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In a market based economy, wage is determined by supply and demand. Then, high wages incentivize new people to enter the high wage field, and low wages disincen

In a market based economy, wage is determined by supply and demand. Then, high wages incentivize new people to enter the high wage field, and low wages disincentivize new entrants. This is a societally productive outcome, because labor gets allocated to the most economically beneficial sectors naturally through fluctuations in wages. If we had 10x the number of engineers, wages would drop significantly. Imagine, for example, that the US allowed unlimited migration from China, India etc for engineer positions... wage situation would be much different. But also likely more societally beneficial due to lowering cost to provide software (which in a competitive market, will get passed down to consumers). A big problem we have though is lack of education/direction given to college students so many of them aren't even really aware of wages of various fields and choose based on likability of the role rather than considering both likability and economics. Unfortunately many people choose to be teachers regardless of low pay. Given that teachers are primarily government paid, we could elect to simply pay them more to attract higher caliber talent. But most fields aren't government employed, so not feasible for other roles. Doctors in particular are problematic, because as I understand it the AMA limits number of new doctors creating an artificial shortage. That should be fixed/regulated against... it's pretty much monopoly power of labor to be able to decide number of doctors. Monopoly power on either the corporate or labor sides pretty much always leads to worse societal outcomes. But yeah, generally in a free market wages will be set "fairly". You're free as a student to choose a career path that pays better. I'm hugely in favor of reducing barriers to role switching and doing away with the traditional 4 year college program. Could open up lots of doors for people. Whole conversation around free college is starting from the wrong premise (that 4 year college should even be the baseline). College is largely just a signaling tool, and the long duration and requirement makes switching career paths very costly, and pretty much impossible for people who aren't in their 20s. Even if it were made free

tylerhou 5y ago
> because labor gets allocated to the most economically beneficial sectors naturally through fluctuations in wages. In a perfect market economy, yes. In an imperfect economy, where the value of each teacher is hard to measure, and where teachers cannot capture the full value of their work (e.g. a lifechanging middle school teacher can't charge much more than a normal teacher) this isn't true. > Imagine, for example, that the US allowed unlimited migration from China, India etc for engineer positions... wage situation would be much different. This is really not clear. First of all, as software engineering can be done remotely, there is already a fair level of global competition. Second, migration doesn't always decrease wages (see Mariel boatlift for a counterexample). And even with open borders I don't think the current top 10pct of SWEs would be paid more than 20% less. > But yeah, generally in a free market wages will be set "fairly". Again, assuming that the market is efficient, which it probably isn't.
- adam_arthur 5y ago
  You're right that the impact of teachers is hard to measure. But we can ask whether educational outcomes would improve by paying teachers more... and my feeling is that the answer is largely no. Most of educational outcome is cultural/determined by the student and their peers rather than the teacher. An interesting experiment would be running two cohorts of students through the same school, with same curriculum but different set of teachers. And paying one set of teachers more than the other and measuring long term outcomes. I would be interested in seeing the results of this experiment. There was already something like this done as a result of a New Jersey lawsuit, but I would have to vet whether it impacted pay of the teachers. In that case there was no improvement in educational outcomes, despite greatly increased funding for the schools. Yes, software could have always been done remotely. But it largely hasn't... and timezones become problematic. Show me where FAANG companies are hiring remote workers en masse for US based teams? Maybe it's happening, but I certainly haven't seen any evidence of that. I worked for a company that primarily hired on H1B, and hiring was a lot easier when pulling people from Europe/India/China due to lower comp expectations. These people were paid the same as everybody else/native US people, but just culturally were less comp sensitive. But H1Bs are highly limited in quantity, of course. Why suggest the economy is inefficient? In areas where the market has little intervention, it's largely efficient. Though I agree there are areas where there actually needs to be more government intervention to encourage a competitive market. Competitive markets are more important than free markets for a societally beneficial outcome. One example: competitive markets require that information is freely available. Companies can profit by hiding information which disadvantages consumers (e.g. cost of healthcare procedures, cost of enterprise software etc... relies on information asymmetry to enhance margins).
quadrifoliate 5y ago
You don't have to explain to me how demand and supply works, but I appreciate it nonetheless. > Unfortunately many people choose to be teachers regardless of low pay. I don't think this statement is true any more. At least in the state where I live, teachers were quitting in large numbers before the pandemic, and the situation is far worse after. This is one factor that's not touched on in the article at all, and IMO is mainly responsible for why schools haven't returned "to normal".
adolph 5y ago
> In a market based economy, wage is determined by supply and demand. A 1973 letter to the editor in the journal Science describes the "famous story" about a physicist whose solution to a poultry farm's egg-production problems began with "Postulate a spherical chicken". https://en.wikipedia.org/wiki/Spherical_cow https://en.wikipedia.org/wiki/Spherical_cow
DarylZero 5y ago
> Whole conversation around free college is starting from the wrong premise (that 4 year college should even be the baseline). College is largely just a signaling tool, Maybe signalling your ability to pay! Making it tuition-free is a good step toward stopping some of that bullshit. University system is a kind of self-governing guild system. The signal is approval from the older generation who satisfied the requirements of the system in their time. It may be a signal that the younger group has put up with their bullshit hazing. Or that they met some reasonable standards. The money requirement is more like the bullshit hazing. > and the long duration and requirement makes switching career paths very costly, and pretty much impossible for people who aren't in their 20s. Even if it were made free Not really. It requires no more time investment than a full-time job. For working age people seeking career advancement not a problem. Replacing the income of a full-time job is part of the funding requirement that is more important for older people. > Doctors in particular are problematic, because as I understand it the AMA limits number of new doctors creating an artificial shortage Any degree system is "artificial scarcity" inherently. Even if the number of spots isn't fixed centrally, you have some social ("artificial") process for including and excluding people. The more exclusive the process, the higher prestige the degree can confer. You cannot remove the exclusivity while preserving the degree. (And maybe we should get rid of a lot of the degrees and the social divisions they create... I don't especially feel that way for MDs though.)

tylerhou 5y ago

> because labor gets allocated to the most economically beneficial sectors naturally through fluctuations in wages. In a perfect market economy, yes. In an imperfect economy, where the value of each teacher is hard to measure, and where teachers cannot capture the full value of their work (e.g. a lifechanging middle school teacher can't charge much more than a normal teacher) this isn't true. > Imagine, for example, that the US allowed unlimited migration from China, India etc for engineer positions... wage situation would be much different. This is really not clear. First of all, as software engineering can be done remotely, there is already a fair level of global competition. Second, migration doesn't always decrease wages (see Mariel boatlift for a counterexample). And even with open borders I don't think the current top 10pct of SWEs would be paid more than 20% less. > But yeah, generally in a free market wages will be set "fairly". Again, assuming that the market is efficient, which it probably isn't.

adam_arthur 5y ago
You're right that the impact of teachers is hard to measure. But we can ask whether educational outcomes would improve by paying teachers more... and my feeling is that the answer is largely no. Most of educational outcome is cultural/determined by the student and their peers rather than the teacher. An interesting experiment would be running two cohorts of students through the same school, with same curriculum but different set of teachers. And paying one set of teachers more than the other and measuring long term outcomes. I would be interested in seeing the results of this experiment. There was already something like this done as a result of a New Jersey lawsuit, but I would have to vet whether it impacted pay of the teachers. In that case there was no improvement in educational outcomes, despite greatly increased funding for the schools. Yes, software could have always been done remotely. But it largely hasn't... and timezones become problematic. Show me where FAANG companies are hiring remote workers en masse for US based teams? Maybe it's happening, but I certainly haven't seen any evidence of that. I worked for a company that primarily hired on H1B, and hiring was a lot easier when pulling people from Europe/India/China due to lower comp expectations. These people were paid the same as everybody else/native US people, but just culturally were less comp sensitive. But H1Bs are highly limited in quantity, of course. Why suggest the economy is inefficient? In areas where the market has little intervention, it's largely efficient. Though I agree there are areas where there actually needs to be more government intervention to encourage a competitive market. Competitive markets are more important than free markets for a societally beneficial outcome. One example: competitive markets require that information is freely available. Companies can profit by hiding information which disadvantages consumers (e.g. cost of healthcare procedures, cost of enterprise software etc... relies on information asymmetry to enhance margins).

quadrifoliate 5y ago

You don't have to explain to me how demand and supply works, but I appreciate it nonetheless. > Unfortunately many people choose to be teachers regardless of low pay. I don't think this statement is true any more. At least in the state where I live, teachers were quitting in large numbers before the pandemic, and the situation is far worse after. This is one factor that's not touched on in the article at all, and IMO is mainly responsible for why schools haven't returned "to normal".

adolph 5y ago

> In a market based economy, wage is determined by supply and demand. A 1973 letter to the editor in the journal Science describes the "famous story" about a physicist whose solution to a poultry farm's egg-production problems began with "Postulate a spherical chicken". https://en.wikipedia.org/wiki/Spherical_cow https://en.wikipedia.org/wiki/Spherical_cow

DarylZero 5y ago

> Whole conversation around free college is starting from the wrong premise (that 4 year college should even be the baseline). College is largely just a signaling tool, Maybe signalling your ability to pay! Making it tuition-free is a good step toward stopping some of that bullshit. University system is a kind of self-governing guild system. The signal is approval from the older generation who satisfied the requirements of the system in their time. It may be a signal that the younger group has put up with their bullshit hazing. Or that they met some reasonable standards. The money requirement is more like the bullshit hazing. > and the long duration and requirement makes switching career paths very costly, and pretty much impossible for people who aren't in their 20s. Even if it were made free Not really. It requires no more time investment than a full-time job. For working age people seeking career advancement not a problem. Replacing the income of a full-time job is part of the funding requirement that is more important for older people. > Doctors in particular are problematic, because as I understand it the AMA limits number of new doctors creating an artificial shortage Any degree system is "artificial scarcity" inherently. Even if the number of spots isn't fixed centrally, you have some social ("artificial") process for including and excluding people. The more exclusive the process, the higher prestige the degree can confer. You cannot remove the exclusivity while preserving the degree. (And maybe we should get rid of a lot of the degrees and the social divisions they create... I don't especially feel that way for MDs though.)