The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

none of this sorting would happen if the less-well-off could follow the better-off into their enclaves. There would be no escaping the mixed, integrated community. In the United States, the price of housing, maintained at a high level by zoning laws that effectively limit the construction of low-income housing, keeps the unwanted lower classes out of a higher-class neighbourhood or out of a desirable city. Conversely, in declining communities hit by trade, we have seen that the better-educated management workers move out, accelerating the decline in the remaining community. The net effect of all this is that in an economy that increasingly requires workers with stronger capabilities, access to acquiring capabilities has become highly unequal, with the children of those who already have strong capabilities more likely to secure them, and the children of those with modest capabilities unlikely to have much hope for their children. The market has subverted the community’s role in providing equal access by creating unequal communities. We have moved toward a hereditary meritocracy.

Hereditary meritocracy