New at Reason: Shikha Dalmia on the Fable of Market Meritocracy

February 12, 2010

In a bombastic riposte—delivered, no doubt, in one of his fabulously expensive designer suits—French President Nicolas Sarkozy proclaimed that the recent financial meltdown had demonstrated that letting markets decide executive compensation was "morally indefensible." "There are remuneration packages that will no longer be tolerated because they bear no relationship to merit," he declared. But as Shikha Dalmia explains, Sarkozy is mistaken. Markets don't reward merit; they reward value—two very different things.

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