So says Matt Miller of the Daily Beast.
American capitalism is a meritocracy, they’ve always been told, a place where people basically end up economically where they deserve to. Yet you can’t open the paper nowadays without seeing screaming evidence that this notion is a fraud. Does former CEO Kerry Killinger deserve to retire to an island with $100 million after destroying Washington Mutual? Did Bob Rubin deserve his $115 million for making Citigroup a ward of the state? And what about the several thousand less-prominent geniuses across Wall Street who made off with less loot (but tens of millions nonetheless) peddling mortgage-related securities that produced illusory profits?
And that hits on the “sort of” part of my agreement.
Capitalism is not completely a meritocracy, but it is not devoid of meritocracy, either. In fact, Capitalism is rather agnostic on the subject of meritocracy.
Capitalism, in my understanding, is based on a pyramid of responsibility/authority. The basic idea of capitalism is that you generally don’t have to put effort into maximizing profit on any one sales item, you can accept a miniscule profit from any one transaction…but you attempt to maximize the number of transactions. So the broader your customer base, the richer you get…if you are at the top. Thus, the workers on the bottom don’t have much authority or responsibility. They show up for work, and everything is taken care of for them, from calculating how much they should get paid, to arranging training, to providing a safe work environment, to withholding their taxes, to sick leave and unemployment…even health care issues, if their job includes that. Basically, the lowest level worker is (consciously or unconsciously) seeking a life without risk…or where the biggest risk is spending more than they can afford on the meager salary that comes with risk avoidance.
Then the higher up you go, the more personal risk you have, the more accountability, the more authority, the more responsibility. For the most part.
There are tracks/levels in the US version of capitalism. There is the worker track, the crew chief track, the lower/individual management track, the management supervisor track, the owner track…and that’s just McDonald’s. Different industries have different tracks.
It is possible to graduate from Yale and go right into the CEO track. It is possible to be even more intelligent, creative, and capable, and yet still be stuck in the labor track due to circumstances preventing the graduation from high school.
Performance-based promotion (meritocracy) only occurs within a track. To jump tracks, you need education or apprenticeship. In fact, it’s pretty dang amazing that in the US, education alone can get you into upper tracks. It’s pretty dang amazing that someone can (in my own personal experience) be an enlisted soldier, and then work hard to get a degree, and then once obtaining that degree, can be chosen to become a military officer. No matter how good I had been as a soldier, I could not have become an officer without the degree. But even with the degree, I had to apply to be accepted in the higher track.
Drawing again from my experience, I was excited about being assigned to an intelligence/analysis center in Hawaii. I thought: I’ll work my way into being an expert on this subject. I’ll report to my boss, who will report to the Pacific Commander, who reports to the Chairman of the Joint Chiefs of Staff (sort of), who reports to the SecDef, who reports to the President! I’ll be 5 degrees from the President, and if I do well, my name will be known. Then when I retire, I could get hired as an Undersecretary of Defense or State for my chosent subject area, and then can move up from there. Get in the news a little bit for doing something good, and maybe I could be a later President’s SecDef choice.
I found out, there’s still something like 13 layers, if not more, between me and the President. I’m not sure if the Pacific Commander ever noticed my name on anything. Most likely, I will never be able to jump to a track that gets me to the “appointment level” of government departments. I could be hired by the DoD or DoS, but will never be appointed to anything…unless I do really well and get really lucky, and get promoted within the military to the O-6 (Colonel) level. But that’s tough to do. It really is another track (despite Colonels being a Field Grade Officer like Majors and Lt Colonels, full Colonels really are apprentice Generals). Retiring from a Colonel spot usually puts you on a executive-ish track within the government…which is still a step down from the “appointment” track.
Running for President is the same way. Although anyone can grow up and be President, most of us are not anywhere near the President track. You can apply for higher tracks, like Clinton did by running for Governor of Arkansas, or be apprenticed (like the first President Bush was to Vice President after running the CIA and being an ambassador). But it comes down to name recognition…and being in the right place at the right time. If you want to be President, your best bet is to find a good district to run for the national House of Representatives. Running for your state legislature is a lower track, and will never get you there. Then if you succeed in the House of Representatives, you have to make sure you make a name for yourself…from there, once you have enough name recognition, you can run for Senate. Since there are less Senators, you can really make a name for yourself and then try a run for the Presidency. If you take off in the nomination campaign, you have jumped up to yet another track. But despite this year’s example, being a Senator and depending on name recognition is not the best way…better to take your name recognition from being a Representative or (later) Senator, then run for Governor, because being governor is easier to present your case and record to be President. Executives have better excuses for political mis-steps than Senators do.
But I digress. The point is, it is all about levels, or tracks, or channels.
So these CEOs get the great salaries regardless of success or failure because they got on the CEO track. Once there, you have obtained a “pay band” that will make you very wealthy, even if you screw things up.
So if you want to be rich, you should never just depending on doing your job well…you should do your job well in order to make the case for jumping up to the next higher track.
Do that, and the sky really is the limit.
Too many people don’t understand that they need to be looking to jump tracks…misunderstanding that may have more to do with “glass ceilings” than gender or race.