On The Money with Katie Show this week, we’re discussing a flurry of scams designed to infiltrate hearts, minds, and wallets—from MLMs to prosperity gospel megachurches (and all of the delightful contradictions therein).

As we were developing the episode, I kept circling the concept of individualism: a cultural belief system (and, I suppose, a political system) that emphasizes autonomy, independence, and self-sufficiency. It generally pooh-poohs the idea of taking a holistic approach to universal needs that collectivist cultures celebrate. (“Individual merit” and “deservingness” were big talking points in the schemes we cover in the episode.)

And while we could debate the ethical implications and capitalist merits for the next 48 hours until the episode drops and still not reach any definitive conclusions, what's always struck me as fundamentally problematic isn’t a moral issue, but a logical one: It doesn’t scale.

Individualism operates under the fragile assumption that the system grades on absolute terms—that if everyone worked hard enough, everyone could receive an A.

But our society grades on a bell curve, shuffling the most exceptional to the front of the class. If everyone became uniformly more exceptional, the curve would just shift to the right—the bar for “average” simply rising.

(Look no further than the way post-secondary education went from something special that set you apart in the job market, to a prerequisite for being hired.) 

There’s no iteration of individualism wherein everyone ends up better off, because its core functioning mechanism is competition—and you can’t have winners without losers!

This plays out in a rather obvious way in something like a multilevel marketing company, which is transparently-but-somehow-not-legally a pyramid scheme. Your success is contingent upon your ability to recruit a greater fool, so widespread success in a pyramid scheme is mathematically impossible.

It’s less obvious in, say, a job market, where—if you take one single company as a microcosm—the hierarchical structure itself plays a definitive role in outcomes. 

The CEO and mid-level manager may be equally competent, but only one person gets to be CEO. There’s a fixed number of “winning” spots, making the race to the top zero-sum. Someone has to be at the bottom of the pyramid, earning the entry-level wages and doing the work nobody else wants to do. 

And while you could say the “loser” in this scenario is still a winner because they have a job, the fact that there are far more people at the bottom than the top is the point: I remember when I started my career in an entry-level role at a Fortune 100 company and observed the path upward, it was clear how I would ascend to the next couple of levels (assistant manager, to associate manager, to manager, to senior manager, etc.), but then things got murky: I could see there were a lot more people on the bottom four levels than the top ones.

I guess I’m going to have to battle it out with these other young women for the few spots that the old men currently hold, I thought to myself, doing some quick math that revealed the uncomfortable truth and wondering what happened to the careers of everyone else who didn’t score one of the few top jobs. 

The promise of career upward mobility, I realized, was a widely held corporate delusion that only came to pass for a select few. Some will work their way up. Most won’t.

Which got me thinking: Individualism is an absurd policy position

A good barometer for testing the scalability of something is asking, “If everyone took this advice, what would happen?” 

Similarly to the hierarchical corporate structure, most individual advice can’t or doesn’t scale well in practice, which makes it an awfully wonky policy position for things like childcare, healthcare, and other infrastructure that a functioning society needs to operate properly.  

A popular, hyper-individualist line of defense for the American childcare status quo is, “If you can’t comfortably afford the average $16,000 per year per kid in daycare expenses, maybe you shouldn’t have those kids.” It’s a mighty strange position, considering roughly half of American households earn less than $70,000 per year before taxes and almost definitely couldn’t “comfortably” spend one-third of their take-home pay on daycare, no matter how low their other bills were.

If all of those people followed the advice to not have children, birth rates (and by extension, the United States’s economic system) would collapse in a few generations, because there wouldn’t be enough replacement workers to keep things rolling. (We’re setting aside the fact that “only rich people should reproduce” is textbook dystopian.) Birth rates are already on a dangerous decline, according to some economists, so doubling down on individual hustle in the childcare realm is an all-around bizarre approach. (It’s worth noting that women’s participation in the labor force and wide availability of contraceptives are some of the reasons given for low birth rates.)

Another relevant example: I’ve long pointed out the fact that financial independence and early retirement cannot exist at scale, because our economic system would cease functioning. If every young person in their thirties or forties achieved financial independence and quit working, the workforce would be limited to those under the age of 35, effectively removing roughly 66% of the current labor force, or the equivalent of about 44 million people.

For reference, approximately 4.2 million people left the workforce because of the Covid-19 pandemic (because they passed away, retired, or couldn’t work for some other reason) and it created an incredibly tight labor market. Imagine that x10, and you’ve got a country where “FI/RE” is prevalent.

Of course, there’s a funny redundancy in the system: If 44 million working-age people retired en masse and ceased most discretionary spending…corporate profits would drop, the stock market would stutter to a halt, and the returns required to support early retirement would vanish, driving everyone back to work.

In the same vein, a popular suggestion for those who work for minimum wage is to “go back to school and get a better job.” Fair enough for a handful of minimum wage workers, but the system might just break if all 1.6 million minimum wage workers applied that advice. 

It’s possible businesses would be forced to pay higher wages if there were suddenly no one willing to work for $7.25/hour anymore, but on a smaller scale in the post-pandemic world, we’re observing that scenario play out before our eyes amidst impassioned cries that “nobody wants to work anymore.”

These are eye-opening thought experiments that illustrate the point: A lot of good advice simply doesn’t scale, and therein lie the limits of individual solutions for certain issues that impact everyone in more or less the same way.

Even our housing policy isn’t exempt 

Well-intentioned individual solutions stop working if everyone enacts them. 

There’s even an interesting school of thought that suggests the housing market—something traditionally believed to have intrinsic, indisputable value—is a bit of a Ponzi scheme, as Jerusalem Demsas highlights in this piece for The Atlantic:

“At the core of American housing policy is a secret hiding in plain sight: Homeownership works for some because it cannot work for all. If we want to make housing affordable for everyone, then it needs to be cheap and widely available. And if we want that housing to act as a wealth-building vehicle, home values have to increase significantly over time. How do we ensure that housing is both appreciating in value for homeowners but cheap enough for all would-be homeowners to buy in? We can’t.” (Emphasis mine.)

It’s worth pointing out that homes in the US didn’t begin appreciating beyond the inflation rate until about the 1970s. By the 1990s, it was a “free market” heavily manipulated by government intervention: Everything from the 30-year fixed rate mortgage to the mortgage interest rate deduction to zoning restrictions and artificially constrained supply impacted the prices of homes.

When we started working on the episode, I had a pretty clear-cut idea of what the criteria were for a scam, not the least of which was a core lack of scalability

But the more my team and I unpacked the idea and “individualism” became a common throughline between the various schemes we uncovered, I found myself asking: Is everything a pyramid scheme? 

It’s hard to point to anything in a modern economy that isn’t contingent upon a new class of suckers coming up, to whom you can offload your overvalued real estate or stocks before cashing in your chips and going on your merry way. 

All the individual advice often touted as the solution to “winning” in modern life is built on the scaffolding of a flimsy contradiction, because—by definition—it cannot work for everyone. The system prescribes that there must be losers, which is all well and good if the prize you’re vying for is a fancier car, a pair of designer shoes, or a lush corner office.

It’s not, however, a legitimate answer to our collective, universal needs like quality childcare and housing.

The half-funny, half-sad thing is, these realizations alone aren’t enough to render advice to individuals worthless, because the system of winners and losers is still the one we operate within—but when individual merit is a society’s answer for creating the conditions necessary for it to continue thriving, reproducing, and growing, things begin to resemble an economic Mad Max. That doesn’t bode well for anyone’s future, whether you’re individually exceptional or not.