George Will recently published a column in Newsweek about taxation. It was his usual supply side pabulum, about how nobody will work or invest if marginal tax rates go up. Ironically enough, a guy whose only thought ever is cut taxes says the following: “But people with only one idea really have no idea.” Whatever. I am happy to take on George Will; he’s a moron whose view of the world is that everybody goes to Exeter and Yale and thus they can all fend for themselves. For Will, higher taxes means waiting a year to remodel the kitchen in your weekend house on Nantucket.
But in his column, Will quoted Richard Posner, a judge on the US Court of Appeals and professor at University of Chicago Law School. Taking on Judge Posner is something I do with trepidation. He is among the smartest of America’s public intellectuals, with knowledge that is both deep and broad, and he is insanely prolific. He seems to publish a book about as often as I can write a blog entry. However, I have no choice but to take issue with what he was saying in Will’s column. Here is the quote in its entirety:
“As society becomes more competitive and more meritocratic, income inequality is likely to rise simply as a consequence of the underlying inequality—which is very great—between people that is due to differences in IQ, energy, health, social skills, character, ambition, physical attractiveness, talent, and luck.”
Judge Posner is not entirely wrong. Smart, hard-working people can get ahead in America, and that can take the form of higher salaries or greater wealth. But this is true more often in theory than in practice. There are many Americans who are very smart, very hard-working, chock full of merit, who for a variety of reasons don’t manage to get ahead. Those reasons include geography, family, or education. But the reason I most want to focus on is generational. When you include the impact of inherited opportunities, it is difficult to call America a pure meritocracy.
Commitment to education, legacy admissions to elite colleges, career networks, wealth – these are all things that parents can pass to their children, and they all tilt the playing field against merit. Economist James Heckman, another University of Chicago professor (and a Nobel Prize winner) has produced significant work showing how early childhood treatment (eg. having parents who use a large vocabulary) correlates to adult success skills. But as important as nurturing an infant may be, I don’t think it compares to having a father who is a partner at Skadden Arps and thus helps gets you in the analyst program at Goldman Sachs.
Consider two teenagers, both equally smart and hard-working. One lives in Brookline, Massachusetts, where he goes to an excellent high school and his parents, who met when they were undergrads at Harvard, support him in his studies. The other lives in Oak Hill, West Virginia, where his school is terrible, and his high school dropout parents are too busy earning a living to help him with his coursework. Of these two teens, which do you think is more likely to go to a good college, join a hedge fund and become wealthy? Sure, the West Virginian could, in theory, make it to Wall Street, but we all know that his odds are low.
So for Judge Posner to argue that meritocracy inevitably leads to an acceptable inequality is to completely miss the point. Success in America’s meritocracy is correlated as much to parental merits, or grandparental merits, as it is to any individual’s merits. This is precisely why Bill Gates’ father (whose partner position in a corporate law firm helped send young Bill to computer classes and then to Harvard) is such a full-throated proponent of the estate tax. He knows that America’s meritocracy is skewed by inheritance. Judge Posner is more than smart enough to know the same thing.