Transcription
Today we look at the question of success. Okay, the question is who succeeds and why? Okay, so we we've done a lot of research and we've discovered that people who who succeed um succeed for certain reasons.
Those who are stupid are often the most confident in the world. That's what what's called the Dunning Krueger effect. And this is this helps explain why the world is why it is because often the people in power are stupid. They don't know they're stupid. They were confident and they do stupid things like Donald Trump. Okay. Okay.
You guys, you guys need to remember this. Just because things are correlated does not mean they cause each other. So, I'll give you an example. We know that successful people, they get up early in the morning. Okay? They get up at 4:00 in the morning. But just because you get up at 4:00 in the morning does not mean you'll succeed. Okay? Just because you work hard, just because you're resilient, just because you have growth mindset does not mean you'll succeed. But if you're successful, you will get up early in the morning because you're more you are more motivated. If you are successful in life, you will have more self self-control. You will have uh more resilience. You you'll be more humble. Okay, does that make sense? So if you're rich, guess what happens? You become successful and therefore you will have growth mindset, self-control, deliberate practice. Okay, does that make sense? But just because you have growth mindset delivered practice and resilience does not mean you'll succeed. Okay.
So the question for us is why does this happen and ultimately who succeeds? Okay. So we know for a fact that rich people are much more likely to succeed than poor people. And in fact what we know from macroeconomic studies is that school doesn't really matter. Doesn't matter how well you do in school. If your parents are rich you'll be successful in life. If your parents are poor, you will not be successful in life. Okay, so let's think about this more carefully.
Why doesn't school matter? Well, it's because rich people and poor people are playing different games with education. Okay, for rich people, college is about signaling. It's about the network, right? You go to Yale, you go to Harvard, you meet other rich kids, you make connections, and those connections get you jobs. The degree itself, it's just a signal that says, "I'm one of you." Okay? But for poor people, college is supposed to be about credentials. You're told, "Get perfect grades, get into a good school, and you'll succeed." But here's the problem. Even if you get perfect grades, you don't have the network. Okay? You don't know anyone who can give you a job. You don't have family friends who run companies. So you end up with a degree but no connections. And the connections are what actually matter. Does that make sense?
So just like the marshmallow test isn't really about self-control, it's about trust. College isn't really about intelligence. It's about privilege. Okay? The marshmallow test measures whether you trust adults to keep promises. College measures whether you have the social capital to convert a degree into a career. Poor kids can be just as smart, work just as hard, but they don't have the network, so they don't get the same outcomes. And people look at this and say, well, education is the great equalizer. But it's not. It's actually a mechanism that reinforces inequality because it pretends to be fair while actually favoring those who already have advantages.
Okay, so what's the difference? Okay, so now let's look at parenting strategies between rich and poor. Okay, so there are lots of differences, but let's focus on three major differences. The first major difference is that rich parents speak to their kids more than poor parents. Okay, high voca vocabulary, low vocabulary. When rich parents speak to the kids, rich parents will use higher vocabulary, longer sentences. Poor parents will just be no, yes, go away. Okay.
Another major difference is in attitude. Okay. So, rich parents use a friendly attitude and poor parents use an authoritarian or command attitude. So, for example, if you are a rich kid and you go and touch a stove, okay, [snorts] and you burn your hand, the rich parent will say, "Listen, you made a mistake. Don't worry about it. Let me explain to you why touching a fire is bad for you because you'll burn yourself and you might have to go to the doctor and uh we will feel pain if you hurt yourself. Okay, so the rich parent will spend a lot of time explaining to the child why this is wrong and how not to do it again. The poor parent is like, "Don't you ever do that again or I'll beat the crap out of you." Okay, don't do that. Pretty simple. Okay. But as you can you can understand the rich kid will understand that the world is safe and that he is respected in this world. Okay. Whereas the poor child will think that the world is scary and he or she must be afraid of adults. And this carries on into school, right? Because as a rich kid, you go into school and you think that oh my teacher is my friend. So you smile at the teacher and you hug the teacher and the teacher smiles back and now you're friends, right? But if you're a poor kid and you see the teacher, you don't you're afraid to look at the teacher. you don't smile, you're you are stressed. Okay? And the teacher thinks that you might be a problem child. So the problem with this is that yes, being a third parent, it is effective, but it creates stress in the family. Okay? It makes the child feel unsafe. And this leads to our the third major difference between rich parents and poor parents.
Rich parents offer stability. Okay? Poor parents can only offer volatility. This is a very simple idea. Rich parents have money so they can afford to keep promises. So I'm rich parent. I say to my child, "Okay, next week we'll go to Thailand for vacation. Guess what? Next week you go, you guys go to Thailand for vacation." But if you are a poor parent, money is always an issue. So it's hard for you to keep promises, right? So, it's like next week we'll go to McDonald's for lunch, but your paycheck um is not enough. So, you're like, "Sorry, we can't go anymore." Okay. And now, because of these different parenting styles, we understand why um rich kids behave different from poor kids, right?
So, let's look at let's look at the idea idea of self-control, right? Self-control. What is the marshmallow test? Marshmallow test is not a test of self-control. It's a test of your trust in others. Right? If you believe that the teacher who goes outside, if you believe that he or she comes back and will pro when will keep his or her promise, then you will not eat that marshmallow. But if you think that this teacher is lying to me, then you're not going to eat that marshmallow. Then you will eat that marshmallow. Right? So it's not really about self-control. It's about your belief and trust in authority figures, right? So, if you're rich, stability, you have stability. But if you're poor, you don't have stability. So, you're actually better off eating that marshmallow rather than waiting for that second marshmallow. Because guess what? Most of the time, you will not get that second marshmallow. Okay? Do you understand? So, it's not that poor kids are stupid. Poor kids are rational and they're responding to the circumstances that they live in. Okay? And resilience, right? Well, the idea of resilience is that you believe that the world will help you, right? So, if you're rich and you believe that everyone helps you, you can be resilient because if you fail, someone will help you get up. If you're poor, if you fail, that probably tells you you should be doing this. Okay? You probably won't succeed doing this. So, you don't have you don't have much confidence in others. Okay? And the idea of self- assessment, right? Looking inward. Well, if you're a poor child who lives under a lot of stress, it's hard for you to be self-reflective because if you look back at yourself, all you think about is your pain and your stress. Okay?
So, from these different parenting strategies, we can now explain why different students behave the way they do. This, of course, may lead you to think, okay, well then rather than construct our schools around self-control, resilience, and um self-reflection, we should construct our schools around better parenting skills. Okay, which means that hey, let's construct schools where kids are exposed to a lot of vocabulary, uh, where teachers are friendly and where there's a lot of stability. Okay, and we've tried this and it's more effective, but it doesn't really work either. Why? Because the kids come in too late. A lot of their worldview is already established. Then you're like, okay, well then let's change how parents behave. And when you do that, what you recognize is that nope, you can't change how they behave either. Okay? So no matter what you do, you end up with massive differences between the poor and the rich. The rich stay rich and the poor stay poor. Okay?
So now the question for us is why is this the case? Okay? And it's the case because society is a hierarchy. Okay? And the hierarchy is usually divided between the rich and the poor. Okay? And these two worlds are night and day. They're very, very different. As a poor person, if you want to survive, you have to obey authority. Okay? But if you're a rich person, the way that you get along with others, the way that you maximize your outcome is by negotiating with others. Okay? Negotiating. Okay? So negotiating can also mean debate, right? So who should be the boss? Well, let's have a debate and present different evidence as to to figure out who's who should be the boss. Okay? So, negotiation means debate and argument. So, this helps us this helps us understand why different parents parent their child differently. If you're a poor parent, your responsibility is to make sure that your child knows how to obey authority. Okay? That's why you command your child. But if you are a rich parent, you want your child to be able to negotiate with authority. And that's why you respect your child and you teach your child how to debate, how to argue, how to negotiate with others, okay? Because they live in different worlds. Another way of saying this is that from day one, rich kids know that they're playing a different game than they're playing a different game from poor kids.
Okay, so let's go back and look at parents. Okay. So, um po poor parents command their child um don't really speak, don't communicate, um and don't keep promises. Okay. All right. So, poor parents do these three things. And we know that if they do these three things, the outcome won't be so good. Okay. And the reason why they do this is that they're not playing a game to improve their kids outcome. They're playing a game to get along with other parents. Okay. Okay. Colleagues, family. Okay. authority. Okay. So, another way of saying this is this police boss. Okay. Family. Okay. All right. So, as a parent, you're trying to figure out how how to negotiate with the police, with your boss, and with your family. So, if you're a poor person and the police knows you're a poor person, the police is going to bully you. And if you fight back, the police will probably put you in jail. Okay? So, it's very important that you accept authority. you don't challenge authority because if you do, you'll probably get into trouble.
Now, let's think about this more carefully. When we talk about getting into trouble with the law, we're actually talking about two completely different justice systems. Okay? There's one system for the rich and one system for the poor. And they operate by totally different rules. So, if you're rich and you commit a crime, what kind of crime do you commit? Financial fraud, tax evasion, environmental violations, right? like dumping chemicals into a river or manipulating stock prices or hiding money offshore. Okay. And what happens when rich people do this? Well, usually nothing. And if something does happen, they negotiate a settlement. Their lawyers talk to the prosecutors, they pay a fine, maybe their company pays a fine, and nobody goes to jail. Okay? But if you're poor and you commit a crime, what kind of crime do you commit? Drug dealing, theft, assault, right? Street crimes. And what happens? You get arrested. You can't afford bail. You sit in jail waiting for trial. You get a public defender who has 500 other cases. And you end up taking a plea deal because you're scared of mandatory minimum sentences. Okay? Mandatory minimums means the judge has no choice. You sell drugs, you go to jail for 10 years. No negotiation, no settlement, just prison. Does that make sense?
So here's what's interesting. If you actually calculate the dollar amount of harm, rich crimes cause way more damage than poor crimes. Okay? Like if someone steals $500 from a store, that's bad. But if a CEO commits fraud and steals $50 million from investors, that's way worse, right? But who goes to jail? The person who stole $500. The CEO, he negotiates a settlement, his company pays a fine, and he keeps his job. He might even get a bonus. Okay? And this goes back to what we talked about with parenting. Poor kids learn from day one that authority is dangerous. That if you challenge the police, if you talk back, you will get hurt. So they learn to be obedient, to keep their head down, to follow orders. And this is rational because for them, the criminal justice system is a trap. One mistake and your life is over. Criminal record means you can't get a job, can't get housing, can't vote in some states. Okay. But rich kids, they learn that authority is negotiable. That if you have money, if you have lawyers, you can work things out. You can make problems go away. So, they learn to take risks, to push boundaries because they know they have a safety net. And we look at this and we say, well, criminals deserve punishment. But we only mean certain criminals. We mean poor criminals. rich criminals, they're just making mistakes or operating in a gray area. Okay, does that make sense?
Your boss, right? If you're a poor person, your your boss will just command you about. And so, it's very important that your child knows how to take orders rather than ask questions, rather than debate. Your child must learn how to just follow orders or at least keep his mouth shut. Okay? And then family is about maintaining good relations with those who can most support you. And that often means the same values. Okay? So if the if your family members or your friends if they are if they are parenting their child in this manner, you're also going to copy them. Okay? Imitation. All right? And for a poor person, this is the optimal strategy of how to parent. Okay? Does it make sense guys? Because if you do another way, okay, if you are if you choose to uh be a friend to your child, if you choose to communicate, if you choose to keep your promises, then the your friends and your family will think that you're doing something wrong. You understand? They they won't think, "Oh my god, you are an enlightened parent who's read a lot of parenting books and great for you." They're going to think there's something wrong with you.
So, one way to succeed is to abandon your community. Okay? But that's high risk, right? So you have to be extremely individualistic to take such a risk. So that's why most most people don't do it because you think about it, the safest option for you is to stay within your community. That's what's going to guarantee you uh the most the best outcome. But if you choose to abandon your community and just say and just say, you know what, I'm going to go somewhere else and try my try my luck. That's taking a really high risk. Okay? So you to succeed, you have to take high risk. And let's think about risk for a second. Okay? Because when we say fortune favors the bold, we're assuming everyone can afford to be bold. But that's not true. Risk-taking is a privilege. Okay? If you're rich, you can take risks. You can start a business, and if it fails, you move back in with your parents for a while. You can quit your job and travel the world to find yourself. You can invest in a risky startup because if you lose your money, you still have your trust fund. Okay? You have a safety net. So, rich people are playing to win. They can take big swings because failure won't destroy them. But if you're poor, you cannot afford to take risks. One bad decision and you're homeless. One business failure and you're bankrupt for the rest of your life. You can't quit your job to start a business because you need to eat next week. You can't invest in anything because you don't have money to invest. So poor people are playing not to lose. They have to play it safe because they're one emergency away from disaster. Does that make sense? So when someone says just take a risk, start a business, follow your dreams, they're speaking from a position of privilege, they don't understand that for most people, risk equals survival threat. And we look at poor people and we say, why don't they take more risks? Why are they so riskaverse? But they're not riskaverse, they're rational. They're responding to the reality that they have no safety net. Okay? And this is why when rich people succeed after taking risks, they say, "See, I was bold. I took a chance." But they don't mention that they could afford to take that chance. They had family money. They had connections. They had options if things went wrong. The poor person who takes the same risk, if it fails, we say, "Well, that was irresponsible. You should have been more careful." But if it succeeds, we say, "See, anyone can make it if they try hard enough." it's completely different standards. Okay.
So, another possibility is war. Um that traditionally historically has been uh the best mechanism of social mobility. When you when you go fight a war and you do really well, you'll get promoted in life. Okay? But again, war is high risk because chances are you'll get killed. Okay? So, not just war, but also revolution, right? Okay. And of course um the best way of course is to marry up. Marrying up. Okay. And that's why remember remember in our very first class we talked about the dating game, right? Where women only want five and four. Okay. The reason why is that five and four are high status and 3 2 1 are low status. So if you're a woman, you don't want to marry into a low status family because your children will be screwed over. Okay? Your best option is to take a risk. gamble into a high stat and marry. You want you want to try to marry into a high status family. Okay. So, traditionally um war and marrying up are the two major mechanisms of social mobility in today's world. Um uh abandoning community can also lead to success. Okay, basically immigrating to a place that offers more social social mobility which often means United States. Okay, but let's think about immigration more carefully. Okay? Because immigration is actually a perfect example of what we've been talking about.
If you're born in the United States, you won the birth lottery. Okay? Just by being born here, your lifetime earnings will be 10 times, 20 times higher than if you were born in a poor country. You didn't do anything to deserve this. You just got lucky. Where you were born determines your life outcome more than how smart you are or how hard you work. Does that make sense? So if birth location is so important, why don't we just let everyone immigrate? Well, because immigration restrictions protect the privilege of those of us who were born lucky. Okay? If we let everyone in, then the advantage of being born American goes away. So we restrict immigration. We say, "Oh, we only want the best and brightest." Immigration should be merit-based. But merit is circumstantial. If you're born in a poor country with bad schools and no opportunities, how are you supposed to develop merit? You're comparing someone who went to Harvard with someone who didn't have electricity in their school. It's not a fair comparison. Okay? And here's what happens with immigration. We take the most ambitious, most talented people from poor countries, right? The ones who have the courage to leave everything behind, who are smart enough and lucky enough to get a visa. These are the people who if they stayed in their home country might have become entrepreneurs, politicians, professors, people who could improve their country but instead they leave. This is called brain drain. The poor countries lose their best people and this makes those countries stay poor. So immigration which is supposed to be about opportunity actually perpetuates global inequality. The rich countries get richer by taking talent from poor countries. And the poor countries stay poor because their talent leaves. Okay? And we look at immigrants who succeed and we say, "See, the American dream works." But we're only seeing the survivors. We're only seeing the tiny percentage who made it. We don't see the thousands who tried and failed. We don't see the people who couldn't get visas. We don't see the people who died trying to cross the border. Okay? It's survivorship bias. We only count the successes and we ignore all the failures.
But another way of saying this is you have to get really lucky, guys. Okay? So, there's lots of poor people who think that, you know, I succeeded because I worked hard and I'm really talented. And let me tell you something about the self-made myth. Okay? Because this is really important. People love to talk about self-made billionaires, right? Like Elon Musk. Oh, Elon Musk is a genius. He built Tesla and SpaceX from nothing. But did he? Elon Musk's family owned an emerald mine in South Africa. He went to elite private schools. He could afford to take risks because he had family money backing him. That's not from nothing. Okay? Or Bill Gates. Everyone says Bill Gates dropped out of Harvard and started Microsoft in his garage. Okay? But first of all, he got into Harvard. That means elite private school before that. His family was upper middle class. His mom was on the board of directors with IBM executives, which is how he got his first big contract. And when he dropped out, he could always go back. He had a safety net. That garage, it wasn't in a poor neighborhood. Does that make sense? Look at any quote unquote self-made billionaire, and you'll find the same pattern. Family money, elite education, social connections, safety nets, they all had significant advantages. But we don't want to see this because we want to believe in the myth. We want to believe that they succeeded purely because they're geniuses who worked hard. Why? Because if we admit they had advantages, then we have to admit that maybe the system isn't fair. Maybe their wealth isn't purely deserved. And that's uncomfortable. Okay? So, we tell ourselves they're self-made geniuses. And we ignore all the evidence that says otherwise. And this brings us to a really important point about why the system stays the way it is.
Look, I was born poor. I lucked into Yale. Okay, it's luck. You can work out. You can work as hard as you want, but the chances are are against you. Okay, and it takes a certain personality, which is you're really individualistic. You're very ambitious and you have high risk tolerance. Most people don't have that. Okay? So yes, there are certain people who despite their background, they're able to succeed. But that's often the exception to the rule as opposed to the rule itself. Okay? So luck is a form of strategy. Okay? Strategy and all this is saying is that you are trying to position yourself in a place that allows you to get lucky. Okay? So I left Canada and I went to United States because I knew that in Canada, doesn't matter how hard you work, no one cares. But in the United States, if you work really hard, then you might get lucky and you might meet someone who's like, "Wow, you're a really hard worker. I want to promote you." Okay? So, so you're right in that yes, you can strategize and increase your luck, but it's still luck. All right? And those who succeed are able to think strategically and far ahead and position themselves in a way that allows them to get lucky. Okay? And they often have the characteristics that we talked about, you know, like so self-control, resilience, and the ability to look inward and better understand what you're good at. Okay? So, it takes a combination of factors. But the point I'm trying to make is that these people are only a minority or a minority. Okay? 1% of the population really. Okay? And they still depend on luck. Any more questions before I move on?
Okay. So, this leads us to a question which is okay. Well, the way that I frame everything, okay, the way that I frame everything, you have poor and you have rich. And as discussed, they live in their own world worlds. And they don't really connect with each other. They have different parenting strategies. They have different outlooks. The rich stay with themselves. The poor stay amongst themselves. So, this looks like a very stable system, right? Stability or the word we can use is equilibrium. But here's the really important question. Why does the system stay stable? Why doesn't it change? And the answer is something called meritocracy. Okay, meritocracy is the belief that we live in a fair system where people succeed based on their merit, their talent, their hard work. And this belief is really, really important for keeping the system stable. Let me explain why.
If you're rich, you need to believe that the system is fair. Because if the system isn't fair, then your wealth is illegitimate, right? Like if you admit that you only succeeded because your parents were rich, because you went to good schools, because you had connections. If you admit all that, then you have to admit that maybe you don't deserve what you have. Maybe you're not special, maybe you just got lucky. And that's really uncomfortable. Okay? So rich people convince themselves that they earned everything. I worked hard. I'm talented. I'm smart. That's why I succeeded. They have to believe this. It's a psychological necessity. And this is why you hear rich people say things like, "I'm self-made." Even when they clearly had advantages. They need to believe in meritocracy because otherwise they have to face the fact that the system is rigged in their favor. Does that make sense?
But here's the really insidious part. Poor people also believe in meritocracy. Okay? And when poor people believe that the system is fair, what does that mean? It means that if you're poor, it's your fault. You didn't work hard enough. You're not smart enough. You're not talented enough. So poor people internalize their failure as a personal flaw rather than a systemic problem. They blame themselves instead of blaming the system. And this keeps them from organizing, from demanding change, from challenging the hierarchy. Okay, there's an alternative way of thinking about this called luck egalitarianism. Okay, luck egalitarianism says we should acknowledge the role of circumstances. We should admit that where you're born, who your parents are, what opportunities you have, that all of this is luck. And if it's luck, then maybe we should try to equalize things a bit. Maybe we should redistribute resources to compensate for bad luck. But we don't do this because we're too invested in the meritocracy myth. We want to believe that success is earned and failure is deserved. And this is why the system is in equilibrium. The rich believe they deserve their wealth, so they don't feel guilty and they resist redistribution. The poor believe they deserve their poverty, so they don't rebel and they keep trying to quote unquote work harder. Everyone is locked into their position. The hierarchy reproduces itself generation after generation. And it all depends on this shared belief in meritocracy, a belief that, as we've seen throughout this lecture, is fundamentally false. Okay.
So what we have is a system that looks fair on the surface. We say everyone has equal opportunity. Anyone can succeed if they work hard. But underneath it's a rigged game. The rich and the poor are playing by different rules in different worlds. And the outcome is predetermined before the game even starts. And the belief in meritocracy, that's what keeps everyone playing the game instead of flipping over the table. Does that make sense, guys? Okay.