How Meritocracy Entrenches Inequality

by singaporearmchaircritic

In a move that took many industry players by surprise, American regulators recently opened a probe on the hiring practice of JPMorgan Chase in China. Ongoing investigation seeks to establish if the investment bank’s recruitment of the offspring of high-ranking and influential Chinese officials aka “princelings” – one of whom is the son of a former banking regulator, the other the daughter of a now-disgraced railway official – was a quid pro quo for coveted business deals, prohibited under the Foreign Corrupt Practices Act (FCPA).

What’s the fuss about, you may wonder. Isn’t the hiring of relatives of powerful politicians and well-connected persons of that ilk a time-tested and pervasive practice that extends far beyond China?

Going a step further, you may even, like New York Times columnist Andrew Ross Sorkin, defend such hiring decisions in a matter-of-factly manner:

… given that many of the children of the elite have some of the best educations and thriving networks of contacts, it is hard to see how businesses are supposed to not seek them out, let alone turn them away. As hard to defend as the phrase may be, it is a reality of life, “It’s not what you know, but whom you know.”

Being well-connected, of course, doesn’t mean a new hire is “unqualified.” The children of political elite who are educated in top universities are the norm and not the exception. However, by arguing that the princelings are being hired on their own merits and by dressing up their inherited advantages as a “reality of life,” Sorkin has conveniently glossed over the modus operandi of meritocracy.

Meritocracy Unraveled

The fallacies of Sorkin’s argument may be illuminated by our local debate over meritocracy. First of all, the need to revamp the concept by adding adjectives to it is, in itself, telling of the pitfalls of meritocracy. For instance, “fair” meritocracy connotes that meritocracy can be unfair; “compassionate” meritocracy underscores how meritocracy may breed a sense of self-entitlement or elitism; “unfettered” meritocracy implies that meritocracy itself has to be restrained.

How is meritocracy unfair? Kenneth Paul Tan explains in “Meritocracy and Elitism in a Global City,”

Meritocracy, in trying to “isolate” merit by treating people with fundamentally unequal backgrounds as superficially the same, can be a practice that ignores and even conceals the real advantages and disadvantages that are unevenly distributed to different segments of an inherently unequal society, a practice that in fact perpetuates this fundamental inequality. In this way, those who are picked by meritocracy as having merit may already have enjoyed unfair advantages from the very beginning, ignored according to the principle of nondiscrimination.

Meritocracy, defined as a system that rewards according to ability or achievement and not birth or privilege, may be unfair precisely because it is blind to differences of class, wealth and social status.

Under Singapore’s education system, for instance, the concentration of good schools in well-to-do neighborhoods and the greater means affluent families have for tuition programs clearly afford the rich an edge over the less so (Donald Low, “Good Meritocracy, Bad Meritocracy”). This is to say that between two equally intelligent children, one from a poor family and another from a rich background, the former has a lower chance of gaining entry into good schools.

Such a passive blindness to differences in the name of meritocracy already aggravates inequality. What is worse, however, is a policy that actively reinforces inherited advantages. A fine example of this is the preferential access to schools given to children of alumni. No wonder experts have found that Singapore’s education system has the proclivity to stifle intergenerational mobility.

Meritocracy, therefore, may be unfair and perpetuate inequality in two ways: (1) by simply disregarding class, wealth or status differences on the principle of non-discrimination, and (2) by deepening differences through discrimination against the less privileged.

If life is one big competition for resources, (1) is akin to inadvertently giving the rich and privileged a head start in the race, whereas (2) is like deliberately installing obstacles in the way of the disadvantaged.

How does meritocracy that purportedly reward in accordance with one’s ability degenerate into a system that recompenses based on one’s birth and wealth?

This has to do with how meritocracy is defined in a society and who defines it.

From Meritocracy to Nepotism and Elitism

The hiring practice of investment banks currently under scrutiny again proves illustrative.

New York Times reported that JPMorgan initiated a program called “Sons and Daughters” in 2006 to impose proper standards when hiring relatives of China’s ruling elite on a separate track. However, the program subsequently went awry:

… in the months and years that followed, the two-tiered process that could have prevented questionable hiring practices instead fostered them, according to the interviews as well as the confidential government document. Applicants from prominent Chinese families, interviews show, often faced few job interviews and relaxed standards. While many candidates met or exceeded the bank’s requirements, some had subpar academic records and lacked relevant expertise.

In this instance we see clearly how the definition of “merit” has been reduced from stellar paper qualifications, relevant expertise plus apparent familial connections to familial connections above everything else. The best person for the job need not be the brightest. His or her merit lies in “opening doors,” or more explicitly, bringing in business deals, and is rewarded thus.

Now expand this scenario to a society.

Amartya Sen, in “Merit and Justice,” writes that the concept of merit is contingent on our view of a good society. Yet, as Kenneth Paul Tan points out,

… the good society (and therefore its idea of merit) is in fact defined by meritocracy’s winners and their organic intellectuals, who must actively promote their definition in order to gain widespread consensus and support. Control of this definition is vital to the control of future prospects for winning and staying in power.

As with the situation in investment banks, the beneficiaries of a “meritocratic” system define merit in a self-serving manner. In Singapore, where winners not only take all but also possess close to absolute control over the definition of merit via ideological state apparatuses such as the media and education, the dominant discourse that has been drummed into citizens is that our system is inherently just, that inequality is but a reality of life or the inevitable outcome of globalization, and that the poor are responsible for their own plight (contradicting evidence) and therefore undeserving of help.

This set of beliefs was branded as elitism by ESM Goh Chok Tong,

When society’s brightest and most able think that they made good because they are inherently superior and entitled to their success; when they do not credit their good fortune also to birth and circumstance; when economic inequality gives rise to social immobility and a growing social distance between the winners of meritocracy and the masses; and when the winners seek to cement their membership of a social class that is distinct from, exclusive, and not representative of Singapore society – that is elitism.

The Perils of Revolving Doors

Now some of you may ask how does it matter if a person is hired for his connections and background. It helps companies win business deals and make money, doesn’t it?

Yet as this writer astutely argues: if the finance industry has to rely heavily on connections to reap profits, then it is not coming up with innovative products that will be rewarded in an open market. It is merely banking on access to the ruling elite to accumulate wealth. This implies that the financial market is a failing one that requires government intervention.

Furthermore, the finance sector entrenches inequality by closing its doors to individuals who are not well-connected by birth despite being talented and able.

In the case of America, the “upper crust passes on their connections to their kids, who then use said connections to acquire a position in finance or some other field where connections are rewarded. The rare person from the middle or lower class who manages to get a foot in the door quickly gets assimilated, using the connections he built during his rise to help his children … Finance becomes the near-exclusive playground of the already-wealthy” (source).

The cost of this market externality, caused by the self-interested behavior of one particular sector, is unfairly borne by the entire society.

If nepotism in the guise of meritocracy in one sector already produces inequality, imagine the ramifications if the entire society embraces and even celebrates meritocracy in an uncritical manner.

The sense of entitlement of the privileged class means it will resist any redistributive policies – a progressive tax system, more generous social handouts, and higher government expenditure on education etc. – to rein in widening inequality. We can all see this is already happening in Singapore.