The Elite Overproduction Myth

0:00 [SPEAKER_00]: Formal education will make you a living. [SPEAKER_00]: Self-education will make you a fortune, gym-grown. [SPEAKER_00]: Today, my presentation is a little bit more macro, probably a little bit more on the social class side of things. [SPEAKER_00]: And I am going to be talking about the elite overproduction hypothesis.

0:21 [SPEAKER_00]: There are more people competing for those same small amount of spots. [SPEAKER_00]: This is going to be kind of a debunking the doomer because I'm going to challenge that thesis. [SPEAKER_00]: I really don't believe that there is this idea of a scarce amount of good opportunities in society.

0:37 [SPEAKER_00]: And basically, for you guys who are not familiar, this was termed by a social scientist named Peter Turchin who is commonly sourced online. [SPEAKER_00]: And the reason why I'm mentioning this is because I've gotten asked more about this than maybe [SPEAKER_00]: any other topic in regards to what I've discussed on this channel and it's the idea that basically there is a social pyramid and that if you have certain qualifications that you belong in a certain level of society I don't think has really ever been true and the problem is now you have a lot more people like the percentage of people who have law degrees is much higher than [SPEAKER_00]: any sort of graduate degree has, I think, it exceeds now 10% of the population in the United States, which is a lot higher than it historically has been.

1:27 [SPEAKER_00]: And it's the same for the amount of people of other professional degrees or MBAs. [SPEAKER_00]: But the problem is that you have a generally a more educated society, but [SPEAKER_00]: There aren't enough of slots in the so-called top 1% for all of them to have things. [SPEAKER_00]: And so as a result, tertians theories that those people will get angry, and they will try to promote radical change or outright revolution, because we produced too many elites for non-nuff elite jobs.

1:58 [SPEAKER_00]: That's his thesis. [SPEAKER_00]: I don't really think it's true. [SPEAKER_00]: One is he hasn't really quantified what is, [SPEAKER_00]: the elite, like even by his own metrics, what was considered the top 1% in 1970, three to four percent of people qualify today. [SPEAKER_00]: So as a result, you have now, even by his, that he says three to four times more people who are doing at that level of success and wealth than you did in 1970.

2:28 [SPEAKER_00]: And he doesn't really state what that is. [SPEAKER_00]: Is it wealth, is it income, is it political power? [SPEAKER_00]: He also conflates two distinct populations. [SPEAKER_00]: Credential professionals, where he said, law, menace, and finance, advance degrees, and capital holders, which are people who actually have ownership, whether that's a business, whether that's of real estate, whether that's entrepreneurs, or whether that's large shareholders in the public markets, et cetera.

2:50 [SPEAKER_00]: Those are the people who actually have control of the levers of wealth and society when [SPEAKER_00]: in reality, that's never really been true, when that's especially not true now. [SPEAKER_00]: And just because those people aren't the same, doesn't mean that opportunity is closed off.

3:06 [SPEAKER_00]: So let's go to the numbers that actually matter. [SPEAKER_00]: Let's look at IRS data. [SPEAKER_00]: In 1980, what percentage of the population do you think made more than $100,000 a year? [SPEAKER_00]: Take a guess. [SPEAKER_00]: Two. [SPEAKER_00]: Blower. [SPEAKER_00]: 0.6 percent. [SPEAKER_00]: So, 0.6 percent of individual income tax returns reported adjusted gross income of more than $100,000 in 1980.

3:29 [SPEAKER_00]: 560,764 returns out of about 93.9 million total returns. [SPEAKER_00]: And that's in $19.80. [SPEAKER_00]: which today would be about $391,000 in $20.25. [SPEAKER_00]: And that bracket really didn't stay fixed. [SPEAKER_00]: How many people today make more households make more than $250,000 a year in the United States today?

4:00 [SPEAKER_00]: That's about 10% of households make more than 250. [SPEAKER_00]: So if I had to guess just based on confidence intervals and basic statistics, it's probably closer to maybe seven to eight percent of households today, make more than 300,000. [SPEAKER_00]: So just by that metric alone, the amount of people who are at quote unquote an elite level, because I would put there's a top 0.07 percent of income to be relatively elite.

4:22 [SPEAKER_00]: is ten times the amount that it is today that it was back then. [SPEAKER_00]: So that means that our society is getting legitimately wealthier, not just inflation. [SPEAKER_00]: And the bracket didn't really stay fixed. [SPEAKER_00]: You had more people make it into what would be considered conventionally the successful level of income and wealth that you've had in the past.

4:46 [SPEAKER_00]: And it's the same story really at the very top. [SPEAKER_00]: The top 1% of household wealth was 23% in the 1970s to about 32% today, and the amount of people with 20 million net worth was probably less than a thousand people in the 1970s. [SPEAKER_00]: And now today, it's well over 150,000 people fit that category.

5:12 [SPEAKER_00]: So, there's basically, he's all wrong because his idea is that there's a fixed bracket of people who achieve a certain level of wealth and success, and whereas the economic data shows that there's a much bigger pool and the pool is growing. [SPEAKER_00]: But the thing is, though, there is a valuable lesson to learn from all this discord on the elite reduction over reduction hypothesis.

5:32 [SPEAKER_00]: Because most people, when they read this irrationality, is like, I should just give up. [SPEAKER_00]: Just to quick break here, I'd like to remind you that the analyzing finance with Nick tour is back for the fourth quarter of 2026. [SPEAKER_00]: And I'm excited to announce all the places that will be having meetups.

5:48 [SPEAKER_00]: We will also be going back to the south in October with three stops in Georgia and the Carolinas [SPEAKER_00]: We'll be returning to Atlanta, Georgia on October 22nd, and then we're going to Charleston, South Carolina on October 24th. [SPEAKER_00]: And then in November, we will be heading to Las Vegas, and then we'll also be having two meetups in Texas.

6:13 [SPEAKER_00]: one in Houston on November 12th and one in Austin on November 14th. [SPEAKER_00]: And to end the tour, our final stock will be in Palm Desert, California on Saturday, December 5th. [SPEAKER_00]: I look forward to seeing you guys all to wrap up the tour and there will be a link in the description and the pinned comments to sign up for your spot via the event bright page.

6:37 [SPEAKER_00]: Now let's get back to the main content. [SPEAKER_00]: The only really way to get to the top of society is being born into it or being well-connected or if I didn't get into an Ivy League school when I was 18, I should just have to settle for our mediocre life. [SPEAKER_00]: But that's not really the answer.

6:51 [SPEAKER_00]: Or I need to demand radical political change so that my group of people can move up to the top through the seizing the levers of power. [SPEAKER_00]: Now those are the right answer. [SPEAKER_00]: to this solution. [SPEAKER_00]: Like, the old script of just getting a degree and then getting a job and working there for 40 years and getting promoted along the way and coasting to retirement doesn't really work.

7:13 [SPEAKER_00]: It still works for stability. [SPEAKER_00]: If your primary goal is just to be stable and have no change, you could theoretically do that, especially if you work in a more government oriented profession. [SPEAKER_00]: But the thing is that that's not going to be really the path to advancement.

7:27 [SPEAKER_00]: That's how to be very different. [SPEAKER_00]: The way to advance in the modern world requires taking on some sort of risk. [SPEAKER_00]: It's just how you choose to take on that risk, can vary. [SPEAKER_00]: But you're going to have to usually take on some sort of risk. [SPEAKER_00]: You can't really coast on credentials alone.

7:43 [SPEAKER_00]: Like even example, like doctors and lawyers, [SPEAKER_00]: Like a doctor in a lawyer can still be very successful today, but they need to treat their practice more like a business owner treats a business. [SPEAKER_00]: So like say if you're a doctor and you're a podiatrist, I'm just throwing out a random example.

8:00 [SPEAKER_00]: And you want to start a podiatry practice. [SPEAKER_00]: in Los Angeles, but there's 250 other doctors who have all five-star yelp review averages. [SPEAKER_00]: It might be hard for you to get clients because there's already so many other people to do it. [SPEAKER_00]: But let's just say you moved to an emerging city or smaller towns, say like Las Vegas or Santa Fe, New Mexico.

8:22 [SPEAKER_00]: As an L.A., there might be one podiatrist for every 5,000 people in Las Vegas, there might be only one podiatrist for every 100,000 people. [SPEAKER_00]: And so as a result, it'll be easier for you to build your book of business. [SPEAKER_00]: You just have to think more like a business owner, and it's not just geographic.

8:38 [SPEAKER_00]: The Haversamble employment lawyers in San Diego. [SPEAKER_00]: But you can be the employment lawyer that focuses on cases where IP is stolen from AI models, some software developers. [SPEAKER_00]: And if you would be the gugun guy who has that niche, people will come to you, even the front of more established employment lawyers in general, because they know that you can handle this one particular niche of the market better.

9:04 [SPEAKER_00]: So those are kind of examples. [SPEAKER_00]: You have to pivot that credential into ownership of something, whether it's your own practice, whether it's your own niche, whether it's your own specialty and reputation that you've built. [SPEAKER_00]: you can't just coast on simply having the credential that a lot of people, especially in my generation and millennials were conditioned in high school and college to do so.

9:26 [SPEAKER_00]: There's also another path in life that you can skip the credential entirely and that's self-employed. [SPEAKER_00]: Self-employed Americans are about 20% of the US workforce right now. [SPEAKER_00]: And despite only being 20% of the workforce, they make up about 2-thirds of millionaires in the United States.

9:44 [SPEAKER_00]: Nearly half of top-decyl income families own a private business versus just one-fifth of families overall. [SPEAKER_00]: And half of small business owners hold a college degree. [SPEAKER_00]: And most of the business owners who do hold a college degree is usually either a bachelor's degree or an MBA.

10:00 [SPEAKER_00]: So like, you don't need to get a PhD or several layers of master's degrees to start a successful business, even if it's something that's intellectually intense. [SPEAKER_00]: This ownership path doesn't really go through the credential pipeline at all. [SPEAKER_00]: It runs through your income statement and your balance sheet and your ability to actually provide value in a more direct way.

10:21 [SPEAKER_00]: There wouldn't be an entire lane that you can side step this whole institutional class pyramid that I've talked about or the whole generic corporate ladder that is pitch to society that [SPEAKER_00]: people like to complain about all the time, and the other pushback, I know I'm going to get from this, is like, Nick, a lot of those people are able to start businesses in the first place because they had good networks, like they can go to their dad's friends in the country club to give them venture capital or...

10:49 [SPEAKER_00]: they know all the people who would be their first clients before they even start. [SPEAKER_00]: And access to capital opportunity does run through relationships, that is real. [SPEAKER_00]: But what they are not saying is that you can build those relationships. [SPEAKER_00]: Proximity is earnable and you can go into those rooms.

11:10 [SPEAKER_00]: You can meet people. [SPEAKER_00]: There are lots of conferences, there are lots of events. [SPEAKER_00]: There are ways, especially in the internet, you can just show your work online. [SPEAKER_00]: If you have anything that's worth paying attention to, the right people will eventually find you, especially if you put in the effort to do it.

11:26 [SPEAKER_00]: And so, that's kind of where I think a lot of this idea of the world being a giant old boys network is not there entirely, like you can build a business or you can find your niche in society by just putting yourself out there, whether in the physical world or in the digital world. [SPEAKER_00]: And like believing the doors closed is the actually the thing that limits people more than the door actually being closed.

11:55 [SPEAKER_00]: So overall, like the anxiety that surrounds Peter Turchins' work and people who advocate for it is real, but excludes a lot of opportunities such as self-employment or the ability to make your own fortune that I think is really common in the world. [SPEAKER_00]: The bracket in the top also hasn't stayed fixed, it is grown, not just as in terms of raw numbers, as the population is grown, but also as a percentage of the population, which people need to know.

12:23 [SPEAKER_00]: And you can't just rely on a credential, even though credentials can still help you if applied correctly. [SPEAKER_00]: The key is that you are able to apply whatever knowledge you gain in a way that actually generates additional value to society. [SPEAKER_00]: And this opens up a lot of paths for people who are more high agency and who are creative and are hardworking and can see opportunities.