MWPOC 20: The Myth of the American Meritocracy & Board Professionalization

The Midwestern People of Color Legal Scholarship Conference will celebrate its 20th anniversary on April 16-18, 2010 at Loyola University Chicago School of Law and John Marshall Law School. Keynote speakers Derrick Bell and Richard Delgado will speak on April 16th and April 17th, respectively.

The theme of the conference is Paradigms Lost: Insider Scholarship, Outsider Scholarship and the Economic Crisis. Legal scholars wishing to present papers at the conference should contact Regina Burch (rburch@law.capital.edu) or Joe Grant (jgrant@law.capital.edu).

I will present a paper entitled The Myth of the American Meritocracy: From Crony Capitalism to Professionalized Corporate Governance. The paper is premised on the highly dysfunctional allocation of opportunities and responsibility within current America, as evidenced by the recent financial meltdown. Ideally, a rational system of advancement operates to allocate opportunities and responsibility in accordance with capabilities, skills, dedication and character. Such a system of advancement will promote macroeconomic growth by assuring that the most talented and responsible have the most power and responsibility. I have written much about the need for the law to cabin economic power and assure it is applied to socially beneficial ends. Less focus has been placed upon our system of advancement.

Appropriate disincentives and incentives mark of a system of a well functioning system of advancement. Consider what our so-called meritocracy has wrought: billions in losses at virtually every major bank, trashed communities all across the country, financial sector insolvency, trillions expended in government support of elites, an historic credit crunch/liquidity trap, skyrocketing unemployment, and a global recession leading to trillions in foregone GDP. For this, financial elites suffer little loss in wealth, huge bonus and compensation payments, and continued control of our financial sector. Some meritocracy!

Even before the financial crisis right of center voices such as The Economist suggested that higher inequality threatened to render the American meritocracy a myth. Since then study after study finds that economic mobility in the U.S. is lower than practically any other developed nation. Moreover, there is good reason to think mobility is declining in the U.S., with less mobility to come as a result of the disproportionate impact of this economic downturn--unemployment is highly concentrated among the bottom 20% of the income distribution.

All of this suggests real problems facing the American economy: we do not have the best and brightest running things, instead we are plagued by the pretense of privilege and the dullness of hereditary entitlements.

In my next post, I will suggest a potential solution, which forms part II of the paper I will present at MWPOC 20. That solution will build upon a proposal I made in 2005 for the professionalization of corporate governance.