Success and Luck: Good Fortune and the Myth of Meritocracy.

• Author: Horwitz, Steven G.
• Position: Book review

Success and Luck: Good Fortune and the Myth of Meritocracy

By Robert H. Frank

Princeton, N.J.: Princeton University Press, 2016.

Pp. x, 187. $26.95 hardcover.

Over the past decade or two, Robert H. Frank has become one of the most frequent and well-regarded progressive critics of the economic status quo. In a series of books, he has argued that social, cultural, and political changes have contributed to growing inequality and economic inefficiency, and he has argued that a larger role for the state is central to resolving these problems. In some ways, he has positioned himself as this generation's John Kenneth Galbraith.

In his latest book, Success and Luck, Frank extends some of his prior work by arguing that luck plays a much bigger role in economic success and therefore in inequality and inefficiency than it used to, which requires a policy response to minimize its effects. More specifically, by contributing to unjustified inequality, luck creates inefficiency by encouraging what Frank sees as the wasteful consumption of status competition among the wealthy. He argues that having a bigger, more expensive wedding or car than the next guy provides no additional happiness to people, only the benefits of relative status. This status competition has become a collective- action problem where everyone would be better off if no one engaged in it. Frank's solution, as he has long promoted, is a progressive consumption tax to discourage this sort of inefficient and wasteful behavior.

In Success and Luck, Frank also argues for using the revenues from this tax for major "public investment" in everything from education to infrastructure. The relevance of luck is that such investments create the conditions under which those lucky enough to benefit from them are able to earn their high incomes. We should recognize our good fortune, both personal and social, with gratitude, and the best way to express that gratitude is to support the public policies needed to make such opportunities available to the widest range of people. We would all be better off with fewer $100,000 weddings and $300,000 cars and more government spending on education, infrastructure, and research and development.

There are a whole range of problems with Frank's argument, from his understanding of the roles of luck and merit in the market to his faith that "public investment" can solve the inequality and inefficiency issues. One need not justify the inequalities of the status quo, a good share of which are based...