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.
GREAT point! You’ve don it again. Helped me see the the fundamental problems w/ the collectivist arguments. Well-done!
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.
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.
I’m not that much of a internet reader to be honest but your blogs really nice,
keep it up! I’ll go ahead and bookmark your site to come back later.
Many thanks!
Hey! Do you know if they make any plugins to assist with SEO?
I’m trying to get my blog to rank for some targeted keywords but I’m
not seeing very good gains. If you know of any please share.
Many thanks! I saw similar blog here: Eco blankets
246251 414933Some times its a pain in the ass to read what weblog owners wrote but this internet site is actually user genial ! . 881198
398363 279538Hi. Cool article. Theres a problem with the website in chrome, and you might want to check this The browser is the marketplace chief and a big component of other folks will miss your excellent writing due to this dilemma. I like your Post and I am recommend it for a Site Award. 800537
121120 755208Music began playing any time I opened this site, so frustrating! 514482
Your article was so explanatory and helpful that I got completely immersed in it as I was reading. I think it’s one of the best pieces written about travel planning. We also discussed something similar about family vacations on TravelForums. Thanks so much for your effort!
Can I simply say what a comfort to find somebody that actually knows what they are discussing online. You definitely understand how to bring an issue to light and make it important. A lot more people need to check this out and understand this side of the story. I was surprised that you aren’t more popular given that you definitely have the gift.
Dinle: Bırak Bu Film Ağızlarını Türkçe Rap Beat
This article was truly eye-opening; I learned so much! Your insights on travel-related topics have expanded my perspective greatly. Thank you for taking the time to share this with us. We had discussed a similar topic about travel tips on TravelForums. I look forward to seeing more of your work in the future! Amazing content, I both learned and enjoyed reading it.
This article was truly eye-opening; I learned so much! Your insights on travel-related topics have expanded my perspective greatly. Thank you for taking the time to share this with us. We had discussed a similar topic about travel tips on TravelForums. I look forward to seeing more of your work in the future! Amazing content, I both learned and enjoyed reading it.