I'm actually starting to believe that factors like trade, industrial policy, and public regulation of economic rents and public goods ... have more to do with our current economic crises than any notion of individual "merit".

I don't understand what do you mean -- I can't see any connection between "individual merit" (and by "merit" do you mean the productive value of a person?) and current economic crises.

seems to be able to afford uneducated individuals, expensive social programs, or short work hours much more easily

I don't understand that either. It's not that, say, Germany can afford a more generous welfare system than the US -- after all per-capita GDP is higher in US than in Germany -- it's just that Germany chooses to reallocate more of the wealth produced in this way.

while Australia and Germany are more equal and stable

Equality isn't a good yardstick -- the old USSR had much more equality than any Western country. And I don't see the stability you're talking about. Stable in which sense?