5

The Bright Side of the New Upper Class

In which it is argued that even if living with the new upper class has its problems, living without it is neither a good idea nor an option.

AFTER ALL THE complaints I have lodged against the isolation and ignorance of the new upper class, it is time to give these Americans their due. As individuals, the members of the new upper class are usually just fine—engaging, well mannered, good parents, and good neighbors. Some good things can also be said for the new upper class as a class.

Starting with the prologue, I have described the America of 1960 in ways that have sometimes sounded nostalgic. But if a time machine could transport me back to 1960, I would have to be dragged into it kicking and screaming. In many aspects of day-to-day life, America today is incomparably superior to the America of 1960. The coalescence of the new upper class must get some credit for the good things that have happened, especially those having to do with economic growth and improvements in the standard of living.

When America got serious about identifying cognitive talent, shipping the talented to colleges and the most talented to the best colleges, it also augmented the nation’s efficiency in tapping its human capital by some unknowable but large amount. The result over the long term was that cognitive talent that in an earlier era would have been employed in keeping a store or repairing broken-down engines was employed instead in running large corporations and inventing new kinds of engines.

How much difference did that make? The effects of upgrading cognitive talent in an organization are less obvious now, long after the revolutions in higher education and the college sorting machine have upgraded the cognitive talent in the upper levels of almost all organizations. But a natural experiment of sorts was undertaken back in 1940 by the New York City Police Department that allows us to look at an episode in isolation.1

In 1939, a decade into the Great Depression and with unemployment still at 17 percent, the NYPD had just three hundred new slots to offer its next class and a vast pool of applicants—thirty-three thousand men. The NYPD decided to select exclusively on the basis of test scores, with no edge given to nephews of influential politicians and no edge for a favorable impression in a job interview. The applicants took two tests, one of cognitive ability (an IQ test similar to the one used by the federal civil service) and a test of physical ability. The composite score gave a 7:3 weight to the IQ score.

The applicants with the top composite scores were offered entrance to the police academy. In an age when few of the men had more attractive job alternatives, the three hundred slots ended up being filled by men who earned among the top 350 scores. The best estimate is that they had a mean IQ of around 130—near the mean IQ of incoming freshmen at elite schools today. They graduated from the police training academy in June 1940.

When the NYPD’s class of ’40 gathered for its fortieth anniversary in 1980, the results had been spectacular. Its three hundred members achieved far higher average rank and suffered far fewer disciplinary penalties than the typical class of recruits. Some of them made important contributions to police training. Many had successful careers as lawyers, businessmen, and academics after leaving the police department. Within the department, the class produced four police chiefs, four deputy commissioners, two chiefs of personnel, one chief inspector, and one commissioner of the New York City Police Department.

That’s what can happen when an organization gets an infusion of cognitive talent, and there is reason to think that similar effects occurred throughout the American economy as cognitive sorting occurred. I cannot make an ironclad case for it, but the timing of various events in America’s economic history during the last half century is worth thinking about.

The conditions for the formation of the new upper class that I described in chapter 2 began in the aftermath of World War II. As of 1960, the root cause of the new upper class—the increasing value of brains in the marketplace—had been growing in strength for years. College enrollment of the top IQ quartile of high school students had gone from 55 percent to more than 70 percent in just the preceding ten years.2 The college sorting machine had spread from the elite schools of the Northeast and was shifting into high gear throughout the nation.

Without knowing anything else about what would happen next, a knowledgeable observer of colleges in 1960 would have known that the campuses of the nation’s leading schools were more dense with talent than they had ever been, that they were getting denser with talent each year, and that there would be implications down the road. The point is not just that more people who could benefit from college were getting the chance to go to college, but that young people with the most potential were systematically being identified and put in situations where it was easier than in earlier decades for them to realize their potential. When those cohorts of young people reached professional maturity, this knowledgeable observer could have predicted, they were going to inject a massive jolt of human capital into the American economy.

That brings us to the timing of changes in the American standard of living. From the early 1960s to the late 1970s, not much changed in the technology of daily life. Televisions that had been black and white in 1960 were color. Copying machines had improved and were in wide use. The mainframe computer had taken its place in many offices, tended by a staff of acolytes. But daily life was about the same. Automobiles, restaurants, hotels, merchandising, radios, hi-fidelity systems, shopping centers, telephones, the transportation of mail and packages, bank services, brokerage services, the equipment in a physician’s office, typewriters, kitchen equipment, lighting, and the chair at your work desk were all similar to the way they had been in 1960.

Then things took off. Beginning around the mid-1970s—the appearance of the Apple II in 1977 is a good symbolic opening—the cascade of changes has been unending. They range from the trivial (it was still difficult to get a really good cup of coffee or loaf of bread in most parts of America in the late 1970s) to the momentous (the Information Revolution is rightly classified alongside the Industrial Revolution as an epochal event). The design, functionality, and durability of almost any consumer product today are far better than they were in 1960. Merchandisers have made it easy for customers in even the most remote parts of the country to get what they want when they want it at rock-bottom prices. For millions of people—me among them—taken-for-granted medications make the difference between debilitated lives of chronic discomfort and the active, comfortable lives they actually lead. Go back to 1960? I wouldn’t dream of it.

Many explanations for this explosion of innovation compete for recognition. The coming of age of the microchip and laser technology in the late 1970s. The end of stagflation and the beginning of an economic boom in the early 1980s. Globalization. A dozen other factors. But among all the other things that were going on, it remains the case that at about the time the new infusion of talent hit the American economy, a great many good things started to happen within the private sector.

So are we sorry that we have this new kind of upper class? The question has to be put in that way, because we don’t have the option of getting all the benefits of an energized, productive new upper class, one that makes all of our lives better in so many important ways, without the conditions that also tend toward a wealthy and detached new upper class.

How might we go about fixing the problems with the new upper class by changing laws? Would you like to roll back rising income inequality? How? Hike taxes back to the 91 percent top marginal rate that prevailed in 1960? If you actually succeed in substantially lowering compensation in all forms, you will also get reduced productivity from those who remain in the United States and a major brain drain among those who accept the opportunities that they will find elsewhere—the same responses among the most entrepreneurial and most able that have already beset European countries that have made it difficult for talent and hard work to be rewarded.

Apart from that, rolling back income inequality won’t make any difference in the isolation of the new upper class from the rest of America. The new-upper-class culture is not the product of great wealth. It is enabled by affluence—people with common tastes and preferences need enough money to be able to congregate—but it is not driven by affluence. It is driven by the distinctive tastes and preferences that emerge when large numbers of cognitively talented people are enabled to live together in their own communities. You can whack the top income centile back to where it was in the 1980s, and it will have no effect whatsoever on the new-upper-class culture that had already emerged by that time. Places like Marin County are not fodder for cultural caricature because they are so wealthy.

Those are theoretical observations. Realistically, rolling back the disposable income of the new upper class in a major way is not an option. The American political culture doesn’t work that way. The same Congress that passes higher marginal tax rates in this session will quietly pass a host of ways in which income can be sheltered and companies can substitute benefits for cash income in the next session. The new upper class will remain wealthy, and probably continue to get wealthier, no matter what.

If the most talented remain wealthy, they will congregate in the nicest places to live, with nicest defined as places where they can be around other talented, wealthy people like them, living in the most desirable parts of town, isolated from everyone else. It is human nature that they should do so. How is one to fight that with public policy? Restrict people’s right to live where they choose?

Congregations of talented people will create a culture that differs in important ways from the mainstream culture and that consequently leaves them ignorant about how much of the rest of the population lives. How shall we prevent that?

Changing the new upper class by force majeure won’t work and isn’t a good idea in any case. The new upper class will change only if its members decide that it is in the interest of themselves and of their families to change. And possibly also because they decide it is in the interest of the country they love.