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Future Hindsight is a weekly podcastthat takes big ideas in civic life and democracy and turns them into action items for everyday citizens.

Jan 11, 2020

The Cost of Human Capital

Meritocracy gives the illusion that we are all equally competing at a level playing field. The reality is that the elite is able to purchase better education, which means they are more qualified when it comes to college admissions and high-income jobs. By heavily investing in education and training, elites build human capital within themselves. They become superordinate workers who are paid enormous wages. The flip side is that human capital enslaves us because we have to yield intensive and alienated labor. In order to maintain status in the elite and reap the benefits of the capital invested in them, meritocrats must work continuously at the highest paying jobs they can find. A member of the elite works punishingly long hours under intense pressure. While meritocracy allows some to become extremely wealthy, they do so at the cost of their own freedom, and ultimately their own happiness.

Meritocracy Erodes Democracy

Meritocracy erodes democracy in two key ways. First, meritocracy frames the reality of systemic failure to provide economic opportunity as the failure of individuals to measure up in society. It tells the person who didn’t get into Harvard or get a job at Google that if only they worked harder or were smarter, they would have succeeded, when in fact they are victims of structural exclusion. This creates deep disaffection among those who are unfairly excluded, who then begin to question the underlying institutions that hold American society together. Populists and nativists are able to harness this sentiment, blame ‘the other,’ rise to power, and attack democratic norms. Second, meritocracy creates a massively wealthy elite minority who can legally buy influence in media, politics, and even reduce tax obligations. Between the alienation of the middle and lower classes, and the outsized power of the elite, meritocracy has been one of the leading causes of the erosion of democracy.

Solving the Meritocracy Trap

Meritocracy compounds inequality through unequal access to quality education. Expensive, elite schools prepare those who can afford them for the most selective universities and then high-paying jobs. In addition, because of the way social security tax works, employers now have a huge tax incentive to hire one superordinate worker and robots as opposed to more middle income workers. Markovits proposes two policies to address these problems: expanding elite education and extending the social security tax. Opening up elite institutions will make them less exclusive and more accessible, providing more opportunities to the middle class to higher income. Currently, the social security tax is capped at $137,700, which means that the person who makes $150,000 and the person who makes $2,000,000 pay the same amount in social security tax. Eliminating the cap would raise almost 1.5% of GDP in steady state, which could help fund expanded education.

Find out more:

Daniel Markovits is Guido Calabresi Professor of Law at Yale Law School and Founding Director of the Center for the Study of Private Law. Markovits works in the philosophical foundations of private law, moral and political philosophy, and behavioral economics.

The Meritocracy Trap is his latest book. It places meritocracy at the center of rising economic inequality and social and political dysfunction, and provides solutions to these problems.

You can follow Daniel on Twitter @DSMarkovits