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Evidence on Poverty Traps from Rural Bangladesh [pdf]

96 points by SQL2219 6y ago

aszantu 6y ago
I've been poor all my life, the thought of having money laying around scares me, I should invest, but giving it away like that scares me even more. I'm moving next week and part of my reserves will be gone, and weirdly enough I'm relieved that someone else will take care of it. I don't feel fit to handle it.
padolsey 6y ago
These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive, bleeding into our corporate performance reviews and our pro-diversity efforts ("we hire only according to merit" <signed, Diversity Manager>). But it is so internally irrational. I'm reminded of this argument: > The case against meritocracy can be put psychologically: (a) The abolition of materialist-elitist values is a prerequisite for the abolition of inequality and privilege; (b) the persistence of materialist-elitist values is a prerequisite for class stratification based on wealth and status; (c) therefore, a class-stratified meritocracy is impossible. > The case against meritocracy can also be put sociologically: (a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible. Source: https://statmodeling.stat.columbia.edu/2007/12/04/meritocracy_won/ https://statmodeling.stat.columbia.edu/2007/12/04/meritocrac... The idea that "innate" merit should be rewarded (this underlies what we consider meritocracy) is fundamentally a noncontinuable state. Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.
- Mauricebranagh 6y ago
  When "meritocracy" was defined it was not used as an example of a good thing :-)
- auggierose 6y ago
  I don't see why you need a) and b) here. A class-stratified meritocracy being impossible is pretty much a tautology in itself.
- refurb 6y ago
  "These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA)" "Evidence on Poverty Traps from Rural Bangladesh" - are you suggesting the situation in rural Bangladesh is applicable to Silicon Valley?
  - buran77 6y ago
    Why wouldn't it? In the end this is a people problem, not a tech problem. And both Silicon Valley and Bangladesh have some form of "local" meritocracy. Meritocracy applied and working within your stratum but not across the boundaries. Whether you're poor or in a lower caste you still get some form of meritocracy within your group to keep you content and motivated. But crossing the boundary to the next level, while not impossible, is designed to be highly unlikely because people in all layers like the security those boundaries provide them.
    - refurb 6y ago
      You don't think things like access to education, medical care, clean water, nutritious food, vaccinations, quality public schools, subsidized colleges, rule of law, minimal corruption, limited impact of religious identify, avaiable reliable housing might have an impact on the outcomes?
      - buran77 6y ago
        That's... absolutely not what I said, or implied. Access to all of that is the boundary between the layers. People in layer n will make sure people in layer n-1 are missing at least one thing so they can't compete on equal footing. People in layer n+1 will do the same to people in layer n. If you don't have access to schooling and someone else does then that's something that will make you always start with a handicap when competing with them. The boundary, whether education or medical services, is there so one layer feels safe from the inferior one. People want it there even if this means they start off with a handicap compared to the superior layer. Most people are more afraid of losing what they have than they are keen on winning something they don't already have.
- solatic 6y ago
  Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force). The problem's roots are when the distribution of rewards becomes hereditary, that the children of the wealthy have near-guaranteed access to the best educational and social institutions, have near-guaranteed access to startup capital (i.e. from their parents), are usually provided with necessities (food, housing, clothing, incidentals) at no out-of-pocket cost by their parents for a considerable portion of their early adult lives, etc. It is the hereditary nature of wealth which is the largest contributor to long-term inequality.
  - sul_tasto 6y ago
    Are you suggesting that we separate children from their parents?
    - Dumbdo 6y ago
      Interesting strawman. There are a lot of other ways to control inheritance than separating children from their parents.
      - dexterdog 6y ago
        Name one way that does not involve theft of property.
        thundergolfer 6y ago
        Before we start naming ways, are you somebody who thinks taxation is theft?
        dexterdog 6y ago
        Are you somebody who can prove that it is anything but?
      - AnIdiotOnTheNet 6y ago
        Not really, because as mentioned the mere fact that the children have access to their parent's wealth while they are growing up already confers significant advantage.
- travisoneill1 6y ago
  The end of your comment seems to imply that meritocracy is intended to generate equality, but actually it's intended to do the opposite.
- sul_tasto 6y ago
  “ Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.” Please consider that you are advocating for communism. I hope you will consider reviewing the histories of China and the USSR, et al. after World War 2. The critique and solution you offer do not lead to “actual equality.”
  - nvarsj 6y ago
    That’s a ridiculous equivalency. You can provide high quality education to all without USSR style communism. In fact I’d argue the long term success of a capitalist system relies on it.
    - sokoloff 6y ago
      I’m not so sure about “high-quality” being possible for all. “Reasonable quality” I’d agree with, but truly high-quality education is incredibly labor and resource intensive to provide as it must be tailored to the student to a significant degree.
    - sul_tasto 6y ago
      In my experience, providing “a high quality education for all” just isn’t possible, because it’s dependent upon what caliber of students are in the classroom. Stipulating an equal distribution of ability levels doesn’t raise all boats, it drags the most capable students down. What I don’t understand is why it’s often considered acceptable to disregard the needs of strong students. Don’t they also have a right to be challenged in the classroom?
      - ModernMech 6y ago
        In my experience education has been defunded for decades while wealth inequality has been exacerbated. One only has to look at the fact that the inheritance tax is indexed to inflation, while the minimum wage and teacher expense deduction aren't to understand where our national priorities are. I'm not willing to say "a high quality education for all just isn’t possible" until we've invested equivalent resources into education as waging war. Imagine if our education budget was $700 billion annually. What could be possible?
- fartcannon 6y ago
  So, how do you decide who gets the rewards? Assuming not everyone can have every job/house/life. Do you tell the people who get the rewards that they were given a chance at random (compared to their neighbor who was not) or do you let them believe they earned it? For the record, I agree that merit is a bad system. Im curious to explore the ramifications of doing away with the system and how it would be different, if at all, from the current system. For example, in a post-scarcity society, everyone has what they need, but some houses still have nicer views than others.
  - deleted 6y ago
    [deleted]
- AsyncAwait 6y ago
  I suspect many who believe in meritocracy are already successful people who like to tell themselves they got there by merely being so much smarter than everyone else around them, dismissing the access, luck, (i.e. quality of schools they were born near), family wealth etc. almost entirely as a factor.
  - sanxiyn 6y ago
    I am not sure how getting there by being smarter is any better. It's not like anyone spent any effort to be smart, it's just genetic lottery.
    - Dirlewanger 6y ago
      How is "being smart" a genetic lottery? Are you serious? That brings up all sorts of implications with race and whatnot. "Being smart" is often a proxy for the things the GP mentions: strong stable family, access to good schooling, and a sprinkle of luck.
      - sanxiyn 6y ago
        Heritability of IQ is >50%, and IQ is a good measure of smartness.
        afuchs 6y ago
        The previous comment's argument appears to be that heritability of "being smart" is not strictly limited to genetic factors, that measures of "smartness" such as an IQ score also measure other factors that are not strictly related to genetics
        PeterisP 6y ago
        Heritability and genetic factors are overlapping but distinct things - for example, socioeconomic status influences many aspects, is hereditary but not genetic.
        6y ago
- throwaway8085 6y ago
  Anecdata that agrees with you follows. Meritocracy is still a factor but the bar is currently very low. My own father came out of the impoverishment of war torn Bangladesh to be a successful real estate developer in the west. Why did his elder brother not have the same results? Very simple: the elder brother was responsible for the family. The family has rewarded the elder brother by taking care of him for years now and he is the happiest old man I know. He will die satisfied. The truth that no one wants to admit is that we have to put (very minimal) resources behind the youth to become independent of their families so they can grow. For all his faults, my father understood this for everyone except me (long story) and funded the education of a few people back home. For two boys I'm aware of, that was about $5-7K/year. The two boys lived in a one room shack that routinely got flooded. One is now an accountant, the other is a working chef. Trust me, neither of them are particularly smart. What's needed is so minimal but the problem we have is too much grifting occurs. Levels and levels of middleman bullshit. I would start experimenting with Kiva-style microloans if you want to make a difference, tbh.
  - inglor_cz 6y ago
    My wife did her bachelor thesis on Grameen bank, Muhammad Yunus and microfinancing. That was like 2009. Is microfinancing still a thing in Bangladesh? What are the effects since then?
- theelous3 6y ago
  This is all well and good to argue around a very literal meritocracy, but I don't think anyone actually argues for this. It's not just "lol, 1 - 1 = 0, meritocracy is impossible". The underlying principal, as I understand it, is that it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company, or a farmer. Yet zuck is compensated as such. We can recognize the "unique" value facebook creates by giving unique compensation, but should that compensation really be x1m times more than the farmer? Reworking wealth distribution is the goal - not rewarding everyone equally for everything in some meme level paradox.
  - donatj 6y ago
    > it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor. A well connected person can bring many many times the value to a company of someone without connections. The right strong personality can be a performance amplifier for the rest of the company, Steve Jobs can be argued to be an example of that. The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value.
    - theelous3 6y ago
      > Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor. I am. It's not me being careless. We reward both by the same means - money. Not my fault it's this way. I think it's perfectly reasonable of me to work from the means of compensation outwards, when making comparisons. > The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value. In my opinion, this is nothing more than business based, pyramid scheme level, cult-like thinking. I'm a well paid webdev. The company is fairly flat, there are only two distinct levels above me - engineering management, and founder-ceo(s). My day to day work is designing and building out random systems, and handling tech debt. I would be doing this in a vacuum too, and to the same standard. The personality and input of the ceo has little to no bearing on my performance. Me and my team would perform equally well under any given non-maniac. CEOs are not like, high level gods or something. They aren't remotely as rare a set of personality traits as the voodoo-thinking of SV seems to think. C-tier management is not literally multiplying my output. Sensible feature requests from users and sensible filtering by product managers has ten times the impact that C-tier has on my work. > deserves a proportional [...] > Steve Jobs can be argued to be an example of that The resignation and subsequent death of Jobs had, in the macro perspective of apple's stock prices, literally no impact on the value of the company. Apple stock is currently over x10 what it was when he was there. An essentially infinite number of things took place that were far more important than Job's personality, which lead to the success of apple. He was more like a train driver railing down the tracks than some maverick cutting through the jungle. At least Bill Gates has the introspection to realise this. General luck, and luck of timing is what generated nearly all of that value, and the rest was generated by labour. Somewhere in there is some ephemeral and unquantifiable sliver of value coming from the specific personality of the founders / ceos. So, what proportion do we dole out? Who do we compensate for luck? For all of the endless work done before that wasn't compensated to the moon but was absolutely required for this moon-level capital generation? It's all too up in the air to try and rationalise that CEOs should earn one million times what a farmer earns and think that makes any kind of sense at all. Think of all of the wealth, (generational too) that came from equally traited men setting out for oil. Literal random chance would go on to create mega-empires that have lasted a hundred years. Our current system of compensation, is pretty close to being nothing more than a load of bollocks, when it comes to this kind of thing.
- orange_tee 6y ago
  You are so focused on economic inequality that you ignore the greater picture: there will still be a hierarchy. There will still be humans dominating other humans and asserting themselves above them. Maybe in the far future humans will create a social technology to live in true equality but in the immediate future this is clearly not happening. As long as there is a hierarchy, you cannot really have equality, sorry. You make humans more economically equal and you create an even worse situation where human hierarchy is based on family name, connections, genetics or just plain violence and social mobility would be even worse than it is now, where it is dictated by income and wealth. Also your definition of meritocracy is contentious. For example you are saying, it is not meritocratic that a boy does not achieve his maximum potential because his parents could not afford to give him the best opportunities. But what if instead of comparing just one generation, we compare two or three? What if we compare their grandparents and their parents? Maybe the grandparents of the poor boy were better off but for whatever reason the wealth did not tickle down in sufficient quantities. Whereas maybe a boy who is richer today had poorer grandparents who worked really hard to make sure their grandchildren had the best opportunities. That looks like meritocracy to me.
  - jasonclaid 6y ago
    It is not the existence of hierarchy that is the problem. It is the type of hierarchy and the effects of that hierarchy. The parent and the study argue that we should give greater resources to those with the least resources in such a way as to broaden access to opportunities. You can argue that is not worth the expense (it costs X to produce Y outcome and redistributing X would lead to negative impact Z. Y + Z results in a net loss to society). But it seems hard to argue that inequality or hierarchy is inevitable so we should not even try to ameliorate the negative effects of that structure or imagine different ones. To me, the “inequality inevitable” mindset seems like a frequent way those who benefited from the existing system rationalize not sacrificing anything to help less fortunate people. I am very sympathetic to arguments that redistribution is not effective, but the debate should be about what is or is not effective. “Inequality inevitable” sidesteps that and asks that we just give up before even trying or imagining different possibilities because we’ve failed in the past. It is hard to not see such arguments as a misguided effort to rationalize one’s self interest.
- danieltillett 6y ago
  That is not what meritocracy is - it is rule by the cognitive gifted. The argument for meritocracy is that meritocratic societies (and by extension businesses) kick the butts of all others. It might not be fair, but it works better than all the other alternatives.
- wffurr 6y ago
  "It's always puzzled me that this idea of meritocracy," Nothing puzzling about it. It's a "just so" story designed to make successful people feel good and justified about their success.
- PragmaticPulp 6y ago
  > It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive, This study looks at some of the poorest villages in Bangladesh with some additional data from other very poor countries. Anyone who even has a shot at applying to a USA tech company is already wildly more wealthy than the type of poverty discussed in this study. In fact, they’d be firmly past the threshold the study identified as the minimum wealth necessary to engage with wealth-building jobs. The conclusions don’t really apply at all to situations like a US tech company, unless you’re trying to understand why homeless people living on the streets aren’t able to get jobs at an Amazon warehouse or other entry-level jobs. Trying to project this on to hiring practices of educated candidates into high paying tech jobs is ignoring the core focus of the study.
- tremon 6y ago
  (a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible. This is a disingenuous argument. (a) and (b) are not talking about the same kind of rewards: (a) : when talking about the equalization of environments, the "rewards" are allocated to areas and groups of people, not to individuals. (b) : the stratification of wealth is talking about "rewards" to individual people. These two concepts are not the same, the mechanisms are not the same, and the justification for them is not the same. They're only grouped together as "rewards" so they lead to the false conclusion (c).
- waihtis 6y ago
  Why is absolute equality a more desirable state than the merit-based system now in place?
  - mehphp 6y ago
    I'm not suggesting we should have absolute equality but is system we have in place really merit-based? Last I checked, about a fourth of millionaires inherited their wealth and the vast majority had the opportunity to become wealthy due to factors completely out of their control (where they were born, to whom they were born and natural cognitive abilities).
- dcolkitt 6y ago
  > These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA) Just to be clear this paper’s about peasants in Bangladesh.
- oytis 6y ago
  > "we hire only according to merit" <signed, Diversity Manager> What you would consider a better policy? Hiring according to a fair dice roll?
- viraptor 6y ago
  > "we hire only according to merit" <signed, Diversity Manager> There doesn't have to be anything contradictory here. Diversity efforts can work to offset biases and enable getting closer to meritocracy. For example hiring the best in your network coming from a high-class university doesn't mean you're hiring the best overall. The diversity effort may be for example to make sure that the job offer is visible to the brilliant person who wouldn't even find it otherwise. Or it may be an effort to ensure a less biased review (masking names?) Or it's making sure that people do behave well internally, so the company isn't avoided by the best people for hiring racist assholes for example.
- bonoboTP 6y ago
  It's not just about "rewarding", or giving out high paying position to who we want to. There are real and difficult things to do in the world that some other people need. They (employers, clients, customers) decide that this work is so important to them that they exchange money for it. Then the person can use that earned money to improve their life. For example if a top surgeon flies to a different country to do a difficult operation, I'd want them to be able to enjoy a relaxing VIP lounge, bigger legroom and direct taxi. Rather than flying low cost and standing in the bus for 3 times longer than the taxi ride. We want to allocate resources to people who accomplish important things for us. Not just as reward or motivation, but in our own interest, we invest in the most capable and competent to have more of our stuff taken care of. Jobs aren't just about sitting in a chair and taking cash and we just pick who gets to sit in which chair to enjoy that cash. It's doing things. And we want those things to be done well. This is the idea behind meritocracy. Not that we praise people for their genetics. I'm not saying this is how it works currently, just that this is what we mean by meritocracy that we should move toward.
  - ModernMech 6y ago
    Agree with everything you said on the surface. Sounds reasonable. Of course we want the surgeon to be prepared for his job. It's important. But then there are those in this thread arguing that Elon Musk's reward should be unlimited because he's "arguably ensuring the long-term survivability of our species." Wow, that sounds very important. I guess he should have the most money then. Nevermind the fact that the majority of his wealth is literally gained by "sitting in a chair and taking cash". That's the job of a capitalist after all - they don't work for their money, they sit in a chair and let the ownership of assets make them money. I mean, sure he's "doing things" but are the things he's doing worth $140 billion? What has he "done" in the last 9 months that made him $88 billion richer? Is the planet saved yet?
    - bonoboTP 6y ago
      I think inheritance and unchecked wealth accumulation work against meritocracy actually. There are things that make people more efficient as a homo sapiens and we want them to enjoy those things and not to worry and stress various annoyances so they can concentrate on what they are best at. But as you say it's obviously not like that for CEOs of big companies. Just because Bill Gates was good at selling software doesn't mean he should hold this immense power in the world and decide how to allocate resources between vaccines and cancer research etc. It has nothing to do with his meritocratic expertise (of course he pays his own experts, but he does maintain the high level control). Some would argue that this value was all created as additional value by him via the efficiencies enabled by the software and that it wasn't merely captured out of existing value. It's obviously a combination, but based on ideology people estimate it differently. We know that rent seeking and dark pattern business practices exist, as do lobbying and other forms of corruption. The billionaire examples aren't examples of meritocracy but of rewarding luck. Nobody would say that as a human Elon Musk is literally that much more competent than, say, the best senior engineer at Tesla. But also, beyond a certain point rich people aren't people any more, more like institutions. They just channel that wealth in different directions, they cannot "enjoy" a significant potion of it as a human being. All that money gets rotated back into salaries of others, else it would remain just numbers in databases. It cannot meaningfully accumulate. Just like if you burn a bag of cash, you induce minuscule inflation effects and everybody else's money increases in value a little bit. If a billionaire sits on his cash, it's as if he didn't have it. But when he uses it, he pays salaries and makes people do stuff. The problem is when this stuff is "the wrong thing". I think the main argument against billionaire power is that the distributed wisdom of crowds and markets are better at allocation and deciding what's worth doing than centralizing it without limit. It's good to centralize it as long as it's about merit and related to expertise or capacity, but not beyond that. Billionaires are way beyond human scale regarding that.
- deleted 6y ago
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- sokoloff 6y ago
  I don't think that "innate" merit should be rewarded. I think that applied merit should be. You could be the smartest, most capable person in the world, but if you won't work to apply that, you're useless to me and the world. If you do apply it effectively, you are likely to be rewarded for that, which seems eminently reasonable.
- 908B64B197 6y ago
  If there's someone with "Diversity Manager" anywhere near hiring at a company it means it has deep issues.
- andi999 6y ago
  Wasnt the study performed in Bangladesh? Since when is Bangladesh considered a meritocracy?
abhinav22 6y ago
For those who want a TL;DR, below is an extract of the summary. I think they did a good job, the article was well written. Poverty traps are one of the most fundamental concepts in development economics. The contri- bution of this paper has been to provide evidence for their existence using the combination of a randomized asset transfer and an 11 year follow up in rural Bangladesh. Our key finding is that people stay poor because they lack opportunity. It is not their intrinsic characteristics that trap people in poverty but rather their circumstances. This has three implications for how we think about development policy. The first is that big pushes that enable occupational change will be needed to address the global mass poverty problem. Small pushes will work to elevate consumption but will not get people out of the poverty trap. The magnitude of the transfer needed to achieve occupational change may be much larger than is typical with current interventions though importantly it can be time limited. Therefore the fiscal cost of permanently getting people out of poverty through a large, time limited transfer might actually be lower than relying on continual transfers that raise consumption but have no effect on the occupations of the poor. The second is that big push policies can have long-lasting effects. Our analysis of long-run dynamics indicates that the asset, occupation and consumption trajectories of above threshold beneficiaries diverge from those of below threshold beneficiaries over time. This finding is impor- tant as it indicates that, by engendering occupational change, one time pushes can have permanent effects. The third is that poverty traps create mismatches between talent and jobs. We have shown that misallocation of labor is rife amongst the poor in rural Bangladesh. Indeed, we show that the vast majority of the poor in rural Bangladesh are not engaged in the occupations where they would be most productive. They are perfectly capable of taking on the occupations of the richer women but are constrained from doing so by a lack of resources. The value of eliminating misallocation is an order of magnitude larger than the cost of moving all the beneficiaries past the threshold. This is important as it implies that poverty traps are preventing people from making full use of their abilities and indeed it is the mass squandering of people’s abilities that is the key tragedy of mass poverty.
- sul_tasto 6y ago
  If only there was some person or some group to realign society and correctly place everyone according to ability.
danishdev 6y ago
It's worth mentioning that poverty is highly inheritable. You could eliminate world poverty by being more selective with reproduction choices.
mahathu 6y ago
Poor people should just sell some of their stock options or properties.
deleted 6y ago
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phatty 6y ago
1971?
travisoneill1 6y ago
> We find that in the absence of credit constraints only 2% of households would be best off doing wage labor, while 97% of households are exclusively reliant such work at baseline. Conversely, only 1% work in livestock when 90% would do so if they had access to the same asset wealth as the middle and upper classes. Overall, this implies that 96% of households are forced to misallocate their labor. So the authors suggest that currently 1% of the labor pool is working in livestock, but an optimal allocation would be 90% of the labor pool? Ridiculous.
- PragmaticPulp 6y ago
  This study primarily focused on rural poor in Bangladesh. Trying to project the conclusions on to relatively wealthy (on a global scale) societies like the United States isn’t going to make much sense.
- bmcn2020 6y ago
  I don't think that's what it said. It's not a recommendation, just a summary: 1% do it now, but 90% would do it if they had the chance.
- howlgarnish 6y ago
  No, the authors are debunking the popular theory that poor people are poor because they don't have the skills/gumption needed to not be poor. Turns out that when you give them a productive asset (a cow) that lets them be not-poor, they're perfectly capable of staying not-poor.
ransom1538 6y ago
In the US: "graduate from high school; get a full-time job; don’t have a child before age 21 and get married before childbearing", this gives you %75 chance of being middle class, about %89 chance of not being poor. This isn't good enough, but seems possible! https://www.vox.com/2015/7/24/9027195/haskins-sawhill-norms-marriage https://www.vox.com/2015/7/24/9027195/haskins-sawhill-norms-...
- st1x7 6y ago
  > this gives you %75 chance of being middle class, about %90 chance of not being poor It doesn't. Those numbers are descriptive, not prescriptive. You're basically giving the advice to be more middle-class in order to be more middle-class.
  - PragmaticPulp 6y ago
    The conclusion of this study is that people above a certain wealth threshold are able to accumulate wealth while those below a certain wealth threshold cannot. The authors argue that sufficiently large, time-limited assistance to these people can bump them over the threshold to where they can start accumulating wealth. Note that this study was about rural villagers in Bangladesh and other such extremely impoverished populations, so stretching the conclusions to middle class people in the US is an extreme abuse of the study conclusions. However, it’s not hard to imagine that giving similar time-limited boosts to people such as funding free public college opportunities could help more people achieve the middle-class stability noted above. However, it’s clearly not entirely a matter of external intervention. Some of the life choices require active participation of the people involved, such as choosing to delay having children (in conjunction with good access to birth control and reproductive education) and choosing to engage in the educational opportunities available to them.
  - deleted 6y ago
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  - augustk 6y ago
    Exactly, social class is bred in childhood. It's really the children or grandchildren of a given person who can enter a different class. http://willskinner.com/class.html http://willskinner.com/class.html
lazyjones 6y ago
These conclusions apply to the third world, not the rest of us. Here in Europe for example, anyone can study and become an entrepreneur (I did it, with pretty much 0 wealth in the family).
- mehphp 6y ago
  Does this mean that poverty, in the first world at least, is a solved problem and being poor is a choice for those remaining in poverty?
  - lazyjones 6y ago
    No, obviously some people are forced to stay poor by special circumstances, but in many cases it's just life choices (trade-offs) or ignorance.
  - rtx 6y ago
    Many people don't like to work hard, and that's alight.
  - bonoboTP 6y ago
    Depending on what you mean by poverty, mostly yes for Western and Norther Europe if you do not count immigrants, who are in a more special situation. The unemployment benefit is usually enough to cover material living costs and to have all the basics, like shelter, food in a fridge, electricity, running water, even entertainment like TV, phone, computer. People have vastly different understandings of poverty and if you define it relative to the median income, you will by definition always have poverty.
- dsego 6y ago
  > anyone can study and become an entrepreneur Let's say I want to become a doctor and not an entrepreneur?
  - PeterisP 6y ago
    Sure, if you're diligent enough, there's nothing stopping you, there's no wealth barrier - studying medicine is a reasonable option for students from poor families. Is it not the case in USA? I have read about doctors coming out of med school with lots of debt, but I had presumed that these loans are reasonably available and would not prevent someone from a poor family from studying there.
PragmaticPulp 6y ago
Please note that this study is in the context of extreme poverty in populations such as rural villages in Bangladesh. It’s an interesting study and worth reading if you’re interested in what it takes to lift these populations out of poverty. The authors propose that their extreme poverty is a meta-stable state that prevents them from accessing wealth-building opportunities. The authors show that time-limited wealth transfers of sufficiently large size can help these people escape the meta-stable poverty state and transition into a wealth-accumulating state. However, the comments here rushing to project the conclusions on to the relatively wealthy (on a global scale) citizens of countries like the US and Europe are abusing the study’s conclusions. Similar wealth traps may exist in these countries, but the relative thresholds would be akin to a homeless person living on the streets trying to secure a job. Attempts to project these study results on to things like hiring practices at big tech companies, where anyone able to apply at all is already orders of magnitude more wealthy and privileged than the subjects of this study, are missing the point entirely.
- nabla9 6y ago
  For developed nations there are many other studies. As a starting point, here is infographic: https://www.visualcapitalist.com/ranked-the-social-mobility-of-82-countries/ https://www.visualcapitalist.com/ranked-the-social-mobility-... Countries in the top 20 are "The Lands of Opportunity" where family background matters less compared to 21-40. Cheap, high quality education, healthcare, and inclusive institutions matter.
- maire 6y ago
  I had the same reaction - Silicon Valley is not Bangladesh. I am moving my comment below to you. Hans Rosling (RIP) did a great job of defining poverty and visualizing the changing nature of poverty. His area of focus was on child mortality - so it tended to focus on the mothers since they have the greatest impact on this statistic. Later he focused on other areas. Sanitation, water, transportation etc. https://www.gapminder.org/dollar-street/?countries=bd https://www.gapminder.org/dollar-street/?countries=bd At the Bangladesh level of poverty, a productive asset is a goat that produces milk. The Heifer Project is doing useful work in giving low income families productive assets. https://www.heifer.org/ https://www.heifer.org/ Finally there is the whole world of micro loans. I have not looked into this as much.
drhagen 6y ago
> A first indication of this is seen in Figure 1a which shows a kernel density estimate of the distribution of productive assets pooling all wealth classes. The distribution is bimodal, with a mass of households around 0.25 and 6.5, and hardly anyone in between. This is an important result in understanding how to get people out of poverty in undeveloped countries, but I suspect it won't translate well to industrialized countries like many in the comments are suggesting. The key result seems to be dependent on the bimodal wealth distribution. (Giving a cow to someone in the lower bucket was enough to push her into the next bucket.) Income distributions from industrialized countries look like the cleanest log normal distributions you've ever seen, so there just isn't evidence of a great repulser in higher income countries that you could push poor people over like they do in this study. Caveat: They imply that income and consumption are bimodal, but never plot them, only wealth. Wealth is notoriously hard to measure, and I can only find good histograms of income for the USA. Income and wealth should track each other, at least over a log scale, but I am not comparing exactly the same thing.
k__ 6y ago
Adult education is shit for poor people and many people had enough of education when getting out of school/university. We need to show people that life long learning can be fun and we have to make it affordable. Even in Germany, were studying is essentially free, poor people have to stay in bad jobs because they couldn't afford to pay their rent when getting a degree.
deleted 6y ago
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jasonclaiid 6y ago
For those that believe people are poor because they did not work hard, I am curious what importance you attribute parenting to the outcomes of children? Every parent I know invests a significant amount of time and often money in raising their children, and there is a significant amount of empirical evidence that parents play a significant role in how children develop. Do you simply believe the evidence to the contrary? It does exist, I am aware. It often seems to measure obviously superficial interventions, in my opinion, but I understand the debate. What is the level of parenting beyond which there is no additional return in terms of economic outcome? Because from what I understand, parents play a significant role in not only cognitive development (reading at an early age, for example) but also in terms of setting expectations for their children.
- sanxiyn 6y ago
  > There is a significant amount of empirical evidence that parents play a significant role in how children develop. I would like to see this. As I understand, Judith Harris wrote The Nurture Assumption in 1998, and it still stands.
MarkMc 6y ago
Here's interesting observation by by Nobel prize-winners Abhijit Banerjee, Esther Duflo: "We have already seen, in the previous chapter, another example of people who had lucrative opportunities to save but did not use them: the fruit vendors from Chennai, who borrowed about 1,000 rupees ($45.75 USD PPP) each morning at the rate of 4.69 percent per day. Suppose that the vendors decided to drink two fewer cups of tea for three days. This would save them 5 rupees a day, which could be used to cut down on the amount they would have to borrow. After the first day with less tea, they would have to borrow 5 rupees less. This means that at the end of the second day, they would have to repay 5.23 rupees less (the 5 rupees they did not borrow, plus 23 paisas in interest), which, when added to the 5 rupees they saved that second day by again drinking less tea, would allow them to borrow 10.23 rupees less. By the same logic, by the fourth day, they would have 15.71 rupees that they could use for buying fruit instead of borrowing. Now, say they go back to drinking their two cups more tea but continue to plough the 15.71 rupees they had saved from three days of not drinking so much tea back into the business (that is, borrowing that much less). That accumulated amount continues to grow (just as the 10 rupees had turned into 10.71 after two days) and after exactly ninety days, they would be completely debt-free. They would save 40 rupees a day, which is the equivalent of about half a day’s wages. All just for the price of six cups of tea! The point is that these vendors are sitting under what appears to be as close to a money tree as we are likely to find anywhere. Why don’t they shake it a bit more?" From "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty" https://www.amazon.com.au/Poor-Economics-Radical-Rethinking-Poverty/dp/1610390938 https://www.amazon.com.au/Poor-Economics-Radical-Rethinking-...
- bonoboTP 6y ago
  Two complicating aspects I just randomly thought up: - the money lending business may not like the fact that their clients are becoming self sufficient and may increase the interest rate to punish such attempts - crabs in a bucket phenomenon. Not every culture is like the US. In many places it's considered a bad thing to stick out from your environment, family, neighborhood etc. and in poverty you need the goodwill of those people. If you go the risky route, people may hate you, envy you, think you are crazy, selfish, etc.

96 points by SQL2219 6y ago

I've been poor all my life, the thought of having money laying around scares me, I should invest, but giving it away like that scares me even more. I'm moving next week and part of my reserves will be gone, and weirdly enough I'm relieved that someone else will take care of it. I don't feel fit to handle it.

padolsey 6y ago

These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive, bleeding into our corporate performance reviews and our pro-diversity efforts ("we hire only according to merit" <signed, Diversity Manager>). But it is so internally irrational. I'm reminded of this argument: > The case against meritocracy can be put psychologically: (a) The abolition of materialist-elitist values is a prerequisite for the abolition of inequality and privilege; (b) the persistence of materialist-elitist values is a prerequisite for class stratification based on wealth and status; (c) therefore, a class-stratified meritocracy is impossible. > The case against meritocracy can also be put sociologically: (a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible. Source: https://statmodeling.stat.columbia.edu/2007/12/04/meritocracy_won/ https://statmodeling.stat.columbia.edu/2007/12/04/meritocrac... The idea that "innate" merit should be rewarded (this underlies what we consider meritocracy) is fundamentally a noncontinuable state. Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.

Mauricebranagh 6y ago
When "meritocracy" was defined it was not used as an example of a good thing :-)
auggierose 6y ago
I don't see why you need a) and b) here. A class-stratified meritocracy being impossible is pretty much a tautology in itself.
refurb 6y ago
"These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA)" "Evidence on Poverty Traps from Rural Bangladesh" - are you suggesting the situation in rural Bangladesh is applicable to Silicon Valley?
- buran77 6y ago
  Why wouldn't it? In the end this is a people problem, not a tech problem. And both Silicon Valley and Bangladesh have some form of "local" meritocracy. Meritocracy applied and working within your stratum but not across the boundaries. Whether you're poor or in a lower caste you still get some form of meritocracy within your group to keep you content and motivated. But crossing the boundary to the next level, while not impossible, is designed to be highly unlikely because people in all layers like the security those boundaries provide them.
  - refurb 6y ago
    You don't think things like access to education, medical care, clean water, nutritious food, vaccinations, quality public schools, subsidized colleges, rule of law, minimal corruption, limited impact of religious identify, avaiable reliable housing might have an impact on the outcomes?
    - buran77 6y ago
      That's... absolutely not what I said, or implied. Access to all of that is the boundary between the layers. People in layer n will make sure people in layer n-1 are missing at least one thing so they can't compete on equal footing. People in layer n+1 will do the same to people in layer n. If you don't have access to schooling and someone else does then that's something that will make you always start with a handicap when competing with them. The boundary, whether education or medical services, is there so one layer feels safe from the inferior one. People want it there even if this means they start off with a handicap compared to the superior layer. Most people are more afraid of losing what they have than they are keen on winning something they don't already have.
solatic 6y ago
Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force). The problem's roots are when the distribution of rewards becomes hereditary, that the children of the wealthy have near-guaranteed access to the best educational and social institutions, have near-guaranteed access to startup capital (i.e. from their parents), are usually provided with necessities (food, housing, clothing, incidentals) at no out-of-pocket cost by their parents for a considerable portion of their early adult lives, etc. It is the hereditary nature of wealth which is the largest contributor to long-term inequality.
- sul_tasto 6y ago
  Are you suggesting that we separate children from their parents?
  - Dumbdo 6y ago
    Interesting strawman. There are a lot of other ways to control inheritance than separating children from their parents.
    - dexterdog 6y ago
      Name one way that does not involve theft of property.
      - thundergolfer 6y ago
        Before we start naming ways, are you somebody who thinks taxation is theft?
        dexterdog 6y ago
        Are you somebody who can prove that it is anything but?
    - AnIdiotOnTheNet 6y ago
      Not really, because as mentioned the mere fact that the children have access to their parent's wealth while they are growing up already confers significant advantage.
travisoneill1 6y ago
The end of your comment seems to imply that meritocracy is intended to generate equality, but actually it's intended to do the opposite.
sul_tasto 6y ago
“ Above all we need to focus on delivering opportunity via improved circumstances and empowerment, irrespective of merit or success: that is the only path to actual equality.” Please consider that you are advocating for communism. I hope you will consider reviewing the histories of China and the USSR, et al. after World War 2. The critique and solution you offer do not lead to “actual equality.”
- nvarsj 6y ago
  That’s a ridiculous equivalency. You can provide high quality education to all without USSR style communism. In fact I’d argue the long term success of a capitalist system relies on it.
  - sokoloff 6y ago
    I’m not so sure about “high-quality” being possible for all. “Reasonable quality” I’d agree with, but truly high-quality education is incredibly labor and resource intensive to provide as it must be tailored to the student to a significant degree.
  - sul_tasto 6y ago
    In my experience, providing “a high quality education for all” just isn’t possible, because it’s dependent upon what caliber of students are in the classroom. Stipulating an equal distribution of ability levels doesn’t raise all boats, it drags the most capable students down. What I don’t understand is why it’s often considered acceptable to disregard the needs of strong students. Don’t they also have a right to be challenged in the classroom?
    - ModernMech 6y ago
      In my experience education has been defunded for decades while wealth inequality has been exacerbated. One only has to look at the fact that the inheritance tax is indexed to inflation, while the minimum wage and teacher expense deduction aren't to understand where our national priorities are. I'm not willing to say "a high quality education for all just isn’t possible" until we've invested equivalent resources into education as waging war. Imagine if our education budget was $700 billion annually. What could be possible?
fartcannon 6y ago
So, how do you decide who gets the rewards? Assuming not everyone can have every job/house/life. Do you tell the people who get the rewards that they were given a chance at random (compared to their neighbor who was not) or do you let them believe they earned it? For the record, I agree that merit is a bad system. Im curious to explore the ramifications of doing away with the system and how it would be different, if at all, from the current system. For example, in a post-scarcity society, everyone has what they need, but some houses still have nicer views than others.
- deleted 6y ago
  [deleted]
AsyncAwait 6y ago
I suspect many who believe in meritocracy are already successful people who like to tell themselves they got there by merely being so much smarter than everyone else around them, dismissing the access, luck, (i.e. quality of schools they were born near), family wealth etc. almost entirely as a factor.
- sanxiyn 6y ago
  I am not sure how getting there by being smarter is any better. It's not like anyone spent any effort to be smart, it's just genetic lottery.
  - Dirlewanger 6y ago
    How is "being smart" a genetic lottery? Are you serious? That brings up all sorts of implications with race and whatnot. "Being smart" is often a proxy for the things the GP mentions: strong stable family, access to good schooling, and a sprinkle of luck.
    - sanxiyn 6y ago
      Heritability of IQ is >50%, and IQ is a good measure of smartness.
      - afuchs 6y ago
        The previous comment's argument appears to be that heritability of "being smart" is not strictly limited to genetic factors, that measures of "smartness" such as an IQ score also measure other factors that are not strictly related to genetics
      - PeterisP 6y ago
        Heritability and genetic factors are overlapping but distinct things - for example, socioeconomic status influences many aspects, is hereditary but not genetic.
        6y ago
throwaway8085 6y ago
Anecdata that agrees with you follows. Meritocracy is still a factor but the bar is currently very low. My own father came out of the impoverishment of war torn Bangladesh to be a successful real estate developer in the west. Why did his elder brother not have the same results? Very simple: the elder brother was responsible for the family. The family has rewarded the elder brother by taking care of him for years now and he is the happiest old man I know. He will die satisfied. The truth that no one wants to admit is that we have to put (very minimal) resources behind the youth to become independent of their families so they can grow. For all his faults, my father understood this for everyone except me (long story) and funded the education of a few people back home. For two boys I'm aware of, that was about $5-7K/year. The two boys lived in a one room shack that routinely got flooded. One is now an accountant, the other is a working chef. Trust me, neither of them are particularly smart. What's needed is so minimal but the problem we have is too much grifting occurs. Levels and levels of middleman bullshit. I would start experimenting with Kiva-style microloans if you want to make a difference, tbh.
- inglor_cz 6y ago
  My wife did her bachelor thesis on Grameen bank, Muhammad Yunus and microfinancing. That was like 2009. Is microfinancing still a thing in Bangladesh? What are the effects since then?
theelous3 6y ago
This is all well and good to argue around a very literal meritocracy, but I don't think anyone actually argues for this. It's not just "lol, 1 - 1 = 0, meritocracy is impossible". The underlying principal, as I understand it, is that it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company, or a farmer. Yet zuck is compensated as such. We can recognize the "unique" value facebook creates by giving unique compensation, but should that compensation really be x1m times more than the farmer? Reworking wealth distribution is the goal - not rewarding everyone equally for everything in some meme level paradox.
- donatj 6y ago
  > it's unreasonable to think for example, that mark zuck literally does millions of time more work than say, a senior software dev at a middle size company Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor. A well connected person can bring many many times the value to a company of someone without connections. The right strong personality can be a performance amplifier for the rest of the company, Steve Jobs can be argued to be an example of that. The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value.
  - theelous3 6y ago
    > Careful not to confuse work and value. Sheer labor is worth minimum wage, the value of someone is far more than their hourly labor. I am. It's not me being careless. We reward both by the same means - money. Not my fault it's this way. I think it's perfectly reasonable of me to work from the means of compensation outwards, when making comparisons. > The long and short of it though is a person who makes the people beneath themselves work more valuable is worth that added value, and arguably deserves a proportional portion of said added value. In my opinion, this is nothing more than business based, pyramid scheme level, cult-like thinking. I'm a well paid webdev. The company is fairly flat, there are only two distinct levels above me - engineering management, and founder-ceo(s). My day to day work is designing and building out random systems, and handling tech debt. I would be doing this in a vacuum too, and to the same standard. The personality and input of the ceo has little to no bearing on my performance. Me and my team would perform equally well under any given non-maniac. CEOs are not like, high level gods or something. They aren't remotely as rare a set of personality traits as the voodoo-thinking of SV seems to think. C-tier management is not literally multiplying my output. Sensible feature requests from users and sensible filtering by product managers has ten times the impact that C-tier has on my work. > deserves a proportional [...] > Steve Jobs can be argued to be an example of that The resignation and subsequent death of Jobs had, in the macro perspective of apple's stock prices, literally no impact on the value of the company. Apple stock is currently over x10 what it was when he was there. An essentially infinite number of things took place that were far more important than Job's personality, which lead to the success of apple. He was more like a train driver railing down the tracks than some maverick cutting through the jungle. At least Bill Gates has the introspection to realise this. General luck, and luck of timing is what generated nearly all of that value, and the rest was generated by labour. Somewhere in there is some ephemeral and unquantifiable sliver of value coming from the specific personality of the founders / ceos. So, what proportion do we dole out? Who do we compensate for luck? For all of the endless work done before that wasn't compensated to the moon but was absolutely required for this moon-level capital generation? It's all too up in the air to try and rationalise that CEOs should earn one million times what a farmer earns and think that makes any kind of sense at all. Think of all of the wealth, (generational too) that came from equally traited men setting out for oil. Literal random chance would go on to create mega-empires that have lasted a hundred years. Our current system of compensation, is pretty close to being nothing more than a load of bollocks, when it comes to this kind of thing.
orange_tee 6y ago
You are so focused on economic inequality that you ignore the greater picture: there will still be a hierarchy. There will still be humans dominating other humans and asserting themselves above them. Maybe in the far future humans will create a social technology to live in true equality but in the immediate future this is clearly not happening. As long as there is a hierarchy, you cannot really have equality, sorry. You make humans more economically equal and you create an even worse situation where human hierarchy is based on family name, connections, genetics or just plain violence and social mobility would be even worse than it is now, where it is dictated by income and wealth. Also your definition of meritocracy is contentious. For example you are saying, it is not meritocratic that a boy does not achieve his maximum potential because his parents could not afford to give him the best opportunities. But what if instead of comparing just one generation, we compare two or three? What if we compare their grandparents and their parents? Maybe the grandparents of the poor boy were better off but for whatever reason the wealth did not tickle down in sufficient quantities. Whereas maybe a boy who is richer today had poorer grandparents who worked really hard to make sure their grandchildren had the best opportunities. That looks like meritocracy to me.
- jasonclaid 6y ago
  It is not the existence of hierarchy that is the problem. It is the type of hierarchy and the effects of that hierarchy. The parent and the study argue that we should give greater resources to those with the least resources in such a way as to broaden access to opportunities. You can argue that is not worth the expense (it costs X to produce Y outcome and redistributing X would lead to negative impact Z. Y + Z results in a net loss to society). But it seems hard to argue that inequality or hierarchy is inevitable so we should not even try to ameliorate the negative effects of that structure or imagine different ones. To me, the “inequality inevitable” mindset seems like a frequent way those who benefited from the existing system rationalize not sacrificing anything to help less fortunate people. I am very sympathetic to arguments that redistribution is not effective, but the debate should be about what is or is not effective. “Inequality inevitable” sidesteps that and asks that we just give up before even trying or imagining different possibilities because we’ve failed in the past. It is hard to not see such arguments as a misguided effort to rationalize one’s self interest.
danieltillett 6y ago
That is not what meritocracy is - it is rule by the cognitive gifted. The argument for meritocracy is that meritocratic societies (and by extension businesses) kick the butts of all others. It might not be fair, but it works better than all the other alternatives.
wffurr 6y ago
"It's always puzzled me that this idea of meritocracy," Nothing puzzling about it. It's a "just so" story designed to make successful people feel good and justified about their success.
PragmaticPulp 6y ago
> It's always puzzled me that this idea of meritocracy, especially in tech (notably USA), is so pervasive, This study looks at some of the poorest villages in Bangladesh with some additional data from other very poor countries. Anyone who even has a shot at applying to a USA tech company is already wildly more wealthy than the type of poverty discussed in this study. In fact, they’d be firmly past the threshold the study identified as the minimum wealth necessary to engage with wealth-building jobs. The conclusions don’t really apply at all to situations like a US tech company, unless you’re trying to understand why homeless people living on the streets aren’t able to get jobs at an Amazon warehouse or other entry-level jobs. Trying to project this on to hiring practices of educated candidates into high paying tech jobs is ignoring the core focus of the study.
tremon 6y ago
(a) Allocating rewards irrespective of merit is a prerequisite for meritocracy, otherwise environments cannot be equalized; (b) allocating rewards according to merit is a prerequisite for meritocracy, otherwise people cannot be stratified by wealth and status; (c) therefore, a class-stratified meritocracy is impossible. This is a disingenuous argument. (a) and (b) are not talking about the same kind of rewards: (a) : when talking about the equalization of environments, the "rewards" are allocated to areas and groups of people, not to individuals. (b) : the stratification of wealth is talking about "rewards" to individual people. These two concepts are not the same, the mechanisms are not the same, and the justification for them is not the same. They're only grouped together as "rewards" so they lead to the false conclusion (c).
waihtis 6y ago
Why is absolute equality a more desirable state than the merit-based system now in place?
- mehphp 6y ago
  I'm not suggesting we should have absolute equality but is system we have in place really merit-based? Last I checked, about a fourth of millionaires inherited their wealth and the vast majority had the opportunity to become wealthy due to factors completely out of their control (where they were born, to whom they were born and natural cognitive abilities).
dcolkitt 6y ago
> These conclusions seem to spit in the face of "meritocracy". It's always puzzled me that this idea of meritocracy, especially in tech (notably USA) Just to be clear this paper’s about peasants in Bangladesh.
oytis 6y ago
> "we hire only according to merit" <signed, Diversity Manager> What you would consider a better policy? Hiring according to a fair dice roll?
viraptor 6y ago
> "we hire only according to merit" <signed, Diversity Manager> There doesn't have to be anything contradictory here. Diversity efforts can work to offset biases and enable getting closer to meritocracy. For example hiring the best in your network coming from a high-class university doesn't mean you're hiring the best overall. The diversity effort may be for example to make sure that the job offer is visible to the brilliant person who wouldn't even find it otherwise. Or it may be an effort to ensure a less biased review (masking names?) Or it's making sure that people do behave well internally, so the company isn't avoided by the best people for hiring racist assholes for example.
bonoboTP 6y ago
It's not just about "rewarding", or giving out high paying position to who we want to. There are real and difficult things to do in the world that some other people need. They (employers, clients, customers) decide that this work is so important to them that they exchange money for it. Then the person can use that earned money to improve their life. For example if a top surgeon flies to a different country to do a difficult operation, I'd want them to be able to enjoy a relaxing VIP lounge, bigger legroom and direct taxi. Rather than flying low cost and standing in the bus for 3 times longer than the taxi ride. We want to allocate resources to people who accomplish important things for us. Not just as reward or motivation, but in our own interest, we invest in the most capable and competent to have more of our stuff taken care of. Jobs aren't just about sitting in a chair and taking cash and we just pick who gets to sit in which chair to enjoy that cash. It's doing things. And we want those things to be done well. This is the idea behind meritocracy. Not that we praise people for their genetics. I'm not saying this is how it works currently, just that this is what we mean by meritocracy that we should move toward.
- ModernMech 6y ago
  Agree with everything you said on the surface. Sounds reasonable. Of course we want the surgeon to be prepared for his job. It's important. But then there are those in this thread arguing that Elon Musk's reward should be unlimited because he's "arguably ensuring the long-term survivability of our species." Wow, that sounds very important. I guess he should have the most money then. Nevermind the fact that the majority of his wealth is literally gained by "sitting in a chair and taking cash". That's the job of a capitalist after all - they don't work for their money, they sit in a chair and let the ownership of assets make them money. I mean, sure he's "doing things" but are the things he's doing worth $140 billion? What has he "done" in the last 9 months that made him $88 billion richer? Is the planet saved yet?
  - bonoboTP 6y ago
    I think inheritance and unchecked wealth accumulation work against meritocracy actually. There are things that make people more efficient as a homo sapiens and we want them to enjoy those things and not to worry and stress various annoyances so they can concentrate on what they are best at. But as you say it's obviously not like that for CEOs of big companies. Just because Bill Gates was good at selling software doesn't mean he should hold this immense power in the world and decide how to allocate resources between vaccines and cancer research etc. It has nothing to do with his meritocratic expertise (of course he pays his own experts, but he does maintain the high level control). Some would argue that this value was all created as additional value by him via the efficiencies enabled by the software and that it wasn't merely captured out of existing value. It's obviously a combination, but based on ideology people estimate it differently. We know that rent seeking and dark pattern business practices exist, as do lobbying and other forms of corruption. The billionaire examples aren't examples of meritocracy but of rewarding luck. Nobody would say that as a human Elon Musk is literally that much more competent than, say, the best senior engineer at Tesla. But also, beyond a certain point rich people aren't people any more, more like institutions. They just channel that wealth in different directions, they cannot "enjoy" a significant potion of it as a human being. All that money gets rotated back into salaries of others, else it would remain just numbers in databases. It cannot meaningfully accumulate. Just like if you burn a bag of cash, you induce minuscule inflation effects and everybody else's money increases in value a little bit. If a billionaire sits on his cash, it's as if he didn't have it. But when he uses it, he pays salaries and makes people do stuff. The problem is when this stuff is "the wrong thing". I think the main argument against billionaire power is that the distributed wisdom of crowds and markets are better at allocation and deciding what's worth doing than centralizing it without limit. It's good to centralize it as long as it's about merit and related to expertise or capacity, but not beyond that. Billionaires are way beyond human scale regarding that.
deleted 6y ago
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sokoloff 6y ago
I don't think that "innate" merit should be rewarded. I think that applied merit should be. You could be the smartest, most capable person in the world, but if you won't work to apply that, you're useless to me and the world. If you do apply it effectively, you are likely to be rewarded for that, which seems eminently reasonable.
908B64B197 6y ago
If there's someone with "Diversity Manager" anywhere near hiring at a company it means it has deep issues.
andi999 6y ago
Wasnt the study performed in Bangladesh? Since when is Bangladesh considered a meritocracy?

abhinav22 6y ago

For those who want a TL;DR, below is an extract of the summary. I think they did a good job, the article was well written. Poverty traps are one of the most fundamental concepts in development economics. The contri- bution of this paper has been to provide evidence for their existence using the combination of a randomized asset transfer and an 11 year follow up in rural Bangladesh. Our key finding is that people stay poor because they lack opportunity. It is not their intrinsic characteristics that trap people in poverty but rather their circumstances. This has three implications for how we think about development policy. The first is that big pushes that enable occupational change will be needed to address the global mass poverty problem. Small pushes will work to elevate consumption but will not get people out of the poverty trap. The magnitude of the transfer needed to achieve occupational change may be much larger than is typical with current interventions though importantly it can be time limited. Therefore the fiscal cost of permanently getting people out of poverty through a large, time limited transfer might actually be lower than relying on continual transfers that raise consumption but have no effect on the occupations of the poor. The second is that big push policies can have long-lasting effects. Our analysis of long-run dynamics indicates that the asset, occupation and consumption trajectories of above threshold beneficiaries diverge from those of below threshold beneficiaries over time. This finding is impor- tant as it indicates that, by engendering occupational change, one time pushes can have permanent effects. The third is that poverty traps create mismatches between talent and jobs. We have shown that misallocation of labor is rife amongst the poor in rural Bangladesh. Indeed, we show that the vast majority of the poor in rural Bangladesh are not engaged in the occupations where they would be most productive. They are perfectly capable of taking on the occupations of the richer women but are constrained from doing so by a lack of resources. The value of eliminating misallocation is an order of magnitude larger than the cost of moving all the beneficiaries past the threshold. This is important as it implies that poverty traps are preventing people from making full use of their abilities and indeed it is the mass squandering of people’s abilities that is the key tragedy of mass poverty.

sul_tasto 6y ago
If only there was some person or some group to realign society and correctly place everyone according to ability.

danishdev 6y ago

It's worth mentioning that poverty is highly inheritable. You could eliminate world poverty by being more selective with reproduction choices.

mahathu 6y ago

Poor people should just sell some of their stock options or properties.

deleted 6y ago

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phatty 6y ago

1971?

travisoneill1 6y ago

> We find that in the absence of credit constraints only 2% of households would be best off doing wage labor, while 97% of households are exclusively reliant such work at baseline. Conversely, only 1% work in livestock when 90% would do so if they had access to the same asset wealth as the middle and upper classes. Overall, this implies that 96% of households are forced to misallocate their labor. So the authors suggest that currently 1% of the labor pool is working in livestock, but an optimal allocation would be 90% of the labor pool? Ridiculous.

PragmaticPulp 6y ago
This study primarily focused on rural poor in Bangladesh. Trying to project the conclusions on to relatively wealthy (on a global scale) societies like the United States isn’t going to make much sense.
bmcn2020 6y ago
I don't think that's what it said. It's not a recommendation, just a summary: 1% do it now, but 90% would do it if they had the chance.
howlgarnish 6y ago
No, the authors are debunking the popular theory that poor people are poor because they don't have the skills/gumption needed to not be poor. Turns out that when you give them a productive asset (a cow) that lets them be not-poor, they're perfectly capable of staying not-poor.

ransom1538 6y ago

In the US: "graduate from high school; get a full-time job; don’t have a child before age 21 and get married before childbearing", this gives you %75 chance of being middle class, about %89 chance of not being poor. This isn't good enough, but seems possible! https://www.vox.com/2015/7/24/9027195/haskins-sawhill-norms-marriage https://www.vox.com/2015/7/24/9027195/haskins-sawhill-norms-...

st1x7 6y ago
> this gives you %75 chance of being middle class, about %90 chance of not being poor It doesn't. Those numbers are descriptive, not prescriptive. You're basically giving the advice to be more middle-class in order to be more middle-class.
- PragmaticPulp 6y ago
  The conclusion of this study is that people above a certain wealth threshold are able to accumulate wealth while those below a certain wealth threshold cannot. The authors argue that sufficiently large, time-limited assistance to these people can bump them over the threshold to where they can start accumulating wealth. Note that this study was about rural villagers in Bangladesh and other such extremely impoverished populations, so stretching the conclusions to middle class people in the US is an extreme abuse of the study conclusions. However, it’s not hard to imagine that giving similar time-limited boosts to people such as funding free public college opportunities could help more people achieve the middle-class stability noted above. However, it’s clearly not entirely a matter of external intervention. Some of the life choices require active participation of the people involved, such as choosing to delay having children (in conjunction with good access to birth control and reproductive education) and choosing to engage in the educational opportunities available to them.
- deleted 6y ago
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- augustk 6y ago
  Exactly, social class is bred in childhood. It's really the children or grandchildren of a given person who can enter a different class. http://willskinner.com/class.html http://willskinner.com/class.html

lazyjones 6y ago

These conclusions apply to the third world, not the rest of us. Here in Europe for example, anyone can study and become an entrepreneur (I did it, with pretty much 0 wealth in the family).

mehphp 6y ago
Does this mean that poverty, in the first world at least, is a solved problem and being poor is a choice for those remaining in poverty?
- lazyjones 6y ago
  No, obviously some people are forced to stay poor by special circumstances, but in many cases it's just life choices (trade-offs) or ignorance.
- rtx 6y ago
  Many people don't like to work hard, and that's alight.
- bonoboTP 6y ago
  Depending on what you mean by poverty, mostly yes for Western and Norther Europe if you do not count immigrants, who are in a more special situation. The unemployment benefit is usually enough to cover material living costs and to have all the basics, like shelter, food in a fridge, electricity, running water, even entertainment like TV, phone, computer. People have vastly different understandings of poverty and if you define it relative to the median income, you will by definition always have poverty.
dsego 6y ago
> anyone can study and become an entrepreneur Let's say I want to become a doctor and not an entrepreneur?
- PeterisP 6y ago
  Sure, if you're diligent enough, there's nothing stopping you, there's no wealth barrier - studying medicine is a reasonable option for students from poor families. Is it not the case in USA? I have read about doctors coming out of med school with lots of debt, but I had presumed that these loans are reasonably available and would not prevent someone from a poor family from studying there.

PragmaticPulp 6y ago

Please note that this study is in the context of extreme poverty in populations such as rural villages in Bangladesh. It’s an interesting study and worth reading if you’re interested in what it takes to lift these populations out of poverty. The authors propose that their extreme poverty is a meta-stable state that prevents them from accessing wealth-building opportunities. The authors show that time-limited wealth transfers of sufficiently large size can help these people escape the meta-stable poverty state and transition into a wealth-accumulating state. However, the comments here rushing to project the conclusions on to the relatively wealthy (on a global scale) citizens of countries like the US and Europe are abusing the study’s conclusions. Similar wealth traps may exist in these countries, but the relative thresholds would be akin to a homeless person living on the streets trying to secure a job. Attempts to project these study results on to things like hiring practices at big tech companies, where anyone able to apply at all is already orders of magnitude more wealthy and privileged than the subjects of this study, are missing the point entirely.

nabla9 6y ago
For developed nations there are many other studies. As a starting point, here is infographic: https://www.visualcapitalist.com/ranked-the-social-mobility-of-82-countries/ https://www.visualcapitalist.com/ranked-the-social-mobility-... Countries in the top 20 are "The Lands of Opportunity" where family background matters less compared to 21-40. Cheap, high quality education, healthcare, and inclusive institutions matter.
maire 6y ago
I had the same reaction - Silicon Valley is not Bangladesh. I am moving my comment below to you. Hans Rosling (RIP) did a great job of defining poverty and visualizing the changing nature of poverty. His area of focus was on child mortality - so it tended to focus on the mothers since they have the greatest impact on this statistic. Later he focused on other areas. Sanitation, water, transportation etc. https://www.gapminder.org/dollar-street/?countries=bd https://www.gapminder.org/dollar-street/?countries=bd At the Bangladesh level of poverty, a productive asset is a goat that produces milk. The Heifer Project is doing useful work in giving low income families productive assets. https://www.heifer.org/ https://www.heifer.org/ Finally there is the whole world of micro loans. I have not looked into this as much.

drhagen 6y ago

> A first indication of this is seen in Figure 1a which shows a kernel density estimate of the distribution of productive assets pooling all wealth classes. The distribution is bimodal, with a mass of households around 0.25 and 6.5, and hardly anyone in between. This is an important result in understanding how to get people out of poverty in undeveloped countries, but I suspect it won't translate well to industrialized countries like many in the comments are suggesting. The key result seems to be dependent on the bimodal wealth distribution. (Giving a cow to someone in the lower bucket was enough to push her into the next bucket.) Income distributions from industrialized countries look like the cleanest log normal distributions you've ever seen, so there just isn't evidence of a great repulser in higher income countries that you could push poor people over like they do in this study. Caveat: They imply that income and consumption are bimodal, but never plot them, only wealth. Wealth is notoriously hard to measure, and I can only find good histograms of income for the USA. Income and wealth should track each other, at least over a log scale, but I am not comparing exactly the same thing.

k__ 6y ago

Adult education is shit for poor people and many people had enough of education when getting out of school/university. We need to show people that life long learning can be fun and we have to make it affordable. Even in Germany, were studying is essentially free, poor people have to stay in bad jobs because they couldn't afford to pay their rent when getting a degree.

deleted 6y ago

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jasonclaiid 6y ago

For those that believe people are poor because they did not work hard, I am curious what importance you attribute parenting to the outcomes of children? Every parent I know invests a significant amount of time and often money in raising their children, and there is a significant amount of empirical evidence that parents play a significant role in how children develop. Do you simply believe the evidence to the contrary? It does exist, I am aware. It often seems to measure obviously superficial interventions, in my opinion, but I understand the debate. What is the level of parenting beyond which there is no additional return in terms of economic outcome? Because from what I understand, parents play a significant role in not only cognitive development (reading at an early age, for example) but also in terms of setting expectations for their children.

sanxiyn 6y ago
> There is a significant amount of empirical evidence that parents play a significant role in how children develop. I would like to see this. As I understand, Judith Harris wrote The Nurture Assumption in 1998, and it still stands.

MarkMc 6y ago

Here's interesting observation by by Nobel prize-winners Abhijit Banerjee, Esther Duflo: "We have already seen, in the previous chapter, another example of people who had lucrative opportunities to save but did not use them: the fruit vendors from Chennai, who borrowed about 1,000 rupees ($45.75 USD PPP) each morning at the rate of 4.69 percent per day. Suppose that the vendors decided to drink two fewer cups of tea for three days. This would save them 5 rupees a day, which could be used to cut down on the amount they would have to borrow. After the first day with less tea, they would have to borrow 5 rupees less. This means that at the end of the second day, they would have to repay 5.23 rupees less (the 5 rupees they did not borrow, plus 23 paisas in interest), which, when added to the 5 rupees they saved that second day by again drinking less tea, would allow them to borrow 10.23 rupees less. By the same logic, by the fourth day, they would have 15.71 rupees that they could use for buying fruit instead of borrowing. Now, say they go back to drinking their two cups more tea but continue to plough the 15.71 rupees they had saved from three days of not drinking so much tea back into the business (that is, borrowing that much less). That accumulated amount continues to grow (just as the 10 rupees had turned into 10.71 after two days) and after exactly ninety days, they would be completely debt-free. They would save 40 rupees a day, which is the equivalent of about half a day’s wages. All just for the price of six cups of tea! The point is that these vendors are sitting under what appears to be as close to a money tree as we are likely to find anywhere. Why don’t they shake it a bit more?" From "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty" https://www.amazon.com.au/Poor-Economics-Radical-Rethinking-Poverty/dp/1610390938 https://www.amazon.com.au/Poor-Economics-Radical-Rethinking-...

bonoboTP 6y ago
Two complicating aspects I just randomly thought up: - the money lending business may not like the fact that their clients are becoming self sufficient and may increase the interest rate to punish such attempts - crabs in a bucket phenomenon. Not every culture is like the US. In many places it's considered a bad thing to stick out from your environment, family, neighborhood etc. and in poverty you need the goodwill of those people. If you go the risky route, people may hate you, envy you, think you are crazy, selfish, etc.