"In a maximally meritocratic society a parent’s wealth would have no impact on the economic conditions of their children."
I don't think this is completely true. In a maximally meritocratic society one's economic conditions would depend on their productivity. There are several things that impact productivity that come from parents. Genetic determinants of IQ and personality, how the parents choose to raise their children, how the parents choose to spend money on their children, and what opportunities that parents make available to their kids. Since we're in a maximally meritocratic society in this hypothetical, it stands to reason that parents in the high productivity quintiles would be better in several respects at producing high productivity children. Since the ability to pass on and cultivate merit in children depends in part on the merit of parents, the children's income would correlate with their parent's income.
That being said, I definitely agree that the US is not a maximally meritocratic society and that we should take down barriers to participation and competition ASAP. Occupational licensing is a huge barrier to competition and participation that comes to mind. Moving to cities has been the source of most of the globe's social mobility over the past millennia so freeing them of regulation and allowing them to grow would also explode social mobility. Border controls are also obviously a huge barrier to international social mobility.
To your first point, much of the genetic determinants you cite have been proven to be nonexistent. Wealthy kids, at birth, do not have higher IQs than poor kids and there doesn't seem to be a "work ethic" gene we can measure early in life. I also think it is unclear what actions constitute "cultivating merit".
To your second, I agree in large part. There are many things that could, and should, be done to increase mobility. However, I do not think occupational licensing is what's limiting mobility in the US today. Or at least, it's not a main reason why mobility is so low. If that were the case, then we would expect countries with more government control of the economy and more stringent licensing requirement to have lower mobility - but the opposite is true. I think many of the largest barriers to mobility come from our education system. Students whose parents can afford to enroll them in better early education fare much better in life than children with poor early education.
Moreover, there are serious inequalities in our higher education system which further entrench people into the class they were born into. I can send a few interesting studies if you want
IQ is know to be genetic, there's that one book you linked which is not the common position. IQ isn't entirely inherited but genetics are important.
"for workers who are trying to enter or change a profession, increased licensing may also result in barriers such as restricted geographical and occupational worker mobility, decreased worker welfare, increased consumer prices, and ultimately impaired economic growth."
Occupational licensing is a huge part of the American economy and it hurts the mobility of millions of workers. It is a big issue and protects incumbents in industries read: the rich.
According to your graph of inequality and mobility the Nordic countries are in the best position and they have very little control of the economy. They are known for having high economic freedom
To the point of IQ, the debate between the impacts of genetics vs environment is debated. Much research on the subject falls into the hole of not being able to tell the difference between changes caused by genetics vs environments. Studies of adopted kids get around this by taking genetic into account. Similar studies of kids from high vs low SES families who get put into the foster care system show that they have no statistically significant difference in IQ-meaning the gap between rich and poor is largely caused by environment, not genetics.
I mean I agree that occupational licensing hurts mobility, but I guess we disagree on the extent. Do you have any research on the direct effect of occupational licensing on decreasing mobility? The cato source says that their math is literally "a back of the envelope calculation" which I will take as seriously as any note on the back of an envelope.
https://tinyurl.com/y2dxucay "A 2019 Cato/YouGov poll found that 45% of welfare recipients reported that the lack of an occupational license had prevented them or someone they knew from getting a job for which they were otherwise qualified."
https://journals.aom.org/doi/pdf/10.5465/AMBPP.2018.62 "occupational licensing not only increased inequality across the entire wage distribution, but also had a more substantial impact on the pay of females than males."
Question for both you & Grady - what does a maximally meritocratic society entail for someone who is highly disabled, who lacks the means to be productive and work hard?
This is a great question! In a total meritocracy, this person would suffer immensely, and I think the case of a disabled individual is a great reason why our society shouldn't be a total meritocracy. (or at least maximally meritocratic) Relying solely on meritocracy to determine outcomes has serious issues like this. I would respond to this by saying that in a total meritocracy (or extremely capitalistic society) this is a reason why there needs to be a universal safety net. Max would probably say that private charity would suffice in this case, and that government is not required to solve this problem. (or at least that's what he's said to me in the past)
I think you shed light on a serious mobility issue in the US. But the standard you hold the country to is too strict, and here's why:
1) Even if you "unrig" parts of the economy (which currently has anti-capitalistic elements that seek to consolidate power), money *naturally* opens the door to more economic opportunities. In a fair free market, if you and I own small businesses but I have 2x as much wealth, I have greater opportunity to expand my future wealth through new hirings, franchises, etc.
2) Wealth is transferred from generation to generation within a family as a natural course of property rights
3) 1 and 2 together imply that in a (procedurally) fair, capitalist society, there will naturally be a >20% chance a top-quintiler's child remains in the top quintile, and a <20% chance a bottom-quintiler moves up that high. More generally, it will be easier to remain in your parent's quintile than to move up one; easier to move up one than move up two, etc.
So for your desired "equal opportunity" condition (i.e. no statistical dependence between your parents' quintile and your own) to take hold, you'd have to do some SERIOUS intervention against 3); something hugely systemic to penalize or transfer greater amounts of wealth so that the properties of 1) no longer flow across generations in any way. So if I have more wealth than you, I might unlock more opportunity for myself in my lifetime, but my and your children should each have the same financial inheritance somehow.
This is a very important point. In fact, if you click the link under "Beetham" in my post you'll see he discusses a similar idea on pages 80-82. This is a serious reason as to why meritocracy CANNOT exist in a capitalist society w/o intervention. I would say that it is desirable to intervene to ensure all children have equal opportunities and that the standard I'm holding the country too isn't too strict. I don't think it's necessary to have all children get an equal financial inheritance since I think many of the reasons wealthy kids have an advantage are structural - not only due to inheritance. With that being said, I'm not opposed to a high estate tax. (death tax) I also think that we should focus on improving now and getting to the ideal later. Today America lags behind the rest of the developed world SO MUCH in this regard that I think we shouldn't worry about managing inheritance until we fix other issues
I plan on writing a post in the future about how the structures which limit mobility act and look - I think our education system is a really good example. I hope to publish it sometime in the next month or two but we'll see what happens
Wow, great post Grady!
Thanks Grady! I always appreciate support from my fans. :)
"In a maximally meritocratic society a parent’s wealth would have no impact on the economic conditions of their children."
I don't think this is completely true. In a maximally meritocratic society one's economic conditions would depend on their productivity. There are several things that impact productivity that come from parents. Genetic determinants of IQ and personality, how the parents choose to raise their children, how the parents choose to spend money on their children, and what opportunities that parents make available to their kids. Since we're in a maximally meritocratic society in this hypothetical, it stands to reason that parents in the high productivity quintiles would be better in several respects at producing high productivity children. Since the ability to pass on and cultivate merit in children depends in part on the merit of parents, the children's income would correlate with their parent's income.
That being said, I definitely agree that the US is not a maximally meritocratic society and that we should take down barriers to participation and competition ASAP. Occupational licensing is a huge barrier to competition and participation that comes to mind. Moving to cities has been the source of most of the globe's social mobility over the past millennia so freeing them of regulation and allowing them to grow would also explode social mobility. Border controls are also obviously a huge barrier to international social mobility.
To your first point, much of the genetic determinants you cite have been proven to be nonexistent. Wealthy kids, at birth, do not have higher IQs than poor kids and there doesn't seem to be a "work ethic" gene we can measure early in life. I also think it is unclear what actions constitute "cultivating merit".
To your second, I agree in large part. There are many things that could, and should, be done to increase mobility. However, I do not think occupational licensing is what's limiting mobility in the US today. Or at least, it's not a main reason why mobility is so low. If that were the case, then we would expect countries with more government control of the economy and more stringent licensing requirement to have lower mobility - but the opposite is true. I think many of the largest barriers to mobility come from our education system. Students whose parents can afford to enroll them in better early education fare much better in life than children with poor early education.
http://www.equality-of-opportunity.org/papers/coll_mrc_paper.pdf
Moreover, there are serious inequalities in our higher education system which further entrench people into the class they were born into. I can send a few interesting studies if you want
IQ is know to be genetic, there's that one book you linked which is not the common position. IQ isn't entirely inherited but genetics are important.
"for workers who are trying to enter or change a profession, increased licensing may also result in barriers such as restricted geographical and occupational worker mobility, decreased worker welfare, increased consumer prices, and ultimately impaired economic growth."
https://www.cato.org/publications/research-briefs-economic-policy/occupational-licensing-labor-market-fluidity
Occupational licensing is a huge part of the American economy and it hurts the mobility of millions of workers. It is a big issue and protects incumbents in industries read: the rich.
According to your graph of inequality and mobility the Nordic countries are in the best position and they have very little control of the economy. They are known for having high economic freedom
To the point of IQ, the debate between the impacts of genetics vs environment is debated. Much research on the subject falls into the hole of not being able to tell the difference between changes caused by genetics vs environments. Studies of adopted kids get around this by taking genetic into account. Similar studies of kids from high vs low SES families who get put into the foster care system show that they have no statistically significant difference in IQ-meaning the gap between rich and poor is largely caused by environment, not genetics.
Just to add to the confusion, I'd like to drop this link: https://amp.theguardian.com/science/2010/mar/19/evolution-darwin-natural-selection-genes-wrong
Which discusses how environment impacts which genes are expressed in children and thus muddies nurture vs nature
Intelligence, like any other heritable complex human trait, can be predicted using polygenic scores.
https://infoproc.blogspot.com/2021/01/from-genotype-to-phenotype-polygenic.html
https://infoproc.blogspot.com/2016/12/genomic-prediction-of-cognitive-ability.html
Individuals with higher polygenic score exhibit, on average, higher IQ scores than individuals with lower polygenic scores.
Looks like this research is still contested
I mean I agree that occupational licensing hurts mobility, but I guess we disagree on the extent. Do you have any research on the direct effect of occupational licensing on decreasing mobility? The cato source says that their math is literally "a back of the envelope calculation" which I will take as seriously as any note on the back of an envelope.
https://tinyurl.com/y2dxucay "A 2019 Cato/YouGov poll found that 45% of welfare recipients reported that the lack of an occupational license had prevented them or someone they knew from getting a job for which they were otherwise qualified."
https://journals.aom.org/doi/pdf/10.5465/AMBPP.2018.62 "occupational licensing not only increased inequality across the entire wage distribution, but also had a more substantial impact on the pay of females than males."
https://www.brookings.edu/blog/social-mobility-memos/2016/02/24/four-ways-occupational-licensing-damages-social-mobility/
Question for both you & Grady - what does a maximally meritocratic society entail for someone who is highly disabled, who lacks the means to be productive and work hard?
This is a great question! In a total meritocracy, this person would suffer immensely, and I think the case of a disabled individual is a great reason why our society shouldn't be a total meritocracy. (or at least maximally meritocratic) Relying solely on meritocracy to determine outcomes has serious issues like this. I would respond to this by saying that in a total meritocracy (or extremely capitalistic society) this is a reason why there needs to be a universal safety net. Max would probably say that private charity would suffice in this case, and that government is not required to solve this problem. (or at least that's what he's said to me in the past)
I think you shed light on a serious mobility issue in the US. But the standard you hold the country to is too strict, and here's why:
1) Even if you "unrig" parts of the economy (which currently has anti-capitalistic elements that seek to consolidate power), money *naturally* opens the door to more economic opportunities. In a fair free market, if you and I own small businesses but I have 2x as much wealth, I have greater opportunity to expand my future wealth through new hirings, franchises, etc.
2) Wealth is transferred from generation to generation within a family as a natural course of property rights
3) 1 and 2 together imply that in a (procedurally) fair, capitalist society, there will naturally be a >20% chance a top-quintiler's child remains in the top quintile, and a <20% chance a bottom-quintiler moves up that high. More generally, it will be easier to remain in your parent's quintile than to move up one; easier to move up one than move up two, etc.
So for your desired "equal opportunity" condition (i.e. no statistical dependence between your parents' quintile and your own) to take hold, you'd have to do some SERIOUS intervention against 3); something hugely systemic to penalize or transfer greater amounts of wealth so that the properties of 1) no longer flow across generations in any way. So if I have more wealth than you, I might unlock more opportunity for myself in my lifetime, but my and your children should each have the same financial inheritance somehow.
Do you still think this is a desirable system?
This is a very important point. In fact, if you click the link under "Beetham" in my post you'll see he discusses a similar idea on pages 80-82. This is a serious reason as to why meritocracy CANNOT exist in a capitalist society w/o intervention. I would say that it is desirable to intervene to ensure all children have equal opportunities and that the standard I'm holding the country too isn't too strict. I don't think it's necessary to have all children get an equal financial inheritance since I think many of the reasons wealthy kids have an advantage are structural - not only due to inheritance. With that being said, I'm not opposed to a high estate tax. (death tax) I also think that we should focus on improving now and getting to the ideal later. Today America lags behind the rest of the developed world SO MUCH in this regard that I think we shouldn't worry about managing inheritance until we fix other issues
I plan on writing a post in the future about how the structures which limit mobility act and look - I think our education system is a really good example. I hope to publish it sometime in the next month or two but we'll see what happens
True, it will be easier to assess the problem in light of potential solutions.
Great post but what are some solutions?
Stick around to find out....