Weekly Roundup: Pain-Free Potlatch And The Permanently Reclined Seat Edition

It's a problem as old as the idea of ownership itself: In any stable society without external pressure, the majority of wealth will become concentrated over time in the hands of a few people. "Them what has, gets." Rich people have options and choices, which typically lead to further accumulation of wealth, while poor people are forced to make harder decisions with greater consequences. Admittedly, this process happened a little slower in historical societies that didn't have mechanisms like payday loans and COVID-19 to accelerate the forcible transfer of wealth from the lower to the upper class, but it happened nonetheless.

The ancient answer to this is a potlatch, in which the wealthiest members of a community make substantial gifts to the poorer members of the tribe -- or, in some cases, simply destroy items of value. The potlatch benefits everyone; it confers social prestige on the people who are giving their stuff away, while enriching the poorer members of the tribe. In the case of "destruction" potlatches, it reduces wealth disparity, envy, and resentment.

The history of the 21st Century so far has largely been a tale of immensely wealthy people and institutions taking ruthless steps to ensure their permanent position on the top of the food chain, coupled with an increasing conviction on the part of those same people and institutions that they thoroughly deserve their position by virtue of an unassailable moral superiority. Ah, but how does the fabled one percent demonstrate that moral superiority? The obvious answer is to throw a society-wide potlatch -- but the problem with a potlatch is that it tends to level the playing field, however mildly, in the favor of the 99%. Could there be a way to obtain the social and moral benefits of a potlatch while retaining all your stuff? Better yet, could there be a way to have a potlatch that actively harms your closest competitors, while at the same time conferring the desired social benefits on you and yours?

I'm pleased, by which I mean horrified, to announce that such a thing is indeed possible. It's happening right now, in fact.

To understand how this works, start by understanding that we now live in a world of externalities. What is an externality? It's the impact of a two-party (or one-party) decision on a third party with no control over that decision, usually negative but not always. My friend-of-a-friend Ryan Holiday once wrote the very simple idea that

Never recline your seat on an airplane. Yes, it gives you more room–but ultimately at the expense of someone else. In economics, they call this an externality. It’s bad. Don’t do it.

Environmental pollution is the classic example of an externality: my factory makes me rich, and it offers you a product that you want, but it also poisons the water upstream from a village and makes everyone who lives there sick. The people who live in the village don't use my product, don't receive any income from my factory, and they have no ability to keep me from polluting the water. They suffer the externality. Anthropogenic global warming, if you believe in it, is an outstanding example of an externality. I buy a V-8 pickup truck and enjoy it, General Motors makes money from my purpose, and some tribe in the Pacific Ocean loses their island because of rising sea levels.

I have written in the past that pretty much every single policy decision made in the United States since 1964 or thereabouts has been designed to decrease the cost of labor and/or raise the price of existing assets. The externality of this is that it tends to decrease the net worth of people who have income and savings, with that decrease corresponding to an increase in the net worth of people who have capital and investments. Since the election of President Biden, the country has been on an inflationary tear in which the cost of pretty much everything goes up while incomes remain the same. This can be understood as a rough externality of sorts. You, as an individual, had no control of the election, but now you're paying Amazon and other corporations about four percent more for the same goods and services you were getting in 2020. Did your pay go up four percent? Probably not.

If you're a working-class stiff, then most of the externalities of the American economy wind up harming you in some way -- but the people who really run the country have the ability to make externalities work for them. Which leads me to the idea of the pain-free potlatch, in which the wealthy would enjoy all the social privilege that comes with holding a potlatch while making someone else foot the bill. Could such a thing really happen?

Let's start by looking at Harvard admissions, as in the image that opens this column. Harvard recently won a court case that grants them the right to discriminate by race. If you think this is fundamentally un-American, too bad. That's the way things are now. Harvard expresses interest in African-American students with an SAT of 1100 or above. White students need a 1310; Asian students need a 1380. That's not what you need to get in the door, of course; the Harvard Crimson found that

A Crimson analysis of the previously confidential dataset — which spans admissions cycles starting with the Class of 2000 and ends with the cycle for the Class of 2017 — revealed that Asian-Americans admitted to Harvard earned an average SAT score of 767 across all sections. Every section of the SAT has a maximum score of 800. By comparison, white admits earned an average score of 745 across all sections, Hispanic-American admits earned an average of 718, Native-American and Native-Hawaiian admits an average of 712, and African-American admits an average of 704.

To put this in perspective, the average African-American Harvard admission didn't quite measure up to the average Ohio State admission across all races. Your humble author took the SAT at the age of fourteen, having not given a moment's worth of thought to it before the morning of said SAT, and sleeping through part of it because I had a BMX race that evening and I wanted to be in good shape for said race. (What can I say; I didn't want to go to college and was only taking the test because my father made me do it.) My score wasn't even good enough to get me into Notre Dame -- but I'd have sailed into Harvard with ease, had I not been, ah, an Ohio cracker.

Harvard didn't spend millions of dollars fighting for their right to discriminate by race just on a whim. To the contrary, the idea that Harvard discriminates by race is critical to the image of the school, its faculty, its students, and its alumni. Harvard's race-based policies amount to a massive potlatch, since a Harvard degree guarantees an upper-class lifestyle to all but its most indolent and dissipated graduates. Every year, Harvard gives away a thousand or so memberships in the American dream to people who otherwise would be at the University of Dayton. This is a potlatch of which the most powerful Native American chief could only dream: to mint a high school auditorium's worth of millionaires once a year, for eternity!

But wait, it gets better. Harvard has been setting all-time records lately for legacy admissions. The Class of 2022 was over 36% legacies. Are you ready to hear something amazing? Only forty percent of Harvard students are white. Fifteen years ago, about half of white students were legacies. Betcha it's closer to ninety percent now.

It's obvious to see, therefore, that the Harvard potlatch is basically an externality. Harvard gains immense prestige for its race-based discrimination, while at the same time ensuring that all the "right" white students are accepted via the legacy channel. The "gift" of the race-based admissions is taken out of non-legacy admissions of other races. The "diversity" slot that is given to an African-American student isn't taken away from a legacy applicant. Instead, it is taken from an Asian-American or white applicant.

There is no social privilege in saying, "Uh, I had a 1580 SAT and should have gotten into Harvard, but they gave my slot to someone else." In fact, saying this publicly would be a good way to ensure that you were very difficult to hire in the future. (The SAT is three sections now, not two -- I think.) But there is tremendous social privilege in being the Harvard alumni who donates heavily to defend the school's race discrimination while remaining dead certain that your own kid will get into Harvard. You gain something and it costs you little or nothing in exchange. The cost is borne by someone you'll never meet.

Oh, and there's another benefit. Ivy League admissions have typically been the ladder by which middle-class people reach the upper class. This ladder has been unapologetically pulled up as part of the pain-free potlatch. Consider John Updike, who grew up as the child of a single mother in Pennsylvania but received a full scholarship to Harvard, which in turn launched his writing career. The John Updike of 2021, whoever he is, will be going to what they a "directional" university (think EASTERN Kentucky) instead. His slot has been potlatched. Meanwhile, the grandchild of the actual Updike is free to attend Harvard, as a legacy.

Thus the current social order is preserved in amber for the rest of history. If you made it into Harvard fifty years ago, congratulations! Your family can always go to Harvard, where they will have the privilege of competing against people with a 1400 SAT instead of a 1580 SAT.

(Break time: It should be noted that the current orthodoxy believes the SAT to be fundamentally racist, and that therefore it is easier for an Asian kid to get a 1580 than it is for an African-American kid to get a 1400. I have no idea if that is true and wouldn't know how to go about proving that. It does seems to be the case, however, that higher SAT scores translate into increased success later in life, and that this effect is race-blind; in other words, getting a 1500 SAT correlates to a certain success level for white, Asian, and Black kids pretty much the same. If, on the other hand, the racist-SAT theory is correct, then we should see a significant change in the racial composition of America's upper class twenty years from now. Let's all come back to this page and comment on it at that point.)

Of course, if this pain-free potlatch was limited to Harvard admissions then it wouldn't be that big of a deal. (It would still be a kind of big deal, because Harvard graduates are omnipresent in public life.) Once you see this pattern, however, you can't help but see it everywhere you go. Almost every major corporation in America sponsors some kind of internship program in which the only allowable internship candidates are "diverse" -- or children of executives. The executives reap the kudos for making their internships "accessible", while ensuring that their children are still given plum positions.

Goldman Sachs advocates for diversity. Donates to diversity. Enforces diversity on its business partners. But Goldman Sachs is not diverse. Amazon didn't have a single "diverse" executive, so they changed the definition of executive. Now they have a few. Target, the most diversity-obsessed store full of Chinese junk in North America... isn't so hot on executive diversity.

Probably the prime example of a pain-free potlatcher would be Robin DiAngelo, the person who coined the phrase "white fragility". She earns millions of dollars lecturing bored corporate drones about the evils of whiteness while being, uh, totally white. In doing so, she is both "on the right side of history" and quite well-compensated. No doubt, some of those corporate drones will walk out of her meetings determined not to hire any more white people for anything -- unless, of course, that person is Robin DiAngelo, pulling down $40,000 for another one-hour corporate lecture.

Heck of a living, if you can manage it.

Not all of the potlatching is related to race or class, of course. The bailout of General Motors was a potlatch at multiple levels; the Obama Administration gave taxpayer money to GM, which then arguably used the money to expand its facilities in China. Everybody made out except for the taxpayer, and who cares about him? Every time an auto executive makes headlines by blabbing about an "all-electric future" that won't take place until after that executive leaves office, that's pain-free potlatching. The executive gets the warm fuzzies for going green, the government enjoys yet another public display of fealty, and the actual implementation of that suicidal strategy is deferred to some person down the road, for whom it will be a decided externality.

We can't even get any authentic robber-baron philanthropy anymore. There are no more Carnegies or Vanderbilts to fund institutions in the public good. Today's super-rich use their money to influence public policy in their own further interest. Mark Zuckerberg spent $300 million to ensure that the election went his way after Trump started looking at properly regulating Facebook. What, did you think he was going to start a library or something like that? And, of course, the net result of that $300M spend will be a legislative environment that enables him to earn additional billions.

Yet Zuckerberg was still feted for his role in "preserving democracy". Who suffered the externality? One in five divorces in the United States cites Facebook as a factor; in the UK, it's one in three. I guess all those children of divorce can sleep easy at night knowing that Facebook is doing okay regardless.

Winston Smith wrote "I understand HOW: I do not understand WHY." O'Brien tells him "Power is tearing human minds apart and putting them back together in new shapes of your own choosing... If you want a vision of the future, Winston, imagine a boot stamping on a human face forever." Yet Orwell could not quite conceive of a world in which the oligarchy needed to be both powerful and admirable, where it would clothe the naked exercise of power and preference in the robes of justice and decency. And that's what he have now. The people who run the future will always be doing the right thing, and someone else will always pay the price. If you want a vision of the future, reader, imagine a first-class airline passenger reclining into the lap of a coach passenger, forever.

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For Hagerty, I reviewed a Benz, told a Lamborghini story, and reviewed the ethics of co-ed collisions.