Grasping Reality on TypePad, by Brad DeLong

I've been trying and failing to post this on TPM Cafe for a couple of days, so let me at least put it up here:

Let me join Alan Viard in beating up on Jared Bernstein for the undefined term "merit" in his first basic principle:

TPMCafe | Talking Points Memo | Let's Talk "Crunch": Economic outcomes are generally thought to be fair, in the sense that market forces dole out rewards to those who merit them. But that’s not always the case. Power, whether it’s based on political clout, wealth, class, race, or gender, is also a key determinant of who gets what.

"Merit" can, I think, mean three things:

1. Marginal productivity--the amount by which, given who you are where you are with the resources you happen to own, total collective product would be reduced if you and your resources were to suddenly vanish from the scene.
2. Optimal incentives--because we want people to take local actions that advance our global goals, we have set up a system that provides people in the right place at the right time with the right skills with incentives that give them a better life--or at least more stuff--if they take actions that we regard as adding to the total pie.
3. From each according to his or her ability--what each would be able to add to the collective pie if he or she had and is the resources to fully realize his or her potential to the extent that that freedom for the one is compatible with that freedom for others.
4. To each according to his or her need--what each of us needs, understanding "need" to include not just bare necessities but also conveniences and luxuries, to the extent that provision of what we need to one is compatible with the provision of what they need to others.

These four definitions of "merit" are very different and have very different implications. By definition #4, an individual with Down syndrome merits a great deal of support and resources. By definitions #1, #2, and #3, such an individual merits zero.

Jared doesn't hold with definition #1 or definition #2--that's the work that the "clout, wealth, class, race, or gender" phrase is doing in the latter part of his definition, to shift us down at least to definition #3. Alan, by contrast, wants to use "merit" as meaning what it means in definition #2--in large part, I think, because the world is not as rich as we would like it to be, and getting incentives right to make the pie bigger seems to him a way more conducive to enhancing social welfare and hence more meritorious than highlighting the gaps between what we each can do and thus get and what we each would get if we had been allowed to develop our ability or get others to recognize our need.

Jared wants to take the word "merit" and use it for definition #3 or #4; Alan wants to take the word "merit" and use it for definition #2 (or #1?). American history and culture is, I think, on Alan's side--though I wish it were otherwise.