When I first heard the term "Nepo Baby", I thought it was a term for some type of illness or birth defect that an infant was born with. Which I guess is not completely incorrect? It is something that they are born into, hence the use of the term baby. What it is not, however, is something that the parents are ashamed of such as a cleft pallet.
Nepo is short for nepotism, a word which means to have higher chances of receiving a job over another individual because of having a relative of higher power/influence within an industry or society.
Nepotism has always existed and will likely continue to exist for a number of centuries in human history. There is no utopian society where there isn't always going to be somebody who considers their son or daughter for a position over an individual who may have better-suited credentials. We even see this in Hallmark movies. There is usually a daughter or son who is given a job at a business shortly after high school, sometimes without any prior educational background, and then within a short duration of time, where they have learned next to nothing about the business practices, is promoted to an executive position of some form. There is usually then a deliberation about how another individual who has been with the business for a significantly longer period of time and has taken the time to get the correct credentials through further education, should have received the position. Then we tend to see a falling out and the more qualified individual quits or faces some other turmoil such as a death in the family and there's a long, drawn-out realization within the son/daughter that they should not have been given the position and it was not what they wanted to do with their life to begin with so they give up the position to the better-qualified employee.
This is not just seen in fictional worlds though. It is commonly seen among childhood actors. Their parents pull strings and get them into careers early on in life because they themselves are in the field and there may be other actors who are better suited for roles or have a wider range of talents. It can also be seen in politics around the globe. Even in small positions such as sales and when somebody is hired in as a manager instead of a sales associate.
Nepotism is just about everywhere and it is not going anywhere any time soon. All you can do is acknowledge it and if you are the product of nepotism, try to do better.
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