What is the Future of Education and the Workforce in the United States

In recent years certain parties have begun to question the economic value of a college education based on changes in both the available number of jobs as well as the success rates for those of various majors acquiring their intended and/or desired job. Overall it seems foolish to argue that a college education does not have any value. In fact one could argue that a college education has never been more valuable relative to the ability to acquire a “quality” job. For example a recent Pew Research Center study determined that an individual with only a high school graduate level education will only earn, on average, about 62% of what an individual with a four-year degree will earn down from the high school graduate earning 77% back in 1979.1

Of course statistics like this appear impressive; typically significant problems come from the utilization of averages. Few will argue that certain jobs have significantly higher financial windfalls than other jobs both of which may require an individual to have at least a bachelor’s degree. Basically the wage curve for jobs in the United States has not increased in a linear manner; the wages associated with the top portion of “quality” jobs have dramatically increased over the years leaving the rest behind in the proverbial dust. Therefore, if one were to remove the top 5% and bottom 5% of wages for jobs held by those with four-year degrees it stands to reason that this 62% number would significantly increase to a number much closer to the 1979 derived 77%. Overall due to education displacement and college graduates taking jobs they are “over-educated” for, it would not be surprising if overall bachelor’s degree wages have decreased in recent years, especially since wage growth in general has been so poor.

This element is an important consideration when contemplating the economic value of a college degree. One of the problems in modern society is the rise of the “gig” economy; basically due to a much lower pool of full time jobs with benefits, individuals now must instead engage in numerous part-time short-term tasks/opportunities with few to no benefits at much less money both in total value and consistency of acquisition. This trend bucks those of the past where the advancement of technology would facilitate increased job growth both in number and salary.

Unfortunately technology may have begun to reach the tipping point where it is a net detriment to job growth instead of a net benefit. Combining this reality with the continued outsourcing of jobs by numerous corporate interests to lower cost environments in other countries, it becomes fair to question the panacea of education that some tout with respects to job prospects. For example there is still this simplistic notion that when individual A loses a job to another individual in a lower cost environment or to a piece of technology, then that individual A simply needs to acquire new skills and that education will “magically” produce a new quality job for this person. Clearly this belief is not supported by reality for numerous well-educated individuals do not have quality jobs despite their determination and skill sets and this trend appears to be worsening not improving.

Based on these conditions instead of “upgrading” one’s position in the job market, the college degree has almost become a prerequisite to compete for a quality job, thereby making the college degree important even for those who are not prepared to excel in college. Strangely enough the “importance” of a college degree has evolved rather inexplicably for even those jobs that in the past were filled by those without college degrees. The general expectations and duties of these jobs have not changed, yet a larger number of companies expect applicants to have college degrees for jobs that involve secretarial or simple logistics work. Why, what does the college degree bring in modern society that in the past was “excluded”? Overall unfortunately with this increase in the general employment “importance” of a college degree the costs associated with acquiring one have also increased, thereby dramatically increasing the risks associated with failure, not only in acquiring the degree, but also in acquiring a job after earning the degree.

To better identify these new risks one looks to the old adage that education is akin to investing in one’s future. In the past one could view going to college as investing 10 dollars for a 80% chance at making 50 dollars (a high quality job) otherwise one could frequently, but not always, still acquire 15 dollars (a lower quality job) even upon failure versus the ability to acquire 15 dollars without having invested that 10 dollars. Now going to college is akin to investing 30 dollars for a 50% chance at making 50 dollars otherwise one is limited to a lower probability than in the past at making 10 dollars (lower quality job with lower acquisition probability). While simplistic this analogy basically demonstrates the almost irrational change that has occurred in the job market in modern society within the United States, more money must be invested for a lower probability of success at achieving a smaller average payday. Note that success is not only acquiring a degree, but also acquiring a job that is appropriate for that degree.

One interesting aspect of this degree acquisition are those who feel community colleges should no longer be used as jumping off points for traditional four-year educations, but instead should focus more on becoming vocational schools to train individuals for specific jobs. Such a strategy is inherently questionable because the purpose of education in general is to produce individuals that can effectively rationalize, make positive contributions to society and responsibly participate in government whether it is as an elected official or a voting citizen. A narrow educational experience in a vocational institution hardly has the capacity to aid in the achievement of such a goal. Thus, converting community colleges into “cogs in the machine” educational environments does not appear to be a responsible choice at this point.

Furthermore it is the second portion of this equation that has failed in the modern economy. Acquiring college degrees is not the problem with more degrees awarded, both proportionally and in total number, than at any other time; the problem is that such accomplishment has lost significant meaning for outsourcing and technology have shrunk the “quality” job pool. Thus, numerous individuals with four-year degrees have had to settle for jobs below what would be expected of individuals with such a level of education.

In fact the unemployment rate for recent college graduates remains higher than years before the Great Recession in 2008 and higher for all other age groups. For those graduates that have jobs they are more likely to be underemployed than past younger college graduates as well as other age groups.2 Wages are also down for them relative to other age groups and their past peers.2 Further exasperating these problems is that these types of jobs seem to no longer have an effective and transparent advancement track. Basically the ability to steadily advance in the company both in responsibilities and salary have ceased to exist in part due to the “gig” economy and in part due to unknown reasons (maybe in the name of more profits).

Some might argue that this conclusion of a shrinking quantity of “quality” jobs is erroneous due to continuous claims of the need for qualified individuals in the STEM (science, technology, engineering, mathematics) fields. Unfortunately this counter-argument is complicated by the expected requirements of those jobs. First, not everyone is attending college for the purpose of receiving a STEM-based degree. Basically the “quality” job demand is not large or widespread, thus should everyone simply attempt to acquire one of these degrees even if it is not in their field of interest or expertise? The problem with chasing the “hot” or “trending” degree, especially for some the very specific fields within the STEM umbrella, is that those areas can contract in a blink of an eye based on changes in market conditions leaving individuals with a near worthless degree (as far as the job market is concerned). Part of the problem in this respect is that not surprisingly the public typically only hears about the successful individuals in these fields not those who struggle or fail.

Second, and more importantly, the limiting factor for acquiring a vast majority of the available STEM-based jobs is not education, but experience. Basically these jobs are reserved for individuals who have degrees in the appropriate field as well as at least 5 years of experience in that field. The problem is that there are not enough entry-level jobs in advanced fields so individuals can acquire this desired experience. Another problem is that the entry-level jobs that exist do not shut out those with experience. Thus, there can be individuals with 3 or less years experience vying for these entry-level jobs as well and not surprisingly they have a higher probability of getting them over one without any experience. In short a young graduate can receive the necessary education, but will still lack the most desired element, experience. Overall the fad in the early 21st century was referencing this glut of demand for STEM qualified individuals and a cooling science and tech environment has reduced this demand, yet the public line has yet to acknowledge this reduction.

This new mindset of a college degree being a prerequisite for a quality job, both in the present and in the future due to the lack of advancement opportunities, has hurt the process of education itself. Education has become a means to an end or a de facto commodity instead of a tool to enrich the life of an individual, thereby turning education into a rote activity with reduced levels of creativity, fun and enjoyment for a number of individuals. This issue is further complicated by the fact that if everyone is acquiring an advanced education then its value becomes diluted psychologically in that it is not viewed as a boon or achievement, but instead as “just something that you do” stripping even more enjoyment from the educational process, especially for those who are not naturally motivated to learn. A side issue is that so many people have advanced degrees employers are less likely to reward applicants for having one in addition to it being expected.

With education becoming more of a commodity it is treated more deterministically, in that people attempt to devise the “optimal” way to provide education forgetting that the students, especially in their formative years, do not learn the same way and have their own strengths and weaknesses. This mindset produces a “one size fits all” methodology, which due to the aforementioned differences will inherently produces winners and losers based on who is best supported by this universal education method. Also this mindset has the significant potential to produce a single blueprint for the future of society, which is dangerous for inherent flexibility and diversity is superior to rigidity. This new mindset is demonstrated in the new testing culture that has arisen in the last 15 years in public education as well as the quasi-retreat from public schools to private and specialized charter institutions by wealthier families.

This testing culture also facilitates a sprinter’s mindset where the only thing that matters is preparing and succeeding on the next test or the next quiz, thus focusing on skills that are only relevant to acquire in the “now” instead of a marathoner’s mindset where long term retention of knowledge and skills is important in order to provide foundations to build upon when acquiring new and more complicated skills (i.e. the basis of quality learning and education). This mindset has also seeped over to the “future” of education in MODO courses and micro-degrees, which can be largely viewed as “cram” courses where 1-2 years of knowledge is comprised into a 2-3 month period. One wonders how effectively this strategy will be in the long-term, but it is difficult to see it as a net positive.

Not only are students hurt by this new culture both in education and the job market, but so are teachers. The single mindset of “make sure students can pass the test” and the seemingly incessant testing schedule has fostered the idea of teachers as simple “cogs in the machine” as well, further eroding the importance placed on the position and diminishing unique and inventive teaching methodologies. Groups like Teach for America and their supporters contribute to this mindset by selling the idea that quickly trained amateurs, most of whom will be out of teaching in five years, can be as successful, if not more successful, than fully trained and/or experienced teachers by simply following “the playbook”.

A sad state of affairs is that these programs, in addition to charter schools, on average have not produced higher test scores or even more “educated” students with the exception of those privately funded institutions with much more money than public schools that hand-pick their student body ensuring high student quality and potential from the start. Failing to produce improved results is not the only accomplishment of these institutions; they have also driven a continuing public and private lack of respect for the professional teaching position, which when combined with continuing negative elements of institutional control as well as negative financial incentives, has created an environment where fewer individuals want to be teachers, thereby inherently reducing the total number of quality teachers in the educational pool.

Not surprisingly teachers, like any occupation, gravitate towards the best financial, occupational and social environments and with less quality teachers entering and remaining in the profession society has created small concentrated environments of universal teaching quality leaving other areas significantly devoid of this element. The current environment regarding education has only exacerbated this division. This exodus of quality teachers and administrators to environments that frankly do not need their talents combined with the lack of respect for the process of teaching has created a serious financial issue for a number of schools. The idea that “anyone can teach” has created the erroneous philosophy of “schools can operate on shoestring budgets”.

This philosophy is dangerous for two reasons: 1) a teaching environment with limited resources place unnecessary pressures on the staff and limits their ability to evolve and grow; evolution that would create a more positive and meaningful educational environment; 2) limited resources place psychological burdens on students, which will commonly result in less motivation, shorter attention spans and greater levels of misbehavior because such an environment facilitates the idea of future prospects seeming so bleak that the overarching mindset is “what is the point?”;

The idea that outside environment matters is a convenient and common exclusion made by teacher critics. When students are motivated, work hard and follow instruction, as well as are curious and ask questions because they want to learn, then even a mediocre teacher appears to be a great and inspirational teacher. When students are frustrated, starving, concerned for their safety, do not respect the institution or its instructors, then even a creative and visionary teacher appears to be a failure unable to “reach” his/her students.

This above discussion has raised two unquestionable issues regarding future job markets and education. 1) the number of available quality jobs relative to the number of applicants is trending downwards in both respects (fewer quality jobs and more applicants) and it is difficult to see a scenario in which this trend changes in the near future if government does not act; 2) the demand of a college degree and the deemed “tools to succeed in college” for even a sufficient opportunity to acquire a “quality” job has produced a single-mindedness relative to the educational process destroying teaching diversity, prestige, and importance; this loss makes the evolution and maturation of a divergent number of intelligent personalities much more difficult, thus diminishing the overall quality of society;

Focusing on the second issue first, some argue that the problems associated with any quality teacher exodus can be overcome by technology. Proponents of MODO and other online instruction methods are already hyping its transformational potential, especially in the avenue of lowering class sizes. However, applying these mediums to education raises questions regarding personal instruction. For example what happens when a student has a question? Basically what is the dynamic of how a teacher is supposed to interact with a classroom of 20 students and other 10-15 “tele-educating” from their homes? What happens if the teacher is the one “tele-educating”? It is difficult to scale any success at the college level to the middle or high school level.

While this is one a single issue of many involving “tele-education”, an interesting element is how does this inherent increased complexity of student/teacher interaction reflect the new modern narrative/trend in education of “anyone can teach”. Others talk of providing personalized education through technology. Such a goal seems incredibly ambitious and complicated, especially since proponents do not provide a clear definition for what a personalized education or personalized educational experience is supposed to represent.

At the moment there are two significant problems facing the incorporation of technology into the current educational system. First, the incorporation of technology appears to be following an inverted need curve, basically the communities that could benefit the most from technology are the least likely to incorporate it due to lack of finances and lack of specialists; instead more wealthy communities have and will continue to incorporate technology while poorer and more rural communities will not. Therefore, instead of acting as an equalizing force in education narrowing the education gap between the rich and the poor or between whites and non-whites, as envisioned, technology is turning out to be simply another means in which the “haves” separate themselves from the “have nots”. Unfortunately for technology adopters this general funding issue appears to be semi-permanent until the financial culture surrounding the importance of education changes.

Second, the utilization of technology as a negative force on education has been widely demonstrated numerous times already. Simply ask almost any teacher to name the most detrimental device to teaching and it stands to reason that a vast majority will reply “the smart phone”. Not only are smart phones huge sources of distraction during class both for the directly interacting student and any others he/she may choose to communicate with via text, but they have also been demonstrated to be useful tools for those who attempt to cheat on assignments and tests. Unfortunately most of the “expertise” that the younger generations are supposed to possess regarding the application of technology appears front-loaded in the entertainment field and lacking in the education and enlightening discovery fields.

For example it could be successfully argued that technology as a whole has fostered an increased level of laziness and carelessness as students simply plagiarize from online pieces regardless of their accuracy. A number of students seem to believe that because something is online then it must be true; or just “Wikipedia” something and call it a day refusing to engage in any deeper level of analysis and understanding. Understand that Wikipedia can be a valuable resource for background as a jumping off point, but too many students view it as the only needed reference. Part of the reason for this increased detrimental behavior in education is the fact that, as mentioned above, education itself has been marginalized to a results-only system, thus the actual process or methodology behind education is viewed as irrelevant, just “getting it down” is important. Overall before technology can actually become a boon in education these problems must be address for technology cannot solve them, only exacerbate them.

So what can be done about the marginalization of education? If one of the hallmark traits of the United States is the idea that anyone can rise from nothing to be something and that education is a central element increasing the probability of such success then establishing a firm set of rules to foster an educational environment that favors some and opposes others, the system that current exists, flies directly in the face of such an ideal. The overall solution is not a difficult one in that successful change needs to involve re-establishing education as a meaningful learning and growth experience, not as a means to an end (i.e. a job).

The first step is to grant methodological freedom back to teachers decoupling their wages and tenure from standardized testing results. Instead evaluations can take place through exit interviews, written student evaluations and final test performance. Finals in given subjects should represent a cumulative knowledge and retention of what was supposed to be taught, thus final grades would be a meaningful measurement element regarding both teaching and learning success. Remember education is a two-way street between the teacher and students, quality instruction and quality reception/retention.

Another part of accomplishing this larger goal is to reintroduce the value of previously vilified as meaningless elements like recess for elementary school level students and a wider array of liberal and performing arts for older students. Basically make education a more global and involved process rather than systematic rote analysis of narrow topics that for most students have little excitement, i.e. create a situation where individuals see value in actually going to school rather than having an environment that could be easily replicated at home through simple focal study.

A meaningful element to stimulate the above process is for both schools and families to better identify the passions and interests of the students and then correlate those elements into the learning process by demonstrating how learning “perceived” mundane things like math and chemistry tie into those passions. This way education becomes an amplifying force for that passion rather than one that detracts and potentially changes it to something that may be more ill-suited for the individual.

Another important element is to psychologically prepare students to embrace the discomfort of learning. Some argue that learning is not fun and education needs to reflect that, but it can be counter-argued that such an environment for a number of students has already been attained; this is a major problem for if students acknowledge learning and education as painful then they will be less interested in engaging in the process and will look for shortcuts (i.e. cheating). Instead one must focus on the discomfort of learning in the context that it is frustrating when one does not know something one wants to know, but proper instruction and hard/smart work makes that frustration ephemeral.

Basically learning is only not fun when no progress is being made. If progress is being made (i.e. some knowledge being acquired) then learning produces a noticeable sense of accomplishment and pain/frustration is limited and short-term. Therefore, one of the chief strategies in the educational process is to focus on why someone is not making progress and rectify it. This is not to say that education and learning is always effortless, but there is always a purpose to the effort.

In summary some of the most important first steps to resolving the second problem… on its face at least, is to increase the value for students in attending school itself, couple individual passions with more perceived mundane topics to demonstrate their overall value, and enhance the educational process by psychologically prepping students that learning is short-term frustrating long-term satisfying and that adversity makes the process worth it. Also while not discussed above it is important to honest evaluate students as well, if they are not ready to move on to the next level then they should not move on to the next level. However, while these goals are noteworthy and commendable, one could question if they even meaningful?

A central problem in education is the influence of the future job market for the sad reality is if one’s education cannot be parlayed into meaningful employment then most will look unfavorably upon that education. The current dictum of society has deemed that diversity in education is not applicable to “maximizing” output efficiency for future employment, thus diversity in education is not properly funded. Another concern is that just having a degree may not be enough as studies have shown that most employers in the “quality” job fields focus on candidates with degrees from elite institutions foregoing even quality well-known and regarded public universities. So how can the process of education be decoupled from the job market?

The most obvious solution is the return of a number of “quality” jobs that do not require a college degree, which would allow more freedom in education instead of degree chasing and resume padding, especially at the high school level (in order to gain entry into those elite colleges). Unfortunately achieving this solution appears very unlikely due to the continuing march of technology and the reduced spending power of young adults limiting the further expansion of the last holdouts of quality jobs not requiring an advanced degree, jobs in the entertainment industry.

There was an initial belief for a significant resurgence in domestic manufacturing, a past bastion of “quality” jobs, at some time in the future driven by dramatically increasing oil prices born from supply issues (i.e. peak oil), which would increase transportation costs to the point where cheaper outsourced manufacturing environments would become prohibitively expensive. However, the surprising significant drop in oil prices in recent years has dramatically decreased the probability of this hope coming to pass, in the near future at least. Overall as long as capitalism fuels the idea of chasing profits as the most important thing to a corporation, it is difficult to anticipate a change in the trend of fewer “quality” jobs available to those without advanced degrees.

A second option is significantly increasing the salaries for various service jobs and the like (the “non-quality” jobs) until those jobs become “quality” jobs. There has been a significant movement towards increasing minimum wages in various cities and a smaller movement for increasing the Federal minimum wage up to $12-$15 an hour. However, while California recently boasted the greatest success for this movement, it is difficult to see any type of major Federal legislation regarding wages in the near future and a number of states are taking steps to neutralize the ability of cities to independently change wage policy. Incidentally the new law in California will be an interesting test case for the viability of increasing wages on service jobs, but because the increase is incremental quality data will probably not be available until the early 2020s. Overall though regardless of the results from California it is difficult to conclude that increasing minimum wage is a valid overarching strategy, it will take hold in certain regions, but not others, which unfortunately may further complicate income inequality.

A third option is changing the admissions process for college by lessening the value of standardized testing and grades and increasing the value of interviews and critical thinking questions. Some would argue that such a process has taken hold in certain universities with optional weighting of SAT or ACT scores and more “holistic” admissions methods. This weighting change would also make sense with regards to grades; for example grades are significantly arbitrary based on some numerous uncontrollable environmental and academic circumstance; i.e. an A at high school x does not always carry the same weight as an A at high school y and some high schools allow students greater amounts of extra credit which conceal their actual knowledge of the subject through grade inflation.

However, the chief problem with these current holistic methods is that universities are not transparent in their application, thus stripping significant credibility from the methods themselves. Also one could argue that these holistic methods are not tangible enough to identify individuals with distinctive and valuable viewpoints in order to validate selecting a high achiever from a less difficult environment versus a lower achiever from a more difficult and/or diverse environment, which could create problems. Whether this problem corrects the “degree value” issue is questionable, but it can aid educational diversity and creativity at the middle and high school level, which is an important element in solving the overall problem between education and employment.

It must be noted that changing the admissions process does nothing to manage increasing tuition costs, especially at elite universities, which is another problem unto itself. However, due to the inherent economic demand detriments associated with most universities due to difficulties meeting enrollment goals from less interest in college and higher levels of competition, it is highly unlikely that significant drops in tuition will be seen in the near future. Government intervention may come from lower interest rates on various student loan programs, but without changes in the general economic system, increasing government grant programs seems wasteful.

Another possible solution is to significantly limit the risk associated with taking more indirect educational pathways that society may find “inefficient”. One of the easiest ways to accomplish this diversification of educational philosophy is by ensuring individuals have available resources to pursue their own educational identities. The chief aspect of risk in modern society is financial; the idea of absorbing risk is one of the elements that produces unbalance in society between rich and poor individuals where individuals with connections and/or resources are typically not punished when engaging in risky ventures and failing whereas those without connections are commonly severely punished when engaging in the exact same behavior and also failing.

One can point out numerous instances when an individual has talent in subject matter x, but needs to take a job in a much less desired and low talent field in order to “pay the bills” because the potential risk associated with attempting to gain employment in the talent field is too great, in part to “secret handshake” connections having nothing to do with skills or education. People like to believe that talent eventually wins out, but modern society has demonstrated too many times that such is not the case.

The most direct way of limiting the negative repercussions of risk is establishing a guaranteed basic income (GBI) which would provide basic living resources for all adult citizens with minor to clean criminal histories within a certain income bracket eliminating the need to take jobs solely to survive. A GBI creates freedom that will increase the probability that individuals will maximize their educational opportunities, talents and passions because of a mitigation of risk. While increasing wage is a nice idea there is question to how much it will actually affect poverty due to potential reduced work hours and the possibility of increased taxes due to tax bracket changes whereas a GBI will definitely eliminate poverty on a meaningful level.

Some may attempt to argue that a GBI will foster laziness and a lack of ambition if individuals receive a certain amount of money for simply existing, but such arguments fail to acknowledge that a GBI will only contribute to survival, it would be very difficult to live comfortably, enjoy luxury and make a mark on the world by forgoing a job only to live on the GBI. Also without things to do, individuals would quickly become board and would look to accomplish things to productively fill their time. Finally a GBI will allow individuals to better “invest” in themselves by providing them the necessary seed money to get started. Realistically there is no accuracy in the argument that a GBI would “corrupt” the work ethic of society and anyone who argues that such corruption would occur is simply wrong.

While the application of a GBI would be the most effective means to decouple the restrictions and risks of employment on education, it would definitely be a significant task to accomplish due to the preconceived notions regarding the application of capitalism in human society. This perception is a problem, for a number of individuals only regard a task as having value when someone is paid to do it, which is a dangerous attitude to have. Overall despite a GBI making sense to all major political parties and supporting most of their fundamental philosophical economic beliefs, its actual passage is presumed to be difficult, in part because no one has the guts to try.

A concerning element with the issue of employment and education is that it should be clearly obvious to anyone that the current method is not productive, does not benefit most individuals or society as a whole and cannot hold. So why did the current method ever rise in the first place and why does anyone actually support it? A cynic might think that such a system is desired by the powerful, those who have championed it in the first place by passing legislation like No Child Left Behind or Race to the Top, because it benefits their children, but provides far less benefit and even potential detriment to less wealthy families and children. Therefore, in such a system individuals who could become competition for these wealthier children are handicapped before the competition really begins. Hopefully this is not the intent of the supporters of the current system, but unfortunately there have been too many scenarios in human history where one individual/group has had no problems “screwing over” another to get ahead even when they do not need to.

In the end a change needs to be made at the basic economic level because even if the appropriate changes are made at the educational level at this point in time, the end result will simply be a society filled with a larger number of well-educated under-employed, if employed at all, frustrated and even possibly angry individuals. Overall it does not appear that the form of capitalism currently practiced by the United States will be able to properly manage this trend and therefore, must evolve in some manner. Whether this evolution is the administration of a GBI, the re-localization of manufacturing, the general abandonment of the “absolute profit above all else” mindset for most corporations or some other significant change is uncertain, except for the fact that such a change must happen. The increasing detrimental economic link between employment and education should simply be viewed as a significant and early warning signal.


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Citations –

1. The Rising Cost of Not Going to College. Pew Research Center. Feb 11, 2014.
http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/

2. Davis, A, Kimball, W, and Gould, E. “The Class of 2015: Despite an Improving Economy, Young Grads Still Face an Uphill Climb.” Economic Policy Institute. May 27, 2015. http://www.epi.org/publication/the-class-of-2015/

The Psychology of Lying and Capitalism

Supporters of capitalism tend to espouse its greatness in large part by intertwining it with the morality and fairness of meritocracy. Frequent are the statements that the rich are rich because they deserve it and the poor are poor because they deserve it. Unfortunately these supporters forget that in society a meritocracy does not function in a vacuum and one of the most critical elements of a genuine meritocracy is the accurate and transparent communication of information. In short actors in a society must be honest and truthful with one another otherwise natural skill is muted by misinformation and the liars and cheaters prosper.

How can an individual expect to make the best possible decisions, not only for that individual, but all parties involved when certain pieces of information are purposely omitted and/or falsely represented? The ability to effectively cooperate with one another is also dependent on all of the information being as accurate as possible when considering the specific circumstances else all parties will lie due to the belief that all other parties are lying to improve their own positions and probability of gain. All of this mistrust and false information will lead to the optimal solution rarely being identified and implemented. Sadly honesty in modern times is significantly lacking, which damages the notion that capitalism has some meaningful quality of fairness based in merit achievement. So to redeem capitalism one must ask the question of why people lie in the first place and then address those causes to reduce the probability that people lie.

The overall rationality for lying is somewhat mysterious. While initially there may be rational reasons for lying, when actually examining those reasons the rationality falls apart in all but one situation. The first reason someone lies is in order to impress someone. Typically the need to impress someone is derived from the lack of self-confidence in one's own abilities and status, for those who are confident care little of the negative opinions of others that are not rooted in fact. Lying about one's accomplishments to impress someone for the purpose of gaining his/her respect is also irrational because as cliché as it sounds if one must lie to gain an individual’s respect that respect has not been genuinely gained, for respect must be earned; to gain genuine respect through deceit is not possible. Unfortunately too many people have come to portray this fraudulent version of respect for the genuine article.

Similar to respect lying to attain someone’s admiration is equally irrational because as idealistic as it sounds the admiration of no individual is worth the honor that is lost when lying to attain it. If one lives life according to his/her own beliefs and ethics that individual has no reason to lie about the way he/she lives life. Unfortunately in modern times talk about relying on honor and integrity to drive behavior seems foolish, especially with the level of money and power typically at stake. These elements are what drive most people to misrepresent themselves to others, thus the best way to stop it is to produce punishment that will not only take these opportunities away, but also make it more difficult to acquire future opportunities for money and power. Society is too lenient on those who lie intentionally and too willing to offer unconditional second, third, fourth, etc. chances. Later the logic behind the appropriate responses to dissuade lying will be discussed.

The second reason someone lies is in order to evade responsibility for specific actions. The motivation to evade responsibility stems from two causes. First, no one likes to be punished, thus misrepresentation of the facts is carried out to evade punishment. Second, some people believe that taking responsibility for an action that does not produce a favorable result diminishes their reputation in the eyes of those with some level of influence in the personal or professional prospects of that individual. This loss of respect may reduce the number of available opportunities for personal or professional advancement. Immaturity and lack of personal pride are significant causes of such behavior. However, there is another element to how individuals judge success that needs to be addressed because it is relevant to this motivation for lying.

Most individuals, incorrectly, judge the success of an action based solely on its outcome instead of the thought and methodology that went into the creation and execution of the action. A primary example of this reasoning is frequently demonstrated in sporting events. Suppose a football game is in the mid-fourth quarter with Team A leading Team B 10 to 6, but Team B has the ball on their own 42-yard line and it is fourth down and 6 to go. In one instance the coach elects to go for it by faking a punt and picks up the first down. What is the typical response of the television commentators? “What a gutsy call by Coach Stan. He knew that his team needed a spark and that Team A would be unprepared. That is just trusting your team to go get you the first down….” In a parallel world assume the exact same conditions, individuals and play except for one linebacker makes an assignment mistake and fills the A gap instead of the B gap resulting in him making the tackle and preventing a successful conversion. Now what do the television commentators say? “What a stupid call by Coach Stan. There is plenty of time left in the quarter and your defense is playing exceptionally well, the smart play is to punt it pinning Team B deep in their zone. That gives your defense an excellent chance to hold netting you better field position and a better opportunity to get that touchdown….”

So the exact same situation and action results in two different outcomes due to a single minute deviation that could not be accounted for by Coach Stan creates two dramatically different judgments by the television commentators and probably the causal fan as well. It is not reasonable to characterize the decision by Coach Smith to go for it as good or bad based principally on the outcome, yet the result of an action is the primary, if not only, criteria most people use. Instead society needs to be reasonable in its evaluation of decisions and look at the methodology and information available that went into making the decision instead of the result.

A majority of the time the result of a decision can be predicted when looking at the available information at the time of the decision and how the decision-makers interpreted and blended the relevant pieces of that information together to form a strategy. Therefore, outside of the rare occurrence when an unpredictable disturbance arises in the decision-making process, it is significantly more appropriate and advantageous to analyze this process instead of the result when judging action. Understanding the correct and the incorrect portions of the analysis can create precedence to what thought-processes typically lead to positive outcomes and what ones typically lead to negative outcomes, so one can learn not to repeat mistakes and emphasize successful strategies.

Changing this perception and habit in evaluating decision-making should reduce both the effectiveness and the rationality behind lying to avoid punishment for a bad result. Instead punishment will be issued for poor decision-making and analysis because these are the elements that are completely controllable by the individual, as long as information is honestly and transparently available. Also if methodology is judged versus result then the evaluation method has more parameters that can be tracked making it more difficult for someone to get away with lying about their role in the decision making process.

Finally, an individual may lie in order to protect another person either physically or emotionally. Most of the time these types of lies are classified as “little white lies” based on their overall perceived significance. From an emotional standpoint while it may seem that sparing feelings or creating an ego boost is a good idea, it is not because lying in this situation is both morally and rationally incorrect. It perpetrates a false reality for the individual asking the question and does not create motivation to solve the underlying problem doing a disservice to that individual. It would be wiser to give an honest opinion to the other individual with an associated reason for such an opinion, so he/she would have the opportunity to rectify any procedure or action which brought about the negative opinion or receive genuine confidence from a genuine positive opinion.

The only lie that can be regarded as appropriate is one that prevents unjustified severe physical harm to an individual. The most prominent example of such a lie could be seen from individuals in Nazi-Germany when hiding Jewish individuals. When asked by German authorities whether or not they were harboring Jews, these individuals lied and answered “no” thereby saving the lives of those Jewish individuals they were harboring. If some honor can be ascribed to the act of lying this would be the reason. However, the severity of this situation must be respected, for it is quite rare and most people, especially those living in the developed world, will never experience this type of justification for a lie. For example it is not appropriate to lie to prevent someone from receiving a citation for marijuana possession.

In addition to being truthful, it is the duty of all individuals to seek the truth. Seeking the truth is not so dramatic as uncovering the meaning of life or the origins of the universe, but instead seeking the truth involves accumulating as much relevant information as possible and using it to determine the what actually happened, what should happen when and if certain decisions are made.

One of the problems with lying is that it appears to be inherent in the human condition. Even without instruction young children lie to conceal actions they believe are wrong or not in line with the desires of authority figures. Not surprisingly as they age children become even more sophisticated liars. While this behavior is troubling, some parties believe that it can be rectified through simple story telling. Researchers in Toronto utilized different moral messages from three different stories, Pinocchio, The Boy Who Cried Wolf and the George Washington and the Cherry Tree myth, to attempt to modify moral behavior in children ages three to seven if they listened to one of these stories before completing a task where cheating was made easy and rewarding.1 The results of this study concluded that the negative consequences associated with lying were unable to modify behavior regardless of its severity; however, the positive praise message that young Washington receives after admitting to his alleged transgression does lead to a higher probability that children would admit to cheating.

The researchers concluded that the Washington story emphasized the virtues of honesty and that telling the truth leads to positive outcomes and consequences. This belief was further supported by no change in behavior when the outcome of the Washington story was changed from a positive one to a negative one similar to the Wolf and Pinocchio stories. However, there is a glaring concern with this study relative to genuine morality. The researchers did not look at how the children would respond after hearing a story where an individual is praised for telling the truth regarding the commission of a negative transgression, but also punished for the admitted transgression; this is the outcome that happens in reality.

For example in the Washington-Cherry Tree story Washington is not punished for chopping down the cherry tree. It is not surprising that children would resonate with the message that if you do something wrong all you have to do is admit to it and there will be no further punishment and you will receive praise for being honest. Therefore, it is unclear how children would respond if these above beliefs about honesty were shattered when they are punished for what they admit to doing. Therefore, children should be taught that there is virtue to admitting transgressions, but also to expect an appropriate punishment for those transgressions. One thing that both children and adults understand is fairness.

The Toronto study directly addressed whether or not a child could be influenced morally by stories and change behavior accordingly, not whether or not honest admissions to wrongdoings was the best moral strategy. Clearly it would be best if children were instructed not to commit wrongdoings in the first place. While the above sentence is easy to say it is more difficult to put into practice. There are a multitude of moral philosophies that many individuals in society practice that conflict with each other. Even the supposed “no brainers” of morality, no slavery and sufficient access to resources, are not agreed upon.

So what can be done? The problem sounds very difficult, but the solution is very simple. Society as a whole should stress the importance of honesty in both words and actions and support that importance through significant punishment for those who are not honest. While cliché the inherent nature of lying is that individuals do so because they realize that the truth is detrimental to their standing in some manner. If one’s personal moral philosophy is regarded as superior and/or logical there should be no need to lie to defend it. Therefore, those who lie should be regarded as weak individuals who do not have confidence in their beliefs because they must distort those beliefs when interacting with society.

Society must also strengthen its resolve against dishonestly. One example of the current disparity in society regarding the importance of honesty is the ridiculously lenient perjury laws in basically all countries other than Australia. While in the United States the maximum sentence for perjury can be up to 5 years, jail sentences rarely exceed 2 years, thus what stops an individual from simply lying to avoid the numerous other criminal violations that have harsher penalties? The sad fact is nothing, which is why so many individuals who are guilty of criminal offenses pled not guilty and then lie about their involvement. Even if the lie is later discovered after the lying party has won his/her trial the penalty is so pathetic, usually ending up as time served, that the consequences are minimal and because of the 5th Amendment nothing can be done about the not guilty verdict that was achieved through deceit. Therefore, perjury must have a much stiffer criminal penalty if honesty is going to have any real relevance in the justice system.

Another example, one that too frequently occurs, is that when it is revealed that someone lies on his/her resume, the only typical outcome is termination from that job. This punishment does not support the value of honesty when the only consequence is losing the job, a job that that fired individual originally believed he/she was not qualified to compete for, thus creating the motivation for lying on the resume in the first place. When the penalty for lying is nothing but the expected outcome that would have resulted from honesty in the first place, then there is great motivation to lie. Therefore, a company that fires an employee for lying on their resume about something significant should be able to legally recoup all of the salary and benefits paid to that employee over the period that he/she worked at that company.

Overall modern society has regrettably accepted the philosophy that the ends justify the means, which allow individuals to lie and cheat as long as it produces a favorable result for those individuals. Unfortunately lying and cheating mitigates the alleged elements of meritocracy that comprise capitalism for it is not skill that allows the individual to achieve greatness, but the ability to cheat the system. Therefore, for capitalism to even approach that of a meritocracy society must demand more honest accountability from its citizens and elements of authority. Dishonesty must be punished accordingly rather than lightly scolded then quickly forgotten. Society will never attain anything close to its full potential until it legitimately begins to accept “honesty is the best policy”.

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Citations –

1. Herbert, Wray. “Chopping the Cherry Tree: How Kids Learn Honesty.” Huffingtonpost. http://www.huffingtonpost.com/wray-herbert/chopping-the-cherry-tree_b_5240579.html

Addressing One Aspect for the Future Stability of Society

The structural evolution of society has depreciated recently due to the catalyzation of what could be described as the triangle of deterioration. The three separate legs form this triangle are unequal economic growth, technological advancement and population growth. Unequal economic growth represents significant economical differences between multiple parties with excessive and superficial growth concentrating towards a select few who facilitate little societal stability. Technological advancement represents the increased capacity of non-human elements to perform human-related tasks. Population growth is self-explanatory representing a large and steadily increasing population.

Representation of a triangle is appropriate to describe the incompatibility of these three elements together as a group. For example if a society has unequal economic growth and a large population, but has little technological advancement there are still numerous occupational and financial opportunities for various individuals; these individuals can later unionize, if so desired, to expand this economic opportunity to maintain societal stability. In a society that has a large population and high technological advancement, but equal economic growth and distribution there is enough man power for both societal advancement and stability because a vast majority of the population, if not all, are able to support economic stability due to wealth distribution equality. A society with high technological advancement and unequal economic growth, but a small population is similar to the first example where even though the unequal economic growth produces stresses on the stability of society the small population reduces the level of competition between individuals ensuring a sufficient level of economic and societal stability. Of course for the existing consumerism economic system that currently exists this scenario is the most unstable of the three above scenarios. Note that the “escape hatches” for society in each of the above scenarios is eliminated when adding the missing triangle element.

So how does each leg of the triangle limit the positive evolution of society and significantly increase the probability of societal collapse.

Inequality –

The chief problem found in inequality is the finite nature of economic exchange. Basically there is a limited amount of capital that society can support at any given time; any attempt to breach this perceptive barrier results in inflation reducing the efficiency of capital. Unfortunately inequality with vast amounts of capital going to already wealthy individuals also creates huge capital efficiency losses. Certain parties believe that concentration of vast wealth in a small population is effective because of the power of scale (1 person with $1000 can have a greater positive influence on economy versus 1000 people with $1). However, while the power of scale can make money more efficient, in reality those currently with the ability to induce this efficiency choose not to do so and there is no evidence that this philosophy will change in the future.

This destabilizing and inefficient reality flies in the face of the common refrain by some parties that the wealthy are “job creators” who create further economic activity. It is difficult to be a “job creator” when one does not spend the necessary money to fill such a role. Instead this excessive wealth is sequestered from society where it still exists, but is not available to society for use. Therefore, the more capital acquired by the wealthy the less efficient the entire economy because of the inflation ceiling. Creating inefficiency in a consumer based economy that breeds specialization puts all individuals at risk.

Another problem with top funneling inequality is that society has determined that non-essential occupational elements are of superior value versus essential occupational elements. The jobs that “earn” the most money are largely in the financial sector (hedge fund managers, stock brokers, CEOs in various companies, etc.) and entertainment sectors (musicians, sports athletes, actors, etc.) instead of in the medical sector (physicians and nurses), education sector (elementary and high school teachers), law and order sector (police, correctional officers and legal aids) and the emergency services sector (fire fighters and EMTs). Notice the difference between the two fields, which one of those groups is more important to the stability of society? Yet ironically that group of occupations is far less financially rewarded by society than the other, thus in times of economic stress the latter group, which is far more important for structural stability of society, is more immediately threatened creating a positive feedback effect which further threatens the stability of society.

Interestingly the acquisition of vast wealth not only increases the probability for societal destabilization, but also reduces the meaning of having vast amounts of wealth for the individual(s) in question. The purpose of having wealth versus just having significant amounts of money can be defined in two ways: 1) increasing available opportunities for material purchase or skill/experience acquisition; 2) lauding over others how much more important one is because of the difference in wealth; while these two purposes seem separate the second one is defined by the first because having large amounts of money is pointless if one is unable to utilize that wealth differently than those who have less money. However, when society struggles various specialization elements will also struggle limiting the goods and services they can provide reducing the variety and prestige advantages to having wealth over significant amounts of money. Basically concentrating wealth increases the probability that the wealth becomes less significant.

On a related note it is interesting that the Republican Party in United States seems to adhere so vehemently to the power of the free market, but refuses to acknowledge the gross inefficiencies created in the marketplace by significant levels of inequality (they instead incessantly focus on the inefficiencies caused by government though). How can they respect and believe in a system when ignoring such crippling flaws?

Technology –

Technology has two major detriments and a forked road on the triangle. The first and most obvious detriment is that technological advancement creates tools that can replace humans for certain tasks. While such advancement potentially increase efficiency and decrease costs associated with production it also decreases the amount of jobs available, especially those that pay well and justify the costs, both financial and opportunity, that were invested in acquiring the skills to perform those lost jobs.

The second detriment is the elimination of regional experts in favor of universal experts. For example suppose Sam wanted to learn how to weld sheet metal. The most efficient option is to identify someone who is experienced and skilled at welding sheet metal and learn the proper techniques from that individual. In the past this would involve searching the area in which Sam lived and selecting an instructor from the experienced individuals within that area. However, with the advent of the Internet Sam can merely go online to a video sharing website like Youtube and learn how to weld for free or attend an online lecture for a fixed fee bypassing the regional individual in favor of a highly skilled “universal” instructor.

Now most individuals would conclude that such a system is appropriate; that technology has removed the inefficiency of “settling” for an instructor that is more than likely inferior to another instructor who simply resides further away and in the past was inaccessible due to distance. However, the problem with this philosophy is the unbalanced two-pronged system that it creates.

In this environment the regional instructors now receive much less business and will find it much harder to make a living as an instructor in that particular field while the select few “elite” instructors will make more money than they can reasonably spend creating significant market inefficiencies similar to the inequality aspect above. Unfortunately this division is self-catalyzing because the individuals who are taught by these universal instructors must surpass them to take their customers otherwise they will end up just like the regional instructors they bypassed to learn from the universal instructors.

The argument made by some in favor of this system that these regional instructors must simply diversify their education acquiring the necessary skills to obtain another middle-class to high paying job is seriously flawed, flaws that are discussed in a past blog post here. The newspaper industry is another example of how technology has marginalized regionality with no appropriate response by society.

The sad thing is that regionality elimination will also permeate the developing world in a similar manner. While numerous people want to praise technology and its catalyzation of globalization for pulling millions out of poverty the elimination of regional interaction will dramatically limit these gains, especially when technology penetration is great enough that experts in the developed world start acquiring developing nation customers. In a consumer based economy the catalyzation of inequality by technology creates greater societal instability in both the developed and the developing world. This is not to say that technology is inherently bad, but that society must create appropriate strategies to address the detrimental elements that technology brings and so far society has yet to act.

Population –

The population element of the triangle is rather obvious, but not simply statistical. Clearly the more people that exist create a greater competition for jobs, but also in a consumer driven economy create a larger customer base. The general theory behind consumerism is that population increases can be managed through the increase in consumption; however, in a resource finite world this theory breaks down. In addition growing rates of inequality create greater consumption inefficiencies in the marketplace further damaging the validity of this theory.

Part of the problem with population is that a number of people simply pigeonhole the numbers themselves without looking at their influence. The 7 billion humans living on Earth is an extremely large number, but the number by itself is somewhat irrelevant. While all humans consume thus more humans equal more consumption, consumption rates are dramatically skewed between regions. For example if all individuals living in Africa were killed tomorrow very little would change in the world regarding the triangle and the speed of resource consumption despite the global population being cut by approximately 14%. This unequal resource consumption is obviously not lost on some who constantly lament the level of consumption in the developed world. Unfortunately little can be done about the consumption levels at the moment regardless of inequality because of the consumption dependency of the global economy.

So what can be done to elimination the action of the triangle of deterioration on global society? The obvious answer is to break it some how, but the how of that strategy is the problem. Clearly one cannot break the population element because of all of the indiscriminate killing; even if one could manage the moral question such a strategy would more than likely still be immaterial because a vast majority of those killed have consumption rates below global average consumption rates. Therefore, breaking the population leg, before it is self-broken by societal deterioration, would demand selective killing. However, selective killing instantly invokes questions of morality when deciding who determines the criteria involved for selecting who gets killed. On the “supply side” clearly elements can be applied to limit population growth like birth control and education, but these factors can only go so far to reducing the overall population growth and do not address those already in existence. The economic dependency of consumerism limits significant widespread changes in overall global consumption patterns when refraining from killing anyone.

It would be difficult to advocate breaking the technology leg of the triangle due to simple momentum. Certainty the global community could pass laws restricting the use and sale of certain technology, but the logistics of enforcing these laws would be nightmarish, especially because most of the global public would not be forthcoming in their adherence to them. One could argue that individual enforcement would not be necessary instead focusing on enforcement against large corporations and websites like Youtube. This is a valid argument because most of the detrimental elements associated with the spread of technology are derived from these agencies, but global cooperation would be required and sacrifices made, something not widely practiced by various countries. For example would country A really enforce technology restriction against company A if tax revenues from such enforcement fell 32% due to income reductions? If country B has little confidence that country A will adhere to the restrictions would they bother to adhere to them either?

Based on the above two problems with two aspects of the triangle it appears that to prevent the eventuality of the society destabilization one must address the inequality leg. Addressing the inequality leg is actually quite easy in theory although numerous powerful people will certainty object to the required policies. As mentioned above inequality stems from the lack of ceilings applied in capitalism. While philosophically understandable the lack of capital ceilings creates significant inefficiencies, which damages society as a whole and also damages the individuals who are taking advantage of the lack of ceilings despite their lack of acknowledgement of this situation.

There are two strategies to address this inequality problem. The first option is to change the balance of importance in society. Recall that the principle reason inequality is destructive is not because it is inherently bad, although it is inherently inefficient, but because it culminates in occupational operations that are not essential to the positive evolution and stability of society. If society determines that police officers, public school teachers, lab technicians, etc. are more important than movie and television actors, basketball players, singers, hedge fund managers, etc. then the destructive nature of inequality against the stability of society is significantly lessened.

Unfortunately this first solution is not ideal because if this switch occurs society may be saved, but numerous people will still be bypassed by society and struggle to survive including the rich individuals who used to occupy the higher tier of wealth before having their salaries cut due to the change in societal priorities. The second solution would be to apply a ceiling to the growth potential of wealth in capitalism. A legislative derived ceiling would make sense both from an efficiency and stability standpoint.

For example suppose an individual became a billionaire at the age of 30, lived to the age of 90 (60 years between becoming a billionaire and death), and never made any more money the rest of his/her life. This individual would have to spend approximately $45,662 each day to completely exhaust that one billion dollars before death. Such a spending pattern, even when including the purchase of a $4-5 million dollar home, is ridiculous and would involve the purchase of numerous frivolous items or items which would go solely to waste neither of which will result in significant job creation or retention. Dividing the above billion dollars into $1 million dollar increments among one-thousand separate individuals will result in the purchase of more bulk goods which more than likely will result in more job creation and retention due to greater economic activity. Based on the way consumerism is practiced in society wealth-based power of scale can be likened to that of a bell curve.

How would such a ceiling cap operate and where would it begin? It would be difficult to determine a quantitative optimal point for a ceiling, thus the best option would be to establish the ceiling through an instinctual mindset of what would be fair. One possibility would create a ceiling of personal finance (cash, assets, etc) at $50 million dollars and a corporate ceiling for net revenue (profits) at $1 billion dollars. All capital accrued beyond this ceiling would be taxed by the appropriate government entity at 100%. The ceiling would operate in real-time versus lifetime implying that if an individual acquired $50 million dollars and he/she later bought a house for $3 million dollars, he/she would be free to acquire another $3 million dollars before acquired capital would be taxed at 100%. Capital acquired by the appropriate government agency would be earmarked to fund food banks, education, apprenticeships and small business loans to increase both the job pool and the number of qualified applicants. Finally in the United States the IRS would be given much greater authority to pursue and charge tax cheats/thieves and all tax cheats found guilty would receive jail terms in medium security prisons with minimum sentences equating to 1 year per $100,000 that was concealed.

Of course a number of rich individuals would cry fowl after reading the last paragraph. They would opine that placing a ceiling on the amount of money an individual or corporation could accrue would be an affront to the drive and ambition elements that characterize capitalism as well as be unfair to those individuals that acquire the most success. The problem with this point of contention is that the current system of capitalism rewards needless consumption and entertainment over intelligence and calculated risk-taking. The ambition argument is also derailed when one considers that 99+% of success is determined by where an individual is born and who his/her parents are, two elements that are completely outside the control of the individual. Finally what is more important: being more fair to society and eliminating the market inefficiencies born from wealth inequality and limited spending constructs or being more fair to a very small group of individuals most of whom were born to favorable conditions?

Overall the elements that make up the triangle will hasten the destabilization of society. Now it can be said that the destabilization of society may not hasten the extinction of humanity, but the destabilization of society will certainly create an environment where quality of life is decreased. Therefore, faced with this coming reality, one separate from global warming entirely, what will society do to ensure its long-term survival?

Ending Poverty?

The war on poverty is an interesting and yet perplexing notion, not because the ideas behind eliminating poverty are foolish or ignoble, but because the mechanisms utilized by those attempting to accomplish this goal are inherently flawed. The principle ideal behind eliminating poverty involves opening the doors of capitalism, giving people the resources to develop opportunities in which to make money and pull themselves out of poverty. Those in favor of these methods, one of the most notable is the use of micro-loans in third world countries, cite numerous examples of success and support expansion of similar types of programs. While these successes cannot be debated, the concern is that individuals are missing the limitations of these techniques on a larger scale. The simple fact is that capitalism in its current form is unable to pull entire populations out of poverty despite its ability to positively influence small local environments.

The biggest problem with capitalism is that the rules change with respect to population growth. Using an analogy relative to a classroom grading curve best describes this characteristic. Suppose there is a Math class with 15 students and a relative-comparison grading curve that assigns letter grade quotas based on a certain accepted level of performance. For example there can only be 20 As, 20 Bs, 20 Cs and 20 Ds, but an unlimited number of Fs. The rational behind an unlimited number of Fs is that if an individual demonstrates an inability to understand the material that individual should not be rewarded simply for having a generally superior understanding relative to others in the class. Basically earning a 34% demonstrates an unacceptable understanding regardless of whether the class average is 15% or 81%. There has to be a minimum absolute level of understanding.

Now assume that the current class average is 36% with maybe 1 person actually passing the class. With all but one individual failing the class only 1 of the grade quotas is filled. Then suppose new math books are delivered to the school, new computers with educational software arrive and a new math teacher shows up. The combination of these three elements provide the resources necessary for the students, who now commit themselves to learning math, to raise the class average to 96%. What a turn around, now each student has a high enough grade percentage to warrant an A grade. This detail is why micro-loan programs in third-world countries work. A small number of individuals receive the loans (the additional resources) in an environment where there is vast level for improvement (the class average of 36%). However, what happens if the class population increases to 40?

At 40 students even if the class manages a class average of 96%, which is unlikely due to a lack of resources, the quotas demands that only half of the students receive As and the other half receive Bs. This distribution would be determined through the 20 students with the highest percentages receiving As and the 20 students with the lowest percentages receiving Bs. One may ask the valid question of ‘if everyone demonstrates 92%+ superiority why can’t everyone earn an A in the class?’ While intuitively this question makes perfect sense and the quota limitation doesn’t, one must remember that this analogy is representative of the capitalistic model and in any economic model money is a finite resources just like the number of As in the model. So just because everyone cannot get an A (be a millionaire/billionaire) does not mean everyone cannot pass the class right? Unfortunately this is not true because the class size is expanding faster than the grade quotas there will be individuals that do not receive the appropriate grade relative to their understanding (population and inflation are expanded faster than the ability to create wealth). Thus because the class population exceeds the total quotas and the class population is growing faster than inflation in the grade quotas, the quota system in this class (capitalistic system) has created a zero-sum game with winners and losers. Sadly the losers are those that are impoverished.

While the above analogy is helpful it is also too simplistic to fully describe why capitalism in its current form and practice is unable to end poverty through the true nature of its established zero-sum game. Overall while the grades demonstrate a level of success relative to other members of the class, the element that actually matters is the percentage of understanding that makes up that grade. Clearly all As in a class are not created equal in how they are earned. One student’s A could be described as a 94%, which in the proper circumstances would be an A, whereas another student’s A could be described as a 145%. Think of it this way in real life both individual A, who earns $300,000 a year, and individual B, who earns $20 million a year, can be viewed as successful, but clearly society will view individual B is significantly more successful.

However, in society just having a proper level of understanding is typically not enough to be successful. There are plenty of intelligent people that do not have a lot of wealth and plenty of stupid people that do. However, the perversion of what society views as important to its evolution and infrastructure is an issue for another time. Returning to the classroom example to add this criterion, the final percentage cannot be entirely comprised of how someone performs on homework, quizzes and tests, but now also includes performance on extra projects. Unfortunately the number of extra projects available for all of the students is limited. For example the following outline can be viewed as the weighted recipe comprising a grade for the student:

Homework – 15%
Quizzes – 5%
Tests – 40%
Extra Projects – 40%+

For the rules of the class/society while the total amount of projects are limited, the number of projects any single individual can undertake is not. If so desired a student can perform enough projects to earn a percentage in excess of 100%. This element is important because one of the major drivers for a student to acquire a percentage in excess of 100% is to further separate him/herself from the other students in the class to guarantee being awarded an A. However, in the battle against poverty/bad grades every student above 100% is taking opportunity for grade advancement away from other students. This relates back to the real world because money is a finite resource, this individual’s success comes at a cost to other individuals. For example revisit individual B from above and suppose he only makes $1 million a year. Now $19 million becomes available for distribution to other individuals in society most likely through investment, which will give more individuals an opportunity to raise their ‘grades’.

The above system can also demonstrate why tax cuts for the rich/super-rich (a.k.a. trickle-down economics) fail miserably in the real world. Suppose the teacher identifies a group of very smart and very ambitious students at the beginning of the year and through experience knows that those students would take a large percentage of the extra projects available to the class (100-150% each). So in effort to avoid that behavior the teacher offers each of these students a free 20% bonus in effort to stem this ambition in hopes that more extra projects will be available for the rest of the class (hopes that bonus will spur investment). Unfortunately for the teacher no conditions are applied to this 20% bonus, these particular students receive it whether or not they actually decide to undertake fewer extra projects than they would without the bonus. Knowing that there are no conditions, the students accept the 20% bonus, yet still do the same amount of extra projects they would have done without the 20% bonus. Thus two major catastrophic failures of trickle-down: one there are no conditions for the 20% bonus/tax cut and two the bonus/tax cut is not a large enough of a benefit to change behavior. The sad thing is that the teacher can never offer a large enough bonus to stop these particular students from doing all of the extra projects they already plan on doing, thus it is pointless of offer the bonus in the first place. There is a third reason why trickle-down will never work effectively, but it is irrelevant to this particular issue.

Now this is not to say that the world should all of a sudden become socialists or ‘insert your favorite economic theory here’ ists, but it needs to be understood that any goal striving to end world poverty under a pure or mercantile capitalistic flag is unlikely to succeed. Overall there are only two ways to end poverty. First, devalue the importance of relative superiority comparisons between individuals in favor of absolute superiority comparisons. Person A should not feel any sense of superiority because he got a 156% and person B only got a 100%, but instead a feeling of self-superiority should be derived from the fact that he (Person A) demonstrated mastery of the topic. Basically for person A there should be no psychological difference between getting a 156% or a 100% because both demonstrate full mastery of the topic.

Now one may argue that of course there is a difference because 156% is a bigger number than 100%, but the additional 56% is artificial, it has no meaning at an absolute level. Basically the additional 56% is only important if someone gives it importance, an importance that would, ironically, not be important. Under this mindset the important element in class would not be the letter grade received by individuals, but the grade percentage and since everybody would have a better opportunity to achieve 100% the letter grade evaluation method would eventually cease to be important and grade quotas would cease to exist, thus anyone receiving a 92%+ would receive an A regardless of how many people earned 92%+ in the class. Note that to achieve this outcome the better students need to give the other students more opportunities to undertake the extra projects rather than undertake them themselves as soon as possible. However, this adjustment in strategy should not be overplayed, while other students should get more opportunity, if they do not have the ability to succeed those extra projects must still be completed by those who can otherwise it creates unnecessary waste.

The second way to end poverty is for the teacher/government to put a hard cap on the number of extra projects that a student can undertake. Basically once a student has 100% that student cannot undertake any additional extra projects. In the real world this would simply amount to a 100% tax of all income above whatever value the government assigned to represent 100%. Clearly a significant and angry backlash to such an action could be expected limiting its overall effectiveness. Therefore, it seems like the best strategy for ending poverty is to eliminate relative superiority and continue to provide the necessary resources (in the analogy: math books, educational computers and teachers) to open opportunity for under-performing “students” to achieve a 100% of their own. Currently society tries to implement the second part of the strategy, but completely ignores the first. Such action doesn’t mean that some people can be pulled from grips of poverty, especially in the third-world, but without the first part the ideal of ending poverty is a fruitless and pointless endeavor.