18 Comments

Wages / salary have nothing to do with how hard you work, they are determined by how many people could do the job.

95% of people could sweep the street

50% of people could deliver the mail

20% of people have professional qualifications

1% of people are doctors

0.000001% of people can win a PGA event, or sell out a stadium concert.

This is kinda how it works.

The main barrier to the higher paid jobs is that you have to invest a huge amount of your time in accumulating valuable skills.

It’s about 10,000 hours of extra study and training to become a professional. That’s 10,000 hours unpaid, doing difficult and thankless stuff.

Nobody does the 10,000 hours if there’s no reward for it. That’s why communism fails every time it’s tried.

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From a purely market-based POV, don't you think some of those "virtuous" workers could be considered underpaid because their labor leads to positive externalities? IE teachers, whose labor (in theory) contributes to a better-educated labor force? Or social workers whose efforts to connect drug addicts with treatment and housing make our cities safer and cleaner?

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This was a bit more savage than the typical post, heh.

Another wrinkle to #6 is that even if employees had a crystal ball that could tell them how much value they are contributing, they don't actually understand how much they're being paid! Ask someone who makes $50k/year how much they think it costs their employer to employ them. In my experience people will say $50k. You don't have to talk to many small business owners before you realize that employing that $50k/year employee is significantly more expensive when healthcare, 401k, workers' comp, etc are involved. Public school teachers are a particular example that tends to base their judgement on wages instead of total compensation. The dollar value of pension funds, tenure, and months of the year off are often ignored when comparing teacher wages to something like "the average wage of a master's degree holder".

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What about

"A fair price is one that splits the surplus equally. That is, if the buyer's valuation is B, and the seller's valuation (or 'cost') is S, then the fair price is (B + S)/2."

To be clear, I don't myself believe in 'fair prices', but I do think this is one of the more plausible candidates.

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A Marxist would object to saying that the rich are paid more than their labor is worth, if they do no labor. And indeed, it is possible for rich persons to just put all their wealth that they wish to preserve and invest into hedge funds, and collect the dividends. In this case, they get paid for making a decision or judgement. What they get paid depends on how well they predicted the performance of the hedge fund. While I do not object to that, it doesn’t seem to fit the frame discussed in the post.

Maybe it needs a different sort of defense, one that defends the idea that people can save and invest in the first place, as opposed to having the state or some workers’ collective invest savings at the level of the community. Should we have the right to postpone consumption and use the remainder to start or participate in some project? Or even if the Marxist denies that, is it plausible that a planning committee or workers' council will be able to improve upon the market's ability to experiment? The Marxist could argue that planners can experiment too, but historical experience so far indicates that they are fond of one-size-fits-all solutions that compel everyone to participate. Experimentation seems to contradict the reasoning behind centralizing things in the first place.

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