
The Tyranny of Meritocracy - yummyfajitas
http://www.theatlantic.com/business/archive/2011/11/the-tyranny-of-meritocracy/248061/
======
jfager
It's hard for me to think of another reasonable person I disagree with more
frequently than Megan McArdle.

 _Other than pure envy, it's hard to see how I could somehow be made worse off
if Bill Gates' income suddenly doubled, but everything else remained the
same._

Nobody reasonable begrudges anyone who is wealthy for creating commensurate
value. The issue is with wealth that accumulates to those who don't, like CEOs
who run their companies into the ground or bankers who crash the entire
economy.

If you're creating value, the wealth society has given you is probably a
bargain for society; if you're not, it's an inefficient allocation of
resources, a symptom of a systemic fault that hurts everyone else.

 _It's actually rather more worrying if what they're giving their children is
a strong education and an absolutely ferocious work ethic. An aristocracy that
simply bequeaths money and social position to its children will eventually
fall. And aristocracy that bequeaths the actual skills required to earn more
money than everyone else is self perpetuating._

Strong education + ferocious work ethic + skills to earn money seems like a
weird definition of meritocracy to me, especially given that later in the
article we acknowledge that this combo doesn't actually seem to be getting
good results. A strong education does not necessarily imply you know how to
apply it, and there's certainly a long history of people without that
advantage succeeding. The dirty secret of working long hours is that much of
it is either for show or spent doing shit work. And the 'actual skills' in
question are still very frequently having the right connections.

 _Don't tell me it got hostage to the wrong ideology--tell me why all those
professors we paid millions of dollars to study economics couldn't provide a
convincing rebuttal to that ideology in advance of the crash. Don't tell me
that regulators were stupid or bankers got greedy until you first explain to
me why tens of thousands of very well educated people, most of them graduates
of colleges and professional schools that had aggressively winnowed them based
on intelligence, barely outperformed a bunch of upstart micks, third-
generation coupon-clipping WASP dimwits, and central bankers who still
worshipped the barbarous relic of the gold standard?_

I... what?

~~~
grandalf
How is a CEO being paid $10M per year and running the company into the ground
different from an employee being paid $6/hour and alienating 10 customers?

In both cases the shareholders were harmed. In both cases, the company made a
bad hiring decision.

If a CEO has the market power to demand a golden parachute and happens to be
paid after she's fired, that's a byproduct of her initial market power, not
corruption.

Unless you idealize a world in which all employees have equal market power
then some employees are going to be able to extract better perks, severance,
etc.

~~~
yummyfajitas
To expand on this, hiring the CEO and giving them a golden parachute might
still be a good thing.

Suppose Nokia's chances of survival were 10% without Stephen Elop and 20% with
him. That means he is worth 0.1 x value of Nokia if Nokia survives.

If you pay Elop based directly on the performance of Nokia (i.e., he only gets
paid if Nokia does well), he'll stay at Microsoft. Why leave MS for an 80%
chance of getting paid nothing? Obviously Elop demands some cash up front, a
golden parachute, or something of that nature, and a rational board of
directors will give it to him.

In 80% of situations like this, the CEO gets paid well for running the company
into the ground. But that's a better situation than the alternative, i.e. 90%
of similarly situated companies crashing and burning.

~~~
barrkel
> _Suppose Nokia's chances of survival were 10% without Stephen Elop and 20%
> with him. That means he is worth 0.1 x value of Nokia if Nokia survives._

With respect, this is complete nonsense. It would only be true if there were
no replacement for Elop who could not produce similar returns for a lower
cost.

Supply and demand, not intrinsic value.

~~~
grandalf
Who is a replacement? Care to list 30 such replacements along with the types
of contracts you expect Nokia would have been able to negotiate?

With many millions of dollars of shareholder wealth at stake, only people with
a strong track record should be seriously considered.

~~~
barrkel
In other words, you're agreeing with me; Elop is benefiting from a windfall of
lack of information. This lack of information forces companies to make
inefficient choices of leaders and waste lots of money on leadership.

~~~
grandalf
So Nokia has a lack of information but you don't ? What decision should have
been made? And whose responsibility is it to make that decision?

Sure there are problems with corporate governance but ultimately we're talking
about the risk of misallocating capital belonging to investors, whose job it
is to oversee the allocation.

~~~
a3camero
Not to nitpick, but since we're on the topic of corporate governance...
Hopefully this will make it a bit more clear on why the governance issues are
so murky: At least in Canada, and I'm fairly sure the United States as well
it's actually not investors' job to oversee the allocation. The board of
directors manages the company. Investors merely get to vote for who gets to be
on the board of directors.

Sooo, it's the job of the board of directors to select who the CEO (an officer
in Corporate Law-speak) is.

~~~
grandalf
Well, it's indirect, but they're still ultimately responsible for it. If there
weren't any control, why would anyone invest?

~~~
a3camero
That's a good question (not sarcasm, it might come off that way). I actually
do have a small investment yet I never planned on exercising any control and
only control a trivial number of shares. There's a fair bit of academic debate
on these theories of control and how shareholders relate to companies.

Personally I think there's a lot of freeloading off the small group of big
players that do exercise control. I have a certain amount of faith that they
won't vote in a way that's seriously adverse to my interests as a little fish.

------
pg
The root of the problem (or at least the fixable part of the problem) is
probably schools. Rich people arrange for their kids to go to good schools,
and poor kids end up stuck in bad schools. So maybe the best way to narrow the
gap is to make the worst schools better. That would be a good thing to do
regardless.

Startups may be able to help: <http://imaginek12.com>

~~~
Alex3917
Most of the achievement gap actually comes from parenting, not schools. And of
the portion of the gap that comes from schools, most of it comes from the
differences within individual schools, rather than the differences between
schools. (In other words, a kid taking high-level classes in a low-income
school is probably getting a better education than a kid on the bottom track
of a high-SES school.)

While I'd like to believe that startups could help, I find it fairly unlikely.
Most entrepreneurs I see in the education space don't seem to be experts in
education theory/research, so most of the time their products seem to be only
making things worse. And if the general public were well-educated enough to
tell the difference, there wouldn't be nearly as much of a problem to begin
with.

~~~
ajross
It may be that parenting is more important (though I'd want to see some data
there -- there's was a recent study showing that for poor children attending
preschool was a very good predictor of life success; this would seem to argue
counter to your assertion), but I don't see how that refutes the point.
"Parenting" is not something subject to public policy, in the general case.
School is. We can pass laws to make schools better. If it works (even
partially), then we should. No?

~~~
Alex3917
"though I'd want to see some data there -- there's was a recent study showing
that for poor children attending preschool was a very good predictor of life
success; this would seem to argue counter to your assertion"

In terms of data, here is the graph showing how SES effects achievement for
school kids:

<http://dl.dropbox.com/u/1655696/SES_and_school.jpg>

It's a little difficult to read, but basically what you can see is that poor
kids and rich kids learn roughly the same amount in school. The reason there
is such a big gap is because A) there is a large gap that already exists when
they get to Kindergarten and B) while rich kids are learn over the summer and
get smarter, the poor kids are actually forgetting what they've learned the
previous year.

If you want to learn about why there is already a 2 year gap before the kids
get to kindergarten, you should read the book Meaningful Differences In The
Everyday Experience of Young American Children.

The finding about within school differences vs. between school differences
comes from the Coleman report, which is one of the largest social surveys ever
conducted, and still one of the most important to date. I also have a blog
post here explaining a bit about why within school differences are important:

[http://alexkrupp.typepad.com/sensemaking/2009/02/the-most-
im...](http://alexkrupp.typepad.com/sensemaking/2009/02/the-most-important-
graph-in-education.html)

If I remember correctly efficacy of preschool is mixed, and it depends a lot
on the type of preschool. However, even the best preschools can never be as
effective as good parenting at imparting language schools, for reasons that
the Meaningful Difference book explains. (However, preschools may be good for
other reasons.)

~~~
frossie
Can I beg we avoid the term "good parenting" as it is semantically very poor
in this context. For example a kid from a loving and conscientious poor and
illiterate parent may receive better parenting than a more perfunctory well-
off parent - and yet the latter will undoubtedly be ahead by the time they
reach kindergarten. The issue is not so much, I believe, in the "goodness" of
the parenting, rather, it is in the richness of the environment.

~~~
Alex3917
You're right about good parenting being a bad term. However, it is the
qualities (value neutral) of the parenting that determines outcome rather than
the richness of the environment. To quote Paul Tough, who gives a good summary
of the research:

"The disadvantages that poverty imposes on children aren't primarily about
material goods. True, every poor child would benefit from having more books in
his home and more nutritious food to eat (and money certainly makes it easier
to carry out a program of concerted cultivation). But the real advantages that
middle-class children gain come from more elusive processes: the language that
their parents use, the attitudes toward life that they convey. However you
measure child-rearing, middle-class parents tend to do it differently than
poor parents; and the path they follow in turn tends to give their children an
array of advantages. As Lareau points out, kids from poor families might be
nicer, they might be happier, they might be more polite; but in countless
ways, the manner in which they are raised puts them at a disadvantage in the
measures that count in contemporary American society."

------
DanielBMarkham
Perhaps what really matters for accumulating wealth is not being transmitted
in colleges?

Call me crazy, but if your assumption is that opening the doors to the
unwashed masses and funding lots of education for poor people raises them up,
and it doesn't? Perhaps you should verify your assumptions. Perhaps what
really matters for accumulating wealth is the modeling of attitudes and
virtues from an existing wealthy set of parents. Much the same way that
watching a movie of a famous piano player won't help you play the piano, but
working day-to-day with one might, perhaps all this structural, fact-based
education actually misses the point of how wealth really accumulates? Perhaps
wealth generation is actually more of a learned art, not an applied science.
EDIT: I see pg says this could also be the quality of the schools, and I think
this dovetails in with what I'm saying. It's better to be around folks who
model and demonstrate the best wealth-generating lifestyles in order to
generate wealth yourself. When we look at the word "education," we are
measuring the wrong thing.

Don't know. Just putting it out there. I found this essay thought-provoking.
Much better than the usual fare on this topic.

------
einhverfr
I think this is a bit of a misnomer. The problem is not meritocracy. The
problem is concentration of control within a fake meritocracy. This is the
same problem that doomed the Soviet Union, and it exists to a lesser, but
still serious extent, here in the United States.

As Hilaire Belloc wrote, control over the production of wealth is the control
of life itself. When we give the rich control over the production of wealth
because they are rich and can afford to fund capital, we disempower the
majority. The answer is not socialism or communism, which try to solve the
problems associated with such concentration through further concentrating that
control. The answer is to back off and recognize that the division between
capital and labor which has developed is an unhealthy one, that laborers
should own their own means of production not collectively but individually and
that the role for big capital should be as restrained as possible. As
Chesterton said, "Too much capitalism does not mean too many capitalists, but
too few."

And as I say "In these economic woes, jobs are the problem, not the solution."

One reason Open Source rocks is that it gives economic ownership to the means
of production to every willing programmer and user. This is a value that
cannot be measured economically. And open source works often according to a
real meritocracy, where those who contribute the most and the best rise to the
top, absent corporate control and marketing.

So it is my hope that we recognize it is not meritocracy that is the problem
but rather the level of concentration of resources and control that has been
achieved that is the problem. These are good reasons to support small
businesses, bank with credit unions, become self-employed, and encourage
others to do the same.

------
protomyth
"In fact, if the last generation is any guide, your child growing up in the
top two-fifths today will have a 60 percent chance of being in the top two
fifths as an adult. That's the impact of picking the right parents --
increasing the chances of ending up middle- to upper-middle class by a factor
of three or four."

Let me get this straight. A kid starting in a bracket that includes 40% of the
population has a 60% chance of remaining in that bracket as opposed to the 40%
if it was totally random. I would actually have expected a higher %.

~~~
sounds
The article has other flaws as well, but the one I disagree most strongly with
is:

"But in the new aristocracy, it is rarely enough to just get born to the right
parents; you also have to work very hard. (Higher earning men are now more
likely to work more than 50 hours a week than are men in lower earnings
quintiles.) Whatever the systemic injustices, it's also quite clear to
everyone ... even parasitic leeches of investment bankers ... that their
salaries only come as the result of frantic effort."

Here's what I think is missing from that paragraph. I've tried to label each
logical fallacy, but I could be fallacious (hah!) in my labelling. Argue to
the point, I'm not interested in getting the fallacy names just perfect.
(Here's a source if you want one: <http://en.wikipedia.org/wiki/Fallacy> )

1\. How can she attack hard work and intelligence? She doesn't state what
metric she is using, but I assume it's what she starts the next paragraph
with: "one's parents to confer such enduring advantages is obviously unfair."
If hard-working well-educated parents teach their children to be hard-working
and well-educated, that does not prove hard-working poorly-educated parents
cannot. "Hasty generalization" fallacy?

2\. What justification does she have to write off "systemic injustices" with a
summary "whatever"? Should that not have been the focus of the article? "Straw
man" fallacy?

3\. Why are investment bankers singled out? "Ad hominem" fallacy?

~~~
scott_s
Perhaps I can summarize what I think are her real points:

The old system was an aristocracy, where people were born into positions at
the top of society, and this was obvious unfair. However, this system was not
stable.

The new system is (supposedly) a meritocracy, where people have to work
towards high positions in society. This system is not _obviously_ unfair. But
it _is_ stable, because parents tend to instill the qualities required to
succeed in their children.

Her point was that what these two systems have in common is that who your
parents were is a good predictor of where you will end up.

------
skurry
Not everyone is cut out for a high-paying white collar job. Some people are
passionate about doing construction work, driving a truck across the country,
or even waiting tables. Or maybe one of these profession is most in line with
their physical and intellectual abilities. These people believe (and rightly
so I think) that if you put in your 40-50 hours of hard work per week in a
blue-collar job, you should earn enough to afford a decent place to live,
food, health care, child care, to send your kids to college and to retire once
you're 65. The problem is today that this is less and less the case. This is
what people are complaining about. They're not envious of the "Top 1%" making
a lot more money than they do, instead, they are noticing that the "ruling
class" is actively pushing blue collar wages down, either directly or
indirectly by outsourcing, dismantling entitlement programs, slashing union
rights and so on, with the help of politicians they bought. Of course, the
money saved goes back into the pockets of the upper class, for example in the
form of tax cuts, bonuses, or dividends, and at the same time they claim that
these are hard times and everyone has to tighten their belts. It's not a
tyranny of the meritocracy, it's a tyranny of the power elite.

~~~
grandalf
Your argument is a nostalgic argument... one might as well argue that an
honest and hard working blacksmith deserves to be able to earn a living wage
to support a family... This ignores the changing economy -- these days people
use bicycles, public transit, and cars for transport rather than horses.

Other areas of the economy are changing too. Most technological innovations
exist b/c they do something cheaper or faster than the human labor
alternative.

No matter how much a person may enjoy menial labor, someone else is working
hard to make that work unnecessary. To fight against this trend is a doomed
effort and frankly longs for the dark ages.

~~~
skurry
Believe it or not, there are still working blacksmiths and horse carriage
drivers. But that's beside my point. My point was that the author of the
article assumes that with enough work and educational opportunity, anyone can
join the meritocracy. But I believe that getting a college degree requires a
certain set of talents, which I believe a sizable chunk of the population
simply does not possess (I admit that I may be wrong here, and that some
people might see this as offensive elitism). It's unfair that those who don't
win the talent lottery should be doomed to a life in poverty. Therefore, there
should be a bottom in labor compensation, and that this bottom should
guarantee a certain standard of living, and that this standard of living
should depend on the wealth of a society as a whole. The US has a minimum
wage, but that is way to low to guarantee any sort of comfort in many parts of
the country.

~~~
grandalf
I think the amount of variation in innate human talent is vastly overstated.
But every year that goes by in which a human fails to thrive (intellectually,
etc.) he/she falls further and further behind. In America, many people are
already significantly damaged by the 2nd or 3rd grade. By the time Junior High
rolls around, it would take a drastic intervention to correct someone's
course.

So I think it comes back to our educational system... both those who run it
and those who consume it (the people). As a daycare/assimilation system it
works great, which is not surprising since this is its primary purpose.

Your comment advocates a welfare state where I'd estimate the bottom 40% of
earners would be on welfare. I'm not sure that such a system is good for
peoples' sense of self-worth.

Instead, people should realize that the secret to success is personal
empowerment, learning, etc. It's never too late to learn new skills, etc.

Many who share your view think that it's unreasonable to ask Joe Sixpack to
learn anything new... that his pride at doing unneeded, outdated work is so
precious that we should simply give him welfare.

As long as society's notion of a "normal" life includes working 9 to 5,
watching sports and drinking beer on weekends, etc., then few will ever have
the time to improve their lot in life.

Every successful person I know works like a dog and has earned what they have,
at great sacrifice (skipping parties and fun activities, working weekends,
late nights, etc.). The fact to be remembered is that motivation is not evenly
distributed in society and that many of the people struggling are simply not
all that motivated. In fact, many teach their kids to disdain learning and
education, etc.

Why should anyone in the US be guaranteed comfort when there are children
begging in the street in Mexico or India?

~~~
skurry
Regarding human talent, we both can't prove either standpoint, so we'll just
leave it at that.

Welfare is not the only solution to this problem. If minimum wage is not
enough to allow a single mother to pay for child care, then we should just
offer free child care, financed by taxes. Mom still has an incentive to work
for a living, but is much better off. Scandinavian countries demonstrate that
this works very well.

>Why should anyone in the US be guaranteed comfort when there are children
begging in the street in Mexico or India?

Because as I said, the US as a society is incredibly wealthy. It's possible
with a few political tweaks to fix this, and not a single person will be
noticeably worse off. There's no real reason not to fix it, except for the
extraordinary greed of a few.

~~~
grandalf
I don't disagree with anything you have said here, only unless you also
advocate a drastic overhaul of our educational system your proposals would
seem to be nothing other than the most cynical form of wealth redistribution.

I think the social status quo would fall within a generation or two if the
structural barriers to education were removed.

Humans have a strong desire to thrive intellectually and to understand the
world. The US K-12 system has done much to stifle that and train people to be
obedient workers.

~~~
einhverfr
As far as wealth redistribution, we've had two great successes with this in
the US. The first was the Homestead Act which helped many Americans escape
poverty in order to become smallholding farmers.

The second was WWII and the GI bill which constituted the greatest downward
transfer of wealth in US history, and created the huge, stable, Middle Class
that has survived well up until recently. The New Deal was at most just icing
on the cake (and I think actually destructive to the overall trends). The
wages of war, the draft, and the on-going benefits were where the real
successes were.

~~~
grandalf
The homestead act I can agree with, but not WWII. At least, I don't think WWII
really created structural improvements that wouldn't have happened on their
own if we'd stayed at peace.

~~~
einhverfr
I didn't say structural improvements. It just took a lot of money from the
wealthy and paid it to people in exchange for military service. In other
words, it set back the concentration of wealth, which is now continuing apace
again.

------
twoodfin
Long ago, I think I actually read the study on Sweden vs. U.S. mobility. Alas,
only the first page is available now without the requisite JSTOR tolls:

<http://www.jstor.org/pss/2951338>

My recollection is that the authors looked at the predictive power of a
father's earnings on his son's earnings, but rather than measure changes in
absolute (or inflation-adjusted) earnings, they measured earnings relative to
the society (Sweden or the U.S.) as a whole. In other words, if my father was
in the 50th percentile for earnings, I could use their "mobility" estimate to
determine my odds of making it to the 75th percentile (or down to the 25th
percentile).

That doesn't seem like a useful statistic on which to make qualitative
comparisons when you're talking about societies with two very differently
shaped income distributions (as the authors acknowledge is very much the case
with Sweden and the U.S. on the freebie first page).

Suppose the middle 60% of Swedish males earn between $25,000 and $35,000
annually. A jump from the 20th to the 80th percentile (or vice versa) in
absolute terms isn't that impressive. If the income curve gets narrow enough,
any impact your parents have will get lost in the noise and you'll have a
"perfectly mobile" society in which everyone makes almost exactly the same
amount of money. But how is that mobility?

In contrast, if the earnings difference between the 20th percentile and the
80th percentile is, as in the U.S., a factor of four+, then moving from the
20th to the 80th percentile represents dramatically more "mobility" than in
the Swedish case. AFAIR, the 1997 study would treat those movements
equivalently.

------
fleitz
"In fact, if the last generation is any guide, your child growing up in the
top two-fifths today will have a 60 percent chance of being in the top two
fifths as an adult."

Great that means that 40% of the top two-fifths will be from people who earned
their way up, instead of being born into it. Tyranny of meritocracy indeed, I
mean what kind of uppity lower class kids are we raising who think they can
earn wealth instead of inheriting it!

------
jka
While I agree that improving access to education and opportunities for all is
a big part of the remedy, I do have to take a disagreement with the author's
initial statement that wealth ratios aren't worth considering.

Expensive education may be one part of the gap that appears to be widening,
but as wealth disparity grows, so does power disparity. Money can't buy you
happiness, or even 'true' friends perhaps, but it can buy you influence and it
can keep people following you. This can let the wealthy 'open' job and
experience opportunities where others might not be so fortunate.

~~~
phaedon
Right. Wealth has both absolute and relative terms. The poor in American today
have it better in many ways than even nobility in millennia past. But there is
also a relative component to wealth too. If Bill Gates and his class can pay
for their children to receive personal instruction from the best tutors and at
the best schools, that does price/crowd out the less wealthy. But that's
because the tutors and schools will naturally seek to get more money rather
than less money. I think most people would. So it's hard to know how to solve
this problem short of forcing these tutors to do what others want at the point
of a gun, or cloning them, etc. None of these seem very satisfying.

I pump this from time to time, but MIT's OpenCourseWare does a great job of
making a fantastic education widely available. Perhaps this is a model others
could adopt more widely.

------
lesterbuck
This is one of the most chilling short audio essays I've ever listened to on
NPR. de Botton blasts a huge hole in the idea of pure meritrocracy.

Commentator Alain de Botton explores the darker side of a western ideal:
meritocracy. <http://www.npr.org/templates/story/story.php?storyId=3200029>

I wish there was a transcript of this. I think he covers the basic topic in
some of his books.

~~~
edderly
Interesting listen.

The topic is pretty challenging, especially so for the left leaning where
quite often the political policy related by affluent lefties is "to give
people the same opportunity as me" to compete in a meritocracy.

------
pmorici
"tell me why all those professors we paid millions of dollars to study
economics couldn't provide a convincing rebuttal to that ideology in advance
of the crash."

Because many business and economics professors, esp. the prominent ones, make
the majority of their income from consulting fees and by serving on boards of
large corporations.

For example Frederic Mishkin a professor at Columbia Business School and a
former member of the Federal Reserve Board of Governors authored a paper
titled "Financial Stability In Iceland" shortly before the countries economy
imploded from a credit bubble. As it turns out he was paid $124,000 to write
it by the Icelandic chamber of commerce.
<http://en.wikipedia.org/wiki/Frederic_Mishkin>

This and many similar examples are detailed in the documentary "Inside Job",
though, it isn't something you hear about in the news much if at all.

In other words the study of business and economics has been corrupted by
corporate money.

~~~
jerf
I don't think you're actually disagreeing, because I think the entire point of
the piece was to highlight the discrepancy between the putatively educated
meritocracy and the fact that they have in fact not produced all that much
merit. I think the "Meritocracy" in the title is intended to be subtly ironic.
I think you're _supposed_ to read this and then kvetch about how the
meritocracy isn't.

I could copy and paste this as a reply to a number of other people complaining
about how misinformed this piece is, then going on to argue in the comment
about how the meritocracy isn't. This piece is a fine bit of judo, getting a
whole bunch of people who probably would otherwise be defending the dominant
educational culture to condemn it, by its own standards.

------
absconditus
"I don't care about income inequality. I care about the absolute condition of
the poor--whether they are hungry, cold, and sick. But I do not care about the
gap between their incomes, and those of Warren Buffet and Bill Gates."

The entire article seems to be about income inequality.

------
PotatoEngineer
I'm unclear on just how bad meritocracy is; the author blames meritocracy for
the recent economic mess, sure. And our meritocracy isn't "perfect"; it
doesn't guarantee that "good" workers end up well-off, and that "bad" workers
end up destitute. Everyone has a leg up (or not) from their starting
circumstances, which unbalances their supposed merit.

But it's really hard to see what the comparison is. Was there more upward-
mobility in the old aristocratic system? Were the leaders too stupid to make
gargantuan mistakes? The article certainly doesn't have any good comparison to
make, and there were certainly problems in the Good Old Days (like, say, the
Great Depression), too.

The whole article looks like it's trying to pin blame somewhere, and it has
enough facts to get a decent start, but it has too many holes to be
convincing.

------
anamax
"But I think that rather misses the point: shouldn't the educational
meritocracy, which really is very different from the combination of WASP
elites and up-from-nowhere untutored operators, have done better?"

It's unclear what definition of "meritocracy" Mz. McArdle is using.

"Don't tell me that regulators were stupid or bankers got greedy until you
first explain to me why tens of thousands of very well educated people, most
of them graduates of colleges and professional schools that had aggressively
winnowed them based on intelligence, barely outperformed a bunch of upstart
micks, third-generation coupon-clipping WASP dimwits, and central bankers who
still worshipped the barbarous relic of the gold standard?"

As I suspected, she's confusing credentialed with educated and thinks that
schools winnow only on intelligence.

------
jisaacstone
I wonder if free education would help?

At any rate I am still more concerned with inequality than with relative
mobility within quintiles. There is always going to be a larger number who
stay than those who move, and the numbers here are not as bad as the author
makes them seem

~~~
marquis
Free education generally means that there are fewer placements. In countries
where university used to be free you had to excel to be accepted, so many
students left school with only the opportunity to enter the trades or an
apprenticeship. Once universities charged fees, they could open up to a
broader range of students. This may leave us where we are now - with people
with degrees and heavy loan payments but maybe it's just a transition period
we have to go through, where students start to become directed more into areas
that actually suit them rather than the default bachelor degree. I'm not
convinced on either method and would like to see a balance in between, and
better funding for apprenticeships.

~~~
einhverfr
Apprenticeships rock.

Actually as I am looking at expanding my business, I am actually looking to an
apprenticeship/guild model for scalability rather than a traditional corporate
model.

------
jheriko
"Other than pure envy, it's hard to see how I could somehow be made worse off
if Bill Gates' income suddenly doubled, but everything else remained the
same."

This statement is enormously naive. Bill's money has to come from somewhere so
the "everything else remained the same" is just not possible...

Unfortunately if people are getting much richer than other people it is
necessarily at other people's expense - a reasonable approximation is to think
of money like energy, which can never be created or destroyed (its not quite
true) - Bill doesn't make his pile of money out of nothing leaving everything
unchanged, the money he makes comes from other people's piles of money - these
need not be poorer people, in fact I bet most of them are big businesses, but
then they don't get their money from nothing either, and their budget
decisions on how much to spend on MS software will be balanced alongside
salaries etc... at any rate, that money moves around and naively, if you made
too much you would quite literally be making everyone else poor. I don't have
access to huge amounts of data needed to workout how this scales in reality
and if Bill is anywhere near the point where he is almost certainly making
everyone poorer, but it is a trivial consequence of the nature of money.

This is the nature of capitalism - if every one does what is in their best
interest, some talented/lucky/greedy people will end up much better off with
zero incentive to improve the situation for anyone else. Thankfully capitalism
is merely an ideal and nobody follows it that blindly - Bill at least tries to
give some of his money away to good causes lately...

~~~
adamjernst
_This statement is enormously naive. Bill's money has to come from somewhere
so the "everything else remained the same" is just not possible..._

Only if you see money as a fixed quantity of dollars. We're really talking
about purchasing power here.

Bill Gates invented a way to make anyone who used his products more efficient.
(You can do a lot more with Windows than older OSes.)

Since everyone is more efficient, your $1 can buy more. Of course, you will
probably choose to give some of your money to Bill Gates, but since the rest
is worth more it's a fair trade. (Also, no one can force you to give money to
Bill. If you think it's not a fair trade, don't buy Windows; ignoring monopoly
power here.)

In formal terms, the economy is not a zero-sum game. Your assertion that
"money is like energy, which can never be created or destroyed" is incorrect,
if we're talking about the purchasing power of money and not its numerical
face value.

~~~
westicle
Is there historical evidence of the deflationary power of operating systems?

Windows has been on the market since 1985. If we're so much more efficient
using Windows than not, one would expect a dollar to be worth more today than
back in the old, inefficent days of... whatever we had before.

However... in 1985 US$1.00 had the same buying power as US$2.08 does in 2011.

Average annual inflation over this period was 2.86%.

~~~
adamjernst
Sure, the measure you're looking for is GDP per capita:

[http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...</a><p>Inflation
is a separate phenomenon that occurs through time and can be influenced by the
money supply. The government encourages inflation to encourage investment
(i.e. prevent people from hoarding cash) and for various other reasons.<p>I'm
only looking at a snapshot: imagine you work for a year in 1985 and spend all
your money the same year. Can you buy more or less than if you work for the
same amount of time (with the same skills etc) in 2011, and spend all your
money the same year? Turns out you can buy much more in 2011.<p>If you really
want to look at the "through time" case, calculate what your $1.00 in 1985
would be worth if you invested it and what it could buy in each case.

------
leoh
Another very good essay, quite cognate. "Lost in the Meritocracy,"
[http://www.theatlantic.com/magazine/archive/2005/01/lost-
in-...](http://www.theatlantic.com/magazine/archive/2005/01/lost-in-the-
meritocracy/3672/), by Walter Kirn a few years back.

------
michaelochurch
Any discussion of so-called "meritocracy" requires that we specify a
timeframe.

Short-frame meritocracy means that resources are allocated to people who will
do the most with them _now_. Long-frame means that resources are given to
people who will produce the most with them in the future (i.e. we invest in
people whose short-term performance may be mediocre). Short-frame meritocracy
is pragmatic and efficient in the context of a static time-frame, but doesn't
produce growth or social justice in the long run. Resources (VC funding, jobs,
educational opportunities) are allocated to those who don't need them. Long-
frame meritocracy is fairer and more productive in the long run but much
harder to implement because it requires a certain foresight.

Most business decisions are made in the context of short-frame meritocracy.
People aren't hired based on what they might become in 5 years, but based on
what they're likely to be doing in 3 months. Schools are supposed to take more
of a long-term outlook, but they have no real incentive to do so, and plenty
of incentives (alumni and parental contributions) to kowtow to society at
large and rubber-stamp the preselected winners.

The truth is that iterated short-frame meritocracy is not much better than
oligarchy. It's oligarchy with a tiny Brownian motion term thrown in, and the
annealing rate is always calibrated so as not to threaten the overall shape of
society.

For a historic analogue, one might consider that it was very easy for the
peasants of medieval Europe to believe that the nobility were of superior
"merit". Merit at the time was physical might (and this wasn't unreasonable,
since it also conferred the ability to protect others). First, the nobles were
better nourished and much larger. Second, they knew how to use weapons,
because they were trained. Third, they could ride horses. Feudal Europe was,
fundamentally, a meritocracy (of the short-frame variety) for some definition
of "merit".

