Has Tech-Driven Meritocracy Worsened Inequality?

Yes, because the advent of a technologically dependent economy rewards the skills obtained in elite universities, making it harder for those who do not possess the financial and social resources to gain admittance.

This has created a vicious circle of reward and denial for those who do - and do not - have the wherewithal to crack the system, thereby substituting a new elite for an old one. JL

Ben Mattison interviews Daniel Markovits in Yale Insights:

“Although meritocracy did open up the elite in its early years, it now stifles rather than fosters social mobility. The avenues that once carried people from modest circumstances into the American elite are narrowing. Middle-class families cannot afford the schooling that rich families buy, and ordinary schools lag farther behind elite ones.” Technological changes transformed the labor market to increase the economic returns to the skills the meritocratic universities produced.(But) even those benefiting from meritocracy aren’t happy. Meritocratic elites must work long hours, in law, business, medicine, or consulting, in order to maintain their status and pass it on to their children.

In the middle of the 20th century, American institutions embraced the idea of meritocracy. Top universities, and the banks and law firms they fed, which had been populated by a hereditary aristocracy, instead sought the smartest and hardest working. But while the meritocratic system was intended to democratize American society, argues Yale Law School’s Daniel Markovits in his book The Meritocracy Trap, it has instead contributed to increasing inequality and the decline of the middle class.

“Although meritocracy was embraced as the handmaiden of equality, and did open up the elite in its early years, it now more nearly stifles rather than fosters social mobility,” he writes. “The avenues that once carried people from modest circumstances into the American elite are narrowing dramatically. Middle-class families cannot afford the elaborate schooling that rich families buy, and ordinary schools lag farther and farther behind elite ones.”

And even those that are benefiting from meritocracy aren’t particularly happy, he adds. In contrast to the aristocratic elites that preceded them, meritocratic elites must work long hours, in law, business, medicine, or consulting, in order to maintain their status and pass it on to their children.

“Meritocratic jobs require elite adults to work with grinding intensity, ruthlessly exploiting their educations in order to extract a return from these investments,” Markovits writes. “Meritocracy entices an anxious and inauthentic elite into a pitiless, lifelong contest to secure income and status though its own excessive industry.”

Yale Insights talked to Markovits about the flaws in the meritocratic system and what it would take to create a society with opportunities for more Americans. 

What was the argument for meritocracy in the 1960s, when Yale and other universities were becoming more meritocratic? 

The argument at that stage was explicitly connected to the two core virtues that people still think meritocracy has today. On the one hand, the idea was that if you made people’s economic income advantage turn on their accomplishments rather than their breeding, you would get a much more capable and effective elite. Yale president Kingman Brewster says, famously, “I don’t intend to preside over a finishing school on the Long Island Sound.” By which he meant, I want to preside over a place that produces real excellence and things that are really worthwhile and has graduates who are skilled and ambitious and hardworking. So that was the one advantage of meritocracy.

The other advantage, also very self-consciously embraced by the early meritocrats, was that capacity and effort are much more widely and equally distributed than breeding. The old hereditary elite had captured all of the income and status, people thought, and if you opened up the elite to people based on accomplishments, you let outsiders in. So it was a way of opening up the elite, of promoting equality of opportunity through what seemed like a fair competition. Both of those things were central to the push for meritocracy at its…inception is not quite right, but at the moment at which it became the dominant ideal of American educational and economic life.

On those terms, did it work?

Initially, it did work. It worked initially because the old elite lacked both the capacity and the taste for training its children. And so when places like Yale opened themselves up to anyone based on accomplishment, lo and behold, the most accomplished people did not necessarily come from the old hereditary families. At Yale in the 1960s, if you graduated from a prep school, for example, you were relatively underrepresented in academic honor societies compared to if you graduated from public school. The most accomplished public school in America was probably Bronx Science—much more academically ambitious and serious than a place like St. Paul’s School or other prep schools. 

And so initially what happened is Yale students got much, much better. The median student in 1970 would have been in the top 10% in 1960 in academic achievement, as measured by test scores or grades. And at the same time, Yale got much more open and diverse as lots of people from middle-class and even working-class backgrounds did well on the tests and got in. So at first it worked exactly as planned.

“A series of technological changes transformed the labor market to dramatically to increase the economic returns to precisely the skills that the new meritocratic universities produced.”

Now you had a new elite. Did that elite group calcify? Was there a point where there stopped being replacement in the elite?

I think two things happened. The most obvious thing that happened is that the new elite, the meritocrats, were the opposite of the aristocrats. Whereas the aristocrats lacked both the taste and the capacity to train their children, the meritocrats, who had after all achieved their elite status through training, knew how to train and had an almost unlimited taste for training. And so the system that had been one of inclusion against an old elite became the technology of exclusion for the meritocrats, who could deploy the things that they had done well at to enable their children to do well. 

And then the other thing that happened is that over the same time, a series of technological changes transformed the labor market to dramatically to increase the economic returns to precisely the skills that the new meritocratic universities produced. And so even as the meritocrats captured a bigger and bigger share of the educational pie, so also the value of education grew and grew and grew. And I argue in the book, in fact, that the reason technology bent in this way was the existence of the educated workforce. But in any event, the bottom line is that a ratchet was created in which inequality along meritocratic lines in education fed into meritocratic inequality in the workforce, which produced incomes in the new meritocratic workers that enabled them to buy even more unequal education for their children, which fed into the next cycle in the workforce, and inequality got worse and worse and worse.

You say in your book that the situation is bad for the people who benefit from it as well as everyone else.

Let’s distinguish between two kinds of sympathy we might have for somebody. There’s political sympathy and then there’s existential sympathy. Political sympathy is the sympathy we have for fellow citizens who are suffering in a way that gives them a claim against the rest of us to make a sacrifice or to change what we do so that the people who are suffering should suffer less. It’s no part of the argument in the book that the elite has a valid claim to political sympathy from anyone, particularly not from the middle class that is increasingly struggling economically and excluded by meritocracy from income advantage status.

Existential sympathy is a different thing. Existential sympathy goes to the fact that it’s difficult to be a human being, and that a difficulty as experienced by someone is real, even if that person is, from some political vantage point, extremely privileged. 

And the meritocratic elite does have a claim to existential sympathy, because, well, old-fashioned or aristocratic wealth freed people. If you owned a factory or an estate, you could do whatever you wanted. Mix your wealth with someone else’s labor and extract income in return. If all of your wealth is held as human capital, as your own training and skill, the only way to get income out of it is by mixing it with your own contemporaneous labor. And so the elite is in that sense bound to or compelled by its wealth to work all the time and at whatever tasks the market favors and to yield enormous quantities of effectively alienated labor in order to get the income it needs to pass its privilege on to its children. And that means that they’re wealthy, but they’re not well. This is not a form of human flourishing.

Can you give some examples of the kinds of positions that we’re talking about?

If you ask, for example, associates at elite law firms today whether they would rather work their current hours at your current wage, more hours at a higher wage, or fewer hours at a lower wage, they overwhelmingly say they’d rather have fewer hours. If you ask elite workers in general, in business, in finance, in law, how many fewer hours a week they would like to work, they answer with large numbers—10 fewer hours a week, 15 fewer hours a week. That’s because these are people who are right now working 60, 70, 80 hours a week. And they’re working in circumstances in which they’re constantly monitored, constantly surveilled, constantly assessed, constantly evaluated, promoted or not, fired or not. That’s the intense provision of labor effort that this form of economic production requires of elite workers.

You mentioned that economic change and technological change over the last half century has been designed for and by these workers. Is there a better way? And can we still get to it?

I think there are two things that can be done to build a better way. The first concern is education. Right now, elite universities, elite private schools, high schools, middle schools, elementary schools provide enormously intensive and demanding educations almost exclusively to wealthy children. There’s no reason at all why those institutions can’t educate two or even three times as many students as they now do, and why the new students can’t be drawn from outside the economic elite. So doubling the size of elite educational institutions across the spectrum would open up these institutions, create a pathway to opportunity for more and more people, and simultaneously, because it would reduce the exclusiveness of the institutions, reduce the stress and the competition among the rich. There’d be more spaces for everyone; it would make everyone better off. And opening up education in that way is one pathway to a better future.

The second is to emphasize in labor market policy and tax policy, in regulatory policy, forms of economic production that favor middle-class, mid-skilled labor. Right now, for reasons having to do with the structure, not just of the income tax, but also the social security wage tax, middle-class labor is the highest-taxed factor of production in our economy. There are enormous tax incentives to replace mid-skilled workers with super-skilled workers and robots. And if we reversed that and created incentives to hire middle-class, mid-skilled workers, then people who invent new technologies would have incentives to invent technologies that made middle-class mid-skilled workers more productive. 

And moreover, the open, broad educational system I’ve just described would provide the workforce that those technologies needed. And so the feedback loops that have existed between work and school and have moved us towards ever more inequality could by these parallel policy changes be run in reverse to move us towards ever more equality, to feed on themselves so that each policy would reinforce the other and they’d grow stronger together.

“There are, throughout the economy, places where opportunities are being neglected to employ precisely the kinds of mid-skilled, middle-class workers who used to drive production.”

Is it possible for an investment bank or a law firm to survive without extracting 80 hours a week from its employees?

In its current form, deploying the technologies of production that these institutions now deploy, it’s not easy, especially against the background of the social norms which valorize elite industry, and would produce a degradation in status to workers who work less and were paid less. 

On the other hand, if you look at the German banking sector or, for that matter, the German legal sector, these are sectors of that economy that produce extremely high-quality justice and a legal system and an extremely effective way of financing economic activity in that country, while at the same time having much less elite and much less highly paid workers who work many fewer hours. 

So the answer is if there’s systemic change, the new system can deliver the result you want, which is a more egalitarian, less intensive, high-end workforce than the system that we have now. The fact that an individual firm in our order finds it difficult to achieve that result doesn’t mean that the whole structure can’t be reformed to make it possible for all firms to achieve that result.

Is there a way for an individual leader to make a difference, if you’re an MBA looking forward to being a CEO and you want to make a reasonable life for your employees?

The systemic path is an essential part of good policy going forward, but there are individual paths also. It’s a part of the argument of the book that there are, throughout the economy, places where opportunities are being neglected to employ precisely the kinds of mid-skilled, middle-class workers who used to drive production, to train them in house and to make money using a labor force that has a profile that’s more equal to the one that’s used in the rest of the economy. 

And there are individual businesses that seem to do pretty well at this. So, a business like Costco, for example, pays its workers much more per hour than other similar retail businesses, but is also very profitable because it trains its workers and deploys technologies of selling that make the workers more productive.

So rather than de-skilling workers and having them be less productive and extracting profits that way, up-skill workers and have them be more productive and extract profit that way.

Healthcare seems like a particularly perverse area where people train, sometimes, for decades, and then they have miserable 80-hour work weeks and we’re all depending on them to keep us healthy.

Healthcare is a great example. Somebody once said to me, a consulting type, that a striking thing about healthcare is that the one part of the healthcare sector that has made major gains in efficiency in the United States over the past three decades is fitness clubs. We wouldn’t think of them as part of the healthcare system, but of course they are. And that’s because they deploy effectively a low-tech way of delivering healthcare using personal trainers, yoga teachers—these are mid-skilled workers. They’re middle-income workers. And they deliver healthcare without elaborate technology to many people in a way that, it turns out, has been substantially improved over the past 30 or 40 years, both in its outcomes and its cost structure. 

And what that suggests is that to build a healthcare system which doesn’t just provide healthcare for everyone but also delivers healthcare through cost-effective, widely dispersed, mid-skilled workers would tremendously improve the system, not just for the patients, but also for the healthcare workers.

There’s a state in the West, for example, that’s experimenting with providing routine blood pressure and heart health checks at dentist’s offices. This is a place people go anyway. Dental technicians can be trained relatively effectively to monitor your heart rate, your blood oxygenation, your blood pressure. And at a relatively low cost, using workers who are not super-elite doctors but are paid a reasonable wage, can deliver extremely important healthcare information to people at scale and in a cost-effective way. And those are the sorts of things that innovation should be focusing on.