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When Elites Fail: The Collapse of Trust in American Institutions
In 2010, a Hunter College High School valedictorian named Justin Hudson stood before his graduating class and delivered a speech that shocked everyone in attendance. Rather than celebrating his achievement, Hudson questioned the very foundation of the meritocratic system that had propelled him to success. "I don't deserve any of this," he declared to his stunned audience. "We are being taught that those who possess academic and intellectual skills deserve more than others."
Hudson's speech struck at the heart of America's most cherished myth - that our system rewards the best and brightest fairly. Yet his critique reflected a growing national sentiment: our institutions are failing us, and the elites who run them are increasingly disconnected from the consequences of their decisions. Christopher Hayes' "Twilight of the Elites" has become required reading among policy makers and cultural critics alike, with figures from Jon Stewart to Elizabeth Warren citing its prescient analysis. The book's timing - published just as the Occupy Wall Street movement emerged - helped cement its status as one of the most important political works of the early 21st century. Even conservative commentators like David Brooks have acknowledged its uncomfortable truths about America's ruling class.
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A Nation Losing Faith in Everything
America feels broken. The past decade has witnessed median household income fall by 7 percent while more Americans experience downward mobility than in recent memory. National polls consistently show overwhelming majorities believe the country is "on the wrong track," with optimism about the next generation's prospects reaching historic lows.
Trust in American institutions has plummeted to unprecedented depths - worse than during the American Revolution. Congress is less popular than Paris Hilton or communism. A 2010 Pew survey found trust in government at its lowest level since measurement began in 1978, with equally dismal ratings for large corporations (25%), financial institutions (22%), and media (31%). Millennials show the greatest skepticism - only the military is trusted by a majority to "do the right thing."
This institutional collapse connects seemingly disparate failures: the Iraq War, Hurricane Katrina, the 2008 financial crisis, Catholic Church scandals, and corporate corruption. The result is a devastating crisis of authority where Americans can no longer assume either competence or good faith from those in power.
Barack Obama's political success stemmed from his ability to connect with this sense of betrayal, positioning himself as someone who had correctly opposed the "dumb war" in Iraq when the establishment got it wrong. Yet as president, he attempted to restore faith in institutions rather than revolutionize them, leading to plummeting approval ratings by 2010.
The response to this crisis divides into two camps: "insurrectionists" who believe our broken institutions need fundamental restructuring, and "institutionalists" who fear the collapse of authority will lead to chaos. Even institutionalists like David Brooks admit the system is trapping good people and bringing out their worst qualities.
This crisis of authority creates dangerous feedback loops. When people view all authority as fraudulent, good governance becomes impossible. In disadvantaged neighborhoods, institutional distrust leads to undercounting in the census, which leads to underrepresentation, which confirms initial suspicions. Similarly, justified skepticism of police creates higher unsolved murder rates and cycles of violence.
The Great Recession has introduced middle America to the grinding despair long familiar to the marginalized. These betrayals have a cumulative effect, creating corrosive skepticism about self-government itself. Tellingly, the military and police are now America's most trusted institutions - we increasingly trust men with guns, not men in suits. The founders would be horrified.
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The Meritocracy Myth: How the System Perpetuates Inequality
We all believe in meritocracy, even without conscious thought. To call an organization "meritocratic" is high praise; to call it "bureaucratic" is an insult. Goldman Sachs proudly declares itself "a meritocracy" in its first sentence to potential recruits. This faith permeates society but is strongest among those who've reached the heights of success - naturally, winners believe the system that rewarded them knew what it was doing.
Yet the term "meritocracy" originated not as an ideal but as a warning. British Labour MP Michael Young coined it in his 1958 dystopian book "The Rise of the Meritocracy," which depicted a future Britain where intelligence testing created a rigid new social hierarchy. Young intended this as satire and warning against what happens when "those judged to have merit harden into a new social class without room for others." Yet Americans embraced the term as the perfect name for our system of testing and social differentiation.
Hunter College High School exemplifies meritocracy's promise and failures. Unlike elite colleges with subjective admissions criteria, Hunter's entrance rests solely on one three-hour test - no legacy admissions, no connections. Half the students have at least one immigrant parent, and many come from working-class backgrounds. The school sees itself as a place where anyone with intelligence and drive can rise from anonymity to elite status, regardless of background.
However, as inequality in New York has intensified, Hunter's single entrance exam has proven inadequate to maintain true meritocracy. In 1995, the entering class was 12% black and 6% Hispanic; by 2009, those numbers had plummeted to 3% and 1%. This decline reflects not just inequality but the rise of test preparation. Manhattan parents pay $90 per hour for private tutors, advantages unavailable to most black and Latino students in a city that's 25% black and 27.5% Latino.
This pattern follows what I call the Iron Law of Meritocracy: eventually, inequality produced by a meritocratic system grows large enough to subvert mobility mechanisms. Those who climb the ladder pull it up after them, or selectively lower it for friends and family. "Whoever says meritocracy says oligarchy."
The data confirms this pattern across American society. Since the mid-1970s, inequality has grown dramatically while social mobility has declined. By 2007, we returned to the wealth distribution of 1928, with the top 10 percent capturing 46 percent of national income. Between 1979 and 2007, nearly 88 percent of the economy's income gains went to the top 1 percent.
Studies show mobility declining as inequality rises - what Alan Krueger calls "The Gatsby Curve." Research reveals that 42 percent born into the bottom income quintile remain there, while only 6 percent reach the top. America is now less mobile than nearly every other industrialized democracy - Germany is 1.5 times more mobile, Canada nearly 2.5 times, and Denmark 3 times more mobile.
Yet ironically, Americans still overwhelmingly believe in meritocracy. Even after the 2009 financial crisis, 72 percent believed it possible to "start out poor, work hard, and become rich." This contradiction - declining mobility alongside enduring faith in meritocracy - helps explain our crisis of institutional trust.
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When Cheating Becomes the Culture: Enron, Baseball, and Wall Street
Before the subprime crisis made Wall Street infamous, Enron represented the pinnacle of corporate scandal, bankrupting the company, destroying $60 billion in stock value, eliminating 5,600 jobs, and vaporizing $2.1 billion in pension funds. Jeff Skilling thought he was building "a perfect meritocracy" where smart, gifted people competed for dominance, creating innovation that would outpace competitors. The culture explicitly rewarded rule-breaking if it produced profits - Skilling would proudly tell the story of Louise Kitchen who ignored his direct orders not to start an Internet trading business, but faced no consequences because her venture proved profitable. The message was clear: rules only applied to losers.
Enron's hypercompetitive environment featured outsize bonuses for stars and brutal punishment for underperformers, including the infamous "rank and yank" policy that routinely fired the bottom 10% of the workforce after biannual reviews. But this same culture, without proper oversight, bred widespread fraud. As whistleblower Sherron Watkins later warned Ken Lay in her famous memo: "I'm incredibly nervous that we will implode in a wave of accounting scandals." Her straightforward theory about corporate malfeasance: "It's all one thing: it's compensation" - the enormous sums at stake made people "rationalize behavior that they normally would not participate in."
Baseball's steroid era parallels Enron's collapse - not as isolated misconduct by villains like Roger Clemens or Barry Bonds, but as systemic breakdown with institution-wide incentives for fraud and failed accountability. When Jose Canseco transformed from a skinny minor leaguer to a "freaking Macy's balloon" with "thick slabs of beef" who hit "450-foot moon shots," his success spread rapidly through baseball's competitive environment. His rookie salary of $75,000 in 1986 ballooned to $1.6 million just three years later, and he became a "chemical evangelist," teaching fellow players what to use and how to inject themselves.
By 2002, steroid use had become so rampant that Ken Caminiti estimated at least half the league was using. The competitive pressure created a situation where avoiding steroids meant deliberately disadvantaging yourself. Even Barry Bonds began using in 1999 after seeing the attention McGwire and Sosa received.
Both management and the union were equally complicit in baseball's steroid era. The Mitchell Report concluded that "prior to 2002, the owners did not push hard for mandatory random drug testing because they were much more concerned about the serious economic issues facing baseball." Teams even documented steroid suspicions in scouting reports without confronting players.
The reason was simple: steroids were incredibly profitable. In 2007, as the scandal surfaced, MLB broke its attendance record for the fourth straight season, with revenue increasing 7.7% to $5.5 billion. The average team value had risen 143% since 1998.
This demonstrates the difficulty in designing competitive systems that reward performance without also rewarding cheating. Two main factors prevent cheating in competitive environments: ethical norms and fear of punishment. Baseball players before 2003 had nothing to fear from regulation since no testing existed, and the league implicitly rewarded those who cheated. As more players used drugs, moral condemnation dissipated.
When cheating becomes institutional norm, those at the top view themselves as ubermensches who hold the uninitiated in contempt. These environments develop cultures of "open secrets" and inside jokes that signal moral corruption. At Countrywide, former employee Mark Zachary witnessed systemic fraud encouragement. When he asked a supervisor what to do if a potential borrower mentioned being unemployed without income, the supervisor replied, "I wouldn't deny it because I didn't hear anything. I would definitely tell the [sales counselor] to shut up or shoot him!"
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The Knowledge Crisis: When We Can No Longer Agree on Reality
We face a crisis where our sources of authority have been discredited while information has proliferated, making it nearly impossible to reach consensus on basic facts. Because we lack time to personally verify the millions of information bits in our lives, we rely on mental shortcuts that have been undermined by recent institutional failures.
Traditionally, we rely on consensus to establish knowledge - if everyone agrees something is true, it probably is. But the Iraq War demonstrated consensus's dangerous failures. Political elites across party lines supported the invasion, with Democrats like Gephardt, Kerry, Gore, and even Ted Kennedy echoing Bush administration claims about WMDs. Media consensus was equally strong, with publications like The New Republic endorsing the war and The New Yorker's David Remnick warning against "deferring a reckoning" with Saddam. After Iraq proved disastrous, many who supported it cited this very consensus as their justification.
After consensus, we rely on proximity to find truth - getting as close as possible to the source. Media values proximity highly, sending anchors to global hotspots and prizing reporters with insider access. Yet proximity failed spectacularly during the Iraq War and financial crisis. New York Times reporter Judith Miller had unparalleled access to White House officials and Iraqi defectors like Ahmed Chalabi, who fed her false WMD intelligence that Vice President Cheney would then cite as independent confirmation. Similarly, financial expert Jim Cramer, despite his Wall Street connections, completely missed the housing bubble's dangers, telling viewers to "Buy Bear!" weeks before its collapse and declaring subprime lending "completely meaningless" shortly before the crisis erupted.
The third mental shortcut we use is assuming good faith - believing people aren't systematically trying to deceive us. When this assumption is violated, as in cases like the Catholic Church abuse scandal, it creates psychological vertigo similar to discovering a spouse's long-term infidelity. The Church's cover-up was remarkably successful, keeping thousands of abuse cases hidden for decades. Organizations like BishopAccountability.org now document how the Church systematically enforced secrecy at every level.
We live in an informational interregnum where old gatekeepers are discredited but not discarded, and their challengers can subvert authority but not reconstitute it. Into this void steps Julian Assange, promising salvation through total information transparency. Founded in 2006, WikiLeaks provided a secure platform for whistleblowers to anonymously publish secret documents, reflecting Assange's worldview that the defining struggle is individual versus institution.
While defenders argued citizens have the right to know what their government does, Assange's faith that "truth will out" seems almost quaint in our era of manipulation and distortion. His philosophy fails to acknowledge that someone must always decide which truths matter - not all facts are equally significant.
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The Power Elite: Money, Platform, and Networks
While the right has cultivated anti-elite sentiment by defining elites as intellectuals, academics, and media figures, what makes people elite isn't their tastes or cultural preferences but their relative power and influence. Occupy Wall Street's framing of the 1% versus the 99% offers a useful dividing line, reflecting how extreme inequality has grown - with the richest 1% claiming nearly a quarter of the economic pie, comparable to levels last seen before the 1929 crash.
Three main sources of power define twenty-first century America: money, platform, and networks. Money confers direct power through control over which products get made and which innovations flourish. Creditors wield tremendous influence, as demonstrated by the International Monetary Fund's ability to remake entire nations' social contracts as conditions for extending credit. In our fully monetized society, money is especially powerful because it can be exchanged for other forms of power.
Platform refers to how many people - particularly influential people - someone can reach. While Rush Limbaugh with 15 million weekly listeners and Bill O'Reilly with 3 million nightly viewers command enormous platforms that translate into bestselling books, the distribution of platform power has actually become less concentrated over time. Walter Cronkite once spoke to 20 million nightly viewers; today's top newscast reaches only 9 million. Media audiences have fractured as outlets proliferate - now 800 million Facebook users each broadcast to small, interconnected audiences.
Social networks provide profound power that's irregularly distributed throughout society. As C. Wright Mills observed, elite power stems from tight connections between different spheres - CEOs working at Treasury, retired generals sitting on corporate boards. Grover Norquist exemplifies network power through his ability to coordinate donors and activists against tax-friendly Republicans from his position at the "switchboard" of the conservative movement.
While conceptually distinct, money, political power, platform and networks are tightly correlated in practice. Today's Power Elite is more diverse than in Mills's time but more geographically concentrated in specific counties. The primacy of money in our post-meritocratic culture creates ready paths to trade different forms of power: Congress has grown 260% wealthier while median American household wealth remained stagnant; former staffers and politicians routinely "move downtown" to lucrative lobbying positions; and figures like Sarah Palin monetize their platforms into multi-million dollar fortunes.
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The Pathologies of Privilege: How Inequality Corrupts the Powerful
While most inequality commentary focuses on its harm to those at the bottom, we ignore how extreme inequality corrupts those at the top. The governing elite and the 1 percent have become virtually identical, with nearly every Obama administration figure worth millions - from Larry Summers ($17-39 million), to Gene Sperling ($2.2 million in consulting fees), to David Axelrod ($1.5 million income), to Valerie Jarrett (with investments worth $1-5 million). This creates a fundamental trust problem: how can the 99 percent trust a governing elite that belongs to the 1 percent?
Extreme inequality produces what I call "fractal inequality" - a self-similar pattern where vast gaps exist at every level of analysis. This structure creates a dizzying vertigo among ambitious elites who, upon reaching one level of success, immediately see new heights still out of reach. At Davos, this manifests as constant status anxiety, with even billionaires feeling "wildly insecure" about their hotel rooms or dinner invitations. As C.S. Lewis warned students about "The Inner Ring," this endless series of exclusive circles breeds moral corruption as people compromise themselves to gain entrance.
This ceaseless competition produces two destructive psychological effects: an inflated sense of having "earned" one's success (even among those born privileged like Mitt Romney), and a paradoxical self-image as a persecuted outsider (as seen with powerful figures like Roger Ailes and Bernie Madoff).
Intelligence has become the core value of our meritocracy, with "brilliant" being the highest compliment for elites. But what's emerged isn't just appreciation for intelligence but a destructive "Cult of Smartness" where intelligence is treated as rankable in a clear hierarchy. This belief manifests in elite legal circles, as when Jeffrey Rosen and Harvard law professor Laurence Tribe criticized Supreme Court nominee Sonia Sotomayor as "not that smart" despite her Princeton summa cum laude degree and Yale Law Journal credentials.
Wall Street epitomizes this obsession with smartness. Investment bankers believe they work with "the brightest people in the world," while hedge fund analysts look down on bankers as "second-class intellects." This creates a dangerous authority: "America does what Wall Street tells it to do" because they've supposedly "got the smartest minds on the planet."
Yet smartness without wisdom, judgment, empathy or ethics becomes destructive. The Bush administration's most disastrous decisions came from "sublimely brilliant" figures like David Addington, whose dazzling legal knowledge enabled him to push extreme policies while steamrolling opposition. This reveals the dark emotional core of the Cult of Smartness: the desire to differentiate and dominate that our meritocracy encourages.
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The Distance Problem: When Leaders Can't Feel What We Feel
The perception that politicians are "out of touch" can be politically fatal. From George H.W. Bush's supposed amazement at supermarket scanners in 1992, to John Kerry windsurfing off Martha's Vineyard in 2004, to John McCain's inability to remember how many homes he owned in 2008 - these moments become powerful symbols of disconnection from ordinary citizens.
America's founding grievances centered on the problem of distance - both physical and social. King George III ruled from an ocean away, making responsive governance impossible. The colonists' revolutionary slogan "No taxation without representation" captured the fundamental crisis created when rulers don't experience the effects of their decisions, breaking the feedback loop between governors and governed. Thomas Paine stressed the importance of elected officials "mixing" with electors to prevent them forming separate interests.
For self-government to function, leaders must remain embedded in the system they govern. Democracy solves the feedback problem through mechanisms that keep governors connected to the governed. Feedback-that stream of information about performance-allows systems to self-correct. Without reliable feedback, systems veer off course and states become predatory toward citizens.
Psychological research confirms Lord Acton's warning that "power corrupts." Lab experiments show that even briefly induced feelings of power profoundly affect behavior. Those primed for high power think more abstractly, pay less attention to details, stereotype more, take greater risks, act more decisively, and justify themselves more readily. Most significantly, power narrows vision-the powerful pay less attention to low-power people and show less empathy.
Lower-class individuals consistently score higher on empathic accuracy tests, better judging others' emotions-a skill developed because their lives depend more on understanding those with power over them. Meanwhile, those in positions of power develop fewer empathic skills, or lose them as they gain status, becoming increasingly blind to perspectives outside their small circle.
This social distance explains institutional failures across sectors. The most incomprehensible aspect of the Catholic Church abuse scandal wasn't that some priests were pedophiles, but why Church authorities kept putting known abusers in positions to prey on more children. This failure stemmed from social distance - bishops and cardinals consistently extended compassion toward fellow clergymen while treating victims with cold officiousness.
Similarly, Hurricane Katrina's evacuation plan failed because officials didn't understand that 47% of New Orleans' poor lacked access to cars. The planning failure stemmed from social distance - the poor, elderly and infirm population left behind was almost entirely alienated from the policymakers who crafted the evacuation.
America has been in continuous war since 9/11 - "the longest sustained combat in American history." Unlike previous wars requiring civilian sacrifice through rationing or higher taxes, these wars have been financed entirely through debt while tax revenue declined. For most Americans, the wars are literally costless. Only 2% of fighting-age adults serve in the military - the lowest percentage since before World War II. Studies show the economic and political elite are significantly underrepresented in military service, creating a dangerous disconnect between decision-makers and those bearing war's burdens.
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Toward a More Equal America: Combining Two Eras of Equality
America has experienced two remarkable eras of equality over the past seven decades. The first era (post-WWII to early 1970s) featured unprecedented economic growth, expanding middle-class prosperity, and declining income inequality. During this period, union membership peaked at 34 percent, CEO-to-worker pay ratios stayed around 25:1, and income gains were distributed across all levels, with the poorest 20% seeing the largest growth.
The second era (mid-1970s to present) saw dramatic improvements in racial, gender, and sexual orientation equality, with more diverse elites, women entering the workforce in unprecedented numbers, shrinking gender pay gaps, and historic LGBT rights advances. However, during this period, economic inequality soared-the top 10% captured all income gains while the bottom 90% saw declines, and CEO pay skyrocketed to 185 times worker compensation by 2009.
We must combine the best aspects of both equality eras, challenging the meritocratic ideology that focuses solely on equality of opportunity while ignoring outcomes. True meritocracy can only flourish in societies with relatively high equality of outcomes. Without concern for equal outcomes, opportunity equality inevitably deteriorates.
Reducing inequality is a "solved problem"-achievable through policies already proven effective elsewhere, like Brazil's successful redistribution programs under Lula da Silva. Across OECD countries, higher taxation correlates with less inequality. America's declining tax progressivity-including the gutting of estate taxes and reduction of top marginal rates from 70% to 35%-has exacerbated inequality. The wealthy now often pay lower effective rates than middle-class workers, turning the tax system from an inequality restraint into a tool maintaining it.
Surprisingly, research by Norton and Ariely reveals Americans actually desire a more equal society than they believe exists, with broad support for taxing the wealthy across demographic groups. The obstacle isn't public opposition but that "people and institutions who benefit most from extreme inequality have outsize power" to protect their interests.
A potential source of transformative power lies in the "newly radicalized upper middle class" - the frustrated professionals who feel increasingly dispossessed despite their education and relative privilege. This demographic forms the core of both progressive movements like the Netroots and conservative ones like the Tea Party. Though ideologically opposed, they share the rage of an "insurrectionist class" who "worked hard and played by the rules" only to find the game rigged.
Hayes points to Occupy Wall Street as an imaginative movement that understands fundamental change requires reconceptualizing basic political divisions around class rather than party or religion. He acknowledges the challenges of building such coalitions but suggests that future crises may create opportunities for new political alignments. The post-meritocratic elite, he argues, inevitably produces failure because it's too socially distant from the institutions it manages.
"Accountability is the word that comes up most in conversations with the new insurrectionist activists. We cannot achieve equality without first achieving some measure of accountability for those at the top."
