Bryan Caplan  

Trevor Burrus, I Want to Convert You to Meritocracy

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Toga! Toga!... Elinor Ostrom, RIP...
The meritorious Trevor Burrus responds to my defense of merit against his critique.  Though he's not crying uncle, Trevor concedes a key point:
Bryan argues that "the correlation between market success and merit is imperfect, [but] still fairly high." Great success can come to the lucky and lazy, but they tend to be the exceptions rather than the rule.

I agree. I respect those people who have risen to the top, and I understand that very few of them got there through pure luck. Even for those imbued with natural intelligence and other advantages of birth, success doesn't just happen.
Trevor objects that this is asymmetric:
[T]he correlation between merit and success is less exact for those who are not successful--that is, there are many people who have worked very hard, have been unlucky, and are not successful. I'm thinking of undiscovered bands, brilliant entry-level workers who had apathetic mentors, and would-be superstar executives who simply didn't have the right friends.
Lots of meritorious people fail to make it to the very top.  But how many meritorious people end up anywhere close to the bottom?
There are also countless people who put in years of good, hard work at companies that eventually failed who are now over-50 and struggling to find a job in a horrible economy.

Yes, but it's rare.  Even now, the unemployment rate for college graduates is 3.9% - and much of that is concentrated among the young.

Trevor:

But whatever the relationship is between success and merit, it is not integral to the case for the free market, and, if pushed too strongly, it may in fact be harmful to libertarian arguments.

Doesn't the same hold for prosperity, tolerance, culture, and all the other good stuff that libertarianism is supposed to deliver?

Trevor:

For me, merit has essentially nothing to do with why I believe in free markets. Insofar as market success imperfectly correlates to what I believe is meritorious, I regard it as almost a coincidence.

Really?  Question for Trevor: If you looked at the world and saw nothing but lazy, drunken idiots making money hand-over-first while hard-working, sober geniuses begged for spare change, wouldn't that bother you?

Trevor poses two questions:

1. If everything that Bryan pointed to was false--if only a smattering of those who are successful could be described as meritorious under any definition of the word--would there still be a convincing case for the free market?

Convincing, but considerably less convincing.

2. If someone had an idiosyncratic view of merit--perhaps that "invisible hand" motives are an immoral of using others' needs and wants to fulfill selfish desires--should that person still believe in the free market?

Probably, but with less confidence.

Trevor:

[I]t may be a tougher sell, but even in the face of such obstinacy a successful case for the free market can be made based on the Hayekian/Austrian argument against central planning and the concept of individual rights. These arguments have the added virtue of being both less subjective than opinions about merit and less potentially demeaning to those who, right or wrong, feel cheated by the market.

"Subjective"?  We could just as easily say that what counts as "prosperity" or "tolerance" is subjective.  There's no reason to think that there's any less consensus on merit.  "Potentially demeaning"?  I say that ignoring the achievements of the virtuous demeans them.  As I told Shikha:

Whenever any other group in society feels disrespected - whether it's women, gays, blacks, immigrants, nerds, or whatever - we advise them to stand up for themselves.  We tell them to demand that their fellow citiziens give them the respect they deserve.  Why shouldn't businesspeople and high-earners follow the same strategy?  Yes, in the short-run, this might be, in Dalmia's words, "off-putting."  In the long-run, though, pride movements are pretty effective.

Imagine a world where people feel as uncomfortable publicly criticizing "the rich" as they now feel about lashing out at blacks or gays.  Imagine a world where politicians nervously fumble, "I'm not complaining about the rich, merely certain aspects of rich culture, because of course rich people make many great contributions to our society..."  It won't be easy, but contra Hayek, this is exactly the direction free-market advocates should be pushing in.

Trevor:

If the fact that markets tend to reward hard work and high skill is a reason to believe in markets, then anyone who doesn't value hard work or high skill can disagree with markets for the same reason. These people may not be as uncommon as Bryan supposes. Many movements in twentieth-century art and music were based on a conscious rejection of skill, practice, and many other meritorious virtues traditionally associated with quality art.

There are also many movements in twentieth-century politics and culture that reject materialism and consumerism.  Should libertarians stop hailing the effect of free markets on economic growth?  There are many movements that reject social tolerance.  Should libertarians stop hailing the effect of market on social tolerance?  

Trevor should reflect more on the why that critics of the market demean its success stories.  They're doing it for a reason.  As I told Shikha:

What do revolutionary socialists tell the have-nots to stoke the fires of alienation and resentment?  That successful people earned what they've got, fair and square?  Or that's success is all a matter of chance?  I agree that there's no need to rub people's faces in their failures.  But if they're complaining about their lot in life, it's not just true, but helpful, to tell them to emulate successful people rather than resent them.

Tell me I'm wrong, Trevor.


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COMMENTS (9 to date)
James Oswald writes:

Seems kind of tautological. Successful people are meritorious, but what is meritorious? Whatever makes you successful, on average. And sure, hardworking, disciplined people are more successful, but much of success is also luck, or at least, many people believe it is because of luck. Since it is hard to separate out luck from lack of merit at the policy level, some people will support welfare for both rather than neither.

collin writes:

For a writer who spends so many kilobytes complaining about college signaling defends meriotcrasy with:

Even now, the unemployment rate for college graduates is 3.9%.

Are you going to the darkside? :)

Jared writes:

"But if they're complaining about their lot in life, it's not just true, but helpful, to tell them to emulate successful people rather than resent them."

Provided that the successful are, in fact, successful from something other than luck.

I read this book once by a very kind and clever gentleman who convinced me that much of my children's future--including their height, intelligence, personality (even their willingness to conform and their conscientiousness), political beliefs, and income--was largely a function of their genetic inheritance. Working backwards, much (most?) of my own outcomes are a function of my inheritance. Nevertheless, this clever gentleman believed, for reasons that I still do not understand, in meritocracy.

We do not earn our genes. We may "deserve" them (I'm not even sure I believe that), but we didn't earn them. Until we do, then to me, there is no meritocracy in a meaningful sense.

John Fast writes:

Bryan (and anyone else interested in the issue of meritocracy): I strongly recommend The 2% Solution, particularly the part in which the author explains the difference between conservatives and progressives as being based primarily on the importance they place upon hard work and personal choice rather than luck.

(For the record, all of *my* success is due to hard work, and all of my problems are due to bad luck.)

Jacky writes:

Thanks for the posts.

As a trader on Wall Street and hedge fund for a decade, I have a highly skeptical view on the correlation between merits and success. It is well-known fact that wall street/HF traders/bankers are the most well paid people in the world (apart from CEOs) but having been in the industry for years, I just cannot see any links between merit (in whatever sense you define) and success. Success comes largely from luck (in a very pure sense of this world) and an ignorance of risks (this could be intentional, but from my observation, it's more likely not, though I could be wrong)
You can argue in the long run, those who have a better perception of risk/reward will win out. But first, who cares about the long-run if you could make millions a year by taking excessive risks? And more importantly, in a bad market environment, even the truly smart (assuming they exist) will get dragged down (say your bank got bankrupted by a bunch of "rouge traders") There are of course outperformers in market downturn, but they must exist by definition or statistically.

I suspect same applies to CEOs as it is difficult to measure a CEO performance precisely. A firm's performance depends on a lot of things and I believe CEO's efforts only account for very little (I believe I have read research affirming this though again, I could be wrong). The CEO will still be rewarded handsomely if the firm prospers (for whatever reasons)

And if the two most highly paid categories of people have a weak link between merits/success (pay), then how can you argue it applies in most other cases?

Thanks.

Foobarista writes:

But do you need a lot of "merit" to get to the hedge-fund table? After all, if you set up a coin-flip competition in which the winners get a billion dollars while the losers lose a few million, and restrict the competition to those who have merit criteria X, Y, and Z to get to the competition, you could argue that the most "meritorious" got in, even if the winners are all lucky.

Bryan Willman writes:

Two comments.

1. Luck will always be a dominating issue - because it's luck that we're literate computer users in the current era and not poor peasents in some brutish corner of the Europe in the 13th century. Luck that the readers of this blog didn't all die in a fire before they were old enough to read. Luck that our ancestors had the mutations that won in natural selection.

2. Whether by luck or by skill, the economy needs for there to be winners - even if they are just winning the lottery. Because winners only arise when there are "players", and players only win when they think they can be winners, and the economy as a whole needs the players - all of them.

So whether you write a best selling book or hit song by skill or luck or both doesn't matter. What matters is that the rewards for doing so are high, so lots of people try. Some will succeed for whatever reason. Society benefits with books and songs.

The same is true of the markets - efficient and liquid markets can only exist when large numbers of people trade based on different opinons, at least half of which must be wrong at any time. Without this, there would be no markets. Since nobody would do this unless they thought they might have a high return, high returns are required.

The "what if all the drunken slobs get all the money while the hard working are broke" question describes communism and some part of post-communist China and North Korea. It appears that such arrangements are not stable over the long enough term (though one has fears about N. Korea.)

Wallace Forman writes:

This post oversells itself. The title seems to endorse meritocracy qua philosophy, but the body just seems to celebrate the fact that there is an some correlation between the free market and rewards to merit.

This may be a correct observation, but I doubt that it is a useful debating tactic for converting people to libertarianism. A true meritocrat wants a system that maximizes the correlation between merit and reward, not merely one that has a correlation.

There are lots of things that increase the correlation between merit and reward that are not libertarian. Most self described meritocrats seem to believe first and foremost in free education, hardly the prescription of the Bryan Caplans of the world. Many meritocrats believe in free health care because no one "deserves" to die from curable illnesses.

If there is a rebuttable presumption in favor of liberty, perhaps the correlation between liberty and meritocracy prevents liberty from being rebutted by a failure to reward merit. But I think that's as far as it goes. Libertarianism is not meritocracy, and the reason for libertarianism is not meritocracy.

Joe writes:

I happen to be one of those people who graduated college at a bad time--twice. Once in December 2001 which lead to a job as a retail manager, which I tried to break away from but had difficulty. In order to better my lot in life, I went back to school in 2006 to get a masters degree in finance. I graduated in 2009. In the last three years I've worked a total of about 7 weeks in finance. I got fired from a new job for what had to be mistaken reasons but it was through a temp agency so I don't even know who fired me to discus why. The agency just relayed the message and said they would look for something else for me. I'm currently unemployed. I'm not really sure where I'll find my next job or where to look. I live in a very upside down home in Metro Detroit. I've been unhappy with my employment situation for most of 13 years despite great effort to change it.

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