I love data—particularly data that provides us with new ways of thinking and looking at problems. These are my insights.
The data indicate that poverty can be viewed through the lens of a social reproduction cycle. Parents with money can provide their children with access to better education and applications to excellent universities that will ultimately land them in a secure, well-paying job. On the flip side, poor parents can’t afford the best education, leading to mediocre (if that) applications and an equally unremarkable job. The following quote by Curtis Child explains this disparity well.
“Here is a puzzle to get us started: If success and failure in life rely on our own talents and abilities, then it must follow that those who 'win' the game of life are those who were smarter and/or worked harder. If this is true, then how should we understand systematic, categorical disparities? For example, why do women, on average, earn lower salaries than men? Why are minorities disproportionately absent from boardrooms and executive suites? If failure and success are the just rewards of our own merits, then it must be the case that women and minorities (and immigrants, etc.) are less intelligent and/or unwilling to work as hard as others. If that conclusion sounds ridiculous, which it should, then we must look elsewhere for an answer.”
–Curtis Child, PhD Philosophy in Sociology
The concept of a cycle that keeps impoverished individuals in poverty is not completely unfamiliar, but there is a growing movement indicating that individuals can break out of the cycle simply by working hard and dreaming big. The data does not support this theory, indicating alternatively that the resources or capital that one has at their disposal contribute enormously to their ability to break out of the poverty cycle and improve their life.
Bill Gates: A Striking Example
Bill Gates was born in 1955 to his father, William Henry Gates, and mother, Mary Maxwell Gates). Best known for the wealth and fortune he gained by spearheading the computer company, Microsoft, Bill’s story is often used as one of entrepreneurship and how people can follow their dreams to success if they work hard enough. Bill even dropped out of college to pursue his company, a story that young adults love to share when they are debating the benefits of college.
Upon further analysis, however, we find an interesting story. Bill didn’t just drop out of any college, he dropped out of Harvard—Harvard—One of the most prestigious schools in the country. In examining Bill’s life, we discover that he had many resources available to him that the vast majority of American’s just didn’t have at the time.
His family had money. He attended the best schools. He had access to technology at a time when it was still new and very expensive. He had free time to read books and learn to program. He had successful parents that displayed a culture of professional success (Bill had been attending Harvard with the intent of studying law, as his father had). He had peers who recognized his abilities and opened doors for him at local programming companies—experiences that led directly to his work with Microsoft.
Did Bill have to work hard for his success? Definitely. Did he have help and opportunities along the way that most American’s didn’t have? You bet. We call that capital—the ability to take a resource and use it to produce something of value. There are many different types of capital, and as we dive deeper, we find that Bill had all of them at his disposal.
When an individual or group possesses money and material resources that can be used to produce something of value, this is known as economic capital. In business, it is used to describe the amount of financial resources that are needed to remain stable. For investing, it is defined as a measure of risk that used to build out a company’s risk profile.
For the typical American, this is simply the dollars and cents that can be put towards food, housing, transportation, health, and other needs (and yes, I would classify those as needs) that an individual might need to pay for. A greater amount of wealth enables someone to drive their car to work rather than taking less convenient public transportation. It can buy access to schools and technology, pay the electric bill, and put food on the table. Economic capital is the way that we exchange something of value for something else that we can use to improve our life or advance our goals.
Human capital comprises knowledge or skills that have been developed by education or training. When I was young, my father taught me how to kayak the whitewater sections of the Salmon River in central Idaho. Seeing the white-capped waves from the angle of a tiny inflatable kayak was exciting for my adventurous personality, but there was always the panic of feeling like the wave was going to toss me from my boat and drag me into the cold, dark water.
My father taught me a valuable lesson for a kayaker: The wave won’t be able to flip you if you hit it head-on. Over the years. my father’s advice has proven true on many occasions; when I am sideways heading into a wave, I regularly find myself swimming back to my kayak. Having access to someone who was skilled and who had learned from experience aided me in becoming better at kayaking than I ever would have on my own. I could’ve learned a lot, but the value of a great teacher enables us to accomplish so much more.
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Social networks and relations of trust that provide us with access to opportunities that we would otherwise miss out on are referred to as social capital. How many business books have you read? I’ll save you some time and money—they all reference the same thing as a game-changer when finding a job or advancing your career: It’s all about your network.
Now, this introduces us to a concept that I find hard to accept. If I don’t know anyone and nobody can put in a good word for me, will I still be able to land my dream job? Will it be given to the CEO's nephew? Or will they only select prospects out of the "referral" pool? The fact that networking is so advantageous when applying for jobs illustrates what happens to those that find themselves outside of the network; they face a lot of rejection and ultimately settle for less desirable jobs.
Cultural capital is a stockpile of knowledge that enables an individual to engage in a certain lifestyle or to take steps in a specific direction. For many individuals that attend top-level MBA schools, a common job to apply for is that of a management consultant, preferably at a top-tier consulting firm. These MBA graduates have been groomed from the time they were young for exactly such a position.
They have been told that they need 3.5 GPAs, at least a 32 on the ACT, and some serious leadership experience. They were taught that if they want to get the job, they need to study case problems (mind puzzles to see how people think) and demonstrate that they can logically reach and defend a conclusion. They have no doubts about what they need to do to make their dream come true; it’s simply a matter of execution.
The less informed have no hope of ever standing out. They missed the boat (culturally speaking) that would’ve taught them about the expectations of a consulting firm regarding its applicants, and this culture proves invaluable for those who were groomed from a young age to reach those lofty goals.
Going back to the life of Bill Gates, it’s not hard to find examples of all the different types of capital he possessed. You see, people can use capital to their advantage, but when they don’t have any capital, they find themselves in a cycle of poverty. These different types of capital aren’t as easy to come by as one may think.
This concept of capital is beautifully illustrated in Barbara Ehrenriech’s book Nickel and Dimed. Barbara goes undercover to investigate and experience firsthand the lifestylez and challenges of low-wage workers in America. Ehrenreich’s goal was to see if she could survive (buy food, pay rent, build savings, etc.) off a meager income and still have enough money for the next month. Her jobs included working as a waitress, a housekeeping maid, and a retail chain employee.
Her findings are thought-provoking: Without any savings and without a support system from parents or other family members, the financial situation for many low-wage workers is a constant demand on their time and energy. Many are unable to make ends meet, and without the right inputs, the output of their life is unlikely to improve (Ehrenreich).
The failures of the lower class are not based on their lack of skill or motivation, but rather on the structural issues that make working their way out of their impoverished situation very difficult. With no initial money, Ehrenreich can’t afford the deposit on her lodging and is forced to pay for a temporary and more expensive motel room. Without kitchen appliances and a place to prepare food, she cannot cook or save food and is obligated to buy more expensive food at gas stations and fast-food establishments.
Capital—without economic, human, social, and cultural resources, we learn that the story of poverty is much deeper than it appears on the surface. Those that lack the proper resources don’t have enough for themselves, let alone their families, and their children grow up to inherit the same lack of capital that that doomed them to poverty.
So Really, Who Wins?
There must be something more going on here. There are systematic, categorical discrepancies in the way that success and failure are represented in our society today. Hard work, intelligence, and determination are all noble qualities that have improved the lives of millions over the years, but we are doing a disservice to those who find themselves on the “losing” side of life if we state that they are there simply because they lack those qualities. Those who win are the individuals who have a structure in place around them that provides them the tools to be successful. It’s very difficult to climb that ladder, and it’s also very difficult to fall down once you’re up there.
- Ehrenreich, Barbara. Nickel and Dimed: On (Not) Getting by in America. New York: Metropolitan Books, 2001. Print
- “Bill Gates.” Biography.com, A&E Networks Television, 4 Dec. 2019, www.biography.com/business-figure/bill-gates.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2020 Brad Nye