Meritocracy is broken. In the post-pandemic world, the best need to take care of the rest

In the US, new technology has divided society into technocratic and industrial classes, and the pandemic has thrown this divide into sharper relief. In the post-coronavirus economy, the question of social fairness must be addressed

Andrew Sheng

Published: 3:00am, 9 May 2020

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At this moment in time, the old model doesn’t work any more. When President Donald Trump pledged to put “America first”, he could not have imagined that the United States would one day top the world in coronavirus cases (over 1.2 million) and deaths (over 75,000). Few could have imagined the world’s most powerful economy would, in a matter of months, move from near full employment to more than 30 million seeking unemployment aid.

And those of us who bought into the “one for all, all for one” mythology of Hollywood movies like Saving Private Ryan cannot believe that the US is willing to sacrifice 100,000 lives to reopen the economy earlier. Do livelihoods matter more than lives now?

American capitalism works on the basis that all are free to pursue their goals, so the best, brightest and most competitive can rise to the top. Competitive freedom is at the heart of a meritocratic society.

British sociologist Michael Young invented the word meritocracy in his 1958 satire, The Rise of the Meritocracy. He wrote: “Today we frankly recognise that democracy can be no more than aspiration, and have rule not so much by the people as by the cleverest people; not an aristocracy of birth, not a plutocracy of wealth, but a true meritocracy of talent.”

He foresaw that the rise of the meritocratic class would divide society into the elite and the non-elite, who would come to realise that members of the elite were governing not in society’s interests but in their own interests.

This abuse of power by the elite is exemplified by the shareholder-value model of corporate governance. The model suggests that a company should pay top dollar for management to maximise shareholder value. Top management talent are given share options so as to align their interests with those of shareholders.

The assumption is that profitable and efficient companies create value for shareholders and society. However, in practice, many managers use the corporate cash for share buy-backs to prop up the value of their share options, sell valuable assets to maintain quarterly earnings and sack staff whenever profits are threatened.

The best can’t be working for the rest when they are looking out for their own interests first.

Coronavirus could leave the world an even more unequal place

In his latest book, The Storm Before the Calm, geopolitical strategist George Friedman reckons that, since the 1980s, new technology has divided America into the best and the rest: the technocratic class who went to the best universities and benefited the most from tech bubbles, and the industrial class who are struggling in the old economy.

As political scientists Jeff D. Colgan and Robert O. Keohane argued in Foreign Affairs magazine in 2017: “Elites have taken advantage of the global liberal order – sometimes inadvertently, sometimes intentionally – to capture most of the income and wealth gains in recent decades, and they have not shared much with the middle and lower classes.”

Today, the pandemic has brought into sharper relief the divide between the best and the rest. Lockdowns have split the economy into viable sectors where people can work remotely and fragile offline sectors where most people work.

In the post-coronavirus economy, big tech companies will thrive, while businesses that depend on high crowd density – such as mega malls, cruise ships, airlines and tourism – will suffer.

This raises a fundamental question of social fairness. Can we still afford to pay financial engineers very high salaries, when the ability of banks to make money is less dependent on public deposits than central banks’ monetary creation? Why should public health workers, who are putting their lives on the line in the pandemic, be paid significantly less than software technicians?

The market cannot price in the social value of different jobs. But if we support minimum wages, to be fair, surely we can consider caps on salaries for less-socially-useful jobs.

Governments may have to increase expenditure in a few areas going forward. First, there is the cost of keeping firms and jobs alive during lockdowns. Second, investment may be necessary to help viable firms make a transition to the post-coronavirus economy.

Last but not least, workers have to be retrained to do jobs in the post-Covid-19 economy; here, governments will have to rely on big tech. However, new technology might not create so many new jobs.

All this suggests that, in the post-coronavirus economy, we can expect large government spending programmes and deficits well in excess of those run during the 2008 financial crisis. Unless there is a miracle in the form of a vaccine, the outcome of the reopening of businesses will depend on the quality of health and social distancing regulations.

In adapting to survive, we need to build in redundancy and be resilient to future shocks. It must be recognised what is resilient is not the most efficient. There are no best solutions going forward.

In a post-pandemic world, the best cannot be the enemy of the good. The best should take care of the rest. This means cooperation, empathy and putting people first. Our hearts go out to the tens of thousands who might die as Trump continues to put “America first”. If that is the best model, the best is not for me.

Andrew Sheng writes on global issues from an Asian perspective. The views expressed are solely those of the author

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