Tuesday, February 16, 2010

Markets and meritocracy, take two

Shikha Dalmia has an excellent follow-up on the markets and meritocracy question, posted up at Bryan Caplan's blog. My favorite excerpt, which again echoes the point I was trying to make in the advice for young libertarians post:

The view that merit powers markets creates a sense of entitlement on the part of smart people that some portion of the world is rightfully theirs. The world owes them something. This is hugely off-putting to the vast rung of humanity (even non-Rawlsians). The sense of superiority of these smart people blinds them to the broader "ecological rationality" of the environment in which they operate. They think they are the ones who make markets tick - instead of the other way round. They think they are the market and what benefits their business, benefits everybody - a mindset that was captured in the immortal slogan: What's good for GM is good for the country! Two, conversely, when they lose in the market - especially to someone or some product they consider inferior -- they regard it as a symptom of market failure and demand corrective action in the form of government regulations to ensure that their competitors' products meet certain quality standards or are not made in sweat shops etc. etc.

Hayek has a brilliant, finely textured discussion of all of this in the chapter on Social or Distributive Justice in the second volume of Law, Legislation and Liberty that is well worth reading. But let me conclude with Hayek's protest against those who have previously espoused Bryan's position:

"It is probably a misfortune that, especially in the USA, popular writers like Samuel Smiles and Horatio Alger, and later the sociologist W.G. Sumner, have defended free enterprise on the ground that it regularly rewards the deserving, and it bodes ill for the defence of it which is understood by the general public. That it has largely become the basis of the self-esteem of the businessman often gives him an air of self-righteousness which does not make him more popular."

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