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Some folks are incensed at the level of wage inequality that emerges in a private market order. That inequality emerges ought not surprise anyone. Workers earn wages (actually compensation) commensurate with their ability to produce valuable goods and services and their firm’s ability to sell those things. If you want a fancy term for this, we understand that compensation is equal to the marginal revenue product of labor.

Of course there are many frictions in markets that could lead to workers being paid less than what they produce (just as there as outcomes where they are paid more). But that does not change the fact that workers with different “skill” levels end up receiving vastly different compensation packages. I put skill in quotes because I use the term to reflect “ability to produce things consumers want” as opposed to the more traditional interpretation as being of high competence in some craft. For example, the creator of the jibbitz is much more highly skilled than the guy who can juggle 10 bowling pins while whistling Dixie.

That market systems would reward the most productive is obvious – and the bane of many on the left. But if people do not believe that higher productivity entitles one to higher compensation, then what is a better alternative? After all, consider how well off each of us would be if we lived entirely self-sufficient lives? The only way we could advance ourselves is to be more productive. It therefore is natural to have this be the determinant of rewards once we interact with other members of society.

So I ask, if it is not OK for some workers to earn vastly more than others in the private sector, then why is there no such consternation raised about inequality within the public sector? After all, there are hoards of government workers earning the minimum wage, just as there are very large numbers earning more than $100,000. If productivity does not matter, then on what grounds are BLS economists being paid $100,000 per year while the janitors in that same building are earning $20,000 per year? And if folks in government wish to promote wage equality in the private sector, ought not they demonstrate their brotherhood first in the public sector?

I hereby propose a new law – that any and all government workers get paid identically – and that should be equal to the average compensation of an American worker in the private sector. Furthermore, I also propose that anyone choosing to work for government not be permitted to take a second job to augment their earnings (in case it is not obvious, that is exactly how state-run medical works in some places).

UPDATE: I just found this.

3 Responses to “Should All Government Workers Be Paid Equally?”

  1. Speedmaster says:

    GREAT point! You’ve don it again. Helped me see the the fundamental problems w/ the collectivist arguments. Well-done!

  2. Harry says:

    As a productivity expert, I’m tempted to invoke authority to intimidate further discussion, but Wintercow raises profound questions and makes several proufound observations.

    Productivity is the ratio of output over input. Wintercow’s students should commit that to memory, and write it down in their general knowledge notebook.

    Wintercow, who knows many angles of the subject, asks about the value of the output part of the equation. He and I are troubled by so many people spending their time doing nothing.

    Now, a cynic might ask how an economics professor can ask this question. After all, isn’t anyone not employed as indirect labor a burden on us all, and is not the would-be inventor working in his garage not too a burden?

    The answer is that however efficient we are free. How productive we are is our own business, unless we make our living being employed by someone else.

    In any event, one can be productive, and one can be counter-productive. If Wintercow just enlightens one or two people a year, he is productive. Paul Krugman, every sentence, is counter-productive.

    Maybe that’s his point.

    Wintercow is to be commended for writing about productivity, a profound idea broadly misunderstood by many, including me. Every day one gets a new perspective. Rioting Greeks on TV now are another lesson.

  3. Harry says:

    I meant Paul Krugman’s point, not Wintercow’s. There are some who wish us to live more humbly, as long as we live equally humbly, unless you are a Commisar.

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