Misplaced Meritocracy

A recent contributor to the “Letters to the Editor” column in my local newspaper proposed a concept that clearly lacked critical analysis.  It associates itself with laissez faire free marketers who view wealth as an important measure for gauging  purpose and value to one’s life.  Included in this notion is the added concept that certain rights and privileges should come to those who “have more to risk”.  This is “free market speak” for those who possess the greatest wealth.

In the letter, the writer starts off on solid ground

The ultimate expression of fairness in our society is the concept of one person, one vote. It is the great equalizer or leveler of people. No matter how much money you have, your vote counts just the same as the homeless person. That’s as it should be.

But then he begins to take a hard right to the notion that this concept can be played out equally in other social systems.

But if that holds true for voting, why shouldn’t it hold true for income taxes: one person, one tax. That way every person has skin in the game, as they say.

As a percentage, the more you make, the more you pay, but the percentage each person pays on income is the same for everyone or true equality.

Conversely, if a progressive tax system is so good, maybe we should also have a progressive voting system.

The more you make, the more you have at risk, thus the more voting power you should have. 

I could challenge his notions about a “flat tax” but my interest in his comments lie with what appears to be a distorted version of a meritocracy.  One that presumes people of wealth are necessarily the most qualified to make choices for everyone else.  In a true meritocracy talent and ability makes one exceptional, not their class or wealth.  But what’s being suggested here is that we reward the wealthy by giving them more power because somehow they have earned that right.

There’s definitely a need for a truer application of meritocracy within government.  Some presidents and state executives have done a better job instilling qualified leaders in their positions than others.  President Obama’s recent appointment of Dr. Jim Yong Kim to head the World Bank appears to be a good example of filling a critical role with the right person.  Bush’s appointment of Michael Brown to FEMA in 2003 is a tragic example of meritocracy’s absence.  But as a form of government who some seek to replace our democracy, human limitations and weaknesses are also sure to diminish this system of efficiency.

The more you make, the more you have at risk”,  our letter writer rationalizes.  Wealthy people however are often more clever than they are intelligent, thoughtful people and have been known to engage in unethical behavior to accumulate their wealth.  In conjunction with this is the central principle of laissez faire thinking, where people always do what is in their own self interests.  Not exactly a prime consideration for someone you want making decisions that affect us all.

To get a sense of how some acquire their wealth in socially unacceptable ways, one only has to read Greg Smith’s recent Op-ed letter in the NY Times explaining why he left a lucrative career at Goldman Sachs after investing twelve years of his life there.  “I believe I have worked here long enough” Smith tells us,  “to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.”

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.   SOURCE

Focusing on others more than self is the hallmark of both good business and government leadership; something that was missing in both leading up to the great recession of 2008.

In his scathing indictment of wealthy bankers back in February, 2011 Matt Taibbi reminds us how the economy began to tank as a result of the financial meltdown that was ignited by Wall Street greed.  “Virtually every major bank and financial company … [was] embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail.”     

TIME magazine listed those who were behind this failure and everyone of them had acquired great wealth in part or in whole from those obscene criminal scandals.  They were aided and abetted by those in government who relaxed or removed the regulatory oversight that had been set up years ago to prevent this very thing from happening again.  Wealth, therefore, clearly doesn’t earn someone a special right to have a greater say in how our government operates.

I would point out too that there is this idealized vision of ardent capitalists who insist that incorporated within the free-markets principals of capitalism is a control measure called “the invisible hand”.  It is deeply held by some that the invisible hand of the free-market will prevent excessive greed by those humans who practice these principles.  Ideally, competition between producers and providers of goods and services would ultimately work to benefit socially desirable ends, even though their goals were not intended for this purpose.

This might have made sense to Wealth of Nations author Adam Smith and men of commerce back in the 18th century, thinking as they might that honorable people would always dominate the ranks of those in commercial enterprises.  But in today’s world of multinational corporations and banks “too big to fail”,  the invisible hand of the free markets is often found stuffed in the pockets of trusting but gullible investors and most consumers while making monetary deposits in the campaign coffers of willing politicians.  When “honorable” men and women in the corporate world do condemn such practices today, most it seems usually do so after the fact and with only ineffectual reprimands against those who have been caught.

What seems to be lost on this letter-to-the-editor writer, or what he’s willing to ignore, is that the wealthy already have a greater say in how government runs and how it does so to the advantage of the privileged one-percent.  Their people in the Supreme Court have already allowed money to serve as free speech’s equal following their decision in Citizens United vs. FEC and behind closed doors there exists the American Legislative Exchange Council (ALEC), the corporate-funded entity that works to “hand state legislators the changes to the law they desire that directly benefit their bottom line.”

The value of a true meritocracy has been lost on those died-in-the-wool defenders of capitalism.  Crony capitalism has served as a substitute for those who truly have the skills and talent to run government where it ably serves all of its citizens.  The norm we’re left with are those political office holders and corporate lobbyists who interchangeably go from public sector jobs to private sector positions and back again, making the rules that we all have to live by while they become independently wealthy and secure from legal persecution.

In a corporate version of meritocracy the only criteria to advance and distinguish yourself is to acquire more wealth than the fellow in front and back of you.  Your major skill asset is your ability to keep pace with this goal lest you get overrun from behind.

7 responses to “Misplaced Meritocracy

  1. What I think is that the person who wrote this is already wealthy if he or she thinks the great equalizer in this country is a person’s vote. Either this person is naive or on the right side of political power. I am skeptical that the banking industry which for years said acquiring personal wealth is more important than clients, can go back and change their philosophy. Is it even possible to change that mentality? I think all those who held that philosophy in their “hearts” must be gone first.

    • “I think all those who held that philosophy in their “hearts” must be gone first.”

      They definitely need to be replaced in critical private sector and government positions, Donna. Thanks for your input as usual.

  2. I’d also point out that Adam Smith was very critical of the capitalists and speculators in his day, and argued that capitalism could not work without some kind of moral ethical standard — he never said markets were magic. He also only used the term “invisible hand” once, and it had limited scope. People who quote Smith as defending a pure free market have never actually read (or perhaps understood) Smith. Ironically, Adam Smith was Karl Marx’s favorite economist — he thought communism was the path to make the economy work as Smith described it should.

    • Thanks Scott for making that point about Adam Smith. The point that he did favor some government regulation to keep greed in check is often overlooked by today’s Milton Friedman/Ayn Rand free-marketers.

      Though I do believe you are right that Smith mentioned the invisible hand theory only once, he did so in an early work of his but I believe later he made reference to it 3 more times in later works. But then I could be recalling that wrong. Your are the economist here. 🙂

  3. All the writers in the 18th century, when cpitlism was young, have been critics…..the philosopher and radical writer, James Mill wrote…….We have seen already, that if one man has power over others placed in his hands, he will make use of it for an evil purpose; for the purpose of rendering those other men the abject instruments of his will. If we, then, suppose, that one man has the power of choosing the Representatives of the people, it follows, that he will choose men, who will use their power as Representatives for the promotion of this his sinister interest……(a post to follow)….

  4. So many things look good on paper, but of course, that is devoid of the human element of greed, jealousy, fear, and all the things that drive humans to do wrong for whatever reason they choose. Those who espouse free-markets and claim that somehow wealth proves ability to make good decisions forget this. Free market economy is like everything else–subject to abuse. Look at the mess that Russia made of communism? We are well along the road of being a corporatocracy. To think that the wealthy do not already largely control government in all its visages is simply absurd. Just look at the fun game being played out by a very few wealthy white men in the GOP campaign.

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