Saturday, January 3, 2009

Universities Cause Reversion to Emphasis on Ascribed Status

American society has become increasingly stratified and the reason is increasing regulation, universities' domination of the labor market and the Federal Reserve Bank. Max von Weber argued that the Protestant ethic engendered capitalism. Talcott Parsons argued that social norms that are fundamental to economic development include universalistic versus particularistic; specificity versus diffuseness of role relations; achieved versus ascribed status; and collectivity versus self orientation.

The idea of universalistic versus particularistic social norms is that in order for a society to develop, laws must apply universally. Resources must be allocated on the basis of universal criteria that reflect objective achievement such as competence rather than by social class, race or other ascribed characteristics. Relations should not be based on general considerations such as family connections, but rather on specific achievements.

America has increasingly become a society where status counts more than achievement. We can see this in the recent proposal to appoint Caroline Kennedy to the US Senate. To see how far we have fallen from America's past achievement orientation, let us compare a Senator from the early 1820s, Andrew Jackson, with the proposed appointee from New York, Caroline Kennedy.

Andrew Jackson, assisted by Davy Crockett who was under Jackson's command, defeated the Red Stick Creek Indians at the Battle of Horseshoe Bend in 1814. In the Battle of New Orleans in the War of 1812, according to Wikipedia:

"on January 8, 1815, Jackson's 5,000 soldiers won a victory over 7,500 British. The British had more than 2,000 casualties to Jackson's 13 killed and 58 wounded or missing."

In 1817 Jackson led a campaign against the Seminole and Creek Indians. Having been ordered to prevent runaway slaves from going to Florida, Jackson invaded Florida, resulting in calls for his censure. Using the invasion as a pretext, Secretary of State John Quincy Adams negotiated the Adams-Onis treaty with Spain, whereby Spain ceded Florida to the US. Jackson served as the first US governor of Florida in 1821.

In 1822 the State of Tennessee elected Jackson to the US Senate. He ran for president in 1824, and although he won the most votes he did not win a majority, and John Quincy Adams was selected by special vote of Congress. Of course, Jackson was elected to the presidency in 1828, and in his second term abolished the then-central bank, the Second Bank of the United States.

Now, let's compare Caroline Kennedy's resume to Jackson's. Caroline Kennedy's grandfather was a wealthy bootlegger who managed to get himself appointed to several government sinecures, to include the first chairman of the Securities and Exchange Commission and Ambassador to Britain. Her father was president. Kennedy attended Harvard and Columbia. She is a mother and wife. She has coauthored and edited several books. She has no other important achievements.

Americans are increasingly insensitive to the lack of emphasis on achievement in their culture. The reason is that universities have intruded into the allocation of labor. Universities masquerade as a form of selection-by-achievement, but they are nothing of the sort. The reason people get into a selective college is a test score that is independent of achievement and/or family connections or other status criteria. Few if any college students can boast of important achievements, and the few who do achieve important things in college like Bill Gates or Michael Dell, do so in spite of the college curriculum, not because of it.

The emphasis on attending a selective college would not in itself render American society ascription as opposed to achievement-based without a second factor: the increasing dominance of Wall Street over American business life. In the nineteenth century Wall Street was a neutral actor that served to finance American business in light of small-scale banks and scarce credit (scarce because of the gold standard). However, that changed in 1913 when the Federal Reserve bank was established and given the power to expand and contract the money supply. In 1933 the gold standard was abolished, and in 1971 its final remnant was cleared away. Since 1971 Wall Street has expanded dramatically because of the massive support it has received from the Fed.

The beneficiaries of the massive expansion of credit have of course been Wall Street executives. They have benefited at the expense of the public and of other businesses, which have not had equal access to credit and to resources that they would have in the absence of the Fed's credit monopoly. This is because of the income tax, the inheritance tax and the inflation tax.

Given the allocation of the public's wealth into Wall Street's hands, the question needs to be asked: who gets to be the recipient of the Fed's beneficence? The answer, of course, is that selection is made on the basis of family background and academic credentials.

Thus, universities serve as the selection device by which a privileged aristocracy, handed wealth by the Fed, gains entry. Universities are the post-World War II form of primogeniture.

Achievement no longer matters for much in American culture. Rather, you get into a good school and then hope you get a job on Wall Street. You try your hand at the markets, and if you're lucky you become a billionaire. This trend of allocation of wealth on the basis of status rather than achievement has brought us Caroline Kennedy. What is new about Kennedy is the arrogance of our politicians. They are willing to put forward a candidate who lacks any competence whatsoever, and whose only claim to the post is aristocratic family background.

America is reverting to the 17th century before our eyes.

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