If you’ve ever spent time looking after young children, then you know that they seem to have an innate sense of fairness. If they are playing in a group, then it’s only a matter of time before someone shouts “Hey – that’s not fair!“. As we grow older, and despite our collective efforts at creating a kind, just and egalitarian society, we are still falling short of our goal. So what’s happening?
Fairness vs. Equality
First, let’s compare fairness with equality. They are not the same thing, and one should not be confused with the other.
The fall of 2011 saw the emergence of the Occupy Movement, characterized by protests in major cities across North America and around the world. Hundreds of protesters in their 20s were marching against social and economic inequality. The message I gleaned from this movement was that the marchers were bitter because people in their 50s and 60s – who have spent 30+ years working full-time and saving prudently – have more money than they do, and are generally living more comfortably. For some inexplicable reason, they feel that they – fresh out of university (or even high school) – should be doing as well financially as someone who has been in the workforce for two or three decades. There is certainly a financial disparity between these two generations of workers, but it’s not unfair.
As a personal example, I attended a local university, and used public transit to get to class, as did many of my fellow students (who weren’t living in residence). There were some who were able to borrow their parents’ car from time to time, but there were also a few who had their own car. How could an 18-year-old afford a car? Most of us had only a part-time, retail job that paid minimum wage, and whatever e earned went toward tuition. As you’ve already guessed by now, they had rich parents who bought them their own car so that they wouldn’t have to take the bus to university.
There will always be inequality in just about every aspect of your life. In fact, this inequality, manifested as the material rewards for years of hard work, can even be motivational… but that’s a topic for another blog post.
The Motivational Myth of the Meritocracy
Growing up, particularly in the age of social media, we are inundated promises of a meritocracy – a society where power is held by individuals who possess talent and a strong work ethic, and one in which gender, race and wealth are unimportant. Advancement in a meritocracy is based on continual effort and hard work, rather than business connections or family ties. Naturally, this appeals to everyone; unfettered upward mobility is one of the tenets of the American Dream. However, as we grow into adulthood, we begin to see an increasing number of examples that suggest that this is not always the case.
The Matthew Effect
“To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable.” – Edgar Bronfman Sr.
The term The Matthew Effect was coined in 1968 by a sociologist named Robert K. Merton. It originates from the Bible, in Matthew 25:29 “For to everyone who has will more be given, and he will have an abundance. But from the one who has not, even what he has will be taken away.” (English Standard Version).
Merton originally connected it to academic work, arguing that well-known researchers will often receive more credit for their work than lesser-known ones. If a prize is awarded, it will go to the most eminent scientist on a team, even if the bulk of the work was done by others. However, The Matthew Effect extends far beyond academia.
Admittedly, the argument that “those who have will receive even more” does, at first, seem counter-intuitive. Most of us donate to one or more charities, and our money goes to those who need it most. We would never donate to people who are extremely well-off. Or would we? In practice, though, that’s exactly what we do, and to some extent, that’s how our society is structured.
Take a look around you, and you’ll see many examples of how society reinforces The Matthew Effect, and ensures that those who already have, continue to receive more, while ensuring that those who don’t are punished.
Payday Loan Companies: If your financial circumstances prevent you from opening a bank account, or if your credit score prevents you from qualifying for a loan, you may be forced to use the services of a payday loan company. They provide short-term loans to people living paycheque-to-paycheque, but they also charge exorbitant interest rates. TV commentator John Oliver broadcast a segment on payday loan companies and how they take advantage of those who can least afford it.
Minimum Balance Service Charges: Banks are notorious for this. If you open an account and deposit a modest amount of money, then you’ll have to pay a monthly service fee. However, if you reach a certain minimum balance, then that fee is usually waived.
Here is a typical example. I’ve pixellated the information that identifies this bank, but it doesn’t really matter – most banks will waive service charges and monthly fees if your balance is high enough.
GIC Rates: It’s no secret that the more money you deposit, the more interest you will earn. People who can afford to buy a $1 million GIC will earn an annual rate of 1.35% instead of 0.90%, which is a 50% greater return.
The Oscar Swag Bag: Actors and actresses who are nominated for an Academy Award receive a bag of goodies worth (as of 2018) $100,000. These people are all millionaires; an Academy Award alone (or even just a nomination) will increase their future earning power substantially. They, of all people, don’t need an additional $100,000 in gifts.
Deceptive Dollar Stores: You wouldn’t think that dollar stores would be a poor value for poor people, but according to this article, they are. The author did some comparative shopping and found that many dollar store items cost more (by quantity) than regular store items, which in turn cost more than bulk purchases at Costco. If you can afford an Costco’s $60 annual membership, then you will be rewarded with lower prices, which, depending on your shopping habits, will usually more than make up for the fee.
We Promote This Voluntarily
I saw the first example of The Matthew Effect in one of my sociology classes, during a unit on social stratification. Our professor recounted a social experiment in which two men in a large city asked strangers on the street for bus fare, so that they could get home. One was wearing a suit and tie, and the other was dressed more casually. To no one’s surprise, the well-dressed man collected almost twice as much money as the other man, during the same amount of time. One stranger offered gave the well-dressed man some extra change so that he might buy a newspaper to read on the bus.
More recently, in Sweden, a similar social experiment was conducted. A man tried to board a public bus, told the driver that he had forgotten his wallet, and asked if he could be allowed to ride for free. He first wore a tuxedo, and tried again while wearing shabby clothes. While he was dressed in a tuxedo, he was always allowed to ride for free; while wearing the shabby clothes, he was turned down by the bus driver each time.
The Matthew Effect also applies to respect. A while ago, I read an article on a similar subject, and the writer quoted someone who had an intuitive grasp of this concept. “When you go out wearing a T-shirt, people call you ‘buddy’; when you wear a (collared) polo shirt, people call you ‘sir’.“
The Toronto Blue Jays’ José Bautista earned US$18 million in 2017. However, in this article, he brags that he hasn’t paid for food since his famous 2015 post-season bat flip. Whenever he goes to a restaurant, people always offer to pay for his meal. Why are we buying food for a man who earns $1.5 million each month?
The Chasm Widens
This is why the rich are getting richer and and the poor are getting poorer. It’s a part of our society, but it’s also our complicit behaviour that is widening the chasm. Sadly, the egalitarian society we envisioned while we were growing up is still a distant blip on the horizon.
I like to visualize The Matthew Effect like this: you are a ball placed on a hill. The x-axis represents your wealth, or perceived wealth. If you can position yourself past the crest of that hill, then you will continue to be propelled forward with increasing speed. However, if you can’t make it that far, then society will push you in the opposite direction, and keep you down. However, before you abandon all hope, Coleman Cox’s vision of a meritocracy is built in to this model: the harder you work, the more luck you will have. Make sure that you work diligently enough to move yourself past that centre point. Once you can accomplish this, then people everywhere (without even realizing why) will go out of their way to make your life a little more pleasant.