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>we can also say that we expect air traffic controllers generate at least their $132k/ year in value This is an important distinction that the author misses. P

by bumby 3y ago

>we can also say that we expect air traffic controllers generate at least their $132k/ year in value This is an important distinction that the author misses. People are paid according to their value to the economy, not their value to society. So, even if the jobs were similar in expertise, the crossing guard would likely not make as much because the ATC provides more to the economy. *FWIW, I'm not saying this is moral or fair, it's just is the way the economic cookie crumbles.

firstplacelast 3y ago
Disagree. People are paid based on value-extraction, not value-generation. They are correlated, but are vastly different metrics.
- bumby 3y ago
  Care to elaborate on the details of the distinction? I think I get the gist, but I’m not sure how much it matters in practice (given the above comment about leverage). E.g., a hedge fund manager is paid handsomely for if they extract value, but that same extraction is value generation for their clients. It feels like two sides of the same zero sum coin.
pydry 3y ago
Nobody is paid according to their value. They are paid according to their leverage. PhDs provide an immense amount of value but have very little leverage. Workers who unionize and use their power effectively have more leverage than those who do not. Land owners contribute precisely 0 value but hold leverage in the form of a legal title.
- bumby 3y ago
  I would agree, but your statement makes it sound as if they are disjointed. You need to have both. (I would also push back a bit that a PhD adds immense value. Many that do get paid well via IP and start-ups, but that’s a better interface with the economy. There are many in my experience that add little more than a credential)
  - pydry 3y ago
    >You need to have both. For employment the most it does is set a ceiling on wages. Pushing up your ceiling doesn't necessarily push up your wages. >I would also push back a bit that a PhD adds immense value. Of course, that's a common opinion. Blue sky research is vastly underrated in the west. This is partly why the Chinese are overtaking us.
    - bumby 3y ago
      >Blue sky research I’m not discounting fundamental research in the way you may be implying. I’m just saying it has little economic value until it has an application. By definition, it doesn't have an economically marketable use, so it can't have economic value. I also don’t think China is overtaking the US on a research front. They publish a lot (although I would question how much 'blue sky' vs. derivative), but that’s a bad metric for a lot of reasons.
      - pydry 3y ago
        >it has little economic value until it has an application That's a bit like saying that employees create very little value until a product is sold. Realized value != created value. It is precisely the lack of competition on this front (research) for decades and the abstract nature of the value created that has led it to be so badly undervalued.
        bumby 3y ago
        That's exactly the point. To put it in more HN terms, the best-engineered software has no economic value until it is put into use/sold. Created value != economic value. So what is the economic value if its never realized? Nothing. The entire distinction is that there is a difference between types of value; my post focuses on economic value because that is what's related to someone's pay. If you could quantify fundamental research's value to the economy (without hindsight), it ceases to be fundamental research. Again, by definition, fundamental research does not have application. If it has no application, it has no interface to the economy. I'm not saying R&D or fundamental research has no potential economic value. It has no current avenue for realized economic value. And our system is incentivized for short-term gain. You could be a magnificent fundamental researcher, but if your work doesn't add to the economy in a relatively short timeframe, you probably won't be paid very well compared to a lesser researcher who does.

by bumby 3y ago

firstplacelast 3y ago

Disagree. People are paid based on value-extraction, not value-generation. They are correlated, but are vastly different metrics.

bumby 3y ago
Care to elaborate on the details of the distinction? I think I get the gist, but I’m not sure how much it matters in practice (given the above comment about leverage). E.g., a hedge fund manager is paid handsomely for if they extract value, but that same extraction is value generation for their clients. It feels like two sides of the same zero sum coin.

pydry 3y ago

Nobody is paid according to their value. They are paid according to their leverage. PhDs provide an immense amount of value but have very little leverage. Workers who unionize and use their power effectively have more leverage than those who do not. Land owners contribute precisely 0 value but hold leverage in the form of a legal title.

bumby 3y ago
I would agree, but your statement makes it sound as if they are disjointed. You need to have both. (I would also push back a bit that a PhD adds immense value. Many that do get paid well via IP and start-ups, but that’s a better interface with the economy. There are many in my experience that add little more than a credential)
- pydry 3y ago
  >You need to have both. For employment the most it does is set a ceiling on wages. Pushing up your ceiling doesn't necessarily push up your wages. >I would also push back a bit that a PhD adds immense value. Of course, that's a common opinion. Blue sky research is vastly underrated in the west. This is partly why the Chinese are overtaking us.
  - bumby 3y ago
    >Blue sky research I’m not discounting fundamental research in the way you may be implying. I’m just saying it has little economic value until it has an application. By definition, it doesn't have an economically marketable use, so it can't have economic value. I also don’t think China is overtaking the US on a research front. They publish a lot (although I would question how much 'blue sky' vs. derivative), but that’s a bad metric for a lot of reasons.
    - pydry 3y ago
      >it has little economic value until it has an application That's a bit like saying that employees create very little value until a product is sold. Realized value != created value. It is precisely the lack of competition on this front (research) for decades and the abstract nature of the value created that has led it to be so badly undervalued.
      - bumby 3y ago
        That's exactly the point. To put it in more HN terms, the best-engineered software has no economic value until it is put into use/sold. Created value != economic value. So what is the economic value if its never realized? Nothing. The entire distinction is that there is a difference between types of value; my post focuses on economic value because that is what's related to someone's pay. If you could quantify fundamental research's value to the economy (without hindsight), it ceases to be fundamental research. Again, by definition, fundamental research does not have application. If it has no application, it has no interface to the economy. I'm not saying R&D or fundamental research has no potential economic value. It has no current avenue for realized economic value. And our system is incentivized for short-term gain. You could be a magnificent fundamental researcher, but if your work doesn't add to the economy in a relatively short timeframe, you probably won't be paid very well compared to a lesser researcher who does.