From President Obama's acceptance speech
It's a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, to look out for American workers, and play by the rules of the road.
This seems very sensible. Newtonian physics is also very sensible; it just breaks down under extreme conditions. Let's take a look at a simple economy with two actors, Peter and Paul. Low key but hard working Peter works for the incredibly driven and very innovative Paul. Suppose their economy starts out very rudimentary. Peter and Paul scrape by to survive until one day Paul innovates his way to a better life.
Now for a while the promise Obama explains above is met. Peter's life gets better and Paul's life, in reward for his contribution, gets much better. But as Paul keeps innovating a strange thing happens. Peter's life keeps improving and eventually, though Peter works for Paul and Paul has much more money, the lifestyle gap between them starts to close.
Paul lives in a much bigger house but you can only be in one room at a time. Paul takes longer vacations but you can only spend so much time away from home before it becomes tiresome. Paul eats at fancier restaurants more often but Peter eats pretty well. Paul has more information available to him but, thanks to the internet, Peter increasingly has a tremendous amount of information available to him as well.
Of course Paul can afford to rent a hotel when he throws a party but increasingly it occurs to Paul that the only way he can be more rewarded for his innovation (which now comes in two parts - that gotten from scientists and that which is not helping Peter at all) is to take something away from Peter.
For instance why should Peter have a secure retirement? Yes society, thanks to the innovation, can afford it but what has Peter done to deserve it? If more money can't really buy Paul anything to preserve the earned gap between him and Peter, the the best way to preserve that righteous gap is to deprive Peter of various "entitlements".
It would be one thing if Paul could buy a longer life span than Peter. Or maybe if Paul could afford help around the house and Peter can't. But, though Paul is trying to kill the middle class, there still remain a whole host of low key Peters (with double income) out there that have a lifestyle that is unreasonably comparable with Paul's.
Don't you see? By living well Peter is killing drive and innovation! And this is the end game of any successful economy that attempts to reward drive and innovation. There are only two ways out:
1) Reduce the rewards for drive and innovation
2) Reduce the benefits for society at large
This zero sum situation for a meritocracy will be reached so long as innovation benefits society and there is some limit to the real rewards available for innovators (for instance if they are rewarded with an every increasing size harem then the paradox is broken).
Meritocracy suffers from two completely insolvable problems. One it's very difficult to determine who has merit. Two even if you know for sure who has merit, rewarding them eventually hurts someone else and so somewhat reduces the reason you wanted innovation in the first place.
The only reward we can truly give to innovators is to think highly of them. Any other kind of reward system threatens to tear a society apart and becomes harder and harder to maintain when the society is successful. What we have now is the complete opposite of that ideal - more and more money going to people that we think less and less of.
The President is expected to mention tax inequality in the state of the union. I think he might as well mention that our meritocracy is busted. Even the Catholic Church has found it in their hearts to support stem cell research (which may cure blindness). Certainly some American politician should be able to admit that an economic system which rewards hedge fund managers so lavishly while researchers struggle is not a meritocracy at all.
We are not a meritocracy and meritocracy, for any successful society, is not really possible. In a successful society merit is more than simply allowing survival. How do you compare a hedge fund manager to a researcher in a fair system anyway? In a successful society we cannot, by definition, have the huge class divisions that drive the rewards systems of less sophisticated economies. While it may not seem fair to some Americans that a person working a twenty hour week have the same lifestyle as a person working a forty hour week even the cartoon the Jetsons realized it was unavoidable, "Honey these three hour work days are killing me!" (Three hours a day, three days a week to be exact.)
America does not need to radically change its economy in a revolution. But we do have to stop trying to shore up a broken system long enough for alternatives to emerge. Third way politicians, like Tony Blair, have for the longest time been trying to convince everyone that the meritocracy is not broken - just poorly managed
It was a meritocracy that contradicted itself, that included too few and left out too many, that failed to ask us as a community what we should do to give others a chance.
Going back to Peter and Paul - Paul has been given power over Peter and a better job - maybe involving less labor. Shouldn't that be enough? Do we really need that Paul be materially better off as well? The meritocracy is failing because its goals are wrong. Maybe emotionally Paul feels like Peter leading the same lifestyle is unacceptable but he needs to get over it or we all risk having nothing at all.