The inequalitiy is getting wider. The rich are doing extremely well. Extraordinarily well.
Across the developed world inequality has increased. Business is doing well. Business profit margins: terrific compared to the record historically.
In the past, the people who have had a lot more wealth and power than everyone else have used an effective tool to justify that inequality. That tool has been religion. The King deserves to be king because God says so.
The nobility deserves to have much more than the peasants because the church says so. End of story. But then came the Enlightenment and the idea that all men are created equal.
An idea so powerful that it fueled a number of violent revolutions, an idea so powerful that it can be found in today's most precious texts: Our constitutions. The US Declaration of Independence starts off by establishing that all men are created equal. The UN Declaration of Human Rights states that all human beings are born free and equal.
Also, in my home country, Sweden, the very first chapter of the Constitution establishes the equal worth of all human beings. This idea that everyone is created equal did create problems for the rich and the powerful. Because if everyone is created equal, then the wealthy and powerful can no longer use religion as a tool to justify the fact that some people have vastly more power and wealth than everyone else.
So what has happened since the advent of the Enlightenment? Have we now eliminated inequality to actually achieve equality? Well, we all know that we have done no such thing.
What has happened instead is that the wealthy and the powerful have replaced religion with a new justification for inequality. The premise that we’re all created equal is the opening line of the American Story. And while we don’t promise equal outcomes We’ve strived to deliver equal opportunity.
Equality of opportunity is what we settle on instead of trying to achieve the equality that our constitutions talk about. Meritocracy is the tool we use to achieve equality of opportunity social mobility is the evidence we have that the meritocracy tool actually works. The idea that success doesn’t depend on being born into wealth or privilege.
It depends on effort. . .
and merit. In this video, I've decided to look into this non-religious and ostensibly Enlightenment-friendly justification for inequality: meritocracy. And to do that, I traveled from Stockholm to Malmö to meet the author and journalist Petter Larsson, who recently released a book titled Rigged: How the Belief in Meritocracy Lessens the Chance of Social Mobility.
A lot of people believe that we have equal opportunities to become anything. The carpenter's daughter can become a professor, the cleaner’s’ son could become a CEO or something. and it creates a lot of lots of problems in our societies, I believe.
First of all, because it's not true second of all, because people believe it to be true. This is the Hollywood actor, Stellan Skarsgård. You've probably seen him in Good Will Hunting, Dune or in any other of the 100 or so movies he's been in.
Stellan has many sons. For example, Alexander, who's also a successful actor famous from True Blood and Big Little Lies. Gustav, who's also a successful actor famous from Vikings and Westworld.
Bill, who's also a successful actor famous from It, and Deadpool 2. Valter, who's also a successful actor famous from Arn and Black Lake. And another child who's also a successful child actor.
A year ago, the term “Nepo Baby” started trending on social media and has since been written about in numerous media articles. To me, the popularity of this term hints at a renewed attention to how power and wealth are distributed in society across generations. The Skarsgård family is an obvious example of a nepo baby family.
But if you start looking for Nepo baby families, you'll find them everywhere. And not only within media and entertainment. So what do the families like these and the popularity of the term nepo baby say about social mobility and in turn about meritocracy and equality of opportunity?
Since we as a society have decided to not do that much about inequality and instead settle on equality of opportunity our society has a highly limited number of positions of wealth and power. For every such scarce position that is maintained from one generation to the next within families that already have wealth and power. There's one less position of wealth and power that someone from a family without wealth and power can climb to.
So if all positions of wealth and power stay within the same families over generations, then we don't really have the social mobility that was supposed to demonstrate that we have a meritocratic society with equality of opportunity. In other words, the Nepo baby phenomenon indicates that today's justification for inequality is a lie. Of course, some may dismiss Nepo babies as outliers that don't reflect society's overall social mobility.
It turns out, though, that there is a whole field of research dedicated to measuring social mobility and the metrics researchers use when they measure social mobility is: persistence. Persistence is how alike are children and their parents? How much of the parents advantages and disadvantages remain with the children?
Because you do not inherit 100% class position or income or something. You inherit a percentage on average. So what you do is that you take the parent generation and you compare them to the average in the parent generation.
And then you take the children's generation and you compare the children to the average in the children's generation. And then you can calculate the correlations between parents and children and you can say you inherit in a way. So persistence is how much remains, how much do you inherit from your parents or from your upbringing?
Persistence is often evaluated through metrics like education, health and occupation. But most studies focus on economic persistence or intergenerational earnings elasticity. Essentially, researchers examine how likely children are to earn similarly to their parents, and the researchers have uncovered three interesting things.
First of all, income persistence varies a lot between different countries. Countries like Brazil, India, the UK and the U. S.
have high persistence levels, in other words, low economic social mobility. Countries like Denmark, Norway and my country, Sweden have lower levels of persistence in other words, more economic mobility between generations. Now, even these low figures of correlations when it comes to income, let's say Sweden, where we have a persistence of, say 30%, that means that 30% is inherited throughout the generations, which means that it takes at least 100 years for a family that starts at the bottom 10% to reach the average 100 years, 3 or 4 generations.
Second, researchers have also found that there seems to be a connection between income persistence and inequality. Countries with low levels of economic social mobility, high persistence tend to have higher levels of inequality as measured by the Gini coefficient. Researchers call this The Great Gatsby curve.
Inequality tends to cement itself, by making social mobility more difficult. If there is a huge distance between, say, the poorest 20% and the richest 10% in a country, it's also much more difficult to climb from the bottom to the top. Indeed, the research shows that within each country, persistence is not uniform across the income distribution.
Instead, there are what researchers call sticky floors and sticky ceilings, meaning that the poorest children and the richest children are likely to stay within or close to their respective brackets. Most of the actual mobility occurs between different levels in the middle. A study has even shown that among the super duper rich in Sweden, among the .
01 percent, economic persistence is close to 90%. The research we've looked at so far, which compares one generation to the next, indicates that social mobility is so low that it takes between 2 and 11 generations for a poor family to achieve average income. But it gets worse because some researchers have designed clever methods to measure social mobility over many centuries.
And what they have discovered about social mobility is truly stunning. In the year 1066, William the Conqueror and his troops invaded England and defeated King Harold at the Battle of Hastings, a conquest that would end up having huge consequences not only for English history but also for our understanding today about social mobility. Now, what happened in England is not only that the Normans conquered England, but they entirely replaced the Anglo-Saxons as a ruling class over a few decades.
Now, every state official, every clergy member, every high church official they were replaced by Normans. So in a few decades, England changed their ruling class, it happened very fast. Now, happily enough, we know the names of these Norman conquerors.
Montgomery, Talbot, Darcy. . .
So why does this matter? Why does it matter that researchers today know the rare surnames of the ruling elite from 1000 years ago? Well, because researchers have been able to use these surnames that were in the elite 1000 years ago to track social mobility across generations until today.
More specifically, the economic historian Greg Clark has studied admission lists to the elite universities, Oxford and Cambridge, and analyzed whether the Norman surnames have maintained an overrepresentation there across the generations. That way he's been able to infer actual rates of elite status, persistence. In the end today there is still a small overrepresentation of Norman offspring, of these families with these Norman names at Oxbridge.
So it's taken a thousand years. I mean the thousand years, that's a really, really long time and they can still be identified as a little bit above average England today. These researchers, they've done the same kind of studies, not going back a thousand years, but a few hundred years at least in several other countries like China, like Sweden, and they have come up with persistence figures of about 70 or 80%, which is far more than the usual measurements.
all these huge changes of society over the years, Democratization. Mass education. Industrialism.
Capitalism. Which all have happened during these last 300 years. I shouldn't say that it hasn't changed anything has changed a lot, but it doesn't seem to have affected social mobility that much.
Despite that, researchers have found that 65% of Swedes and 50% of Americans believe that the system is basically fair since everyone in the country has an equal opportunity to succeed. And 32% of Swedes and 46% of Americans believe that the poor are poor because of a lack of effort on his or her own part. 38% of Swedes and 39% of Americans believe that the rich are rich because he or she worked harder than others.
This is Oprah Winfrey. She was born into poverty in rural Mississippi to a teenage single mother, facing abuse and teenage pregnancy. Today, she's a multibillionaire and one of the world's most influential people.
This is Andrew Carnegie, a Scottish immigrant who worked in a Pittsburgh cotton factory as a boy. By the end of his life, he had transformed the American steel industry and became one of the richest Americans of all time. This is Howard Schultz, raised in a humble housing complex in Brooklyn where he experienced poverty firsthand.
Today, he's a billionaire businessman celebrated as the driving force behind Starbucks’s global success. These stories, rags-to-riches stories, are really, really important for upholding the illusion of social mobility. You could take a Swedish example: Jan Eliasson.
His father was a metalworker, his mother was a seamstress he was born in a working class neighborhood in Gothenburg. And it becomes the deputy secretary general of the United Nations. That is really, really an achievement.
Or Zlatan Ibrahimovic, for example, from this town here where we live in Malmö who becomes a world renowned football player and there are numerous examples of this. Now these stories from rags-to-riches they sell the idea that social mobility is possible, and it is for a few people, for very few people, but it sells it to everybody. And that is a really important function.
Now, the French sociologist Pierre Bourdieu, he call these Les Miraculeux the miraculous ones. Their function is to to make people believe that the system fair while for the big majority it is not. In his book, Petter argues that this misplaced belief in meritocracy that these stories help create is a huge problem.
Why? The belief, that we live in a meritocratic society, which people tend to see as a just society, that means that they are willing to accept larger inequality because inequality is a well-earned the poor people are lazy, they are not that talented, while the rich people, the successful people, they are considered talented and hard working. So in that sense would be fair to to have greater inequality.
And this effect is actually been measured by the Dutch researcher Jonathan Mijs, who has found that the more unequal a country is, the more its inhabitants believe in meritocracy. Jonathan Mijs calls this The Paradox of Inequality and if you stop to think about it, it's a pretty profound discovery because if you recall The Great Gatsby curve, the more unequal a country is, the higher the persistence levels are. In other words, the more unequal a society is, the less meritocratic it actually is.
But despite that, people tend to believe more in meritocracy in these unequal societies. The illusion just grows stronger and at the same time in the real world inequality also grows stronger they go hand in hand. My name is Andres Acevedo and this is The Market Exit a channel where I publish short documentaries about law, fairness and capitalism.
I decided to make this one after I read Petter Larssons’s book Rigged. If you can read Swedish, I highly recommend this book. The book forced me to challenge my own assumptions about meritocracy it did leave me thinking about my own life, career and achievements.
Obviously, the book includes much more than I had time to talk about in this video I will let Petter say a few more words about the book but before that. . .
since you’ve come this far, maybe you found value in this video. If so, please help me out by liking the video, by subscribing to my channel, and most importantly, by sharing the video with your family, friends and colleagues. I want to make more documentaries like this, and to share them freely on platforms like YouTube.
But for me to keep doing that, I need your support. If you like what I’m doing on this channel, go to patreon. com/themarketexit Now, let’s hear some more from Petter Larsson.
This is what it looks like in Swedish. Riggat, which means Rigged. The book is divided into two parts where in the first empirical part, I see to what extent can we talk about equal opportunity and to what extent do we inherit traits, advantages and disadvantages from our parents or from our upbringing.
And in the second part, which is the more interesting part really, I discuss what type of problems do these beliefs create in our society.
