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Meritocracy, family enterprises, and “the lucky sperm club”

Are you a member of “the lucky sperm club,” as Warren Buffet termed those who are the children of members of the elite? Or have you built yourself up by the sweat of your own brow, using your innate perseverance, industry, prudence and strength of character? 

The debate about the value of meritocracy – a belief that an individual’s position in society should depend on his or her combination of ability and effort – rages on. After a number of book-based attacks in recent years by philosophers, political scientists and academics, now we have a substantial volume written in its defence: The Aristocracy of Talent – How Meritocracy Made the Modern World by Adrian Wooldridge, a long-serving journalist at The Economist and author.  It’s an excellent read and of sufficient merit to be hotly tipped to win this year’s FT Business Book of the Year.  

With that degree of experience, an individual like John Elkann from the Fiat/Agnelli dynasty can pivot the family business in an entirely new and innovative direction

Going all the way back to Plato to bolster his argument, Woolridge is strongly pro meritocracy, writing: “The meritocratic idea has been one of the great drivers of progress. It swept aside race and sex-based barriers to competition built ladders of opportunity from the bottom of society to the top and put rocket launchers under the economy. It did all this by reconciling the two great tensions at the heart of modernity: between efficiency and fairness, on the one hand, and between moral equality and social differentiation on the other.” 

The issue of meritocracy is, of course, an especially important one for family enterprises and how they treat their members of the “lucky sperm club.” It’s increasingly unusual for family enterprises of any degree of success or maturity simply to permit entrance to its leading ranks without any display of ability or merit. While openly admitting their privileged status many ensure that those who wish to become actively involved in running the business prove themselves first outside its confines. A sense of humility 

With that degree of experience, an individual like John Elkann from the Fiat/Agnelli dynasty can pivot the family business in an entirely new and innovative direction.  

In addition, many are highly sophisticated and meritocratic when importing talent from the outside.  Although their leaders rarely share the same bright spotlight of publicly quoted company business leaders, operating away from the public limelight. Last year’s Family Capital list of 100 Influencers may contain many names unfamiliar to readers of newspaper business pages but it’s a highly competitive market for executive talent. 

However, meritocracy has come under fierce attack in recent years not just from the left, armed with weapons such as “Critical Race Theory” but also the right. Wooldridge quotes the shock jock Fox TV host Tucker Carlson who remarked “the problem with meritocracy [is that it] leaches all the empathy out of society…the second you think that all your good fortune is a product of your virtue, you become highly judgemental, lacking empathy, totally without self-awareness, arrogant, stupid – I mean all the stuff that our ruling class is.”  The wave of populism that has swept the globe has little time for the post- WW2 liberal ruling class.,

Such a sentiment makes Carlson’s championing of Donald Trump extremely odd. Not only was Trump born with a property developer father’s silver spoon and a notable lack of empathy or self-awareness but once in the White House, he surrounded himself with family members in an effort to recreate a new Camelot like the Kennedys. 

Nevertheless, Trump appealed to the blue-collar, left-behinds who felt meritocracy had done very little for them, denying them opportunity. This concern is growing among the HR or Talent departments of large commercial organisations. Just this early Autumn accounting giants PWC and KPMG did a massive mea culpa about their homogenous social nature. A lack of social mobility comes under both the S and the G of ESG.  

  KPMG has set a target for the number of employees from working-class backgrounds. It wants 29 per cent of its partners and directors to come from lower socio-economic backgrounds by 2030, compared with 23 per cent of partners and 20 per cent of directors as of now.

Dial back 184 years to 1837 and Wooldridge reminds us of the future 10th Earl of Wemyss who attended an interview for a place at Christ Church College, Oxford, and faced only one question: how’s your father?  Needless to say, he was straight in with an unconditional offer and given the smartest room on the finest quadrangle. This system of advancement according to birth and social connection has structured almost all human societies throughout history. The words of the Victoria hymn says it all: “The rich man in his castle/The poor man at his gate/God made them, high and lowly/And ordered their estate.” 

For social mobility to work, the project of advancing those in lower socio-economic strata must begin early at school. And it is education where the greatest bitterness is found in the UK.  We’ve just heard the deputy leader of the British Labour party describe those educated at one of our most celebrated private schools, Eton College, as “scum.”

Take this out. Just this last Sunday the Uk Sunday Times spent 6000 words on an article entitled ”Forget Oxbridge. For today’s gilded youth, Ivy League is the goal — and parents will spend a fortune to get them there. Private school pupils, fearing they are being snubbed at home in favour of state-educated peers, are turning to the US instead — guided through the steps by a lucrative consultancy industry.”

The article, a comprehensive how-to guide to ensure your offspring remain at the top of the pile, garnered no fewer than 1,100 comments. It touches a supremely tender sour spot of today’s technocratic elite – namely positive discrimination in favour of poorer state school educated kids at Oxbridge which has seen a halving of the number of Etonians getting accepted by Oxford or Cambridge in the last seven years. Nothing gets under the skin of a parent who has splashed out little short of a quarter of a million pounds on private school boarding fees to be told that a state school educated child with inferior A level grades is taking the Oxbridge place that would have been a dead cert a decade ago. 

But it’s not just education. Even our cars are un-meritocratic. A recent Prospect magazine article about electric cars was Tweeted with the following handle: 

“We may need policies to ensure rapid-charging does not remain a privilege of the rich—or we risk creating a level of mobility-inequality not seen since serfs.”

This is, on the face of it, a very odd moan,  drawing, as it does, on notions of feudal injustice and serfs knowing their place at the bottom of the heap with never a chance to rise up through society’s stratified ranks however high your IQ, your sense of industry or sense of virtue in eschewing the internal combustion engine.

But it deserves unpicking. It’s a fact that if you fancy an electric vehicle, say a Tesla, then you are going, as an early adopter,  to have to fork out more than for a conventional fossil-fuelled car.  Even a modest Renault Zoe which the Prospect author drives is £28,795. Whereas the cheapest equivalent Renault the Clio costs £15,000

Those rapid chargers are, for reasons of simply efficiency, likely to be situated where they are most needed. Thus, like it or loathe it, you are more likely to find one in London W1 than in the most deprived areas of the UK such as Jaywick in Essex or Blackpool. 

This all boils down to the issue of “fairness”, a highly tricky concept. iWhen meritocracy turns to egalitarianism. All shall have prizes. There shall be no winners. 

We are especially hung up with “fairness” in the UK. A piece of YouGov research from a couple of years back shows Britons are much less likely than Americans to think that life is fair

A belief in fairness and fair play is supposed to be one of those quintessentially British attributes, like the stiff upper lip or talking about the weather. Meritocracy is fair.  The research showed that just 25% of Brits say that life is fair, compared to 59% who think it is not. A further 16% don’t know.

By contrast, Americans are much more likely to think that life is fair. Nearly four in ten (38%) believe it is, although more (46%) still think life is unfair.

Conservative voters are the most likely to say they think life is fair at 35%, shortly followed by Liberal Democrat voters and people aged 65+ (34%). By contrast, Scots and Labour voters are the most likely to say life is unfair at 63% each, with UKIP voters, Londoners and working-class people not far behind on 61%.

You cannot consider meritocracy within entering the dangerous waters of intelligence measurement. Because ability, certainly if it is measured by IQ, is to a large extent inherited, a couple generations of actual meritocracy creates a divide where the elites actually are significantly more competent. However, as this tails off, there is regression to the mean of the ancestral population. Cross social class marriages remain uncommon.  But if you did have genuine meritocracy plus selective mating for long enough, you would get social classes highly stratified by ability. Is this a desirable outcome?

A final point. Plato in The Republic called his ideal state “the rule of the best.” Eton has famously provided the United Kingdom with twenty prime ministers, far more than any other school. However to claim that the last two Etonion occupants of Number 10 Downing Street were “the best of the best” – or to use the words of Miss Jean Brodie, “the creme de la creme” –  might stretch even the most die-hard Eton loyalist. 

 

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