[WorldMaker]

That's an interesting question and I think the big point here is to differentiate merit from meritocracy. There's nothing wrong, and a lot right, by trying to base payment/encouragement upon perceived merit. The disconnect is trying to make it systemic (meritocratic) and forgetting the subjective nature of merit, and that the only merit you reward/punish is that which you perceive.

It's very easy to build a culture based on merit metrics and tautologize that numbers are objective, this merit system is based on numbers, therefore this merit system is objective and thus this is objectively a "meritocracy". There's a number of logical fallacies wound up in that thought process, but that's how a lot of bureaucracies get formed, and a how a lot of them rationalize themselves as objective/benign.

I guess the underlying problem is that merit is great, but the illusion that "merit" scales to form benign meritocracies is something that we need to question a lot more than we do.