All the merit money can buy

Chris Hayes has an excellent piece in The Nation about the slipperiness of meritocracy in the United States. In it, Hayes establishes what he calls the Iron Law of Meritocracy:

The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. […] Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up.

This is the classic line against those who try to distinguish between equality of opportunity and equality of outcome. Unequal outcomes generate unequal opportunities for a large number of reasons, one of which is the ability of wealthier parents to pay for opportunity-enhancing services and products. As Jonathan Chait put it recently: “The number one thing parents try to do with their money is to buy better opportunities for their children.”

I have seen this argument made dozens of times, and it is a useful one. In a society with unequal outcomes, the rich can spend more money and effort capturing better opportunities for their kids than the poor can. But I think we can take this argument even further than that. In a society with extremely unequal outcomes, spending more money and effort capturing better opportunities for one’s kids is a much more lucrative and necessary thing to do.

Imagine being a parent in a society where around one-third of the population is living in or near poverty. If you care about your kids, you will use all the money and connections you have to make sure they wind up near the top. Not doing so would mean opening your kids up to the very real risk of an adulthood of economic deprivation and insecurity. Any parent would game the system where they could to lessen the risk that their kid winds up in that bottom third.

If the society had a much flatter income distribution however, the stakes would not be nearly as high. If everyone had a solid standard of living, and the spread between the poorest and richest fifth was quite small, rich parents would have much less motivation to game the merit system. Some still would, but I imagine that the amount and extent of system-gaming would decline.

So increasing income inequality harms equal opportunity for two reasons. First, it gives rich parents more money to skew the playing field in favor of their kids. Second, it gives those rich parents a much bigger reason to do exactly that. Ultimately, a society of high inequality generates a system that crowds smart poor kids out of important positions while crowding mediocre rich kids into them. Such a system poses a real problem for the achievement of fairness and institutional competence.