A pure functioning meritocracy would produce a society with growing inequality, but that inequality would come along with a correlated increase in social mobility. As the educational system and business world got better and better at finding inherent merit wherever it lay, you would see the bright kids of the poor boosted to the upper echelons of society, with the untalented progeny of the best and brightest relegated to the bottom of the social pyramid where they belong.
But the Iron Law of Meritocracy makes a different prediction: that societies ordered around the meritocratic ideal will produce inequality without the attendant mobility. Indeed, over time, a society will become more unequal and less mobile as those who ascend its heights create means of preserving and defending their privilege and find ways to pass it on across generations. And this, as it turns out, is a pretty spot-on description of the trajectory of the American economy since the mid-1970s.