Those who follow me know that I take a perverse pleasure in purposely making the Bourgeois squirm. Let today be no different. This is part 2 and 3 of my multi-part rant on how the inefficient education system in the US is responsible for our current economic malaise. Please see the entire post here. The next installment, probably even more controversial than this one, will be published forthwith. Remember this is both a continuation of a previous article and lengthy - thinking caps, an open mind, and a little time to dedicate are prerequisites!
The Talented Tenth and Class, 101
As a target for the definition of Dubois proverbial "Talented Tenth" who are to be the true “new” educators of this country’s youth, I advocate a minimum of a higher “upper middle class” standing, ex. a score of 23 on the boombustblog.com_social_class_model v.7.3 156.00 Kb. By definition, this transforms the Talented Tenth, in a mathematical sense, into something more like the Talented Three, due to the significantly increased rigor of the selection process resulting in the top three percent of society, in lieu of the top ten percent. It is very, very important to recognize the fact that this does not mean that only the wealthy can teach, for wealth is only one aspect of the socio-economic class structure, and there are many in the higher strata that are not necessarily wealthy, although there are none that are poor. This concept is very, very important and cannot be overstated. In a nutshell, it is actual accomplishment and influence that sets this strata apart and provides the actual credentials to teach. In essence, I feel that one cannot teach what one doesn't know, hence how can one teach another how to succeed at something that one hasn't succeeded at themselves. Basically, this is the antithesis of the mantra "That that can do, and those that can't teach!"
Simply taking characteristics that the media has popularly attributed to success such as education, or income will easily mislead today’s youth (and their parents) into a false sense of both security and superiority. I personally know many highly educated people who have little in terms of productive (income producing and/or appreciating) assets other than the home that they live in and a small retirement account. I know many individuals and couples with high incomes, over $250,000 who are also devoid of productive assets and socio-political clout. Social class, the metric of membership into that club W.E.B. Dubois coined “the Talented Tenth”, and to a greater extent the metric from which Mill’s tome, “The Power Elite” is far too complex to be broken down into one or two variables such as education or income. The variables that we need to ascertain class are automatically calculated in the boombustblog.com_social_class_model, but one must have a firm understanding of the meaning of the inputs in order to get a valid assessment:
1.Wealth – the pre-eminent factor, for in a capitalistic society, capital reigns supreme. Remember, what is being preached is far from materialism, and those who confuse the pursuit of capital as materialism are erring on the side of ignorance. I consistently remind my children what money is for. When you ask many people lower on the socio-economic ladder what money is for, you frequently get in response “to buy things”. This mentality and belief leads to a circular situation wherein the lack of understanding of the nature of money leads to an inherent lack of it. Capital in its purest essence - or to put it more simply, money - is used as a proxy for labor. As a result, the more capital that you have, the less you have to toil in your own labor. Once you have reached the point of equilibrium where your capital is equivalent to your labor, you no longer have to work to retain your current standard of living. All capital above this point of equilibrium can then be used to purchase the labor (hence the livelihoods) of others. The more capital you have, the more control you have over your own destiny, and then over the destiny of others. Capital is defined as property, eg. Cash, income producing assets (bonds, businesses, rental properties, mortgage notes, royalty generating intellectual property, etc.), appreciating assets (eg. Stocks, real estate, businesses, readily tradable antiquities, etc.), and to a much lesser extent in terms of value, depreciating assets (cars, jewelry, clothing, etc.). Wealth is defined as total assets (capital) minus all liabilities (debts and obligations). With these explicit definitions, we can now see the pursuit of wealth not as a material pursuit, but as a means of gaining control over the economy (notice I stated “the” economy not “our” economy), the political system, the social structure of the country and the futures of ourselves, our children, and others.
2.Income – provides the liquidity needed for day-to-day operations as well as long term planning. Income is often quoted as the primary determinant of class and is often mistaken as a proxy for wealth. This is patently false, for one can have high income and very little wealth, and this situation very, very prevalent. High income equates to social prestige, but is not nearly as accurate a determinate of power, influence or socio-economic standing as wealth is.
3. Income source – where income is derived dictates the autonomy, independence and reliability of that income. For instance, income derived from a salaried job is less secure and desirable (you can always get fired from your job, or become incapacitated due to illness) than income derived from one’s own business which is less secure and desirable (you ca become incapacitated due to illness in smaller companies, where the markets can move against you in larger businesses) then income from a broadly diversified portfolio of investments (which could easily include your own business) since it is virtually impossible to get fired, suffer financial distress from incapacitation, or have an adverse move in markets significantly damage your financial standing.
4.Occupation – while less important from an economic perspective, this factor is significant in the social purview. What you do often transcends how much you make or even how much you have in many social circles. For instance, a untenured college professor can easily make less then a prison corrections officer that works overtime, yet the college professor is deemed to be of higher social standing, even if he rents subsidized housing from his school/employer (aka social welfare, popularly thought to be only the province of the lower classes) while the corrections officer can not only own his own residence in the same neighborhood, but also own the one next to it for investment income.
5.Education – Academic education has traditionally been seen as the key to success in many circles. I have come to the conclusion that it is far from the key to ultimate success, but it is an important, if not necessary, component. This issue boils down to cause and effect. It is obvious that many successful people are well educated, but is that because successful families get educations or educations lead to successful families. Regardless of the chronological linkage of the occurrences, highly educated individuals are viewed with more prestige then lower educated individuals, and this prestige leads to a higher social standing. There is also significant evidence that academic education does have a connection to improved economic standing as well, but it is much more complex than popular opinion would have many to believe.
6.Dwelling area – basically, you are where you live. Very few powerful or wealthy people live in the ghetto unless their power is solely or derived from the economic underground (eg. Drugs, prostitution, etc.) that is forced to fly under the radar of mainstream social circles, which by default forces them into the lower classes. Conversely, very few powerless poor people live in the Gold Coast areas unless they are there as live in domestic help. People of like means tend to cluster together, so dwelling area has a high correlation to class.
7.Housing – highly correlated to class due to the fact that home ownership is a class marker. So is the value and size of the home. Most of those on the very low end of the SES scale do not own their own homes, while most on the very high end tend to own several homes.
Class consciousness (affiliations) – The ability to actually know where you stand and influence others in the group that you stand is a class marker, as well as the ability to know where others stand in relation to your standing and influence. Your affiliations help label your class strata. For instance, being a leader of local PTA, and being aware of that positions influence puts you in a higher standing than no group membership or just belonging to the local bowling team. The same goes to membership to a Fortune 500 or multinational not-for-profit board as compared to PTA membership. The more you know about class and class affiliation, chances are the higher you will be in the class standing.
Social Mobility: Unlike the Jefferson's, We're moving on down!
Social class is defined (on this blog) as the amount of control one has over one's socio-economic environment. It is much more than money, although money is a large component. For instance, Barack Obama is in a higher class than Robert DeNiro or Michael Jackson, although Robert DeNiro and Michael Jackson are most likely wealthier (although that is quite debatable after taking into consideration the value of Obama's campaign contribution list and membership database from his social networking site!). Obama's higher class stems from his ability to exert more control over his socio-economic environment. The factors that this author uses to determine class combine (with the associated weights) to create a "socioeconomic index":
(Occupation X 12) + (Income source X12) + (Income X 7) + (Wealth X 14) +
(Education X 7) + (Dwelling area X 15) + (Class Consciousness X 7) +
(Housing X 12)
There is a handy dandy BoomBustBlog class model (based loosely upon the Index of Status Charcteristics) available for download for anyone interested in delving into this further. See boombustblog.com_social_class_model v.7.3 156.00 Kb.
As you can see, wealth is the largest contributor to the class standing, and coincidentally it is the factor
that is the most at risk in this current economic climate. I believe that there will be a significant entry into the upper middle class by those who were once firmly entrenched into the upper classes! While that may not seem like a big deal to many, it is damn big deal to those who are moving down the ladder. This also means, that there will be some space for others to move (relatively speaking) up the ladder. One man's (or woman's) misfortune is another's opportunity. I believe this blog can not only be used to insure and proof against downward mobility
for those in the upper strata, but can also be used by those in the lower, middle and lower upper strata to rise upward a notch or even two. Social Mobility is the name of the game in times of severe dislocation - times like we are experiencing now.
Lower Middle Class
Upper Middle Class
Lower Upper Class
<-- 20% to 30% ofBoomBustBloggers are here, roughly 1,000 of you!
Higher Upper Class
Now, in term of wealth (not social class and influence, just wealth) we can split the upper strata into three different categories (there are only two above because of the other factors that come into play when social class or socioeconomic standing is taken into consideration).
There is the poor wealthy, those guys and girls that are just a hair's breath from being pulled into the upper middle class strata due to marginal wealth. This would be the $1m to $10m net worth crowd, who rely on business profits, salary and investment returns for income. The next would be the middle strata of the wealthy, hailing between $10 to $100 million in Net Worth, and then there is the upper strata wealthy at above $100 million. Each of these three strata of wealth represent, in my opinion, distinct behavior tranches in terms of discretionary expenditures, investment, and politics and (what passes as, this is a story for another post) philanthropic activities.
Source of wealth
Lower strata wealthy (High net worth)
Service professionals, corporate executives, entrepreneurs,
Salaries, stock options, restricted stock, small business
$1 m to $10 m
Middle strata wealthy (Very High Net Worth)
Corporate executives, entrepreneurs, inheritors
Business ownership, investment returns, salaries, restricted
$10 m to $100 m
Upper strata (the truly
Entrepreneurs, inheritors, very few CEOs
Business ownership, investment returns
$100 m to several $billion
A trip to practically any decent sized yacht club or recreational vehicle port reveals the relatively stark differences in discretionary spending behavior. The first strata can be found in the 36 ft. to 68 ft. yacht docks (where a captain is optional, but not mandatory and you really don't need a crew). The second strata can be found 50 ft to 120 ft docks, where captains, crews and semi-custom fiberglass boats abound. The third strata are almost exclusively in the super yacht category, where the carrying cost alone for these (basically waste of money) fully custom built hulls and vehicles are about million a year to start with. You can also see the other social economic strata as well, upper middle class in the 20 to 35 ft boats, the middle and working class in the considerably smaller fishing boats - as opposed to the ultra fast Viking and Hatteras deep sea fishers, etc. It is an interesting and instructional study in social studies and anthropology just walking along your local docks! Once you are aware of how these things break down, you will see many settings in a different light.
The dark purples, deep greens and reds are most likely the general demographic to get hit hardest.
Fortunately, those who follow this BoomBustBlog closely, either personally or through their advisor, should have seen a net increase in net worth rather than a net decrease. This has hurt non-BoomBustBloggers in this demographic tranche significantly, and will hurt them even farther. At the same time, let's hope that the opinion and research that I bring to the blog helps, because many will need it. Download The new BoomBustBlog.com Socio-economic stratification model
The problem of training today’s student is materially complicated by the fact that the whole question of the efficiency and appropriateness of our present systems of formal and academic education, for any kind of child, is a matter of active debate, in which final settlement seems still far off. Consequently it often happens that persons arguing for or against certain systems of education have these controversies in mind and miss the real question at issue. The main question, so far as the American student is concerned, is: What, under the present circumstance, must a system of education do in order to raise the young man/woman as quickly as possible up the rungs of the socio-economic ladder in order for him/her to compete as rigorously as possible for that prize which is at the top? The answer to this question seems to me clear: It must strengthen the privileged’s character, increase their knowledge and teach them to acquire the assets of power, production and influence. It is paramount that the aforementioned struggle take place, for without it (which is the situation that we currently face), those who hold the mantle easily become complacent and eventually lose said mantle to other nations who are hungry enough and competitive enough to allow the diverse juices within their own populaces to be set free. This is the REAL reason to fear China, et. al.!
Now it goes without saying that it is hard to do all these things simultaneously or suddenly and that at the same time it will not do to give all the attention to one and neglect the others.
We could give our young boys and girls the ideals, knowledge, and mindset to motivate them to acquire economic assets through entrepreneurship and the established corporate environment, but will that alone provide the socio-political influence necessary to counteract the pervasive subset of classism that is currently trapping immense stores of human capital, talent and creativity under the mantle of a globally unproductive oligarchic labor mill? Said labor mill mentality is being taught as core curriculum in our school systems and appears by design to prevent out boys and girls from capturing the helm of capitalism which is the ownership of valuable property?
We might simply increase their knowledge of the world, but this would not necessarily make them wish to use this knowledge to the betterment of their selves and families in lieu of the betterment of their socio-economic class masters.
We might seek to strengthen character and purpose, but to what end if the people have nothing to eat or to wear or be without the means to aggregate and exploit?
A system of education is not one thing, nor does it have a single definite object, nor is it a mere matter of schools. Education is that whole system of human training within and without the school house walls, which molds and develops leaders – not followers. The indoctrination of followers is actually the antithesis of education. It is the brainwashing, the encoding of a semi-caste system of servitude that does not need to be forced upon children for said children’s parents/caregivers/advisors actively seek out this programming designed to make others socio-economically successful upon the backs of proletariat labor as having finally arrived!!!
If then we start out to train an ignorant and unskilled people with a reflexively reinforcing cycle of self-limiting or self-destructive habits, our system of training must set before itself two great aims — the one dealing with motivational and inspirational character, the other part seeking to give the child the technical knowledge necessary for him to acquire and manipulate financial and social capital under the present circumstances.
These objects are accomplished in part by the opening the minds of the common schools to the precepts of socio-economic status, its true meaning and how to manipulate it to one’s own benefit. We must create productive asset gatherers, not workers. This is true, especially for those who are trained to teach these schools — men and women of knowledge and culture and technical skill who understand modern civilization, but most importantly Men and Women of Accomplishment, for only accomplishment can assuredly attest to the training and aptitude to impart accomplishment to the children under them.
There must be teachers, and teachers of teachers; but to attempt to establish any sort of a system of common and industrial school training, without first (and I say first advisedly) providing for the higher training of the very best teachers, is simply throwing your efforts to the winds. School houses do not teach themselves - piles of brick and mortar and machinery do not send out leaders. It is the trained, living human soul, cultivated and strengthened by long study and thought, that breathes the real breath of life into boys and girls and makes them human, whether they be Black or white, Greek, Russian, African or American, Jewish, Sikh, Buddhist, Christian or Muslim.
My Personal Experience With the NYC School System
Public and even private schools teach to the test. They teach students to pass and excel at written tests versus excelling at life and business skills. The results are obvious. You have students that can rock the SATs but can't think their way out of a wet paper bag. These children have no strategic creativity, and are the antithesis of individualism. These children have grown up to assume very strategic positions in the power centers of this country, many believing that they have risen to that level through their own volition - please reference the aforementioned C. Wright Mills excerpts from above, to wit:
... members of the power elite had strikingly similar social origins. They fruitfully used vast resources and insular social ties to move across the three institutional hierarchies in both formal and informal capacities (references to the alumni of the Great Vampire Squid are nigh impossible to avoid). The result was (and in my oh so humble opinion, still is) a robust web of entitlement.... The circle remained exclusive because real influence, for Mills, was located not in individuals (where it should be for that would release true creative and productive energies from said individual into greater society), but in their access to the “command of major institutions…the necessary bases of power, of wealth, and of prestige.”
Simply put, the powerful can and do make use of their resources to set favorable terms by which to safeguard their position at the top. C. Wright Mills, The Power Elite (New York: Oxford University Press, 1956), 9.
Hence, out of one of the most heterogeneous pools of human capital in the world, a small homogeneous sliver of living Groupthink perpetuates the status quo, not only failing to benefit from, but actually squelching the vibrant, diverse, adaptive and evolutionary energy that springs forth from heterogeneity. This is done not for the betterment of society, but to protect the extant oligarchy. This my friends, is the antithesis of the raw tenets of capitalism, which is in my uneducated opinion an economic extension of Charles Darwins "survival of the fittest" theory. When the same children who are taught the same things from the same schools ran by the same professors graduate to the same jobs from which they use the same techniques gleaned from the same life experiences often gathered from the same families to face the same problems.... Then GroupThink rules the day. The problem is.... What happens when the new problems are not the same. Fast forward to 2008 - 2012, the US credit and housing crisis as well as the Pan-European sovereign debt crisis. Now you know how we got into this mess, and now you know why it will be so difficult for us to get out of it. No, it was not a failure of capitalism, but a failure to allow capitalism in its truest forms!!!
I have three children - ages 5, 11, and 19 (make that one child and two young men), hence I have been through all facets of the school system in NYC, both public and private. My kids have went from the most diverse school in the country (72 languages spoken) where the average family is poor enough to enable the entire school to receive free lunch, to the best school in the entire country (as indicated by the Wall Street Journal- reference "The Price of Admission", and clickhere to learn more about this school). After paying 3 times what I paid for college for my eldest to attend high school (all in after tax dollars) decided to take matters into my own hands at the aforementioned public school with the extreme diversity and low average family income. I obtained permission to teach my own "enrichment class" as an adjunct to what the school taught (which as how to pass city and state academic tests - may I add that I have never heard of anyone getting paid to pass these tests!), and hired my own staff to assist in doing so. My son was in first grade when this started (I actually skipped over kindergarten to increase the challenge), and I purposely avoided hiring "professional teachers". At first, I personally taught science and finance to the class - which encompassed earth science, biology, zoology, animal husbandry, math , entrepreneurial studies, dramatic reading/speech and social studies (socio-economic stratification - the subject of this article). I then managed to hire a thespian for English/language arts, an Australian mathematician to tutor in math, and a PhD in neuroscience to head up biology. These hires took the pressure off of me and allowed me to focus on my core competencies/interest - dramatic presentation, finance and entrepreneurial studies.
Due to my willingness to dip into a very diverse pool of potential and lift up whatever it was that was both willing and capable to come with me, I led a bunch of 1st grades to learn (and I mean enthusiastically learn) high school curriculum! That's right! You heard correctly, these were 1st graders in a NYC public school that had free lunch. The class size was limited to 5 members, who were picked by the teacher as being able to benefit most from the enrichment (code word for not getting anything out of the NYC school's curriculum - which described(s) all of my children). The same teacher also had about 5 students removed for ESL (English as a 2nd language) and a few removed for behavioral issues, and by and of the day she had a very manageable class size of about 15 or so kids - and more importantly, these kids had a homogeneous skill set, meaning that they could all be taught a single lesson in unison.
The result of this intellectual experiment was interesting. The kids WANTED to attend class and some would actually cry when they couldn't make it. The first grades dissected sheep brains, cow eyes, built a REAL human skeleton (and memorized every single bone by its scientific name - a feat I dare any adult reading this to try) and read and wrote at a level that was literally multiples of the city standard.
The kids started their own for profit business selling fresh, organic berry juice (an actually made money) - delegating sales staff, bookeepers and preparers - all according to the kids natural abilities. I then made them swap roles ot get an appreciation for developing other talents and overcoming their inner fears. You would be surprised at how many kids have a fear of speaking to strangers, asking for what they want, or being responsible for counting and keeping money.
The dramatic reading created a true love for reading, writing and public speaking! We read comic books (Marvel, Image and DC) and Dr. Suess (ex. Green and Ham) and the students and I literally brought the house down - You know, the On Broadway-style William Shatner used when he channeled James T. Kirk in the original Star Trek series???!!!
The science class dissections actually caused parents to take off from work, and teacher and admin to come in on their lunch breaks to take notes, observe and learn during our large mammal dissections. That's right, teachers, parents and admin actually took time off to come back to the first grade they never had.
I'm sure this would sound like a marvel to many reading this, but the "create a slave" mentality of this countries' oligarchical influence got in the way. Other teachers bitched and complained that I did not create similar progras for their classes (despite the fact that my son was not in their class). Parents bitched and complained because I did not include their kids in the program, although I was the only one dedicating my own time and money to the initiative, on top of the fact that it was the teacher that chose the kids and not me. Even a few of the parents whose kids were in the program bitched and complained for they thought the program was elitist, and didn't want their children participating in such. Yeah...
Eventually, the principal bitched and complained because she felt the program was becoming too successful and the kids were learning too much outside of the city's core curriculum - in other words they were learning how to be successful instead of learning toa) slave for someone else or b) perpetuate the groupthink of the status quo oligarchs until said groupthink can no longer support the current oligarchical regime and the whole thing comes tumbling down(this was 2007,fastforward to 2012 and this is where we are now).
I have interviewed all of the top public and private schools in the city and many on Long Island. I think I can say I know my way around the block here.
Are Colleges and Universities Any Better?
Exactly how many of those bankers, traders and analysts from the Wall Street "creme de la creme" actually set themselves apart from the crowd? Is such a feat actually doable? After all, despite the undeserved (look here andherefor plenty of proof), whiz bang aura that surrounds Goldman Sachs, their bankers traders and analysts went to the same schools, studied under the same professors teaching the same curriculum as everybody else on the street. So, when groupthink loads (leverages) everybody up on one side of a trade... say real estate or MBS derivative products in 2007 or European sovereign debt in 2009... Boom! 'Know what I'm sayin'? That's just my 66 cents (it was just my two cents, but I've been hanging around a lot of European bankers lately, so I levered up 33x!!!)
Next up, I will demonstrate how the Groupthink mentality that the American school system uses to indoctrinate its students has (and currently is) preventing what many believe to be the brightest minds from seeing the obvious despite the fact that is it sitting right in front of them. You heard correctly! I will take this hypothesis and prove it with both historical (that have been proven highly contrarian and immensely profitable) and real time investment ideas. Again, unable to see the coniferous expanse due to excessive tree bark blindness.