The Unattainable Illusion of Meritocracy

Posted on October 26, 2014 by Yves Smith

http://www.nakedcapitalism.com/2014/10/unattainable-illusion-meritocracy.html
Im a big fan of Richard Bookstaber, the author of the important book A Demon of O
ur Own Design. And while Im glad to see a rare new post from him, on how to deal
with the matter of inequality (as in whether to deal with the problem ex ante, b
y creating more equal opportunities, or ex post, by trying to reduce disparities
of outcomes), I found one of the core parts of his discussion, on merit and mer
itocracy, to be maddening. In fairness, this isnt Bookstabers fault; hes working wi
thin an established framework of thinking on this topic.
Repeat after me: in complex societies and organizations, merit is a complete ill
usion. We nevertheless pretend to achieve that for reasons of institutional legi
timacy, and also, to the extent we can generally steer people who are fitter on
some key axes towards more important or resource-intenisve activities, for reaso
ns of efficiency. Note that this view is also likely to be more satisfying for i
ndividuals, since it will encourage those who may be less capable in certain way
s that are considered important (intelligence, social skills, empathy) to apply
themselves to do better in those areas. So motivated but less talented people have
an avenue for their energies (il faut imaginer Sisyphe heureux).
But lets not kid ourselves that an idea that has all sort of upside as aspiration
and ideology actually works. Consider what Bookstaber writes, which one can tak
e as an reasonably orthodox view:
I have written various posts on social policy related to the question of whe
ther and how we redistribute income.
I think of income redistribution as an ex post policy. Another approach is t
o make ex ante adjustments to level the playing field, and then step away and le
t the chips fall where they may. When properly executed the ex ante approach is
consistent with a meritocracy, and indeed creates a better, deeper and more succ
essful meritocracy than ignoring the differences in essential endowments.
Assume that there is an objective standard for merit, and a test that correc
tly ranks the subjects in terms of that standard. (For the record, though basing
merit on a testing regime is common in many societies, I do not advocate it). A
lso assume that we can identify the factors that govern success on the test that
are within the control of those taking the test, such as how hard they work, as
well identify as the factors that are beyond their control. Given these two ass
umptions, one scheme for the redistribution, suggested by John Roemer (and in th
is short post I cannot do justice to his argument and stray from it in various r
espect), is first to define what constitutes the endowment of important characte
ristics that are outside a persons control, and then assign people to cohorts bas
ed on their levels of this endowment. For example, if the endowment is parents we
alth and parents education, we place people into cohorts based on the level of th
ese two factors, with the cohorts made narrow enough so that we can take all tho
se in each cohort as being the same with respect to the endowment.
The example he later uses is a tennis player, where a mediocre but highly traine
d and motivated individual beats someone with vastly greater native ability. Boo
kstaber regards this as a poor societal outcome and proposes ways of thinking ab
out how much to invest in each person that are arguably fairer but also better i
n terms of overall results.
What bothers me about this level of abstraction is that it ignores the salient e
lement of modern society: an extreme degree of role specialization in jobs. Emil
e Durkheim discussed this in his book The Organization of Religious Life. He cal
led pre-modern societies mechanical because everyone was an interchangable part. M

odern societies were organic because different people could do different things, b
ased on their inclinations and skills. The community is richer because we have o
pera singers and sports players and other entertainers, as well as people who ar
e good at their crafts or at running or being in a specialized field.
So what exactly is talent? Educated people like to think of it as intelligence,
and that intelligence will be reflected in better educational attainment. But ed
ucation in America has a lot of credentialing and is mixed in terms of substance
(theres a very strong argument to be made for the educational system that Bonapa
rte implemented in France, which has sadly decayed beyond recognition, where it
made a systematic effort to find smart kids, no matter how poor their background
, and track them so that they had as much opportunity to get into the Grandes Ec
oles as children who grew up with highly educated parents. Bonaparte is arguably
the father of meritocracy as a paramount organizational principle, and that mea
nt uniform delivery of educational product throughout French schools. The same les
son would be taught to all fourth graders at 3:00 PM on a particular day all acr
oss the country). And intelligence is not all of a muchness; it has numerous compo
nents that are not well understood or analyzed (testing makes a stab at that on
assessing verbal versus mathematical skills). And thats before you get to the imp
ortance of social skills and emotional intelligence. James Heckman stresses the
importance of socialization, that students who get GEDs (they pass a test that d
emonstrates they have mastered the material needed to get a high school degree)
do markedly less well than students who complete high school.
So we have a huge range of things that people who have some ability and a reason
able self-discipline might aspire to (and that assumes young people know themsel
ves well enough to gravitate to roles in society that they actually can perform
well at). So how can you think about merit for jobs as different as computer progr
amming versus writing ad copy versus selling heavy machinery versus being an off
ice manager in corporate cube land?
And achieving meritocratic outcomes within an organization is a hopeless task. A
s we wrote in The Conference Board Review in 2007:
Consider the experience of OaklandAs general manager Billy Beane, the hero of
Michael Lewiss Moneyball: The Art of Winning an Unfair Game. The baseball indust
ry has always measured players skill and achievements by a handful of well-known
statistics, but in recent years researchers have questioned the value of those t
raditional measures. To make the most of a limited budget, Beane used the new pr
inciples to sign low-salaried players whom his analysis showed were dramatically
undervalued. The result: The team, with one of baseballs lowest payrolls, has pl
aced first or second in its division each of the last eight seasons
Here, then, you have a business where the recruiting is unusually transparen
t, the basic rules have remained unchanged for decades, competitive encounters a
re in full view, and the incentives for success are high. This would seem to be
the perfect environment for developing good decision rules, yet the entire indus
try was largely wrong
OK, so diversity programs may not serve the people they are designed to help
. One of the reasons is that these initiatives are assumed to undermine merit-ba
sed hiring and promotion. Indeed, as [Stanford professor of neurobiology Ben] Ba
rres points out, citing research, When it comes to bias, it seems that the desire
to believe in a meritocracy is so powerful that until a person has experienced
sufficient career-harming bias themselves they simply do not believe it exists. B
ut the idea that an organization can be truly meritocratic is, alas, a fiction.
On a practical level, the best a company can hope for is that, taken as a wh
ole, the people it hires and promotes are better as defined by the companythan the
people it rejects. On an individual level, the role of luck, combined with inher

ent shortcomings of performance-appraisal systems, make it impossible to have confidence in the fai
rness and accuracy of any particular staffing decision
Other factors can thwart an organizations meritocratic efforts (many of these
observations derive from a 1992 paper by Patrick D. Larkey and Jonathan P. Caul
kin, All Above Average and Other Unintended Consequences of Performance Appraisal
Systems). Many people, for instance, run up against conflicts between individual
and organizational interests. Implicitly, any employees job is to serve his boss
, when his check is actually being cut by the company. If the employee views his
role as being different than his boss sees it, the bosss view prevails, whether
or not it is correct. In an extreme case, if the boss wants the employee to run
personal errands, and the employee refuses, he runs the risk of getting a negati
ve review.
Theres the Peter Principle conundrum that the skill requirements at one level
may bear little relationship to the demands of the next. Youve heard the old che
stnut, Promote your best salesman, and you lose a good salesman and gain a lousy
manager. But this situation puts bosses in a real bind. If you promote the person
who is best in a department, his skills may fall woefully short of the requirem
ents of his new role. But if you promote the person you deem best suited for tha
t job, and not the top performer at his current role, you will demoralize his fo
rmer peers, create resentment against him (undermining his authority and effecti
veness), and raise questions about your judgment.
And then there are difficulties in ranking employees across organizational u
nits. Even though organizations want consistent ratings firmwide, its a practical
impossibility. There are considerable barriers to a manager giving his staff me
mber honest and useful feedback that lead to inflated ratings. They have an ongo
ing relationship; and thus both sides do not want the review process to create f
riction. Yet most employees have an inflated view of their achievements, which p
redisposes them to doubt, perhaps even resent, a truthful appraisal. And since t
he assessment of a job of any complexity is largely subjective, its difficult for
the boss to defend a rating that is at odds with the employees self-assessment. I
n addition, managers consider themselves at least partly responsible for their s
ubordinates performance. Thus a low rating reflects badly on them.
The consequences are profound. It means that the typical defense against the
failure to achieve diversity, that the company was in fact hiring and promot
ing based on achievement, is hollow. These systems not only are subjective (inhe
rent to most ratings) but also often lead to capricious, even unfair results.
And there is evidence that subjective processes set a higher bar for minorit
ies
and women. For example, a 1997 Nature paper by Christine Wenneras and Agnes
Wold, Nepotism and Gender Bias in Peer-Review, determined that women seeking r
esearch grants need to be 2.5 times more productive than men to receive the same
competence score. In 1999, MIT published the results of a five-year, data-drive
n study that found that female faculty members in its School of Science experien
ced pervasive discrimination, which operated through a pattern of powerful but un
recognized assumptions and attitudes that work systematically against female fac
ulty even in the light of obvious good will.
So here you have the worst of all pos sible worlds. You want to achieve dive
rsity, if for no other reason than to forestall lawsuits and present a better fa
ce to your customers. Yet you have long believed the main reason is that you hav
ent been able to find enough talented members of the various groups to fill out you
r managerial ranks. But your performance-appraisal system is subjective and prob
ably unreliable, and the complex nature of organizations means that who rises is
largely arbitrary, and it is likely that out

groups are subject to higher performance standards. All this to say that wom
en and minorities frustration at their failure to achieve reasonable representati
on may well be completely justified. Your organization may be guilty as charged.
One of the revealing things about this now-seven-year-old article how the big co
ncern then about unfairness in hiring and promotion related to race and gender d
iscrimination. Its astonishing how the top income strata have so visibly pulled a
way in the wake of the crisis that economic mobility is now seen as at least as
big a barrier to opportunity.
So while it makes sense for all sorts of reasons to aspire to meritocracy, the f
act that it cant even remotely be achieved even when people of good will make gen
uine efforts means that what Bookstaber called ex post solutions are critical. I
n other words, tax the rich. They dont deserve it.