Adrian Woolridge wrote a thought-provoking essay titled "Meritocracy, Not Democracy, Is the Golden Ticket to Growth," advertising a forthcoming book.
Meritocracy, the secret sauce of growth?
To Woolridge, meritocracy is the secret sauce of prosperity:
The surest sign that a country will be economically successful is not the health of its democracy, as some liberals like to think, or the leanness of its government, as some free-marketers imagine, but its commitment to meritocracy. Singapore is a soft authoritarian power. But it has transformed itself in a few decades from a poverty-stricken swamp into one of the world’s most prosperous countries, with a higher standard of living and a longer life expectancy than its old colonial master, because it is perhaps the world’s leading practitioner of meritocracy. The Scandinavian countries have some of the world’s largest governments and most generous welfare states. But they retain their positions at the top of international league tables of prosperity and productivity in large part because they are committed to high-quality education, good government and, beneath their communitarian veneer, competition; in other words — meritocracy.
By contrast, countries that have resisted meritocracy have either stagnated or hit their growth limits. Greece, a byword for nepotism and “clientelism” (using public-sector jobs to reward partisan cronies), has struggled for decades. Italy, the homeland of nepotismo, enjoyed a postwar boom like France and Germany but has been stagnating since the mid-1990s....
Democracy alone does not lead to growth, and likewise growth does not swiftly lead to democracy. Look at China vs. India, and many democratic, at least in the sense of leaders chosen by fairly free elections, but poor countries around the world.
For a generation, political economists have been looking more deeply at institutions -- rule of law, property rights, etc. -- as a secret sauce. "Meritocracy" is a good buzzword for a different idea of what is centrally important.
...countries that favor recruiting professional managers through open competition have higher growth rates than those that favor recruiting amateur managers through personal connections. America has the highest overall management score, followed by Germany and Japan. Rich-world laggards such as Portugal and Greece, and big emerging-market countries such as India, have a long tail of un-meritocratic and therefore badly managed firms.
The essay goes on, condensing much more evidence.
It is plausible that meritocracy is especially important now, as businesses globalize and incorporate IT. The rising skill premium and larger reach of global corporations means that it is ever more important to match skilled people with the positions that require skill.
His bottom line
... The idea that there is a necessary relationship between democracy and growth rests on a false positive. The really robust relationship is between meritocracy and growth. ..the evidence of economics is overwhelming: Meritocracy promotes prosperity, and dismantling meritocracy will reduce it. Those who support the current campaign against merit need to admit that they are opting for lower growth.
I am not an expert on the huge political/economic literature on the correlates of growth. This sounds reasonable, but the Acemoglus, Barros, etc. of the world may have important things to say on the evidence. Still, it's a novel idea and let's follow it.
We should distinguish "leading country" growth that must come from innovation, and "catchup growth" that simply uses current ideas most efficiently. Woolridge, and the rest of this essay, is, I think, mostly about the latter. For almost all of the world's population, that's what matters. And in my view, the US is a good deal below the efficient frontier as well.
Some evidence on the other side:
Another way to measure the prosperity-producing power of meritocracy is to look at what happens if you remove it. The City College of New York had a well-deserved reputation as the “Harvard of the proletariat,” taking thousands of poor adolescents, many of them the offspring of immigrants, and turning them into the successful citizens of a knowledge society — doctors, lawyers, academics and, in the case of 10 alumni, Nobel Prize winners. Then in 1970 the university introduced an open-access regime, admitting anyone who had graduated from the city’s high schools. The result was a simultaneous boom in student numbers and a collapse in academic standards. By 1978, 2 out of 3 students admitted to the college required remedial teaching in reading, writing and arithmetic. Dropout rates surged. Talented scholars left. A college that had once specialized in producing the rocket fuel of a successful society — talent — became synonymous with protests and sit-ins. In 1999, a task force led by former Yale president Benno Schmidt pronounced the larger City University system to be “in a spiral of decline.” The college only began to recover after it abandoned open admissions as a failed experiment.
This is nice as it illustrates where modern universities are going. It is however not obviously germane to the larger point. Maybe City College moved to an equally important role of providing remedial education to people ill-served by the city's disastrous public high schools. Maybe City College fed meritocratic middle managers, and left to Chicago the business of producing Nobel Prize winners. Really, that City College failed in this new role is the more trenchant criticism. But the decline of meritocracy in favor of other goals is indeed the post 1968 trend of modern universities.
Woolridge offers the story of Venice
...Venice is one of Italy’s least favored cities when it comes to natural resources. Yet in the early Middle Ages it was the richest city in Europe. Venetian sailors — there were some 36,000 of them in the 14th century — popped up as far away as China. Venetian merchants invented the prototype of today’s joint-stock companies, the commenda. The same merchants used the proceeds of ingenuity and dynamism to build some of the world’s most spectacular buildings and patronize some of its most glorious arts.
This Manhattan of the Middle Ages owed its success in large part to its unusual openness to talent: Rather than a hereditary ruler, the standard at the time, Venice had a doge who was selected by the ruling families; rather than a royal court, it had a council of wise men whose job it was to advise — and constrain — the doge. Social mobility was commonplace. Daron Acemoglu of MIT and James Robinson of the University of Chicago Pearson Institute calculate that in government documents in the years 960, 971 and 982, new names made up 69%, 81% and 65%, respectively, of those recorded. Institutions became more inclusive: From the late 12th century onward, a hundred new members were added every year to the Ducal Council, which kept the doge under tight control.
Yet from the late 12th and early 13th centuries, the most powerful families took to rigging the system in favor of their children. In 1315 they succeeded in locking their position at the top of society for good by publishing the “Book of Gold” (Libro D’Oro) — an official list of Venetian noble families that was intended to keep the social order exactly as it was. Venetians called this La Serrata: the closure.
La Serrata spelled the end of Venice as the world’s most successful city-state. A self-satisfied oligarchy used its power to hoard opportunities and strangle innovation...
It's a nice story, but I don't think we need to go back to the Middle Ages to see the pattern over and over. Societies in which people who make important decisions are chosen by skill, not connections, prosper. I hope the book will have a longer list of more recent examples. Military examples seem to me particularly useful. The tension between giving command decisions by political connections vs. meritocracy is always present, and both military disasters and successes often traced to the results.
On to the dragon in the room:
The West — and particularly the United States — is turning against the meritocratic idea precisely when the greatest geopolitical rival it has ever faced, China, is embracing meritocracy more tightly.
Though China's government is run by "the insider dealing of this rather grubby elite,"
The Chinese educational system is determinedly meritocratic: Children compete to get into the best nursery schools so that they can get into the best secondary schools and then into the best universities. Examinations — most important, the university entrance examination or gaokao that students take at 18 — regulate the race to get ahead. This examination system, which draws on the tradition of civil service examinations that were administered for more than a thousand years, is now more geared to produce scientists and engineers rather than Confucian officials.
The Chinese Communist Party claims that it is trying to create a system based on “political meritocracy,” ...routinely recruiting the brightest young students into its ranks. The party’s Organization Department acts as a giant human resources department keeping records on high-fliers across the country. Provincial governors and university presidents are evaluated on the basis of their success in hitting a number of targets.... the West should at least prepare itself for the possibility that, albeit messily, China is turning itself into a giant Singapore, determined to use meritocracy as a tool of growth and social progress.
Equity and opportunity
Here is the paradox. The US paternalistic/aristocratic elite is running away from meritocracy under the banner of "social justice" and "racial equity." Yet meritocracy throughout history has been a great equalizer, a great leveler, the main way that excluded out-groups could get ahead. US universities originally adopted standardized tests and dropped racial quotas e.g. against Jews, and discovered a wealth of talent that did not come from "holistic assessment" at the time, i.e. did you go to Andover and Exeter and come from "the right" families. Standardized tests, and the meritocracy they represent was and is one of the great equalizers of opportunity and gates of social and economic mobility, allowing people to prove themselves.
I would argue that the idea of merit is one of humanity’s most successful privilege-busting inventions.
And I would agree.
The abandonment of meritocracy
Woolridge is naturally worried about trends in the US and the West:
Meritocracy is under assault from all directions. For progressives, it is a tool of White male privilege...
... San Francisco’s Lowell School is one of the most successful schools in the country and has given thousands of poor immigrant children (among others) a chance of an elite education. The San Francisco Board of Education has now banned it from using admission tests and introduced a lottery system instead, with the school commissioner, Alison Collins, pronouncing that meritocracy is “racist” and “the antithesis of fair.” Elite schools in New York and Boston are also under threat. Programs for the gifted and talented are being dismantled across the country. Universities have been reducing the importance of standardized admissions tests, with some going so far as to make testing optional, and putting more emphasis on “holistic assessment” instead.
...Companies are introducing formal or informal quotas in the name of “equity” (which is increasingly taking the place of equality of opportunity as a measure of justice).
...Meritocracy is one of the great building blocks of modernity, along with democracy, capitalism and liberalism. ... Is it really the case that meritocracy is a tool of White male privilege? W.E.B. Du Bois and Ruth Bader Ginsburg might have something different to say. Are lotteries or holistic assessments really better ways of distributing educational opportunities than standardized tests? Most of us would hesitate before flying with a pilot who had been chosen by lottery. Do we really want a society in which group identities trump individual abilities? A glance at the history of India or the former Yugoslavia suggests that we should at least pause before taking this leap.
This is a deeper point. Many political systems, both democratic and autocratic, carve up power and benefits based on group markers -- class, ethnicity, religion, race, parentage, caste. Not many who do so are meritocratic, prosperous, or peaceful.
Woolridge moves on to the political implications. This is interesting, but here I disagree a bit.
As we now know, "Capitalism and Freedom" was not entirely right, that economic growth would quickly lead to political freedom.
In the 1980s and 1990s, Western intellectuals convinced themselves that they had discovered a firm link between economic growth and democracy. ...policy makers welcoming China and Russia into the global order on the grounds that they would inevitably evolve into liberal democracies, and a group of neoconservatives even arguing in favor of “regime change” in the Middle East on the theory that democracy and prosperity would naturally replace the toppled regimes.
Woolridge thinks that meritocratic autocracies (an oxymoron!) pose a threat, given our self-inflicted wounds.
A cohort of rising powers are trying a different approach: linking meritocracy with autocracy of various degrees of hardness. Lee Kuan Yew recognized that the best way to enjoy Western levels of prosperity was not to introduce one-person-one vote but to borrow Western mechanisms such as an elite civil service, recruited through open competition and dedicated to corruption-free government, and graft it onto older Mandarin traditions of the rule of the scholar-bureaucrat. Since then a growing number of countries, led by mighty China, have tried to imitate his model....Countries as diverse as Rwanda and the United Arab Emirates have chosen authoritarian modernization over democracy.
Here I disagree. Yes, meritocratic autocracies can prosper for a while, but not for long. The autocracy part always eventually takes over. The group in power wants to keep power, and wants to keep their children in power (even communism turns to hereditary monarchy, see North Korea). Yes, Singapore. But it's hard to think of a prosperous meritocratic autocracy that has lasted as such for several transitions of power.
And if democracy is not automatically meritocratic, using political power to reward interest groups, autocracy is definitely not automatically meritocratic! Overall, it's hard to make a case that autocracy is more likely to be meritocratic than democracy. Cuba, Venezuela, North Korea, Russia... So Woolridge must have in mind some other secret sauce that produces a stable, long-term meritocratic autocracy, that survives changes of power over generations. I have no idea what that might be.
Democracy is not great at producing technocratic efficiency. Democracy is not great at stemming the army of rent-seekers. Indeed, democracy's greater responsiveness to desires of organized groups often means responsiveness to the desires of rent-seeking groups demanding protection. But democracy is good at the main thing it is designed for: stopping tyranny; Kicking the bums out when they get too entrenched.
Autocracy is not automatically meritocracy! It is usually the opposite. Democracy here in the US was invented to resist an exclusionary, anti-meritocratic autocracy, King George's UK. At a minimum, when you get a bad King all you can do is wait 30 years for them to die.
We also forget that autocrats are often a good deal weaker than democracies. A democratic government at least has a measure of legitimacy. Autocrats worry about waking up the next morning, and have to please the interest groups that keep them in power. It is not obvious that autocracy is better at quieting rent-seekers than democracy. Indeed, the opposite seems to be the case. Quieting rent seekers, avoiding tyranny, and avoiding a bloodbath when power must eventually change hands are three main problems of government. It is not obvious that autocracy does better on any of the three, despite democracy's tumult. And despite the occasional benevolent autocrat who produces some meritocracy and prosperity, for as long as one lifetime.
Though our woke elite aristocracy is moving headlong away from meritocracy, it's not obvious the voters are going along with it. The last election was very close, and a surprisingly large number of the supposed beneficiaries of noblesse oblige voted Republican. The meritocratic ideal, equality of opportunity not statistical equity of various groups, runs deep in America and surfaces every four years.
Here also I think Woolridge confuses the argument somewhat. The "-cracy" part of the word means rule, as in aristocracy, bureaucracy, autocracy and so forth. Meritocracy, strictly speaking, is about merit and skill as the selector for positions of power in government. But much of what Woolridge talks about is the looser sense of meritocracy -- whether decision-making positions in private companies are awarded on merit or on family contacts, ethic group, or other trust mechanisms. Meritocracy in universities is not about who controls the government. One can have meritocratic institutions in an autocratic and un-meritocratic government and vice versa.
His real complaint is that institutions -- corporations, universities, etc. -- in the West are moving away from meritocracy. As an economist, that always smells to me of lack of competition. A society can only afford non-meritocratic institutions if those institutions do not have to compete. That is in part political -- politics offers protection from competition, often precisely to allow non-meritocratic private structures. But the surest solution is not to try for a cultural revival of meritocracy in government-protected uncompetitive industries and institutions (universities). The surest solution is more competition, so institutions have no choice but to be meritocratic.
Thus I also disagree with Woolridge's political musings,
The West has thrived materially over the past century or so in large part because it managed to fuse democracy with meritocracy. America’s Founders understood that the reason for embracing democracy was not that it made us rich, but that it gave ordinary people a say in how their country was governed. They also understood that democracy could actually destroy prosperity if it wasn’t diluted with a degree of meritocracy. They built meritocratic restraints into the Constitution by giving senators six-year terms and giving Supreme Court justices jobs for life. They also put limits on the power of the state to interfere in the wider economy. One reason meritocracy flourished was that the U.S. made it easy for companies to claim limited liability without declaring an explicit public purpose. Another was that the U.S.’s lax immigration laws and vast territories attracted tens of millions of ambitious and energetic people from more crowded and tradition-bound societies.
Other Western countries pursued a similar policy of fusing meritocracy with democracy: France and Britain competed to produce the world’s most elite civil services, and the European Union imposed even more restraints on democratic overreach than the United States did. During the golden years of the 1980s and 1990s this formula worked because the democratic part of the formula generated political legitimacy and the meritocratic part generated good government and economic growth.
In part, this depends on what one means by "democracy." I analyze the same facts by noting the US is not a "democracy," in the sense that each issue is decided by 50% + 1 votes. We are a representative democracy, with strong protections for electoral minorities. Or at least we were -- we are trending to much more 50% + 1 and much less protections in the form of limited government and personal rights. But to say these structures are a "fusing of democracy with meritocracy" seems to me profoundly to miss the point of property and other rights, limited government, and structures that requires more than a transient 50%+1 majority to make huge changes, including transferring money and who gets what job responsibility around.
The current attack on meritocracy is not just a threat to the prosperity of particular countries. It is a threat to the prosperity of the whole democratic world. Prosperity will increasingly be identified with top-down authoritarian regimes that make up for their failure to give their people a voice by giving them jobs and improving their welfare.
Here I disagree again. Authoritarian regimes that buy support by "giving" jobs and handing out money -- most of them -- are neither meritocratic nor prosperous. A few countries, South Korea before it became democratic, Singapore, China for a while, combined meritocratic economics institutions and lower-level government, and generated prosperity. For a while. South Korea became democratic, and China is facing the conundrum that meritocracy at the top means loss of power. In any case, these countries allowed their citizens to make themselves jobs and wealth, with a quid pro quo of stay quiet politically. For a while. While the West may be trying to shoot itself in the foot, it is not clear that autocracies will provide a durable attractive alternative -- to anyone but the autocrats!
Democratic countries in turn will be associated with economic stagnation, populist revolts and racial disharmony, as people try to get ahead in a low-growth environment by emphasizing their membership in defined groups rather than their individual merits.
This is indeed our danger. But those pesky peasants with pitchforks are darn meritocratic at bottom.
All in all though, it's a very provocative idea that meritocracy has been a building block of prosperity, one that many countries struggle to achieve, and that we are now deliberately throwing away.
In response to thoughtful comments below. Yes, meritocracy is about whether people are selected for positions of decision making or power based on skill, talent, and preparation. This is not about redistribution. One can have a very meritocratic society with lots of redistribution. The question is whether a society (and government) redistributes by handing out checks, by giving people high paying jobs of little consequence, or by allocating actual decision making powers based on considerations other than skill. Those who pursue the latter have a point. Social status and power in society are about more than money, and tokenism is pretty repugnant. A meritocratic redistributionist society must face the dilemma of keeping enough incentives for the talented to put in the hard work to acquire skills, and to match their talents with opportunities; and for the talented and skilled to put in the incredible hard work it takes to start, innovate and manage companies. But all that is for another day. This post and essay are not about redistribution.
A good blog post series on meritocracy by Mike Overmann
I'm not sure how it is provocative to suggest you might be screwing the pooch if you don't take advantage of the fact not everyone is equally skilled at accomplishing any given task... I mean, you're getting a worst job done across the board.ReplyDelete
What is not obvious to me is why that story would not hold up in the data. Aren't we almost begging the question given we're bound to define meritocracy as ranking people according to their productivity at a given task?
Merit is ultimately defined not by the government but by the individuals making the transaction.Delete
Is cleaning your house merit worthy? Well, if you're willing to pay someone to do it, it must be. The best definition of merit is based on what people care about and that varies by person and time. When governments attempt to define merit independently of people's individual varied needs, they inevitably fail.
It's not productivity but helpfulness that defines merit. The best measure of whether something is helping someone is whether they recipient is willing to pay for it.
That's why you can't really have a meritocracy with communism.
Absolutely agreed! When a person is preoccupied with the concept of equality of outcomes, the person is unlikely to understand the key point about meritocracy above.Delete
Yeah, the woke Democrats are ruining US meritocracy! Remember when Joe Biden's kid sat in on a G20 meeting?ReplyDelete
"In part, this depends on what one means by democracy. I analyze the same facts by noting the US is not a democracy, in the sense that each issue is decided by 50% + 1 votes. We are a representative democracy, with strong protections for electoral minorities. Or at least we were -- we are trending to much more 50% + 1 and much less protections in the form of limited government and personal rights."
I disagree with what Woolridge writes about Asia.ReplyDelete
Its not clear why Chinese politicians being smart and the stereotypical, almost "orientalist", stories about the imperial civil service exams matter much for why the Chinese economy is now productive at the firm level. The politicians are not running the firms, with the exception of the inefficient SOE sector.
Singapore was one of the most prosperous and dynamic cities in Asia well before LKY took charge (which it not to say it was rich by European standards) and its growth has more to do with productive Chinese entrepreneurs than elite politicians. The goal of an elite, non-corrupt civil service with tendencies towards economic liberalism sounds rather like the British Colonial Civil Service - think pre-handover Hong Kong.
It is more likely that economic growth in all of these countries has had more to do with the success of the private sector than the merit of those who staff their governments.
Nice post and a good chance to reflect on what we mean by meritocracy.ReplyDelete
Wooldridge (and probably also John) seem to use the term “meritocracy” to describe two separate ideas: (1) the idea that we get more and better stuff when people perform tasks for which they have a comparative advantage and (2)the idea that comparative advantage is (mostly) a characteristic of individuals that can be (mostly) objectively discovered and/or cultivated.
The first proposition is obviously true.
The second proposition is only slightly more challenging. Evidence on group differences (e.g., male v female differences in spatial reasoning) at best describe crude aggregate measures that pale in comparison to individual variation. Further, while some types of comparative advantage are more easily measured than others, most are discoverable through examination and experience (e.g., a battery of tests can tell who will make a bad pilot while careful observation is needed to tell who is likely to be an inspirational leader.)
I’m nearly certain that John (and probably Wooldridge) would agree with a third proposition, that is mistakenly confused with meritocracy: the claim that the political institutions and cultural habits associated with “capitalism”—most importantly, a deep respect for individual autonomy—will give rise to a flourishing meritocracy with all the resulting material benefits.
Distinguishing the first two propositions from the third is helpful because it makes clear that defending meritocracy is different than defending capitalism. An advocate of command-and-control socialism may be a fool, but you may not convince him of this by telling him that meritocracy –as defined by the first two propositions--is a sham.
There is another proposition that also seems to be confused with meritocracy: that it is not possible to alter the distribution of rewards to merit without sacrificing the benefits of meritocracy. To take an extreme example, LeBron James may be the greatest basketball player of all time. He provides enormous benefits to his fans, and in any conceivable version of capitalism, James will play basketball and earn vast sums of money. But is it possible to design a mechanism that limits LeBron’s income to that of, say, a successful dentist while not leading James to a wasted life of pulling teeth?
There is a final proposition that opponents of the idea of meritocracy sometimes mistakenly (and all too often disingenuously!)present as part of what it means to believe in meritocracy: the proposition that “merit” is an essential measure of an individual’s value. Think of how often you’ve heard someone say something like “America is a corrupt and wicked place because it values basketball players more than school teachers”.
I doubt very much that this is what either John or Wooldridge intend as part of their defense of meritocracy. That statement fails as a matter of simple economics—there is a well-understood distinction between marginal value and total value (or, if you prefer, “value in use” and “value in exchange”). More importantly, meritocracy and capitalism are compatible with wide range of views on individual human value. You can believe that LeBron James is mostly the recipient of good luck while kindergartner teachers are truly doing God’s work and still believe in meritocracy and capitalism.
The reason that merit is associated with liberty is that merit is ultimately defined not by the government but by the individuals making the transaction.Delete
Is cleaning your house merit worthy? Well, if you're willing to pay someone to do it, it must be. The best definition of merit is based on what people care about and that varies by person and time. When governments attempt to define merit independently of people's individual varied needs, they inevitably fail.
"meritocracy" is not monopolized by any one political system. It might be said to be 'agnostic' and indifferent as between "democracy" and "autocracy" or "oligarchy".ReplyDelete
As for "democracy", we see it in the mob rule in certain cities in the U.S. today. It was rightly feared by the early colonists and it was ruled out as a form of government by them when drawing up the constitution, notwithstanding the lofty principles written by Thomas Jefferson in the declaration of independence.
Given a choice between merit and democracy (as in "equality", "fraternity", and "liberty"), choose merit every time and you can't go wrong.
This is good, but missing an important key: How do you define "merit"?ReplyDelete
The proponents of communism simply define merit in terms of effort or in terms determined by the government.
Where capitalism differs is that "merit" is defined by two people making the transaction. When we leave the definition of merit up to individuals based on their needs, we can maximize helpful behavior.
"Democracy" can be seen as just a voting system, or it can be viewed mystically, as some kind of social nirvana of absolute equal harmony among people. We tend to confuse the utopian sentiments with the practical imprecision of electoral results.ReplyDelete
Indeed, forget "mystical democracy" and let an unregulated society use entrepreneurs to move changes, instead of a voting system.
Meanwhile, if the voting system is "to choose leaders," how much better to have the voting system allow Negative Votes, to fire bad 'Leaders.' Vote against X without needing to vote for odious Y instead.
Seems like there's be a high correlation between "high levels of property rights/limited government" and "meritocracy". The more you keep/depend on the rewards of your efforts the more you will want talented people managing things.ReplyDelete
Thanks for this post. There's some quantitative basis for this kind of extreme claim. One recent reference is the 2019 HHJK paper in Econometrica [https://onlinelibrary.wiley.com/doi/full/10.3982/ECTA11427].
They have a nice, clean way of doing the decomposition, attributing 20-40% of US per-capita growth from 1970-2010 to improved allocation of talent, which is massive. A further decomposition finds 4:1 (discrimination by educational institutions):(discrimination in labor markets) (p. 1461).
So the author concludes that "meritocracy" falls from the sky. Really?! It has nothing to do with free markets! Jesus Christ...ReplyDelete
If I were writing a book that mentioned the Scandinavian countries, I would *at least* learn that these countries became rich via free markets, and have been lagging since they started with their transfer programs. Besides, current taxation in scandinavia is equivalent to the US but their markets are less regulated. Yet, they compare to the poorest states in the US, despite Norway's oil.
"Meritocracy" *only* happens via free markets. Democracy has nothing to do with it. Democracy is simply mob rule. But this is not new at all.
This obsession at sounding "independent" in the discussion about free markets against planed economies just makes me doubt the author's entire arguments as fallacious.
This comment has been removed by the author.ReplyDelete
Where do prior accomplishments / failures fall in judging the merit of an individual?
The classic example I can give is the story of Colonel Sanders whose businesses failed numerous times and yet regardless of the lack of merit Sanders obtained in prior endeavors was able to build a successful fast food chain.
The definition of merit (according to Webster's) is this:
"...the quality of being particularly good or worthy, especially so as to deserve praise or reward."
I think what is missing from judging a person by merit (meaning looking at past performance) is that it ignores effort and a willingness to learn from prior mistakes.
"After a while, Sanders began to practice law in Little Rock, which he did for three years, earning enough in fees for his family to move with him. His legal career ended after a courtroom brawl with his own client destroyed his reputation. This period represented a real low point for Sanders. As his biographer John Ed Pearce wrote, Sanders had encountered repeated failure largely through bullheadedness, a lack of self-control, impatience, and a self-righteous lack of diplomacy."
Isn't nepotism a form of meritorious award system - the prior achievements / merits of the father / mother are rewarded through heirs?ReplyDelete
Are Social Security benefits based upon merit?ReplyDelete
How about interest payments on government debt?
"Are Social Security benefits based upon merit?"Delete
To the extent that Social Security benefits are paid based upon one's past employment history and employment compensation, then it can be said that those payments are based upon 'merit'.
If you can afford to pay for the government bond in the first instance, in order to obtain the interest, then, yes, interest payments on government bonds are based upon 'merit'.
Old Eagle Eye,Delete
"If you can afford to pay for the government bond in the first instance, in order to obtain the interest, then, yes, interest payments on government bonds are based upon merit."
Government bonds as an asset (unlike social security benefits) are transferable from one generation to the next. And so how is inheritance a meritorious award?
Also, if I can pay enough to a college recruiter to accept me (or my son / daughter) irregardless of high school performance, then either me or my son / daughter has been accepted to college based upon the "merit" of my payment to the recruiter.
The whole point of meritorious award is to level the playing field regardless of wealth or status.
You seem to disagree.
"To the extent that Social Security benefits are paid based upon one's past employment history and employment compensation..."
The realized returns on "investing" in the Social Security program are based on not only your past employment history but also how you live your life both during your working days and after you retire. If you spend your days smoking like a freight train and in a drunken stupor, your return on "investment" into Social Security isn't going to be that great.
The point I am trying to make is that the Social Security system incentivizes working and maintaining a healthy life style. Generic, run of the mill, interest paying government bonds do not.
But trying telling that to any right leaning economist (aka someone being paid by the private banking / insurance industry) and they bemoan a program like Social Security while nary saying a word about government bonds.
Here's an alternate view on meritocracy that hints at how it endangers how institutions are sustained and maintained.ReplyDelete
There's also psychological and social harmony externalities to deal with. Measuring them however is tricky. No econometric model to tease out concretely the economic cost of these externalities.
The article describes the costs / benefits of the race to the top.
"Wealthy students show higher rates of drug and alcohol abuse than poor students do. They also suffer depression and anxiety at rates as much as triple those of their age peers throughout the country."
"A recent study of a Silicon Valley high school found that 54 percent of students displayed moderate to severe symptoms of depression and 80 percent displayed moderate to severe symptoms of anxiety."
And so I think that cost / benefit analysis must be continuously analyzed by each individual - are the benefits worth the toll?
The article also mentions the recent college recruiting scandal.
"The intense and widespread fury generated by the college-admissions scandal early this year tapped into a deep and broad well of resentment. This anger is warranted but also distorting. Outrage at nepotism and other disgraceful forms of elite advantage-taking implicitly valorizes meritocratic ideals. Yet meritocracy itself is the bigger problem, and it is crippling the American dream."
I don't agree with the last sentence. The incentive to cheat, lie, steal rises as the risk / reward ratio falls. And so, to change the balance, you need to either increase the risks (stiffer penalties) or lower the rewards.
The rewards would still be based upon merit, but would not be so generous (relative to the risks) that they incentivize cheating.
I would say in its current form that meritocracy's incentive structure is warped, for where is the merit in cheating, hmm?
It's the perception of meritocracy that matters. Just as institutions matter so do their perceptions. Otherwise, what's the point of incurring a cost if the benefit doesn't get right up to the point where MC = MB? Why play by the rules if the benefit could be had for less? That's the problem with the incentive structure and enforcement with this regime. There are two sets of "rules."
The trick is not assigning a probability to getting caught- it has to a be a certainty, a matter of time. Enforcement matters. Ha. Or, maybe the real benefits just aren't as "valuable" as they need to be.
You bring up good points.
Regarding Marginal Cost (MC) = Marginal Benefit (MB).
I think that too many economists try to apply marginalism to situations that are not applicable.
What is the marginal benefit of one semester of college education?
What is the marginal benefit of 3 stories of a 10 story building being constructed?
There is a slang term in poker called being "pot committed". It basically means that a player has already put so much money into the pot that despite any new information gathered, he / she cannot simply fold the hand.
Yes, it may be tempting to fit everything into that model. However, making decisions on the margins is pretty universal. Read "Thinking Fast and Slow" by Kahneman. Even thinking is economic in nature. His experiments on measuring pupil dilation while computing strange numerical sequences is fascinating. Point is, yes, decisions are often made on the narcissism, either with good data or really bad data and bias.
When it comes to earning the benefits via meritocracy, this where North was right: institutions matter. Some people will try to be clever and game the system in a manner to minimize their marginal cost while maximizing their marginal benefit. The institution needs an enforcement mechanism to remove these violators so people can trust and have faith. Without it, it ends up being a corrupt system with two sets of rules.
I don't believe Utopia is possible. But I think it's worthwhile trying to get as close as possible to it.
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"Yes, it may be tempting to fit everything into that model. However, making decisions on the margins is pretty universal."
I don't agree. For many things in life (construction of a building, obtaining a college degree for instance), the costs are recurring, but the benefits are not realized until after completion.
It goes beyond narcissism. For any long term investment, the marginal benefit is going to be less than the marginal cost since the benefits are not going to be seen until most / all of the cost has been incurred.
Another good example where marginal benefit is not equal to marginal cost is any type of insurance program.
The cost is recurring - for instance payments on an auto, home owner, life insurance policy in the private sector or contributions to Social Security, Medicare, etc. in the public sector.
The benefits (other than peace of mind) are not realized until much later or perhaps never at all.
If meritocracy is such a bad thing, do we not have to do something about professional sports?ReplyDelete
It's not that meritocracy is a bad thing, it's the "winner take all" incentives that drive individuals to do anything to reach the top (lie, cheat, steal or at worst resort to violence).
I got to this one late. The arc of Venetian history is not as Woolridge described it. The Republic of Venice began in 697 and ended in 1797: 1100 years later. By way of comparison, the Roman Republic lasted for 482 years (509 BCE to 27 BCE) and the American republic is a mere pup of 245 years.ReplyDelete
The Republic of Venice was not democratic and had no ideology of democracy. And, they were not woke in any way. Venice had many overseas possessions like Crete, and treated the locals abysmally. What it was devoted to was the rule of law. It took official corruption in its far flung possessions very seriously and went to great lengths to weed it out.
La Serenissima came to an end, not by internal strife and civil war like Rome, but by being conquered by Napoleon. But, for that it might have continued on until the current day.
Its fatal flaw at the end was that the Ottoman Empire drove it out of the Black Sea and Eastern Mediterranean and it lost the trade from Asia and Africa that had made it wealthy to the Atlantic kingdoms that learned how to sail around Africa and opened the New World.
One major problem with meritocracies is that anyone on the bottom has to accept that they are a failure because they deserve to be a failure. In a non-meritocracy someone can always claim that their own personal failure was really the result of their belonging to the wrong gender, class, race, etc. Another problem with meritocracies in primitive societies is that the supply of (potentially) meritorious people vastly exceeds the actual demand. Someone who is told that they are going to be a peasant digging in the dirt with a stick trying to grow food to survive just because they only received 99.96% on their final exam; while their twin brother who received 99.97% of the same exam gets to be part of the elite isn't likely to willingly accept that outcome.ReplyDelete
This is just a variation on the common confusion among self-styled thinkers that we should be prepared to sacrifice a little freedom in order to obtain a bit more efficiency. Unfortunately, the reality is that we invariably end up with less of both.ReplyDelete
What about the anti- meritocracy actions of companies; when they squeeze out competitors, or collude with government to undermine competition, this limits the growth of future leaders/companies. The anti-meritocracy is not only practiced by politicians, but others trying to protect their power.ReplyDelete
I do not agree with John on this one. He argues that the number of East Asian authoritarian regimes (South Korea, Taiwan, probably somewhat Singapore) eventually became democracies, which is supposed to refute the idea that they were meritocratic and prosperous. I think this argument is backwards. As societies become wealthy and prosperous, they are more likely to become democracies. So, if anything, cases of South Korea, Taiwan, Chile are big successes of authoritarian regimes.ReplyDelete
Being able to quiet or simply ignore entrenched rent-seekers and special interest groups is a major advantage of authoritarian regimes. Ability to dismantle or reset army of bureaucrats is another one. I am somewhat puzzled that John does not get it. Over the recent 45 years, can we name a single example of a country in North America or Western Europe, which undertook massive deregulation and rolled back a number of important rules, protecting rent-seekers?