Feed on
Posts
Comments

I see no reason why any particular group of employees in this country is adored or idolized more than any other. I don’t, for example, pay any special attention to a school teacher or a soldier than I would my electrician. Indeed, I find this reasonable given that I’d like to evaluate people on their personal qualities, and not some imagined quality that is represented by their occupation. All of these folks take jobs with a full understanding of the pay, risks, rewards, non-monetary benefits and costs and typically perform tasks as expected of them. Very little is a surprise. In other words, given the free entry and exit into and out of occupations, and the fact that even in the People’s Republic of America there is still some semblance of labor market and compensation flexibility, we can say fairly surely that when people make decisions about preferences, they are doing as well as they possibly can.

A corollary to this is that folks will largely be indifferent, at the margin, between doing one particular occupation over another (if they were not, then the current world would be hyper-irrational). Although I was paid considerably more as an investment banker, I still made the choice to become a teacher because that job yielded me more satisfaction. People make these moves all the time. But the interesting aspect of this observation is the following: think about the occupations that end up being represented heavily in parades, TV commercials, feature stories, etc. and the like. Are they plumbers? Or are they soldiers, police, fire and teachers? Overwhelmingly the latter. And what is interesting is that the more public adulation that is tossed at them, the worse off in compensation terms these people are going to be. If a substantial amount of joy is obtained by these workers because of their public recognition, then at the margin the wage and benefit offers that would be required to attract them would not have to be as high as they are today.

Thus, if you truly cared about the material well-being of these adored professionals, you might reasonably begin a Foundation or a Charity that spends every waking minute tearing down members of those occupations. Make them feel bad about being teachers and soldiers. Mock them at the parades. Shun them in social gatherings. Then the only way schools and the military and the police force would still be able to attract then would be by increasing their material well-being so that their “total compensation” at the end of this change is the same as it was beforehand.

And if you think more carefully about this, you might come to the very sobering conclusion that there is absolutely little else you can do to improve the well-being of other people, particularly when it comes to intervening in the economic realm. This is why I find economics to be exciting. Not only do you come to understand the truth of the above statement, but it also gives one a framework to understand why must actually happen in order for the well-being of large swaths of people to improve. And a single word that describes that change is “productivity.”

I think the reason people hate economics, and I guess Capitalism, is that we make that observation regularly and powerfully. The only way to obtain a sustained (you like that word!) improvement in the lives of people is to improve their (and our) productivity. The problem with the world is not only that folks don’t recognize this point, they do not have a serious understanding of what this term, “productivity” means. Sure it can refer to our ability to punch out screws on an assembly line more quickly today than yesterday (using fewer resources), but all we mean by it in economics is that we are able to provide more of the things we value today using the same amount of resources as we did yesterday. Or provide the same amount of things we value today using fewer resources (how does this idea jive with the anti-market, anti-capitalist rhetoric of the “Sustainability” advocates? I am sure this is what they mean.).

3 Responses to “Things One Must Not Speaketh in Polite Company”

  1. Harry says:

    Productivity is the ratio of output over input. That is the broad definition.

  2. jb says:

    Brilliant Wintercow. One of your best posts. When I served in the Air Force virtually everyone I knew derived a good deal of satisfaction from serving the Nation. Indeed, just look at recruiting commercials; they appeal to sacrifice, duty and love of country. You don’t see them publishing pay schedules (though educational benefits are certainly touted).

    So the fourth of July parades for veterans, the praise we heap on teachers, the FDNY T-shirts, etc. probably go a long way in keeping the tab lower than it otherwise would be for taxpayers. I hadn’t thought much about that until now.

    And for that matter about those “evil” bankers and oil company executives…no wonder they are paid so much! They have to go home at night and look their kids in the eye as their kids turn on CNN and see how Daddy spent the day “exploiting the masses”. You have to come up with some serious dough to offset that cost…Dam mit they earn their pay!

  3. drobviousso says:

    “All of these folks take jobs with a full understanding of the pay, risks, rewards, non-monetary benefits and costs and typically perform tasks as expected of them.”

    Indeed, and one of the non-monetary benefits some of these people expect is the adoration or idolization of their peers inside and outside of the profession. When people select their own professions, I don’t think you can overlook this component.

    So your suggestion may change the type of people that become the next crop of soldiers, clergy, or civil rights activist, I don’t know how much you’ll be helping out the current crop.

Leave a Reply

tawse-propitiable