Merit Pay in many settings sounds like a great concept. A utopian concept. Capitalist idealism. In practice it can create as much bad as good. Widely applied it simply isn't the answer.
P.S. As a self-proclaimed Randian Objectivist and in rejecting the concelpt of the common good, then you reject the overall precept of the U.S. Constitution, "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
The alternative is a collectivist structure that rewards the most incompetant at the expense of the most productive and has been proven not to work.
Actually I don't reject the constitution at all and neither does Rand in fact since the US was a country formed by the rational thought of man, it fits with her philospophy perfectly. I should clarify..I support helping ones fellow man voluntarily, but not through the threat of force s most current welfare programs do (don't pay your taxes to support welfare, you go to jail).