Extraordinary Impacts: Malcolm Gladwell, the New Yorker contributor and author, wants to talk about how we limit human potential. Only one in six kids from poor schools who could perform athletically in college sports actually get a scholarship. Why? This is the capitalization rate: what percentage of people successfully achieve the things that they could? And there are three things that hold down capitalization rates in the US, he says. The first is poverty. “I have a friend who finds kids from poor schools and gets them scholarships. But the high school they go to requires them to cross gang lines, which means none of the boys can go .”
What other conditions are there? He looks to one of the best junior hockey teams in Canada. What’s strange is the birthdates of most of them are in the first half of the year. Why? In the world of hockey, the cut-off date is January 1. The selectors pick the big kids, regardless of their skill - and then give them 10 years of special training. By the time they’re 17 or 18 the kids who were just the biggest are now also the best.
This is an extraordinary constraint on capitalization. Common sense would say that if you started a second, parallel hockey league which June 1 you should be able to develop twice as many great hockey players. The cap rate . The cap rate isn’t limited by poverty, but by the stupidity of the officials who don’t recognize they aren’t good at growing talent.
He refers to James Flynn, an academic who got really interested in why Chinese immigrants to the US vastly outperform white Americans. Within one generation, they’re achieving at an extraordinary rate. The difference is not usefully described by differences in IQ. The cap rates for people who are smart enough to be a professional who end up being a professional is vastly different in different communities: 78% in Chinese American community rather than 60% in the white community? How are they able to capitalize on this? Flynn suggests it’s because they work harder, and Gladwell agrees. But why?
If you take a group of Chinese schoolkids and a group of American 10-year-olds and give them a complex maths task and time them at it, you’ll find the American kids give up after 2 minutes; the Chinese kids will still be working after 15 minutes. It’s about persistence: it’s the consequence of ingrained cultural notions of how hard you should work.
This is a cultural problem. Why is this discussion so important? Our initial thought is always to argue that there is some innate difference in ability. That’s wrong: what cap rates say is that there’s another explanation - to do with poverty, stupidity and culture. “We have a scarcity of achievement in the US because we’re squandering it. But it’s not bad news, it’s good news - because it’s not scarcity we have to live with: we can do something about it.”