Beneath the Surface

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Having described in some detail how meritocracies degenerate into self-serving oligarchies, Chris Hayes ends his book with a brief discussion of what might be done about it. Although his subtitle, America After Meritocracy, suggests that he wants to destroy meritocracy, he explains that he wants only to reform it. “At its most basic, the logic of ‘meritocracy’ is ironclad: putting the most qualified, best equipped people into the positions of greatest responsibility and import. It would be foolhardy to toss this principle out in its entirety.” This sounds almost like the collison of an irresistible force and an immovable object; we have both the “ironclad logic” of meritocracy in principle and the “iron law” of its corruption in practice! So what’s to be done? Resist the corruption by keeping inequality from getting out of hand:

If you don’t concern yourself at all with equality of outcomes, you will, over time, produce a system with horrendous inequality of opportunity. This is the paradox of meritocracy: It can only truly come to flower in a society that starts out with a relatively high degree of equality. So if you want meritocracy, work for equality. Because it is only in a society which values equality of actual outcomes, one that promotes the commonweal and social solidarity, that equal opportunity and earned mobility can flourish.

Hayes makes clear that he is speaking primarily of economic equality. Although he acknowledges other sources of power besides money–political office, platform (being in a position to address a large audience), social networks–he sees these as highly correlated. For example, candidates who run for office usually need to have a lot of money of their own as well as the social connections to raise it from other wealthy people. And the wealthy generally have their way: Research in political science finds that actual policy outcomes correlate highly with the desires of the wealthy and hardly at all with the desires of middle-income or poorer voters. Hayes regards the “1%” and the “governing class” as nearly the same group.

Hayes then endorses the classic liberal goal of economic redistribution through government taxing and spending. “As a general rule, the more taxation, the more redistribution; the more redistribution, the more equality.” He brings this ostensibly radical idea into the mainstream by citing surveys showing that Americans want wealth to be distributed far more evenly than it is, and that they favor raising taxes on the wealthy. He acknowledges how difficult this is to accomplish: “People and institutions who benefit most from extreme inequality have outsize power they can use to protect their gains from egalitarian incursions.” But he hopes that mobilizing the power of the majority can shift the political balance. He pins his hopes especially on a “newly radicalized upper middle class,” since their prospects for getting ahead have also been diminished by the self-serving policies that favor the 1%.

One thing that struck me about the book was how much politics and how little economics it contains. The author seems to see the world primarily as a struggle of social classes for control of the government, one class using it to consolidate their privileges and others to expand equality. That may be true, but it’s not the whole truth. America also faces a struggle to maintain and expand the wealth of the whole country. Having just read Arne Kalleberg’s Good Jobs, Bad Jobs, I’m interested in the question of how the United States is going to compete in the global economy. Will we join a race to the bottom, creating as many low-wage jobs as possible, or find a way to create better jobs for well-educated, highly trained workers? Government policies in areas like human capital development and investment in new industries may have implications both for reducing inequality and increasing national wealth and competitiveness. If so, framing the issue as redistribution for redistribution’s sake may be unnecessarily narrow and divisive. Hayes mentions the postwar era in which economic growth and increasing equality went hand in hand. Many leaders of that era realized that it was good for the economy for workers to earn enough to join the middle class. Similarly, we may all benefit if the nation develops the talents of all its citizens and the new industries to employ them. The result may be a society that is not only fairer, but more prosperous.

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In my last post, I described Chris Hayes’s “Iron Law of Meritocracy,” the idea that meritocracies eventually produce so much inequality that they undermine equal opportunity and degenerate into self-serving oligarchies. Here I’ll describe some of the ways that he elaborates on his basic argument.

Meritocracies need social norms defining the meritorious behaviors to be rewarded. But “it’s rather difficult to design a competitive system that heavily rewards performance and doesn’t also reward cheating.” The greater the inequality of outcomes between winners and losers, the higher the stakes and the greater the “moral hazard.” Once a few people start cheating, those who don’t join in are placed at a competitive disadvantage, further weakening the social norms. Bad behavior starts to drive out good behavior, just as bad money drives out good money according to Gresham’s Law. During the housing bubble, financial firms that were willing to make shaky loans based on bogus appraisals and sell them off to unsuspecting investors expanded their businesses at the expense of more traditional, cautious bankers. Once a culture of cheating develops, its participants develop some pride in their own slickness and some contempt for the suckers who don’t understand how the game is really played. Those who are supposed to enforce the rules may be overwhelmed by the volume of cheating or corrupted by its benefits. One reason why Major League Baseball tolerated steroids for so long was that all the power-hitting brought in fans and revenue. Economists who endorsed the newfangled financial instruments that turned out to be toxic were rewarded will lucrative consulting deals.

Meritocracies depend on a relationship between knowledge and trust. Ordinary people place their trust in authorities, since they can’t know everything themselves; but they must know enough to have some basis for that trust. Our enriched information environment gives us more information, but also more opportunities for some to have information that they keep secret from others. The Bush administration used carefully controlled leaks to make the case that Iraq had weapons of mass destruction, while not revealing that CIA analysts had serious doubts about that case. The professional journalists we expect to tell us what’s going on can fall victim to the same deceptions, either because they too are misled or because they learn to see the world through the eyes of the elites they cover (“cognitive capture”). “Without some central institutions that have the inclination, resources, and reputational capital to patrol the boundaries of truth, we really do risk a kind of Hobbesian chaos, in which truth is overtaken by sheer will-to-power.” The term “post-truth” politics was already being applied to this situation before the 2012 presidential campaign, in which the absence of trusted authorities who could set the record straight made lying a more viable strategy.

Critics of social inequality usually focus on how steep hierarchies hurt the people at the lower end of the social pyramid. Hayes prefers to focus on the destructive effects closer to the top: “As American society grows more elitist, it produces a worse caliber of elites.” The winners of the meritocratic competition are, not surprisingly, the truest believers in the meritocracy. The system allows them to claim that they succeeded because they were smarter and harder working than their competition, an idea that inspires egomania and disregard for the worth of others. The “fractal” reward structure (many levels of smaller hierarchies within larger ones) encourages a great deal of insecurity, since there’s usually an even higher echelon of success with an even smaller inner circle beyond the level one has already achieved. So the status-seeker looks upward, toward the next rung on the ladder, the next group of higher-ups to please, the next expectation that must be met to get ahead, whether it’s good for society or not. Hayes cites psychological research showing that status-conscious, self-preoccupied, insecure people usually lack empathy for others, especially others lower than themseleves in the social hierarchy. Since the book’s publication, former private equity CEO Mitt Romney provided a perfect example, dismissing the 47% of the population not subject to income taxes as freeloaders unwilling to take responsibility. (In actuality, most either have legitimate reasons for not working, such as age or disability, or they work in low-wage jobs subject to payroll taxes but not income taxes.)

If a meritocracy is to work for the benefit of all, the authorities must be able to receive and act upon honest feedback from people at all levels of society. But extreme inequality creates excessive social distance between the top and the bottom. Elites can call for war without worrying that their sons and daughters will need to enlist in order to get a job or an education. Political authorities can call for an evacuation of a city like New Orleans without thinking very much about the people without cars or money to travel. Catholic Bishops can be “the very archetype of a cosseted elite, remote and diffident and hermetically sealed,” so that their loyalty is “first to their institution, followed by compassion for their brother priests, with very little left over for their actual flock,”even those victimized by sexual molestation. During the housing boom, many people in the neighborhoods most affected by predatory lending knew that something was amiss, but the Wall Street high-rollers who were making the most profits were too insulated to know or care. Hayes uses the metaphor of a sinking ship:

The ship sprung a leak down in the lower decks, flooding the servants’ quarters, and no one up top realized that it would bring down the whole thing. The cocktails continued to flow, the band continued to play, and the party rollicked on Wall Street throughout the housing bubble, even as subprime borrowers drowned, as their lives and wealth and homes were destroyed.

My final post about Twilight of the Elites will deal with Hayes’s discussion of the prospects for reform.

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Christopher Hayes. Twilight of the Elites: America After Meritocracy (Crown Publishing Group, 2012).

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In this book, MSNBC commentator Chris Hayes ties the recent financial crisis to a larger crisis of authority. For Hayes, the financial meltdown is just the most recent example of “elite failure,” the “latest in an uninterrupted cascade of corruption and incompetence” that also includes Enron and other corporate scandals, the inept response to hurricane Katrina, baseball’s steroid scandal, and the coverup of sexual molestation by the Catholic Church. Even before the financial crash, surveys showed an erosion in trust in almost every social institution. And here the exceptions may be as troubling as the rule: What kind of democratic society has high confidence in its military but almost no confidence in its elected representatives?

Hayes distinguishes between “institutionalist” and “insurrectionist” responses to the crisis of authority. For institutionalists like David Brooks, popular distrust is itself the problem, since it can lead to a breakdown of social order. For insurrectionists like Hayes himself, the real problem is the elite behavior that has inspired the distrust. Loss of confidence in elites could be a step toward social reform, but for the most part that hasn’t happened yet, so we remain in limbo with poorly functioning institutions, largely run by “the same elites who screwed them up in the first place.”

What makes this book different from many discussions of elite failure is the depth and breadth of Hayes’s critique. He is not simply attacking particular groups of leaders for particular behavior; he is questioning the fundamental assumption on which leadership in America is largely based, which is the assumption of meritocracy. Emerson said, “The existence of an upper class is not injurious, as long as it is dependent on merit.” The idea that inequality based on merit is both morally justifiable and practically efficient is fundamental to the American belief system. One corollary is that giving people something they haven’t merited is immoral. Conservatives like meritocracy as a basis for authority and privilege, and liberals like it as a basis for openness and diversity. Talent rises to the top, and social factors like race, ethnicity, religion and gender need be no obstacle to the recognition of talent. Hayes cites the election of Barack Obama to the presidency as the “crowning achievement” of meritocracy, although ironically occurring “just at the moment that the system was imploding on itself.”

A belief in the importance of education goes hand-in-hand with a faith in meritocracy. In theory, good schools identify and develop talent from all corners of society, and then funnel it into positions of responsibility. Between 2000 and 2005, 40% of Princeton’s fully employed graduates took jobs on Wall Street. Hayes’s critique of the meritocratic system begins with education, specifically the elite elementary school he attended, Hunter Elementary School in Manhattan. It is a free public school accepting high achievers from all over the city on the basis of a single admissions examination administered to sixth-grade students. But as economic inequality has increased in New York, as elsewhere, Hunter’s enrollment has become increasingly wealthy and white, and minority admissions have slowed to a trickle (3% black and 1% Hispanic by 2009). This is partly because the successful applicants can afford special coaching to prepare for the test. It also reflects the general rule that income is a good predictor of test scores, since children of successful parents have opportunities that other children don’t have.

Advocates of meritocracy usually make a sharp distinction between equality of opportunity and equality of outcomes; meritocracy is supposed to provide the former but not the latter. Equality of opportunity provides the “level playing field” for competition, but the rewards go primarily to the winning competitors, as they should. Hayes questions whether opportunity and outcomes can be so neatly separated. He proposes the following “Iron Law of Meritocracy”:

Eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible….Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies, and kin to scramble up. Whoever says meritocracy says oligarchy.

If that sounds familiar, it’s because it was inspired by the “Iron Law of Oligarchy” proposed by German sociologist Robert Michels in 1911. Michels was describing the process by which entrenched oligarchies emerge in any complex organization, as people who obtain important positions use them to maintain their power. Hayes also notes that Michael Young, the British writer who coined the term “meritocracy” in 1958, intended his book as a warning about what he perceived as a threat to democracy. He saw meritocracy as a system in which a small group of winners could run society to the detriment of the losers, as opposed to a system in which large groups like industrial workers could get ahead together.

In support of his contention that inequality of outcomes can undermine equality of opportunity, Hayes cites economic research showing that economic mobility has decreased as income inequality has increased. Contrary to what advocates of meritocracy might hope, the U.S. has more inequality and less mobility than most other industrial democracies. For Hayes, the issue is not just that this is unfair, but that it bears on the the crisis of authority, the perception that our elites just haven’t been doing a very good job lately. Extreme inequality creates a corrupted upper class that serves society poorly. I’ll explore this aspect of Hayes’s argument in my next post.

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