition, the next examination, and the next assessment. All of these conditions prepare the elite to work in highly competitive employment in adulthood. Before they know it, they have become Excellent Sheep.
Since the seminal book Schooling in Capitalist America, things have gotten worse. Today, the new elite’s children – just as working-class and middle-class children at lower levels – are conditioned to accept the domination of capital “before” even entering the workforce. Today, the well-conditioned acceptance of hierarchy, domination, and authority applies to elite children as well.
Much of this has rather dire consequences for the poor and the middle-class. Middle-class jobs are increasingly eliminated. Simultaneously, jobs for the poor are made even worse. At work, managerial control is smoothed and consistently move onto technology. The adjacent ideology makes these technologies appear neutral, and if possible, even natural.
Meanwhile, middle-level managers are successively eliminated. The new elite no longer has any use for them. Technological advances in computing, the Internet, and algorithms – algorithmic management – in measuring employees, surveillance, communication, and data analysis gives elite managers immense powers of scrutiny and command over workers. Such algorithms are indeed Weapons of Math Destruction.
Next to Amazon, one of the best-known examples using algorithms is Uber. Uber’s use of algorithms furnishes the über-surveillance power of a relatively small elite group of top managers. It enables them to watch Uber’s thousands of employees directly. At Uber, algorithm coordinates the work of hundreds of thousands of drivers. Most of these drivers have never met a single Uber middle manager.
Corporations such as Uber no longer require vast sections of middle management to manage the link between business strategies set by top management and the implementation of such a strategy that is assigned to workers. In the very near future, the corporate restructuring will eliminate or at least shrink middle-management substantially. It will diminish unnecessary, unwarranted, and often rather incompetent white-collar middle managers. With that layers of managers reporting to managers will be gone.
Instead of this, elite consulting firms will tell elite managers in large corporations how to use algorithmic management. These elite managers no longer seek to automate line workers away, but how to automate the middle manager’s job away. There is a rather massive change already on the way. It consciously plans and operationalises a massive corporate clean-out of middle managers.
This is made possible because of new managerial technologies capable of culling middle-management. It is merely a surplus that is no longer required. It is made redundant by new technologies. This has been the case ever since the birth of capitalism. What is new is that it is set to hit middle-management and inevitably, the middle-class.
Finally, corporate consulting firms, like McKinsey Global Institute, have already predicted a dramatic shift away from middle-management. It predicted that nearly one-third of the US workforce will be displaced through automation and algorithms by the year 2030. These are not manual production workers. Significantly, it will be middle-management and mid-skilled jobs that are lost.
It is the new elite that is driving this process. This is a self-reproducing elite based on elite training at elite universities and business schools ready to find employment in elite corporations. According to Daniel Markovits, this new elite operates with the motto, we are all in this together, but some pigs are smarter than other pigs and deserve more money.
First published on Counterpunch.
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