The American Dream is a meritocratic ideal. Our national ethos is that no one should be guaranteed prosperity, but all citizens should have an equal opportunity to pursue it through their merit. What a person can become should turn only on his or her intelligence, effort, skill, and the like—and not arbitrary features, like race or parental wealth. That way, if a social hierarchy emerges, it is a “natural aristocracy”—as Thomas Jefferson put it—filled by “virtue and talents”, not “wealth and birth”.
But it is not a libertarian ideal. If we followed libertarian principles and implemented libertarian policies, we would create a very different economy than the one so many Americans desire. We would create an economy in which merit was not taken seriously.
Consider the lamentable state of opportunity in the United States today. Our economic mobility is among the worst in the developed world. Children who are born rich stay rich. Others, no matter their merits, cannot escape the trap of poverty. Note that this is not because genetics determine economic outcomes; they do not. Instead, birth into wealth provides social advantages, like access to elite education, as well as brute inheritance. The wealthiest 1% of American households inherited, on average, $3 million. This is no coincidence.
Unequal opportunity is incompatible with meritocracy. Whether you are rich or poor ought to turn on your merits—not your parents’ merits, or their parents’ merits.
What are the remedies for unequal opportunity? We can provide high-quality education and health care to poor and middle-class children, and break up the intergenerational passage of wealth and influence. These policies are desirable not only on grounds of justice but of economic efficiency as well: Educated citizens are more productive, and less likely to engage in damaging activity, like crime.
Yet these policies are anathema to libertarians who demand “the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution”. They would eliminate Medicaid and the Children’s Health Insurance Program, as well as all public support for education. At a time when we should be leveling the playing field, libertarian economic policies would make family circumstance an even more decisive determinant of prosperity.
At the same time that we have neglected equal opportunity, our economy has become less responsive to merit. We still reward innovators like Bill Gates and Steve Jobs—and rightly so—but we increasingly enrich executives who make no economic contribution at all. Dick Fuld, the former CEO of Lehman Brothers, made half a billion dollars for driving his storied firm into the ground and helping to crash the American economy. No merit, but an enormous reward.
We discriminate against best-qualified applicants because of their race or gender. We pay people more if they are pretty. We allow executives, like Fuld, to gain control over their own salaries, and so they make more than they deserve given their merits. And our labor markets are overrun with nepotism (anyone on the job market today will testify to the overwhelming importance of “networking”).
These are all injustices from the meritocratic point-of-view. Hiring and salaries should purely be functions of merit. It is unjust to deny a meritorious woman a job on account of her sex. It is unjust to deny a meritorious man a job in order to promote “diversity”. The same goes for discrimination on the basis of race, appearance, sexual tastes, religion, and all the rest. Merit, and merit alone, is what ought to count.
In contrast, libertarians regard these features of our economy as unproblematic. Firms allegedly are at liberty to discriminate, in hiring and compensation, however they like. Under libertarianism, there is no moral requirement to hire, promote, or reward meritorious people. As a result, even competitive libertarian markets may be inefficient.
Now I do not want to overstate the differences between these two theories of economic justice. Meritocracy and libertarianism have much in common. First, they both reject the egalitarian’s call for equal economic outcomes. Second, they believe that markets are the right way to organize economic activity, thereby promoting broad prosperity.
And third, both meritocracy and libertarianism endorse an ethic of personal responsibility. But we must ask how much responsibility there can be in a society in which a person’s wealth is predetermined by his parents’ wealth; failure gets rewarded; and gender and race—rather than merit—determine who gets jobs and who does not. As philosopher Joshua Preiss puts it, “in the political and economic status quo, preferred libertarian policies . . . undermine the ethic of personal responsibility that Americans from across the ideological spectrum value and many conservatives and libertarians celebrate”.
Instead of pursuing libertarian policies, we should redouble our efforts to make the American Dream a reality. This requires that we establish equal opportunity and ensure that citizens are judged strictly on their merits. That is responsible, and efficient, and just.
homas Mulligan, a faculty fellow at Georgetown University’s Institute for the Study of Markets and Ethics, is the author of Justice and the Meritocratic State. Before coming to academia, he served in the US Navy and the Central Intelligence Agency.