Merit Schmerit

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite BY Daniel Markovits. NEW YORK: PENGUIN PRESS. 448 PAGES. $30.

The cover of The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite

When Americans talk about inequality, we prefer to skip over an important foundational question: Are richer people better than poorer people? In general the unspoken assumption is yes. Conservatives tend to believe richer people are better because capitalism is designed to reward goodness: Thrift and hard work make wealth, so wealthy people must be thrifty and hardworking. Liberals tend to believe richer people are better because capitalism provides them with more opportunities and access to experience, while poorer people are on average deprived of good education and international travel.

How, then, do we understand today’s winners? What do they deserve, and how? In The Meritocracy Trap, Yale Law professor Daniel Markovits offers his assessment: Super-skilled workers have remade the economy in their image, leaving themselves overworked and unhappy while rendering middle-class Americans underworked and unhappy. It’s nobody’s fault, he concludes, as we can hardly blame the rich for learning a lot, working hard, and innovating. But his students are way too stressed out. “Meritocracy—including the immense skill, effort, and industry of superordinate workers—increasingly clearly serves no one’s interests,” he writes.

Most of the book’s policy conclusions are reasonable: higher taxes on companies that pay huge salaries, bigger admissions classes at elite schools. But The Meritocracy Trap gets tripped up in its own premises. Markovits jams together a range of critiques into an argument that probably seemed honest, empirical, and heterodox to the author at the time. Instead, the framework is original in a bad way, full of holes and contradictory to its core. A graduate of Yale, the London School of Economics, Oxford, and Yale again, Markovits turns in research so lazy, prose so laborious, and thinking so shallow as to refute the very idea of merit in the anglophone system of higher education. If this is what they reward at Yale, then I don’t know what they’re measuring over there—it’s certainly not skill or hard work.

Markovits consistently refers to his meritocrats as “the 1 percent,” but in a mistake so fundamental it can’t possibly be a mere oversight, he doesn’t mean the top 1 percent by wealth (those with assets over $10 million), he means the top 1 percent by income (those with an annual household income of over $420,000). The groups are hardly comparable—one is made up largely of people who own companies, the other of the people who figure out how to make those companies profitable. But an important part of Markovits’s thesis is that inequality between labor and capital now pales before the inequality within the labor force itself: The real division, for Markovits, is between the rich workers—in the higher echelons of law, management, banks, tech—and the rest. This places the book on the former side in the debate between hack commentators like Richard Reeves and David Brooks, who think the main American social division is between the top 20 percent of earners and the bottom 80, and actual economists like Emmanuel Saez and Gabriel Zucman, who locate it between the 1 percent of capitalists and the 99 percent of workers.

After attempting to redefine the generally accepted meaning of the term “1 percent,” Markovits makes a further dodgy move that throws the legitimacy of his whole project into question. Even when measuring the richest households by income, not wealth, a significant part of the money the rich declare on their taxes each year comes from profit on investments—what is known as capital income—rather than from salaries. But Markovits unaccountably tries to blur this distinction when he claims that the top percentile (and tenth of a percentile) of income earners “today owe perhaps two-thirds or even three-quarters of their total incomes to their labor and therefore substantially to their education.” That’s a fishy number, and Markovits justifies himself in an endnote: “Tax data from 2015 suggest that an average member of the top 1 percent owed 56.4 percent of his total fiscal income to labor . . . this number is an underestimate . . . however, because much of what tax forms designate ‘capital income’ is . . . actually attributable to labor.” But by redefining capital gains as labor income he’s blending the two different 1 percents, constructing his own version that makes it very difficult to compare to the research. It’s intellectual fraud.

Were someone to try to validate Markovits’s claim, they’d probably turn to the aforementioned experts, who have led research on longitudinal studies of inequality. The author is certainly aware of their work: Saez comes up thirty-one times in the citations, Zucman twenty-two. The more famous Thomas Piketty is mentioned in the body of the text—twice, briefly and dismissively. Markovits knows their work is valid, but he ignores their clear conclusion. In the May 2018 issue of the Quarterly Journal of Economics, Saez, Zucman, and Piketty repeatedly, explicitly reject the thesis that the richest income earners owe the bulk of their fortunes to labor rather than capital. “The top 1% derives over half of their incomes from capital, the top 0.1% more than two thirds today,” they write. The difference between their less-than-one-third and Markovits’s “perhaps two-thirds or even three-quarters” is massive. In a footnote the economists add, “If anything, it is likely that we underestimate the rise of the capital income share at the top over recent decades.” It’s hard to imagine Markovits missed this paper. Choosing to ignore it while also citing the authors dozens of times is bold, to say the least.

The disagreement isn’t really about the numbers, it’s about ideology: Markovits doesn’t think we give the rich enough credit for their work. It’s hard to suss exactly what he’s saying, because the book is framed as an attack on the meritocracy, but when he goes out of his way to claim that noted scammer Mark Zuckerberg earned his fortune, aggressively misclassifying the Facebook founder’s wealth as labor income, the author tips his hand. “Fraud, rent seeking, and the resurgence of capital make real contributions to rising inequality, and diatribes against them denounce real targets,” he writes. “But the dominant causes of inequality lie elsewhere, inside meritocracy itself, and therefore on ground that inequality’s main critics find less congenial.” The rich are better after all, despite what we read in the book’s opening sentence (“Merit is a sham”).

The Meritocracy Trap is based on a well-received, ostensibly critical graduation speech Markovits gave to his law students at Yale a few years ago. No doubt there’s a market for tellers of tough Ivy truths (“Even Oxford and Cambridge, long-standing symbols of the intersection between social class and elite education, today enroll student bodies with substantially greater economic diversity than Harvard and Yale”), as long as the call is coming from inside the house. But the form is a severe limitation. Rather than follow the data, he’s working from feelings about his rarefied environment. Markovits wants to argue that over the past forty years meritocrats have increased their income share relative to the general population. Yet much of what people think of as the meritocracy—the college-educated professional middle class—has seen its income shrink or remain static over this period. It’s not meritocrat jobs per se that have changed in the ways the author lays out, it’s the jobs that his students are taking, in finance, consulting, and corporate management—all fields that have seen salaries rise dramatically since the ’70s. This is the group, along with tech founders and other inventors, Markovits has in mind when he talks about “the 1 percent.”

All elites are the products of arbitrary privilege, but Markovits isn’t writing about journalists or artists or history professors—professions in which “meritocrats” are overrepresented but where salaries have decreased nonetheless. His meritocrats make money. But exactly what kind of merit does money measure? It’s not until late in the book that Markovits bothers to look at what these people do and what their jobs share: maximizing profits, in particular by “squeezing payrolls for everyone below them.” They’ve hidden behind marketing buzzwords like innovation and disruption, but these are essentially the villains from every American movie between 1983 and 2002. There’s the evil land developer/factory owner/timber baron and, standing next to him, his scumbag lawyer.

Conflating inventor CEOs and the lawyers they use to sue their competitors may be flattering to Markovits’s law students (and by extension, their professor), but it leads the book into a fatal failure of analysis. Markovits quotes the lament of a Stanford Law dean: “Higher salaries require more billable hours to support them, longer hours require higher yet salaries to justify them, and each increase generates another in a seemingly endless cycle. Whose interests does this serve? . . . Does anyone actually want it?” Unfortunately, Markovits treats these urgent, central questions as rhetorical. Since he excludes actual capitalists from his analysis—ignoring them or redefining them as superordinate workers—the reader can’t see in whose interests the entire system operates. Yes, the owners of capital want increased profits, which is exactly what they’ve enjoyed and the end to which they continue to employ Markovits’s students. The small slice of workers who attend to the business needs of the shareholder class have done very well for their bosses, much to the detriment of everyone else. What these lawyers and consultants and managers and disrupters and offshorers are paid to do is increase capital share at the expense of labor. It’s the same thing hired thugs do for mineowners.

No child grows up wanting to be a management consultant, and the fact that high levels of educational achievement strongly correlate with becoming a management consultant doesn’t mean people who become management consultants are any smarter than dental hygienists or taxi drivers or the unemployed. That’s where any honest accounting of meritocracy has to land, but the author can’t manage it. “The returns to education have increased principally because education genuinely teaches real skills, and the transformation of the labor market has made the skills that education provides increasingly productive,” Markovits writes in an endnote. “Superordinate workers, that is, get their enormous pay mostly in exchange for providing enormous economic value, rather than by theft, fraud, or other unmeritocratic means.” But why does he assume the production of enormous economic value is mutually exclusive with theft and fraud?

What Markovits is unwilling and/or unable to understand is that value has a dual form. Under capitalism, innovation and the demand for corresponding new kinds of labor don’t emerge according to human needs, they develop according to potential profit, that is to say, potential labor exploitation. The rich are better—better at making money off of other people. Markovits teaches their lawyers, and it shows. In his acknowledgments for The Meritocracy Trap he thanks not one, not two, but sixty-six research assistants, for a book that comes in at under three hundred pages. Nice work if you can get it.

Malcolm Harris is the author of Kids These Days: Human Capital and the Making of Millennials (Little, Brown, 2017) and a freelance writer living in Philadelphia.