Pumpjack Book Reviews

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Book Review: Success and Luck: Good Fortune and the Myth of Meritocracy by Robert Frank

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A powerful and illuminating book.

“Failure to appreciate luck’s importance has made successful people more reluctant to pay the taxes required to support the investments necessary to maintain a good environment."

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert Frank is a quick and illuminating read about the fundamental role of luck in success, how ignoring that simple truth contributes to wealth inequality, and a straightforward tax-based solution to help mitigate it.

The problem is simple: people who succeed, at anything really, attribute their success solely to hard work and perseverance, negating the ever-present role of luck. And those who don’t succeed are often seen as simply not trying hard enough, or lacking the skill and expertise to succeed, as if somehow deserving of their poor fortune, rather than considering their lack of good fortune.

As Frank points out, there’s a good reason for this — it helps us make our way through an uncaring, often hostile world: “So if believing that talent and effort are all that matter makes it easier to tackle difficult tasks, then denying luck’s importance may be adaptive.”

We lie to ourselves that we’re masters of our own destiny to avoid sitting around paralyzed with fear and doubt: “As with beliefs about luck, then, beliefs about free will might be adaptive even if they are objectively false.”

This is belief is inaccurate of course. Luck — from the country you are born into, the color of your skin, the wealth of your parents, the food your mother ate before you were born, the circle of influence wealth gives you — is completely outside our control, but each element contributes to a cumulative propelling effect that, in addition to effort and tenacity, lead to more opportunities and better potential outcomes.

The problem of course is without the myriad forms of luck that lead to enrollment in an ivy league school or a job on Wall Street, all the hard work and tenacity in the world still can’t overcome bad or even neutral luck. Admitting to this, which seems pretty straightforward to me, drives some people to distraction, as if it’s an attack on the American dream itself. And NOT owning up to this has dramatic effects on society.

“If being born in a good environment is one of the luckiest things that can happen to anyone, it is failure to appreciate luck’s importance that has done the most to undermine our collective stock of good fortune. That’s because failure to appreciate luck’s importance has made successful people more reluctant to pay the taxes required to support the investments necessary to maintain a good environment.”

Being born lucky (and that can take any number of forms — say, white, straight, into a wealthy family in an affluent neighborhood) — and you get to swim with the economic currents. If you’re born unlucky, and start taking away any of those attributes, you have to swim against the currents. Effort, tenacity and personal responsibility still count, it just takes two, three or four times as much to make it half the distance.

The author uses some basic studies from cognitive science — all the biases we carry around with us to justify being the heroes of our own stories — to bring this to light.
He points out that “…those who are oblivious to their own advantages are often similarly oblivious to other people’s disadvantages…”

And he offers a simple tax change to start mitigating against the inequality and lack of opportunity that keep so many swimming against the current: a progressive consumption tax rather than an individual income tax to generate enough revenue to fund a society that can help offset bad luck and create more opportunity.

“…individuals can’t choose the environments into which they’re born. But society as a whole can mold those environments in significant ways. Doing so, however, requires intensive levels of investment. We who were born into highly developed countries are thus the lucky beneficiaries of centuries of intensive investment by those who came before us. In recent decades, however, those investments have been depreciating.”

His proposed tax plan works something like this: people pay taxes on the difference between what they earn and what they save, the money spent on consumption. It’s progressive, so money spent on the basics, say, food and rent, is taxed at a lower rate than money spent on a condo on Park Avenue or a high-end sports car. The tax, in essence, helps re-direct money spent on lavish items into the federal coffers to spend on infrastructure and social investments and, since we’re all in the same boat, it doesn’t feel like the wealthy are being singled out to pay a greater share.

“…being born in a good environment is an enormous stroke of good fortune. More important, it is the one form of good luck over which societies have any significant degree of control. But that control requires high levels of investment, which many societies have lately been reluctant to support.”

It seems like a pretty elegant solution — and one that will progress exactly zero inches under the current administration and in a society that seems determined to redirect the fruits of the economy to the lucky few at the top — deserving of it’s own book.

Still, it’s great to see an author providing an actual, well-thought out solution to wealth inequality and shining a light on the dark side of a society in which so many struggle to get by while a lucky few, with wealth and influence passed from generation to generation, shape policies that prevent others from having the opportunity, with a little luck, to climb the ladder as well.

“People succeed on a spectacular scale, then use some of their gains to win more favorable tax and regulatory treatment, which increases their wealth still further, enabling them to buy even more favorable treatment…”

Positive change, it seems, starts with an appreciation of the role of luck in individual success:

“In the normal course of events, few of us give much thought to how seemingly minor random events often profoundly alter our lives. Failure to give luck its due is of course not the only reason we’ve failed to maintain the environments that so many of us have been fortunate enough to enjoy.”

The book ends on a well-deserved note of caution:

“We could wait for the inevitable financial crisis to occur. Or we could start talking now about why it would make sense to take action more quickly.”