I mean, yes everything has limits. I think the point is that the limit for how much merit is required for our system to run is much much lower then people would intuitively expect. Which is why its surprising when we see very clearly incompetent people thriving at the same time other very clearly competent and talented people are struggling, and wondering how that could possibly happen.
The whole thing runs on survivorship bias. And if you don't agree, just wait and see.
The system is too big and complex for there to be a notion such as merit. We are animals and just like all animals we must fight to survive. Some people get lucky, some get unlucky. Merit is irrelevant.
And if you try to create a merit based system, you take away the liberties of the people. Who decides what person deserves more than another? You will create a system ripe for corruption.