Markets of Meritocracy or Value?

First off, I apologize for the lack of posts in recent days. There has simply been little political news, presumably as a result of the snow days in D.C. and the start of the Winter Olympics.

This morning, an article on Reason.com caught my eye. As I have been in a mood to study economics of late, I found this article particularly interesting. In it, the author debunked what she called the “meritocracy”–a theory which purports that the market rewards people based on their skills and training. She cited noted economist F.A. Hayek, whose theories stated that the market actually rewards those based the value of their ideas.

It would seem that by accepting one, the other theory must be rejected. However, there is a middle ground. These ideas may, in fact, coexist peacefully in attempting to describe the workings of the market.

In an attempt to entice high school seniors to attend college, statistics and figures are thrown at them which show that college graduates make around $2 million more in their lifetimes than those with high school diplomas alone. The accuracy of this figure is disputed, but the underlying premise is not: with more training comes higher-paying jobs and more money, generally speaking. In short, the market rewards those with training. Many people who attend college are working with the same amount or less of “natural resources” (i.e.: brainpower, motivation, ability) as those who did not attend college. If you have ever stepped foot on a college campus, this is painfully evident. But in the end, the college grads will get better jobs. This fact strongly supports the meritocratic market idea.

However, America has always been a place where a man with a good idea could get rich from the fruits of his labor. Pick anyone. Levi Strauss, Craig Ferguson (the late-night comedian, alias: “the Scottish Conan guy”), any one of the winners of American Idol. Each of them had talents or ideas which would mean little in a meritocratic market, but here they are (or were, as the case may be), sitting rather pretty as a result of the money spent by those who value their talents. Hence the support of the value theory by many, including the author of the reason article.

The market consistently rewards those with more training and sharply-honed talents. And it rewards less-frequently the efforts of those with less traditional talents. The man at the top does actually deserve more, if only because of the extra eight or ten years of schooling he suffered through to learn the intricacies of his trade, which in turn causes him to lead the company to more efficiency and profits. But that’s not to say that the assembly line worker who comes up with a better bolt that increases the effiency of production ought not, or even would not, be well-rewarded for his efforts.

Really, it takes a village to participate in the market.

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2 Responses to “Markets of Meritocracy or Value?”

  1. antag9 Says:

    I stand with you on middle ground: markets diverge considerably from ideality. But, those on the “value” side could attribute the success of “the skilled and trained” to the idea behind attaining that status (and its potential rewards).
    Largely unrelated, but I would like to see you handle the problem of “inherited wealth.”

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