Comments on: The Dangers of the Myth of Merit

By: Recomendaciones « intelib

Recomendaciones « intelib — Wed, 17 Feb 2010 18:04:48 +0000

[...] The Dangers of the Myth of Merit, by Steven Horwitz [...]

By: Steve Hankin

Steve Hankin — Thu, 03 Dec 2009 08:02:18 +0000

Steve, I found your article quite interesting. I certainly agree that
there is no reason to think that entrepreneurs are, as a group, more or less intelligent than beauracrats, but I think you fail to consider the importance of risk taking to being an entrepreneur. Before one can be in a position to read the market signals or even to benefit by being lucky, he must put himself in the game -that is, he must be willing to take the initial risk required to become an entrepreneur. Certainly, the entrepreneur is given the most opportunities for entrepreneurship in a free market setting. Steve (do you recall meeting me at FEE and exchange a few emails–the lecture by the author of that book on Keynes was as I suspected a Keynes love fest, but I did my best to rain on his. parade. Thanks for the questions.

By: Steve Horwitz

Steve Horwitz — Tue, 24 Nov 2009 14:55:46 +0000

Eric,

I’m not arguing that one can easily replace entrepreneurs with the “average man.” What I AM arguing is that being a successful entrepreneur in the market doesn’t necessarily require that one is very smart or super hardworking or any of the characteristics that we think of as “meritorious” in the ethical or philosophical sense. Rather it simply requires that people see ways of creating value and have a plan for executing it.

Just because one has an IQ of 150 or whatever, does not make one a good entrepreneur, nor am I convinced that good entrepreneurs necessarily have higher IQs.

And yes, if we moved talent entrepreneurs into government, government would perform just as (maybe even more!) poorly. Could politicians and bureaucrats learn to become good entrepreneurs? Let’s put it this way: they’d have to actually face profit and loss for the first time, which would force them to learn or get out of the way (unless they are a bank or car company ). So yes, over time, some would learn how to survive in that environment. How successful they would be as a group would depend NOT on their intelligence or hardwork, but whether they could create value. Period, end of sentence.

By: Eva Ziessler

Eva Ziessler — Fri, 20 Nov 2009 21:24:30 +0000

Wow, thanks! That needed saying almost more than anything else if people are to understand the workings of the market. I would be in favor of not only dropping the word “merit” when discussing markets but also the word “reward”. Problem is, when we talk of “rewards” we mean it in a purely descriptive and formal sense; most others, however, especially those who do not understand markets yet, will tend to load it with content–with the sorry result of for instance the campaign slogan of the Free Democrats here in Germany: “Leistung muss belohnt werden!”, i.e. “Achievement has to be rewarded”, the implication being that the party, now of the governing coalition, is capable of substituting their own criteria of “worth” for the market process and the pricing system and thus abolish markets altogether.

By: The Dangers of the Myth of Merit « thak’s cool links

The Dangers of the Myth of Merit « thak’s cool links — Fri, 20 Nov 2009 02:02:32 +0000

[...] The Freeman » The Dangers of the Myth of Merit. I couldn’t agree more. [...]

By: Greg Ransom

Greg Ransom — Thu, 19 Nov 2009 18:59:46 +0000

If you watch Bill Gates and Warren Buffett at an appearance before MBA students you can’t help but think that human beings are hard wired to see merit and “smarts” and other “good qualities” in those with outsized wealth, power, and success.

We see the same sort of thing all of the time with powerful rulers and mega-celebrities.

People weep when tyrants die, even when the most evil tyrants die.

Psychology experiments reveal similar outcomes — when people identify someone as wealthy, powerful, successful, etc., they ascribe outsized good qualities to them, i.e. unearned merit.

I agree with your case for the “myth of merit” — but I don’t think it’s going away any time soon.

By: Greg Ransom

Greg Ransom — Thu, 19 Nov 2009 18:52:56 +0000

When we look at Bill Gates or Angilo Mozilo, Warren Buffett or the many folks involved in the mortgage finance & securities business, what we see in part are folks who were often “lucky” in there ability to exploit the vagaries of government power — Bill Gates got government enforced exclusivity to a bit of code written by someone else — and cribbed from a third party. Buffett exploited estate ax law which forced private businesses to “sell out”. And Countrywide, Goldman Sachs, Fannie Mae, etc., etc., etc. — well, we all know that story.

The conditions of “luck” are often molded by government — and “luck” goes to those with a talent and moral character fit to exploit that environment.

By: Eric Dennis

Eric Dennis — Thu, 19 Nov 2009 18:16:20 +0000

This argument seems to be extrapolating from the obvious fact that not every successful entrepreneur is particularly smart or noble to the unwarranted conclusion that there is no general tendency in this direction.

Does anyone doubt that the average high-achieving entrepreneur is significantly smarter and harder-working than the average man, as found by objective measures (e.g. IQs and average hours worked per week)?

Suppose, for instance, we select 500 successful businesses at random, remove their CEOs, and replace them with House Reps and Senators. Is your contention that, after a sufficient introductory period, these companies would perform just as well? — or that if we do so in reverse, that the governmental departments would perform just as poorly? I.e. are you doubting the existence of a selection effect in terms of what kind of man would prefer and succeed at the task of creating wealth through trade vs. at the task of navigating government bureaucracies.

Also, were it not for the highly regulated nature of our economy, I suspect the differential would be even greater.