>Sorting people by ‘merit’ will do nothing to fix inequality
No one ever said it would, nor would we want it to. Concentration of capital and talent is how progress gets made after all - a million labs with $10 research budgets aren't going to be able to compete with one lab with a research budget of $10,000,000. That was one of the fatal flaws of Mao's Great Leap Forward, a billion Chinese farmers trying to produce steel in their back yards was overall much less productive than a few massive steel plants with dedicated professionals and experts on staff would've been.
Instead meritocracy hopes to fix injustice in the inequality of our world, so that those who have more have earned it and those who have less earned that too. It is an impossible ideal, obviously, but the point is to strive for it always even knowing we can never reach it.
>As wealth increasingly reflects the innate distribution of natural talent, and the wealthy increasingly marry one another, society sorts into two main classes, in which everyone accepts that they have more or less what they deserve.
The problem with this hypothetical society isn't that the most meritorious have more wealth, but rather that they have all the wealth. Although those with the most merit do deserve a bigger slice of the pie (IMO anyway), they obviously don't deserve all the pie. One of the benefits of meritocracy is the old phrase "a rising tide lifts all boats", but that isn't true if the top percent eats all the benefits of their own capital investments.
>The ideal of meritocracy, Young understood, confuses two different concerns. One is a matter of efficiency; the other is a question of human worth.
It's not a confusion, it's just how humans are wired. "Moron" originally had no negative connotation, but over time it gained a profound one. Similarly "plebeian" wasn't originally an insult, but now it is. Heck the ultimate evil force in most stories, the "villain", derives his name from the latin term for a low status farm hand (villanus)
Anything associated strongly with the "least efficient" rung of society will inevitably become tainted in this fashion, as human beings are inherently status-oriented creatures looking for some way to put down others and elevate ourselves. It's an unfortunate part of our nature as a species.