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Rob Fishman

Rob Fishman

Posted: December 2, 2009 04:15 PM

Prize of the Meritocracy

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Goldman Sachs is a meritocracy.

Then they admit it, the booming-but-beleaguered bankers, whose website says it loud and clear. And why not? Everyone in America knows what a meritocracy is. Rule by the worthy, not the rich, regal or related. As at Goldman Sachs, where your "opportunity to contribute…will be directly connected to your ability to excel."

Of course, as Michael Young, author of that obscure classic, The Rise of the Meritocracy, once wrote, "the most influential books are always those that are not read." If from the grave, Young has second-guessed that supposition, he need Google no further than the aforementioned advert. Had Goldman's copywriter read Young, he would have steered far clear of the locution, and in so doing, left the public's worst fears about his employer unconfirmed. But then, his bonus probably dwindled this year to the low six-figures.

Young coined the word "meritocracy" in 1958, in a futuristic story set in 2034. There, "the world beholds for the first time the spectacle of a brilliant class, the five per cent of the nation who know what five per cent means."

A simple formula reigns supreme: IQ + effort = merit. To be merely intelligent or industrious is not enough; only those with both succeed. In the new Age of Meritocracy, "all persons, however humble, know they have had every chance." Your opportunity to contribute, in other words, is directly connected to your ability to excel.

Goldman Sachs is by its own and all accounts a textbook meritocracy. Long before C.E.O. Lloyd Blankfein was doing God's work, he was growing up in the projects, and, on a scholarship, attending Harvard at age 16. Silver spoons don't earn gold medals, grit and brains do. If IQ + effort = merit, and IQ + effort = Goldman, then Goldman = merit.

Or in the plain English of Vanity Fair: "Goldman is better." And not because they're plutocrats ("Government Sachs") or oligarchs ("Goldmine Sachs"), but because they're the smartest and savviest. Meritocracy at its apotheosis.

But that's only half the story, half of Michael Young's story. As he writes in a foreword to Rise of the Meritocracy, many readers have "neglected, or not noticed, the fact that the book is satirical." It is not only an argument for meritocracy, but a counterargument against it: "another story, showing how sad, and fragile, a meritocratic society could be." In the language of fifty years later, the story of subprime loans, health care crises, and populist rage.

"If the rich and powerful were encouraged by the general culture to believe that they fully deserved all they had," Young continues, "how arrogant they could become, and, if they were convinced it was all for the common good, how ruthless in pursuing their own advantage."

"I think a strong Goldman Sachs," says Blankfein, "is good for the country."

Whether it's God's work or only Goldman's, it's clearly the province of the meritorious.

Kids these days are told, in the words of one Harvard instructor, that investment banking "is the only valuable way to finish your education. You'll work with the smartest people and the most exciting, high-profile clients." For off-the-charts IQs and outstanding efforts, the destination's no longer NASA; it's Goldman.

And therein lies the same conundrum that Young introduces, in the so-called "Chelsea Manifesto, of"—believe it or not—"2009":

Were we to evaluate people, not only according to their intelligence and their education, their occupation and their power, but according to their kindliness and their courage, their imagination and sensitivity, their sympathy and generosity, there could be no classes. Who would be able to say that the scientist was superior to the porter with admirable qualities as a father, the civil servant with unusual skill at gaining prizes superior to the lorry-driver with unusual skill at growing roses?

Imagine what they'd call the original meritocrat if he wrote that today!

The fear today is that Goldman has lost its lorry-drivers, employing only those adept at gaining superior prizes. As Bethany McLean writes, the Goldman of old, who refused to partake in hostile takeovers, is gone. In its stead is a belief that Goldman "cares about one thing and one thing only: making money for itself."

As one Wall Street executive tells McLean: "Why do you have a business? Because you have a customer. You have to make an appropriate profit. But is it possible that Goldman has changed from a firm that had customers to a company that is just smart as shit and makes a shitload of money?"

More and more these days, we see intellect and ingenuity employed to lucrative ends, IQ + effort = $$$. In this story, Buffett, Blankfein and Bloomberg are not so much antiheroes as provillains, rags-to-riches cases who bear out the meritocracy, and in so doing, reveal its inadequacy.

The problem with Goldman is not false advertising. Like the civil servant, it's an inability to smell the roses.


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