A Defense Of Meritocracy And Its Shortcomings

A Defense Of Meritocracy 

The big problem with critiques of meritocracy is that the critics are rarely clear about they want instead. Mere calls to “be better” are just the Nirvana Fallacy, and aren’t worth addressing. And those contributing to the “meritocritique” aren’t usually even calling for a replacement for meritocracy, they’re just loosely suggesting some kind of redefinition of merit—often holistic approaches instead of SAT scores, even though elite schools and private employers already use a holistic approach. 

. . .

here’s one interesting paper, looking at CEO performance by using 2 measures of stock performance, published in a good management journal:

“We found that an Ivy degree granted before 1960 did not confer any performance advantage; the opposite was true for degrees granted after that date. Thus, the value from an Ivy degree is derived not so much from the social capital conferred during the earlier era of social elite selection, but rather the talent associated with selection in the more recent meritocratic era.”

That’s not a clean test, since it really is just lumping all CEOs older than 55 in one group, and all under 55 in another, but by measures of both statistical significance and economic significance, the Old Boys’ Network looks at most half as valuable as the New Meritocrat’s SAT-Infused Diploma. The cynical “Matthew Effect” would predict that the value of an Ivy degree should increase with age as your network of Ivy insiders grows tighter and more powerful, but in real life it shrank—just what you’d expect if SAT-driven college admissions were actually a good way to find real-world, practical talent. . . .

the corporate governance literature has a relevant, non-utopian message: That the good old days of not-too-meritocratic corporations, the kind that JK Galbraith wrote about in The New Industrial State, were actually terrible, and that the relatively more meritocratic LBO era of Milken et al. was much better for the world, warts and all. 

. . . 

Nostalgia for the comfy old days when insiders ran cozy corporate clubs is wildly misplaced, and likewise the utopianism of a more comfortable, less rough-and-tumble, not-too-meritocratic elite selection process is likewise misplaced. I’d turn to Shleifer and Vishny’s influential paper, “Survey of Corporate Finance” on this. Searching for the words “family” and “insider” in their paper gets as some of this.

To exaggerate only slightly, if meritocracy imposed a huge cost, then I’d expect current Italian and pre-Asian-Financial-Crisis Thai firms to be ruling the world: familial capitalism and crony capitalism should be winning corporate models. 

. . .

A non-utopian critique of meritocracy would probably have to start by providing serious evidence that the spoils system and at-will employment in government helped cause prosperity and human flourishing, and that the Pendleton Civil Service Reform Act, on net, hurt prosperity and human flourishing.

A non-utopian meritocritique should probably also offer evidence that the Foreign Service Officer Test is, on net, bad for the State Department and that the U.S. military should stop using the Armed Forces Qualifying Test to screen out military recruits. If you’re serious about the meritocritique, I suspect you’ll have to be serious about dramatically reducing the role of test scores in U.S. government institutions. 

From here. 

Analysis

On balance, I support meritocracy. 

This article, however, makes something of a straw man argument on behalf of its opponents. The alternatives suggested are basically "nepotism and clientelism." But the critics of meritocracy that I have encountered (e.g. arguing for the abolition of SAT requirements) aren't arguing for that.

I think that meritocracy can overcome stronger arguments which outlined below, in a lot of circumstances. But any argument should attempt to overcome the strongest arguments against it, rather than weaker arguments against it.

Affirmative Action As A From Of Anti-Nepotism And As A Remedy For Past Social Injustice

Sometimes, they are really usually arguing for some sort of affirmative action, which is really an almost polar opposite of nepotism, in part, because they believe that diversity provides intrinsic benefit to society and prevents it from becoming a harmful oligarchy, and in part, to undo past injustices.

For example, one way to interpret the rise and fall of the U.S. labor movement is that the standards of merit used prior to the Ivy League reforms of the 1960s, were also meritocrat but defined merit in culturally specific terms that excluded people ethnically different from the WASP elite for higher education and management positions. This resulting in talented capable people excluded from the ruling class putting their talents to work instead as union leaders and creating a powerful union movement, that undermined elites formed under the old standards of merit.

The economy-wide downsides of creating a class of under-recognized talented people is a macroeconomic externality that no one institution can make much of a dent in without collective action or some sort of policy mandate, even though this present a global, black swan threat to the stability of the system as a whole, if the system gets too far out of whack as a result and this leads to revolutionary responses.

When meritocratic reforms of college admissions like the SATs, and the emergence of much more robust financial aid removed those barriers, bright young people from the wrong background who otherwise would have joined the labor movement and tried to undermine the goals of managers of big businesses instead were co-opted to become management. As a result, the union movement suffered brain drain and eventually withered.

If you believe that few strikes and less unionization is good for the economy, as many business elites do, then anti-nepotism was a benefit to the economy. On the other hand, if you that a strong union movement led by talented union leaders who were not co-opted by management was beneficial to the economy, then perhaps the less meritocratic approach to college admissions and management hiring that was in place prior to the GI Bill and the Ivy League admissions reforms of the 1960s was beneficial to the economy in a backhanded way.

To connect the dots, affirmative action may be valuable to society and elites, because it co-opts talented people to work for the elites rather than against them.

The Risk Of Misdefining Merit And Thereby Wasting Promising Minds

Other critics of meritocracy tend to favor something of a laissez-faire approach to hiring employees and admitting students that argues that the meritocracy is flawed because fundamentally, as a matter of epistemology, it is impossible for all practical purposes, to accurately define what constitutes "merit". The harm to be prevented here is locking society in on an institutional basis that is hard to change, to an inaccurate definition of merit that excludes some truly exceptional people who have great potential to make huge contributions to society from a path that would allow them to do so. 

For example, at least some of the band members of The Beatles, were put on a dead end vocational school track by the British education system that would have crushed the contribution that they made to music if they hadn't defied its expectations for them.

Maybe high school academic ability isn't the best way to measure the larger contributions one can make to society, and to enterprises. But, if we mandate or prefer meritocracy according to universally accepted by flaws measures, we'll never get a chance to learn that another approach is better.

A laissez-faire approach to hiring employees and admitting students is that could lead to a more "natural" evolution-like way to determine which approaches work better and are worse, because those institutions that use the wrong approaches will disproportionately fail, and if they don't, the distinction is perhaps not all that important.

If meritocracy is really as important as its advocates claim, meritocratic enterprises will thrive and those that are less meritocratic will decline, and policy makers should neither encourage nor discourage meritocratic practices as a matter of law and policy. This is slower than mandating an outcome, and may not optimize the benefits of well done meritocracy. But it avoids the risk of locking in an inaccurate measure of merit.

On the other hand, perhaps meritocracy increases productivity and the benefit conferred by higher educational institutions and we have pretty good evidence already of ways to measure merit accurately. If so, by not taking policy actions to encourage meritocracy, we are allowing our educational system and economy to lag while meritocratic policies elsewhere cause those institutions to excel. If that happens, we might never catch up, because the economy increasingly has winner takes all incentive structures. And, there are lots of barriers to institutional change that can prevent subpar institutions from failing and can prevent better alternatives from thriving, even if the institutions with meritocratic policies are intrinsically better. The status quo can be very hard to dislodge without policy reforms, even when the status quo is an inferior one. 

The Case For Adding Value Rather Than Merely Sorting In Higher Education

In the higher education context, there is also something to be said for the notion that selective admissions are themselves misguided and in conflict with true educational mission of a college or university. Ideally, colleges and universities should be plays that add intrinsic value to their students, rather than merely engaging in a mission to sort the wheat from the chaff and to socialize young people into a college educated class identity. 

If selective higher educational institutions through their admissions processes are basically just sorting talented people from less talented people, without adding much value themselves, maybe these institutions are basically failures and we ought to focus on boosting institutions like the City University of New York (CUNY) system which boosts more working class kids into the middle class than the entire Ivy League combined, than on Harvard and Yale, which educates the best and the brightest, and whose successes have as much to do with being the best and the brightest in the first place as it does with the transformations that they experience in college.

Now, there's also a counterargument to that. Students with insufficient preparation and academic ability going into colleges and universities are most likely to drop out, and those who do graduate consistently show the less objectively measured signs of academic improvement and knowledge and thinking skills gained from the experience. Certainly, there is a decent case to be made for limiting higher education to those who benefit from it, or, in less black and white terms, to most strongly encourage rigorous valuing adding higher educational experiences for those most likely to benefit the most from the experience.

If our educational institutions are really working, we should care a lot about making sure that no one who can benefit from higher education is shut out of this opportunity entirely, something that affirmative action programs in higher education rarely do since these policies have far more impact in selective institutions than in open admissions colleges and universities. But, as a society, we shouldn't care much whether someone gets an opportunity to learn new things at a less prestigious institution like CUNY, or a more prestigious institution like Harvard. So, meritocracy in selective college and university admissions shouldn't matter very much.

On the other hand, maybe there are quality differences between what can gain from attending and getting a degree from CUNY and attending and getting a degree from Harvard. And, maybe the additional value added that a Harvard education provides is a result of a more rigorous curriculum that only the very most academically superior students are capable of benefitting from rather than being overwhelmed by.

In that analysis, selective institutions optimize the objective of providing the most benefit that can be obtained in the aggregate from offering an exceptionally rigorous course of study by having meritocratic admissions.

Also, even if selective college admissions mainly do serve a sorting function, perhaps the college admissions process, and the stress test of determining who manages to actually finish a demanding four year course of study, is a better way to do that sorting than the alternatives, which in turn permits employment hiring to be meritocratic more accurately and easily, which in turn makes the firms that employ college graduates more productive and efficient. This is certainly a very expensive and cumbersome way to engage in sorting, but if the students themselves pay for a large share of the costs of doing so that they are personally benefitting from, then maybe the expense is worth it.

In the absence of this kind of sorting, firms might have to hire and fire more entry level employees and might have to have long probationary periods to weed out new hires with self-discipline and behavior problems that would otherwise have been culled by colleges and universities before firms had to bear the downside risk of hiring such people.

The Case That Favoritism Towards Family And Others One Feels Kinship Towards, And Not Just Business Productivity, Is Part Of The Mission Of The Enterprise Especially In Small Enteprises

A third argument for a laissez-faire approach to hiring employees and admitting students is especially relevant in smaller enterprises. People start businesses to support their families. Nepotism arises, in substantial part, because for the owners or managers of the business it is often the case that providing livelihoods for family members is a more important objective than maximizing the productivity of the business. Nobody questions this self-serving attitude when the business distributes profits to business owners that the business owners used to improve the personal quality of life that they and their families can enjoy, rather than reinvesting the profits to make society in the aggregate more productive. 

Similarly, advocates of this rational argue, private educational institutions and their donors may legitimately include as part of their mission a goal to improve the lives of black young people, or young women, or members of a particular religion, even if this means providing educational resources and institutional prestige to people who further that mission rather than to people who would objectively benefit most from access to those resources and that prestige.

The kind of studies mentioned in the article below, in contrast, are to some extent victims of the implicit ethos of economists that the only thing that matters is maximizing per capita GDP and productivity.

This said, the case for nepotism and favoritism in lieu of meritocracy is much more palatable in the context of small enterprises in a world where there are few barriers to entry than in large publicly held companies, public educational institutions, and less particularistic mission driven private educational institutions, in which no one individual or group can legitimately argue that nepotism and favoritism should be part of the institution's mission.

Seen in this frame, nepotism and favoritism aren't inherently bad for all enterprises and institutions. Instead, they are simply a case of particular institutions, especially governmental and large private institutions, that don't have legitimate interests in preferentially promoting some families or communities over others, acting contrary to the missions of those particular institutions. 

The Case That Meritocracy Is More Important In Some Circumstances Than Others

Also, more supporters of meritocracy imagine that returns to merit are more or less linear. But as apologists for political patronage and nepotist systems often not, lots of hiring decisions involve satisficing and not optimizing.

Firms need someone capable of doing a job. But, in many positions, as long as the job gets done, there is no economically important distinction for the firm between someone who gets the job done well enough and someone who does a truly outstanding job. So, in those kinds of posts, as long as the job gets filled, it doesn't matter to the firm whether the hire was the most qualified candidate or was merely good enough. Indeed, if anything, a candidate who is merely good enough might be better than the most qualified candidate, as the latter is more likely to move on to bigger and better things eventually, rather than becoming a stable part of the firm's workforce.

On the other hand, there are some positions were merit can matter a lot, and there are disproportionate and exponential benefits to having someone who is just a little bit better, especially when the economy creates winner take all circumstances.

For example, maybe having a slightly better lawyer makes the difference between winning and losing a case that determines if an enterprise or institution or someone individual's future thrives or is utterly destroyed.

The same can be true in the case of scientists, senior managers, generals, engineers, or other employees, especially managerial and professional employees.

Again, the basic question is the domain of applicability were meritocracy makes sense. In many kinds of jobs in many kinds of firms, or for many courses of study in many kinds of educational institutions, the important thing that that the people selected are able to get the job done, or are able to complete the course of instruction offered, and there are rapidly diminishing returns to any level of merit that is very far beyond the threshold that is required. But in a few kinds of firms, and for a few courses of study in a few educational institutions, particularly large firms and governmental institutions looking for top level elites for highly demanding or high stakes engagements, maximal meritocracy is highly desirable. And, of course, the world isn't black and white and there are lots of circumstances where merit above a minimum threshold does confer some benefit, but not an exceptionally disproportionate benefit.  

If that is the case, and it probably is, we need to narrow our advocacy for meritocracy to the circumstances were it is particularly desirable, rather than trying to elevate meritocracy to a universal objective.

There is a reason that Ivy League professors and elementary school teachers have different inclinations towards the importance of meritocracy informed by what they do.