Thursday, July 12, 2012

How Meritocracies Become Oligarchies

Another very important book I’ve been meaning to mention: Twilight of the Elites: America After Meritocracy by Christopher Hayes. Hayes' book is an important work in making sense of our predicament. Hayes describes in detail how meritocracies devolve into oligarchies over time. The problem is, they still have the illusion of meritocracy, justifying the winner-take-all position of the elites.

As we reach the age of limits where world’s resources dwindle, and capitalism with it’s imperative to expand indefinitely begins to collapse as communism did, Hayes book is important to understanding how our predicament will unfold in the years ahead. Because the elites feel entitled to their positions due to their superiority, their ruling ethos has changed from one of noblesse oblige to one of Social Darwinism. And because they are insulated and cut-off from the masses they “manage”, they will feel entitled to scoop up everything that’s not nailed down as they head to their lifeboats. What fossil fuels remain will go into the jets that fly the elites to Davos, or to build the skyscrapers in London and Shanghai where the elites will live and conduct their business. The rest of us will become disposable useless eaters, eking out a living where reliable, steady employment has vanished, driving is a luxury, and all of our income will be spent on basic necessities. This will all be justified by “merit.” Or, at least, they will try to. Cory Doctorow bogged an excerpt in BoingBoing:
In The Nation, Christopher Hayes has a brilliant article on the way that "meritocracy" inevitably turns into oligarchy, and what that means for our society today. Hayes's account of the transition from meritocracy to oligarchy isn't just about self-delusion ("I am on top, and I am superior, therefore we live in a meritocracy") but also about the way that those who move to the top cement their position by changing the rules. He relates this to the end of economic mobility in the US, the concomitant concentration of wealth, and the way that these factors were a harbinger of collapse in other societies.

In order for it to live up to its ideals, a meritocracy must comply with two principles. The first is the Principle of Difference, which holds that there is vast differentiation among people in their ability and that we should embrace this natural hierarchy and set ourselves the challenge of matching the hardest-working and most talented to the most difficult, important and remunerative tasks.

The second is the Principle of Mobility. Over time, there must be some continuous, competitive selection process that ensures performance is rewarded and failure punished. That is, the delegation of duties cannot simply be made once and then fixed in place over a career or between generations. People must be able to rise and fall along with their accomplishments and failures. When a slugger loses his swing, he should be benched; when a trader loses money, his bonus should be cut. At the broader social level, we hope that the talented children of the poor will ascend to positions of power and prestige while the mediocre sons of the wealthy will not be charged with life-and-death decisions. Over time, in other words, society will have mechanisms that act as a sort of pump, constantly ensuring that the talented and hard-working are propelled upward, while the mediocre trickle downward.

But this ideal, appealing as it may be, runs up against the reality of what I’ll call the Iron Law of Meritocracy. The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. The Principle of Difference will come to overwhelm the Principle of Mobility. 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. In other words: “Who says meritocracy says oligarchy.”
Following is mashup of several excellent reviews:
Hayes pins the blame on an unlikely suspect: meritocracy. We thought we would just simply pick out the best and raise them to the top, but once they got there they inevitably used their privilege to entrench themselves and their kids (inequality is, Hayes says, “autocatalytic”). Opening up the elite to more efficient competition didn’t make things more fair, it just legitimated a more intense scramble. The result was an arms race among the elite, pushing all of them to embrace the most unscrupulous forms of cheating and fraud to secure their coveted positions. As competition takes over at the high end, personal worth resolves into exchange value, and the elite power accumulated in one sector can be traded for elite power in another: a regulator can become a bank VP, a modern TV host can use their stardom to become a bestselling author (try to imagine Edward R. Murrow using the nightly news to flog his books the way Bill O’Reilly does). This creates a unitary elite, detached from the bulk of society, yet at the same time even more insecure. You can never reach the pinnacle of the elite in this new world; even if you have the most successful TV show, are you also making blockbuster movies? bestselling books? winning Nobel Prizes? When your peers are the elite at large, you can never clearly best them.

The result is that our elites are trapped in a bubble, where the usual pointers toward accuracy (unanimity, proximity, good faith) only lead them astray. And their distance from the way the rest of the country really lives makes it impossible for them to do their jobs justly—they just don’t get the necessary feedback. The only cure is to reduce economic inequality, a view that has surprisingly support among the population (clear majorities want to close the deficit by raising taxes on the rich, which is more than can be said for any other plan). And while Hayes is not a fan of heightening the contradictions, it is possible that the next crisis will bring with it the opportunity to win this change.[1]

At its heart, Twilight of the Elites is an indictment of the meritocracy—or what passes for it. A compelling revelation that comes early in the book is the bastard etymology of the very word “meritocracy.” The man who coined the term, Michael Young, did so in a book that was written as a satire, though not read as one by the general public.

Much of Twilight’s framework comes from the work of Robert Michels, whom Hayes invokes to attempt to explain how and why it is that “the pyramid of merit has come to mirror the pyramid of wealth and capital.” Michels, grimly, believed that “oligarchy is inevitable” and that any organization will inevitably breed hierarchy.

With this as our context, Hayes goes on to argue that a functioning meritocracy needs The Principle of Difference (the idea that natural hierarchies of talent exist) and The Principle of Mobility (there must be a selection process that rewards merit and punishes failure). The problem is that “eventually the inequality produced by a meritocratic society will grow large enough to subvert the mechanisms of mobility” and once that occurs:

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.

In the ensuing chapters, we bear witness to a well-cited series of examples, stories and evidence of the erosion of meritocracy. Hayes illuminates well how “intensely competitive, high-reward meritocratic environments are prone to produce all kinds of fraud, deception, conniving, and game rigging” through examples of Wall Street plunder, Congressional and regulatory malfeasance, and steroid use in baseball.

But it is not simply that our elites are failing. It’s that they’ve insulated themselves from accountability, and even compelled journalists to craft false narratives. Hayes points out that simply having access to elites for journalists “has a tendency to produce cognitive capture” which Hayes points out is “an inevitable outcome of sustained immersion.” But the immersion does more than convert those meant to hold power to account. It allows the elites to absolve themselves of judgment via their own insularity.[2]

In his telling, that's one example of the "Cult of Smartness" that has taken hold in American life, a pathology characterized by the mistaken assumption that intelligence is an ordinal quality -- that it is possible for observers to accurately rank intelligent people in order from most  to least smart, and that the right person for a job is always the one deemed smartest. "While smartness is necessary for competent elites," Hayes retorts, "it is far from sufficient: wisdom, judgment, empathy, and ethical rigor are all as important, even if those traits are far less valued." Aside from "The Cult of Smartness," why are present arrangements -- lets call ourselves an "aspirational meritocracy" -- failing us? Hayes' theories are many:

•Institutions designed to reward merit are being gamed by the privileged, who create a self-perpetuating elite. The most familiar example concerns admission to prestigious schools. Admissions tests like the SAT began as a high-minded reform. Applicants would be chosen for intellectual prowess and compete for their spot on a level playing field. Thanks to test prep, the rich get lots of time to practice on it, while even smart poor kids don't.

•More broadly, inequality begets more inequality. "Those who climb up the ladder will always find a way to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up." Thus the astonishingly outsized gains seen at the very top of American society.

•The intense competition inherent in meritocracy creates powerful incentives to cheat, and encourages the attitude that whatever you do in pursuit of dominance is fine as long as you profit or win. For example, at Enron traders who broke the law weren't punished if they were making money. And in Major League Baseball, everyone pretended that steroids weren't around.

•When elites break the rules they aren't punished like regular people. They're bailed out of trouble, or spared criminal prosecution for their lawlessness. This is actually the subject of Glenn Greenwald's latest book.

•There is too much social distance separating the people in charge with the folks subject to their decisions. Thus Catholic bishops who sympathized more with molesting priests than their victims, Senators who send men from a class they rarely encounter to fight the wars they approve, and the disaster planners who couldn't conceive of how the timing of Hurricane Katrina at the end of the month would affect the ability of poor residents to evacuate. There is a long history of Americans complaining about the gulf separating them from their leaders, from the 'distant, unresponsive' King George to the 'out-of-touch, inside-the-Beltway' politicians of today.

Twilight of the Elites perhaps blames too many pathologies on America's relationship with meritocracy. Don't elites in most cultural systems grow distant, self-perpetuating, and unaccountable? Still, most of what Hayes laments are problematic aspects of the current ruling order.[3]



Here’s some terrific anecdotal evidence:

New details about Romney's wealth confirm F. Scott Fitzgerald's quip about the rich. Note His sons have a 100 million dollar ($100,000,000) trust fund.

Reminiscences of Miles Kimball, and others (Marginal Revolution):

Miles and I were in the same entering class in Harvard...Steve Kaplan, from the same class, later became known as an empirical economist but his theoretical acumen was remarkably good...Alan Krueger, in his third year, obtained the reputation of having the best eye for an important empirical paper and how to execute it; he learned the most from Larry Summers.  Nouriel Roubini was generally quiet, though he looked all-knowing and at times slightly jaded...Brad DeLong was a few years older.  He was thought of as the slightly right-wing guy (compared to his peers he was) who read a lot of unusual history of economic thought, including Adam Ferguson...Miles is also a cousin of Mitt Romney, and he will soon blog “Will Mitt’s Mormonism Make Him a Supply-Side Liberal?”...Most of all, he seems to be a great dad, or at least his daughter thinks so.  She too is studying at Harvard, for an MBA.  Here is her project Expert Novice, “Every month or so, I write a letter about what I’ve learned lately.”

Wow! Even more here.  Tyler Cowen is a poster child for Hayes book - highly intelligent, erudite, accomplished, and knowing nothing of the world most of us actually have to inhabit outside of theoretical models and research papers.

And it even extends to our genetic cousins: The Old Primates' Club: Even Male Monkeys Ride Their Fathers' Coattails to Success (Science Daily)

Is it any wonder people have lost faith in our elites and our institutions? Is it any wonder they've given up?

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