Tim Lee on the differences between meritocracy in Silicon Valley from on Wall Street and in Ivy League universities:
Silicon Valley is at least as obsessed with the meritocratic ideal as the Ivy League and Wall Street are. But Silicon Valley’s conception of merit is more closely tied to real-world results. At a firm like Google, “merit” means the ability to create good software. Because successful tech companies must satisfy millions of finicky users, the difference between good software and bad software becomes apparent rather quickly. Facebook succeeded where Friendster and MySpace failed largely because Mark Zuckerberg was a more talented programmer—and better at hiring talented programmers—than the guys who ran the other sites.
The meritocracy of the Ivy League and Wall Street are much more loosely tethered to reality. The SAT measures a certain kind of raw intelligence, but it does a poor job of measuring characteristics like imagination and resourcefulness that may be important for real-world achievement. And once you convinced an Ivy League admissions office to take you, the standards become much more subjective and forgiving. As for Wall Street, the volatility of financial markets makes it almost impossible to distinguish genuine talent from dumb luck. So while there are certainly smart people working on Wall Street, there’s no particular reason to think the smartest rise to the top.
This is slightly too optimistic – if the market always or even usually selected for good tech, NeXT would have succeeded and Internet Explorer wouldn’t have beaten Netscape – but certainly true by comparison to Wall Street and the Ivy League. But I think the introduction of the latter into the equation confuses the issue somewhat. I, to my considerable discredit, haven’t read Chris Hayes’ The Twilight of the Elites yet (upon which Lee is riffing), and so maybe I’m rehashing things here, but it seems like there are three, quite different, versions of the meritocratic ideal:
1. Descriptive appropriateness ideal: Rewarding people in proportion to how capable they are at the task at hand makes things go best, where “best” is defined by whatever goal the institution in question is supposed to accomplish (maximizing profit, imparting knowledge, etc.).
2. Descriptive genetic elite ideal: Rewarding people in proportion to raw intellect or IQ makes things go best.
3. Normative genetic elite ideal: Rewarding people in proportion to raw intellect or IQ is morally required, even if it doesn’t make things go best.
Silicon Valley seems committed to #1, Wall Street to #2, and the Ivy League to #3. I think there’s considerable evidence at this point that #2 is laughably wrong-headed (forget the financial crisis, Halberstam was on this first), and #1 has more of case going for it. But they’re both testable hypotheses. One could theoretically figure out if hiring the smartest people in the world makes a hedge fund makes more money than its competitors, or if the fact that the best programmers (very very) occasionally become billionaires improves the quality of software, as measured by its users. And we in fact have some pretty good natural experiments on these questions.
The third ideal, the one you’re immersed in if you go to a highly selective college or university, or if you go to a secondary school that feeds into those colleges and universities, is of a different sort. It has moral content, and that moral content, when spelled out, strikes most people as deeply repugnant. And rightly so! But I think stamping out that kind of pernicious rankism is a quite different problem from disabusing Wall Street of its cult of the whipsmart trader. You can show the Wall Streeters studies proving they’re wrong. It’s harder to convince a Harvard undergraduate that he’s the beneficiary of a deeply unjust system, as I spent the last four years discovering.