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Luigi Zingales
Who Killed Horatio Alger? « Back to Story

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The founding fathers never rejected aristocracy; remember they wanted to make George Washington king.

The founding fathers sought to protect their own property rights, not to provide opportunity for all citizens. The Constitution is a conservative document written to protect the wealthy landowners. The Constitution doesn't say anything about the pursuit of happiness. Jefferson wrote the Declaration of Independence which declares that right to all citizens. It was the first 10 Bill of Rights (Jefferson, Madison, the authors) which extended other protections to fill in the gaps that the Constitution omitted, reflecting the grievances against English laws and stating the power of the states.

Also, at the time of ratification, most support for the Constituion came from the eastern part of each state, where people were wealthy and established. The more western populace wanted a document which was more liberal with more personal liberties.

The caution is, that each generation of historians reinterprets our history based on the conditions during the time they write. So interpretation vary.
Would not a large contributor to the halt in upward mobility be the Great Society Welfare State itself? It locks people into a bottom quartile dependancy upon government. The generation of poor that grew up beginning in the mid 1960s were often in a household with a single parent who lived off welfare. Gov't welfare paid more to those without a man in the HH. Next generation only wants more welfare from government - isn't that the Democratic Party model?
Great comments about the benefits of a meritocracy and the dangers of nepotistic redistribution. But then followed by a conclusion that lower-income families should be assigned resources ("better schools") based not on merit but the fact that they are lower-income families, which would presumably involve a "redistribution of value" somewhere along the line...
David E. Shellenberger January 12, 2012 at 6:07 PM
"Consider, for instance, the problem of growing income inequality."

Income inequality is not a problem unless it is the product of state coercion. Incomes in free markets naturally vary.

Politicians, government employees, crony capitalists, and academics (subsidized by the federal student loan program) are beneficiaries of the state. Downsize government, eliminate government regulation and corporate welfare, and end the student loan program, and the market will be freer.

As to educational choice, the best answer is to get government out of providing or financing education, and let the market provide the service. Regarding the corporate income tax, it should simply be terminated.
I also like the articles ideas on education. It said education neede improvement, especially for poor kids, but did not suggest pouring in more money to the existing system, or listening to the teachers unions. Instead it suggested free market alternatives, like vouchers.
Good article. One that the repub party in particular should pay attention to. Especially that part where it says being pro market is not always the same as being pro business. The real enemy of capitalism is not socialism, because socialism always fails when matched up against real capitalism. The real enemy of capitalism is crony capitalism, where big companies can make more money developing good lobbying connections with gov, and getting bailouts and preferencial treatment, than they can developing new products. Once crony capitalism is entrenched, then the good name of real capitalism is ruined, and socialism becomes a viable alternative to many.
The education component to some of the comments here are surprising. There are systems that work and level the playing field to all students even the poor single family students. Watching the documentary “Waiting for Superman” showed that there is a way to level the playing field in education. The current education system is ridgid and resistant to change. This is not solely the fault of the teachers union but they are part of the problem. The administrations seem very reluctant for positive change. The only question for me is now that we know how to do this, this being able to give a quality education to the poor - single parent students as well as the students without such environments, and be able to compete with the educations that other countries are giving to their children, is why are we not doing this? A great article overall.
Mr. Zingales:

Maybe because of your life in academia, you are failing to mention the 800-lb. elephant in the room. The decreasing mobility of the lowest quarter of the population is due to two factors - family breakdown, and particularly, dare one say it, among blacks (70% out of wedlock birth rate) and Hispanics (50% out of wedlock birth rate), and multiculturalism which slows the learning of English amongst Spanish-speaking immigrants - who, with their higher birthrate, now account for almost a quarter of all schoolchildren - and this latter linguistic factor is probably a major reason why California public schools are failing so miserably despite massive spending (well, that and bloated teachers salaries and pensions.)

This family breakdown, which by now is multi-generational among African-Americans, simply cannot be overcome by any legislation or money; many inner city school districts are failing horribly despite massive spending. Even reverse discrimination will help little when so many of these students end up in prison, in gangs, on drugs, or as single teen mothers, and fail to meet even a minimum standard that would make a minority student or applicant a viable candidate.

There simply is no external solution to the family breakdown problem; until these minority communities, and the largely white leftist elites do something to reverse these out-of-wedlock figures, there can be no solution. While some will overcome these struggles, perhaps by attending magnet schools or religious schools, most will continue to fail, and will, as difficult as it is for us to accept, have to be written off.
I have read some Alger stories, although it has been a while. Still, I seem to recall that in some the struggling boy gets his break through sheer luck, e.g., the child snatched from in front of the oncoming train is the offspring of a rich businessman who gives him a leg up -- things like that.
It is quite a coincidence that Mr Zingales wrote an article themed on Ragged Dick and that I happened to read it. There are very few people still above ground who have read Horatio Alger's children's book. I am one, apparently Mr Zingales is another.

I agree for the most part with his analysis but there are some points in his explanation of the decline in support for meritocracy in the US where causality runs at least a strongly in the opposite direction as in the direction Mr Zingales describes. While a decline in economic mobility among the lower strata of the economy is clearly a cause of a growing anti-meritocratic sentiment, it is also a result of that sentiment. If the poor do not believe that hard work will be rewarded they are unlikely to work as hard as they might if the did believe, and are more likely to remain poor.

I was a bit disappointed by his suggestions for a pro-free-market but not pro-business agenda. He offers several suggestions that might make the system incrementally more fair, but I don't see them as having that much effect on the perception of the system as fair. It's the perception that matters and that is a harder nut to crack.
Zingales is full of common sense, something woefully lacking in Washington. His overarching argument is one of fairness, something woefully lacking on Wall Street.

Somehow, Washington needs to regain common sense. With it, it will be able to enact legislation that promotes fair play. With fair play, America has a shot at regaining greatness.
It seems to me that the evidence does not support the idea that the reason some students chronically underperform is their school system. Rather, it seems that the emphasis their families put on learning, both at home and at school is a lot more important. Programs such as Head Start don't appear to have long-term impacts.

Unfortunately, I don't believe that there are simple problems to the variability problem, and most of what probably needs to be done would run afoul of various interest groups which would take offense that any culture needs to be "fixed."
"To this day, Americans are unusually supportive of meritocracy, and their support goes a long way toward explaining their embrace of American-style capitalism"...

Really?!?!

Do you see that support manifesting itself in the liberal lizardes that have been put into elective office?
I think the issue is one of transparency: Americans don't trust the system anymore because the rules are so opaque and byzantine that they believe - not without reason - that the system is rigged. The first order of business is a bring the disinfecting sunlight in so people can see and understand what is happening. A system may be imperfect, but at least with transparency it's easier to see where one needs to go when one understands where one is. We aren't even close to that now.
A market system is hard to manipulate?

Excuse me, but did Mr. Zingales spend the past 30 years in a cave in Outer Mongolia?

Oh no--at the U of Chicago. Well, that explains it.

Academe is an environment where people get privileges by kow-towing to alpha primates and their beta henchpersons, and by remaking themselves into whatever polishes teacher's apple, or panders to the rich funders of academic departments.

Anything that any professor has to say about "markets" is immediately called into question by the fact that the only "market" they've ever competed in is sounding like the smartest kid at the cocktail party long enough to get the plummiest positions. If they could "compete in the market"--meaning in the real world of business, not the school world of business--they'd be there. Not pontificating from a tower made from the front tusks of the elephant, and the back residue the animal deposits.
Chris Hayes briefly discussed The Meritocracy on his show this morning. He reported US vs. Europe's standing as though it were some new phenomenon -- giving thanks to the NY Times for filling us in this week. Wut?!

I understand that entertainers like Hayes are popular replacements for analysis like Zingales'. (I blame Fox News for being allowed to drive the conversation.) World-aware and full of facts has always been something to which liberals could cling, especially compared to unpersuasive moral-driven arguments from conservatives.

In terms of argumentation and awareness, this one goes to the right.
@horn (Steve Horvitz):

Incomes have increased, but so has the cost of living and incurred debt.

How much has the cost of living increased vs the increase in wages? How much has aggregate consumer debt increased?
QUOTE: Another policy that could help ...

It is policies that are the problem, picking winners (and losers) by the Chicago school... of politics.

The best policy, the only good policy, is NO policy.
" But it’s troubling that the United States is among the top 12 nations for the variability of scores"



Because, quite frankly, some groups do not value education as much as others. Whites and Asian kids are near the top, blacks and hispanics are near the bottom. Only a change in cultural attitudes among the poorly performing groups will set this straight.

http://www.rti.org/pubs/op-0005-1105-dalton.pdf
Seems to me this excellent article neglects the psychological perspective of a free market, which boils down to "I get to keep what I make!" When the individual feels empowered by market rules (sanctity of contracts, Rule of Law) essentially to reward himself, he works harder than if his work rewarded someone else, or an unknown.
Not surprising that a professor today would write about the virtues of societal meritocracy and the effects of its decline and not mention race, ethnicity, affirmative action, etc. You can't restore a meritocracy if you're afraid to even say why it's in decline.
Pro-market but not pro-business is a tough sell. Milton Friedman was "pro-consumer, not pro-business" (as he said on that Donahue talkshow), still he was branded a heartless social darwinist.

We can always hope that times have changed and for someone more media savvy to re-introduce those ideas, but it seems like a long shot to me.
"Nevertheless, in a move that contradicted the meritocratic spirit, Chicago MBA students voted in 2000 not to reveal their grades to recruiters. The reason was clear: allowing recruiters to distinguish among them based on merit would benefit a minority of them at the expense of a majority."


As Chicago MBAs and, thankfully, MBAs at my Ivy as well, both realized, but Professor Zingales apparently does not, grades represent skill at a snapshot in time and not underlying talent/merit. We are not talking about undergrad here. Some people coming into b-school bring years of work experience in core subjects--accountants for example--that gives them a serious advantage in those subjects that in turn will lead them to gain higher grades than classmates with less experience but higher ability. Declaring grades to recruiters forces all students to stick to those subjects in which they were already strongest for fear that otherwise they would lose out in recruiting, thereby undermining for all the very reasons that most people go to b-school, namely to strengthen areas of weakness, experiment in hitherto unpursued subjects and/or switch careers.

The tax code ideas as of late are encouraging; 9-9-9, flat tax etc..but you can tell the major opposition is from both political party's establishments. There campaign contributions and loopholes to boeing and amazon bring re-election money in. So I am not optimistic, but at least the conversation has started.
Because of politically corrupted minds of politicians and their constituents, business and teachers unions it seems we will self destruct the merit based system before the ideal is gone from the populace mind. We are DOOMED!!
Dear City Journal,

With all due respect, has professor Zingales ever actually read Alger? He's a terrible writer, and I won't even get into the issue of actually trying to take seriously a novel called Ragged Dick in America in 2011. Perhaps, he should take a look at Nathanael West's A Cool Million, which gives a pretty damning and hilarious critique of the whole Horatio Alger myth, and this already in the 1930's!

Apart from this literary point, what the professor declines to acknowledge in his argument is that the voucher programs and choice initiatives he describes will only offer a way out to a small talented tenth of any given population. The truth is that the start up "corporations" he wants to give tax breaks to, don't create jobs. They are part of a new economy that can rely on technology to be productive with little or no labor, running on minimal human oversight, and serving a niche market of consumers who are themselves not going to spend or live or contribute in any way to the economies of our poorest communities.

Thus the two-tiered anti-meritocratic divide continues to grow, as those who are in a position to profit have the way smoothed for them, but the vast majority who are not are left to rot or serve as labor at the most menial level, either through the penal system or the lowest-wage least rewarding, and least promotional jobs, which are proliferated by the those large corporations who, as the professor correctly points out, are allowed to skirt their legal tax obligations by being wealthy and well-connected politically.

The problem with this sort of neo-liberal panacea is always the same. It is blinded by a circular ideology. Perfect markets allow economies to direct resources and energy to the most useful ends, and lo and behold! wealth geysers up magically and spreads to us all, and the invisible hand nudges a stable rational system towards utopia, which is of course a world of perfect markets.

Back in reality where most of us live there are no perfect markets. There is no transparency of information, no equal opportunity to invest, no perfect trade balance, and yes historically constituted differences of class that also overlap with racial and ethnic distortions and discriminations. Because of these historical and human contingencies, no Chicago economic model or Keynesian model or any other fancy contraption has ever made a single successful historical prediction. In the meantime, the overall impact of neo-liberal reforms has proven time and again to concentrate wealth, and fragment human societies, while offering no sustaining value for people to aspire to other than quick schemes for getting rich. Which one could take as tending to confirm Voltaire's rule of politics which is that it is the art of taking from one class and giving it to another. Or Marx's point, that the dominant ideology of every age is always that of the ruling class, and is quite likely to be, shall we say, self-serving.

Zingales thinks Americans are experiencing a lack of faith in the capitalist elevator. But one could argue that in fact, it is simply that they have finally figured out how that elevator really works. And how does it work?

Well, by looting.

Ironically, professor Zingales is correct in at least this first part of his assessment. Yes, the illusion has crumbled. No one growing up in this system believes hard work will get them anywhere. They believe exactly what society has projected for the last 30 years as a reasonable, indeed rational, approach to life: winner takes all, get rich or die trying, get in make a fast buck and get out. Ride the bubble, sell before the bottom drops out. Looting.

Looting is what has happened to Russia's "privatized" economy, and across the liberal market economies of the Eastern Block. Looting is what is understood at the street level by the lumpenproletariat in London. Looting is what practiced on the DJIA, by Countrywide, Citi, Lehman, Enron, and countless others. Looting is what is celebrated by music "artists" on MTV, and "real artists" trying to close deals at Art Basel Miami Beach.

Professor Zingales would have us believe that this is merely the result of a slight miss-calibration, a partial error, a glitch that once removed will set all aright once again in America and allow Ragged Dick to climb from his rank as shoeshine to captain of industry, as it should be. But 2011 is a far cry from 1867, when this unfortunately titled dime novel was serialized.

Perhaps, professor Zingales should drop his hack fiction and take a walk beyond the moat of his well-fortified campus. I would contend that the South Side of Chicago tells a very different story from the one he attempts to relate here.

Interesting that the Horatio Alger books and ideal appeared during the Gilded Age, perhaps the most unequal decades in American history, prior to our own.

What had to happen to reach the more equal postwar era? Severe disruptions of the global economy, including two devastating world wars, a global depression, massive inflation in Germany and elsewhere, harmful protectionism severely reducing global trade and growth, and resulting stagnation. The Second World War, coming after a depression in which many of the rich, too, lost their wealth, helped forge national solidarity in which income and class distinctions were temporarily minimized (at least officially) to help in the common war effort. After the war, we had memories of wartime bonds between employers and employees, and businesses in which quasi-wartime regulations and control persisted for some time (especially in some industries like transportation and communications) before finally being relaxed under Regan.

In other words, the conditions that made for greater income equality between the 1950s and 1980s may have been a generational one-off, a fluke unlikely to be repeated.
I'd like to see the author address the fact that the "playing field" is now global, meaning national actors (governments) are no longer completely in control of incentives. "Meritocracy in one country" now has to compete with other countries and systems that may not be meritocratic, but which can offer cheaper labor, freedom fro environmental regulations, or other factors that mitigate merit.
P.S.: The greatest school-building boom this country has ever experienced was under Republican administrations in the 1920s.
reflectionephemeral: Did you not understand Prof. Zingalez's distinction between "pro-big business" and "pro-free market"?

Sure, Democrats are pro-big business. They love one type of capitalism: the crony kind, where government gets to dispense favors to privileged insiders in return for campaign contributions. See Nancy Pelosi's husband's insider deals that benefited investments of his. But those kinds of insider deals are the opposite of a free market. When the 19th century robber barons enjoyed monopolistic control over whole industries, it was a type, I suppose, of capitalism but not a free market. The same type of crony "capitalism" prevails in many countries around the world. That doesn't mean those markets are truly free.
While looking for something else, I stumbled across this Census report on household income from 2006.
http://www.census.gov/compendia/statab/tables/09s0668.pdf

What's really interesting is to look at the percentage of households in each income category and how that's changed over time. If the prophets of doom and decline and rising inequality are right, we would expect to see, I'd think, lots more rich households and lots more poor ones as the supposed gap widens.

The reality, as it turns out, is different. From 1980 to 2006, the percentage of US households earning $100,000 or more (in constant 2006 dollars) grew from 8.6% to 19.1%. The percentage between $75k and $100K grew from 10.3 to 11.3 percent. At the other end, the percentage under $15K fell from 16.6% to 13.4% and the percentage between $15K and $34K fell from 26.2% to 23.3%. Thus all three categories below $35K fell a total of 6.1 percentage points.

... In other words: the net movement of households was an 11.5 percentage point gain in households above $75K and a net reduction of 11.5 percentage points in houses below $75K. So the percentage above $75K rose from 18.9% to 30.4%. That is, it increased by over 50%.

Let me repeat that: over 30% of US households in 2006 earned above $75K compared to under 20% in 1980.

Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%. Fewer households are poor, fewer are middle class, and a hunk more are above $75K....Not bad for what so many people claim is 30 years of stagnation."

~ Steve Horwitz
great article, but too long to be read!
Professor Zingales, meet the late Professor Mancur Olson
Just a little note that Horatio Alger was a pedophile who had "unatural" connections with little boys...
It pleases me so much that there is an organization such as this one that intellectually approaches the political issues affecting America as a society. If only more people were exposed to these kinds of arguments made with the same eloquence as in this article. MI does much to change the perception that "conservative" or "non-liberal" economic ideas are products of "self-interested elitists and the uneducated middle americans who follow them."
The right killed Horatio Alger, beginning in the 1980's, when it proclaimed a work ethic while spitting on those who did actual work for a living. The disdain for those who hadn't already made it to the top was palpable, and a requirement for anyone wishing to be considerate a "real" American. This attitude continues to inform policy and American culture.
This was one of the best articles on the American economic plight that I have read in some time. It speaks to the American people as a whole, and not just the Tea Party or Occupy Wall Street, or Liberals and Conservatives. It is not divisive, but inclusive. It talks about what Americans share in spirit, not what divides them. It speaks to the power of our optimism, and how we must hang on to that, no matter what.

Thank you, Luigi Zingales
Oh my God...I loved this piece! So easily understood.
reflectionephemeral November 02, 2011 at 9:12 PM
"America’s political spectrum has long been divided between a pro-business side, which understands economic incentives and wants to grow by playing on those incentives, and an antibusiness one ... "

How disappointing, to read this patently false conclusion to an intriguing essay. That claim is just plain false, as is the claim that intellectuals tend to be "anti-free market".

Pres. Obama has raised more money from Wall Street than every Republican candidate combined. As someone under 40, I have never seen an anti-business Democratic Party. I'm perfectly willing to entertain the idea that such a thing existed around the time of Pet Rocks, but it has nothing to do with Clinton's centrist "reinventing government" approach and Pres. Obama's inclination to work toward consensus with all stakeholders.

"redistribution that reduces the incentives to create wealth to begin with."

Is the economic performance of the US in the past thirty years better or worse than that of countries like Germany or France? What are their policies on taxation & their outcomes on disparity? What is the empirical basis for the claim that returning some marginal income tax rates to surplus-era levels will reduce people's efforts to create wealth?

You can't just say that "we don't like increasing the top tax rate by a couple percentage points because Socialism" and call it a day.
There is an excellent way to rank professors, and it does not require that one possess any knowledge in their field: ask where, and what, their former students are. Enrico Fermi is possibly the most prominent example: one doesn't need to understand nuclear physics in order to appreciate a man who could count 5 noble price winners among his students.
Studies show Happiness is in direct proportion to Equality.

Great article.Great diversity of comments,

Inequality was created 1980-2010
Wealth Increses were not shared in bottom 60%.
Big Spend/Borrow government
Reagan gave 1% a 60% tax cut. Reagan increased(spending) the size of government by 80%.

Bush II by 92%(spending). The two added 7000B to our debt.

That Income/Wealth Increase went to top 10%.
Wages were stagnant.

Blame bottom 20% is dumb dumb

1945-1980 Bottom 20% gained more, percent, in wealth than top 20%.

In 2008, top 50% took 87% of individual income and paid 10% of total income in individual income taxes. Shame. We borrowed for them.

In oecd nations we are 5th least taxed nation
Our corporations are least taxed of all but Iceland.

It we had 1% tax conservative Republicans would still chant cut taxes cut taxes for it is their main promo distraction from economic horrors they have created.

Yes! They gave us 1929 nd 2008. Only those.
Cut Taxes = Jobs flourish. 3 since 1980 got 99,000 par month. Lord Clinton and Sir Jimmy got 222,000.

Since 1921 Conservtive Presidents got 800,000 per year to Liberal 1,800,000

Since 1980, the 3 Conservatives initiated our involvement in 10 foreign conflicts.

Peace Loving Lord Clinton and Sir Jimmy=O

Prove me wrong with facts numbers not blarney
cswinney2@triad.rr.com
author Lifeaholic
A complex argument for many folks. Here's a simplified notion: How does "x" relate to growing freedom for as many as wish freedom?

Merit alone is just another word, ready for Marxist revisionism to grasp and twist to its purposes, as is capital and capitalism.

Merit at my university was wholly interlocked with saying the correct things to the correct people and not making waves by intellectual disagreement. For this, a game I played well, I was rewarded with their version of merit -- a doctorate. But my subsequent "outing" of views has made me an opposition to the same faculty over time, and while the degree cannot be withdrawn, the merit internal to the department and school most assuredly has been. Not that I care.

The young girl who was at a disadvantage in the game of Monopoly quit. This is a fine strategy, and is a microcosm of what is happening with capital all around the world. Capital "flight" from a Greece or Argentina, from municipal bonds is a matter of freedom, not a matter of merit and meritocracy.

Let us think plainly and clearly about freedom, which implies the preposition "from." Merit alone does not get us there. No one has killed Horatio Alger, except time and changing tastes. I look forward in the collapse of social welfare governments to Marx receiving the same "killing." Such are killed by freedom.
> Look at the recent studies showing that the best way to learn is to think deeply about the subject/concept you're studying.
Golly. Who'd have thunk it! What a novel idea! No wonder it took recent studies (which ones, by the way?) to unearth it.
He died under his own weight.
"Clearly, we need a better school system, particularly for the poor, and the best way to create one is to provide lower-income kids access to better schools through a voucher program or other choice initiatives."

Successful students require motivated teachers and motivated parents. If the parent side of the equation is lacking (as is more often the case among Blacks and hispanics than other groups) there's little more that vouchers can do.
Craig in Scottsdale November 01, 2011 at 9:43 AM
This otherwise excellent article overlooks the primary cause of the bottom quintile not climbing the socioeconomic ladder as before--namely, the rise in single-parent families, brought about by the welfare state and changed social mores.
Alger heroes always relied on the patronage of some rich guy. His books hardly showed a meritocracy...
"Clearly, we need a better school system, particularly for the poor, and the best way to create one is to provide lower-income kids access to better schools through a voucher program or other choice initiatives."

This is far from clear. Another way to look at it is that poverty is the real issue in educational outcomes, and that unless we have lower poverty rates, educational outcomes will continue to show a lot of, as you say, "variability."
Horatio Alger does not fit the socialist ideal and is therefore being erased from our cultural memory by leftist "educators" and the mainstream media.
The fact that Americans believe in something doesnt make it so. Just as a large number of Americans believe creationism doesnt mean that the Earth was created a couple thousand years ago. The same is true about 'rewards' in America: was Dick Fuld a 'hard working creator' who was 'super frugal' and thus was rewarded? What about John Thain? O'Neil? Bob Rubin? All the other great dons of capitalism your students no doubt aspire to become?

"Clearly, we need a better school system, particularly for the poor, and the best way to create one is to provide lower-income kids access to better schools through a voucher program or other choice initiatives."

Improvements in education are good by themselves, but not an answer to increasing inequality. An improved education system will more effectively segregate the talented and the untalented. This can lead to increased rather than decreased income inequality. Certainly, the ability of the talented non-rich to get a college education has risen dramatically in the 20th century, but so has income inequality.
Meritocracy doesn't work when not everyone can play. Tyler Cowen's ZMP theory along with the current technological trends (automation that will not, unlike past times, create massive amounts of new jobs. See Martin Ford) is important to understand here. With only so many jobs available at the high end (likely to be "automators", researchers, and people who manage/own) and the rest being taken over by automation, we'll reach, in the not too distant future, a time when most people are simply unemployable. How do you have a meritocracy when human beings do not offer an advantage over machines for most jobs? You don't, and have to give in to the idea of a massive welfare state (guaranteed income, for starters) until such time as we achieve superabundant food, energy, etc. and so have no real use for traditional units of account/stores of value.

Among other things /too much competition/ can produce cheating on a massive scale. See "The Cheating Culture."

Level playing field should mean level "basics". If you can pay for college with no debt, you're at a huge advantage. If you can pay for my medical emergencies rather than going into debt, you're at a huge advantage. The albatross of debt for things that are basically unavoidable means that you will/may take longer and longer to get anywhere, and the thought of paying off that debt for years is an absolute motivation KILLER, since it feels like you won't even get to the "starting line" for years, maybe decades. Work harder? Can be impossible with various medical conditions. Work through college? I've personally done that; it turns you into a zombie. You can get all A's and still feel like you've learned nothing. Look at the recent studies showing that the best way to learn is to think deeply about the subject/concept you're studying. There's no deep thinking when you're going from work to class and sleeping 3 hours a night. Not everyone has parents to help them. I certainly didn't. This is not a recipe for turning out *truly* educated, skilled, entrepreneurs. It's a recipe for burnout and poor results (which give politicians and school administrators the ability to cross off line items about their systemic educational achievements, which may in fact achieve little.)

As far as Free Trade goes, this is very disingenuous. Not all Free Market supporters are "Globalist" Free Market supporters - they believe in Free Markets only in domestic ones, with "managed" trade to their international trading partners. Second, even for Free Trade true believers, if you're intellectually honest, you do not support the current system since it doesn't meet the Ricardian definition of free trade by a long shot(!) Our current system is Ricardian Free trade turned on its head. As per Paul Craig Roberts: "However, free trade doctrine is based on the assumption that domestic capital seeks its comparative advantage in its home economy, specializing where its comparative advantage is best and, thereby, increasing the general welfare in the home economy. David Ricardo, who explicated the case for free trade, rules out an economy’s capital seeking absolute advantage abroad instead of comparative advantage at home."

Thank you.
Thought-provoking article. I disagree with the weight given to international rankings of student success, however. In other countries, not all children are given access to the educational system. We, on the other hand, are so egalitarian that we even admit students who are here illegally and who aren't literate in their own language, much less in English. That behavior naturally distorts the results of those rankings.
BRL raises an interesting point and lifts the lid on the value of what 'meritocracy' means in the real world. Free markets are better. Merit that can be manipulated by a popular view or personal value. Read the history of science - where merit should be easily perceived and you will run into politics, manipulation of facts for fame and personal gain. Free markets aren't perfect - but I would bet my life on those instead of a perception of merit by someone else - esp. the government.
Excellent article. We have not lived in a free market for quite some time, and we would do well to note that fact lest the perception take hold that free markets are behind our problems. It would be great to end the blockade of the trolls at the bridge to the future. The division of labor in a free market facilitates the progress of mankind. The trolls sap the efficiencies of the division of labor by stealing from each economic transaction, which makes transactions less beneficial, which makes for fewer of them and less productivity. We can build pyramids for kings, or the modern equivalent, or we can let the human race advance at its incredible natural pace. Imagine where we would be technologically and economically if mankind had been generally free for the last few thousand years.
Ward L. Reed, Jr. October 31, 2011 at 8:28 AM
Superb article. I particularly appreciate the vital distinction between being pro-business and pro-market.
Interesting article. I was surprised that the author did not have the courage (surely he must know) that the biggest difference between American in 2011 and American 1900-1963 is Affirmative Action. Affirmative Action means straight A kids without any preference will not get financial aid; they see mediocre minorities other favored groups get generous scholarships often full rides. This is one of the reasons the % of males i the universities has dropped. Young men know that unless they are a favored minority that they will be discriminated against in colleges. So most prefer to work. But it should be obvious that if a large sector of an economy remains marginalized and undereducated that gradually this group will lose economic competitiveness in a technology and paper credential world. Meritcracy still exists in small busines and in the private sector (though to a much lesser extent large corporations). Crocker Bank (no defunct)and the Bank of America are two institutions that hired exclusivly by quota for years. The reslut was an exodus of hardworking white males who saw themselves passed over by women and minorities who never worked an evening or Saturday and whom they often trained themselves. Crocker Bank went bust in part because young and inexperienced managers with paper credentials over rulled and fired old pros who knew better and were wiser. The old timers cautioned this obession this craze for volume explaining they had no idea of the true risk. But with computer models tens of millions of dollars or loans were automatically approved without any real knowledge of the markets or the businesses involved. I knew one banker personally who worked at Crocker. He did not have one year of losses from 1955 until 1977; his youthful Harvard MBA bosses dismissed this record as "luck" and "excessive caution". Within five years they proceeded to lost in one department only over 70 million dollars more than the combinded profit margins of the previous 25 years. Those incompetent managers were not promoted due to excellence or experience or even longevity but primarily because they were Affirmative Action Brats (female and minority) withIvy League Credentials. I am sure they later moved to the Mortgage Industry or Wall Street though I hope for the sake of America that some retired early to rest on their "laurels".
Most people are afraid to tell the truth because they think it will hurt their career. I am past caring as I am approaching the end of my own career. I don't expect ever to be promoted not do do anything but survive. I have survived because I take jobs no one else wants and so make myself useful. I still work nights and Satudays and in the Summer. I still am 100% reliable never arriving late and rarely if ever calling in sick.

But in Academia, big corporations , the country , state and Federal governments it is best of all to have Affirmative Action prefernce. That is much better than merit. So the meritocarcy of America is gradually dying. Why get a 5 on an AP test when a minority student with a 2 or 3 on the same test gets into a top school and you didn't. Why get a 5 on an AP test to go to a very expensive school that could leave you $250,000 in debt. I suggest working class people and middle class people go to junior colleges, state colleges and the military (one of our last meritoracies though also partially corrupted by PC and Affirmative Action). There is still merit to be rewarded in small business and individual propriorships. But then these business are bing taxed and regulated out of existence by a parasitic publc sector. The number bode ill for America's productivity in thelong run.
A person who has merit is a person who meets a set of values.

Who determines the values? Those who decide the goals and purposes of an organization -- their mission statement if you will.

If a person exemplifies the values of an organization, he/she has merit. If a person meets the requirements of his job, he/she has merit. If a person has no requirements set out for his/her job, who knows who has merit? Merit can't be determined because no values have been set down, or the values change with the political breezes.

Meritorious behavior is not the same across all jobs or organizations. How can Lady Gaga's monetary success be of any concern to intellectuals? Are they assuming there is one and only one standard of merit? Only one standard of values? Boy, I hope not, or it would be difficult to call them intellectuals.
(a person of superior intellect). I suggest they act more like persons of superior envy.

You talk a lot about people's attitudes toward the free market, and in general I understand that you think Americans doubt the free market is good for them. I see lots of negativism among citizens toward the free market also.

But we have no free market, defined as exempt from external authority, interference, restriction, etc. We have a regulated one.

Throughout your article you talk about free markets as if we live in a free market system. We do not. Government puts up numerous barriers to entry and business operation through minimum wage laws, licensing requirements, regulations to meet government decided, not market decided, minimum standards, food codes, tax and work place laws and reporting requirements, teen work environment requirements, etc. There is nothing "free" about our economic system.

And now the new thing is bailouts to go along with the old thing, corporate lobbying, which is payouts to those in power, to further restrict new entrants into this "free" market of ours.

I learned much from your article, and I appreciate that you wrote it, but I was disappointed that you want further government intervention by handicapping the government school system and further regulating the corporate tax system.

You know the old adage: KISS, keep it simple, sir.
Another KISS, keep intervention slight soon.
SPLENDID. MUCH NEEDED. NOW CURTAIL THE TRIAL LAWYERS, WHO RIG AND LOOT THE SYSTEM.THEY GROW WEALTHY WHILE EVERYONE ELSE PAYS. SEE INSURANCE RATES FROM 1950 THROUGH TODAY.
I agree with his presentation up to the point of his solution. His solution seems to negate all his enthusiasm for Capitalism and free markets by suggesting handicaps be imposed to “equalize the starting points of the players” and that “[a] primary target for such handicapping would be the school system.” The reason Ragged Dick is unable “to rise to respectability by learning the three Rs” is that he is being handicapped by poor teachers who have held onto their jobs because of the teacher’s unions. He may have failed to mention it as he being an educator, benefits from the union’s stranglehold on the U.S. education system. Public unions, such as the teacher’s unions, are just the sort of lobbyists he seems to target as the problem. U.S. citizens not only don’t have a place at the table in negotiations with public unions, we aren’t even in the room. Politicians, whose campaigns have been financed by these public unions, are beholding to vote for whatever these public unions want for their members. That being said, along with incompetent teachers, Ragged Dick is unable “to rise to respectability by learning the three Rs” because he is surrounded by peers who do not speak English. He is pushed to the back of the class and the back of his potential because our government has failed to enforce our immigration laws. This has been exploited by those who break our immigration laws to the point where U.S. citizens are paying more all the time for education and getting poor results for their students. I say dismantle public unions and let “meritocracy” rule. Enforce our immigration laws and quit educating their offspring. This would give the Ragged Dick[s] a level playing field. After all according to the author, “Americans do not want to redistribute income, but they do want the government to provide a level playing field: over 70 percent of Americans said that the role of government was “to ensure everyone has a fair chance of improving their economic standing.” Fair, is enforcing our laws so that our tax dollars are not spent providing for lawbreakers to the detriment of U.S. citizens.
Fair, in the business arena, would be for the U.S. government to get out of subsidizing businesses that cannot stand up on their own, serve no useful purpose and have actually been shown to cause harm to all U.S. citizens. “A spring 2007 report by the Environmental Protection Agency said that "ozone levels generally increase with increased ethanol use." (Etter) So eethanol mandates in gasoline have been found to cause more pollution than carbon fuels to the environment, not to mention the food insecurity that is caused by using 40% of our corn crops being used for fuel. Ethanol also damages engine parts. Subsidizing tobacco farmers and at the same time waging a war on the deadly effects of cigarette smoke does not seem to be a wise use of U.S. tax dollars either.
Fair, for large businesses and their supposed small tax payments, as well as ALL businesses, would be for the government to get out of the way and stop regulating businesses to death. Even with the tax deductions businesses are able to take for research and development, at least for the time being, the EXTREME regulations imposed on businesses have a chilling effect on their willingness to do business in the U.S. In this case I’m thinking of a recent EPA ruling that has blocked oil drilling off the coast of Alaska by “Shell Oil Company, who after spending five years and nearly $4 billion, has been forced to abandon its efforts to drill for oil in the region.” This quote in the story is telling. “The EPA’s appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project. Environmental groups were thrilled by the ruling. “What the modeling showed was in communities like Kaktovik, Shell’s drilling would increase air pollution levels close to air quality standards,” said Eric Grafe, Earthjustice’s lead attorney on the case.” (Brownfield) So, now even if you’re close, but not over air quality standards, you are shut down as far as the EPA is concerned. I’m certain in light of Shell’s experience and expenditure; it is unlikely any other company will want to take the risk only to come up empty. Certainly reducing the corporate tax rate would be good for all business as would eliminating the regulation stranglehold now imposed on all businesses.

Works Cited

Brownfield, Mike. "EPA Blocks Oil Drilling in Alaska." 25 April 2011. The Heritage Foundation. 26 April 2011 .
Etter, Lauren. "Ethanol Craze Cools As Doubts Multiply." 28 Novemeber 2007. The Wall Street Journal. 30 October 2011 .

The lack of economic mobility is one I wrestle, because in the past it was because as Thomas Sowell says the statistics are of categories and not real flesh and blood people. Secondly government transfers are not counted in the income categories. So I discounted the statistics.

But your statistics are for real flesh and blood people.

The other factor I look at is how the public employees skew the categories. As their gain is the free markets loss.

Anecdotaly though you have to say that economic mobility appears to be diminishing.

The other factor would be the obvious one that between cheap labor and subsidized immigrants there would have to be a swing away from U.S. labor for those who cannot adjust?

At any rate this article is a good read.
I only made it to the end of the first paragraph. If a writer does not know the difference between meritocracy (government or the holding of power by people selected on the basis of their ability) and free enterprise, he is not going to get any more of my time.
Technology has amplified the weight of what variability there is in educational achievement and native wit. Those who can handle complex spreadsheets etc. can do, faster and more accurately, work formerly done by several mid-level managers, for instance.

The computer and the internet have pushed the economy in the direction of winner take all.

Nobody is to blame for this, and it does help us create more wealth. But quite without any cheating, it has lead to greater inequality of income.
Free Enterprise Capitalism is the difference.