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The short and easy answer is because wages/wealth has no necessary connection to how hard you work. The tying of the notion of the cost of something to how muc
by ACow_Adonis 13y ago
The short and easy answer is because wages/wealth has no necessary connection to how hard you work.
The tying of the notion of the cost of something to how much work goes into it is more or less the "labour theory of value", a notion traditionally tied to Karl Marx (these days) and classical economics. About the only place you'll see it brought up these days is either with die-hard marxists, or, ironically, people trying to justify their wage/wealth. The later do this because it seems almost ingrained in humans to assume that reward is tied to work somehow. We hate shirkers.
Economists of course know this theory is bullshit, but it seems it won't die, either from marxists, or as folk-economics among the general populace.
Wages are the cost to hire labour to someone with money. In that case, how much they want something (their demand) depends upon, more or less, the marginal value of that good (or the thing derived from it in the case of labour) and how much money they've actually got to pay for it. No money = no one really gives a hoot for your preferences/say.
On the side of labour, you've got few barriers to doing the job. Just about everyone can labour in the fields, work on the industry line, sweep the hall. There's not much of a barrier to getting such a skill. So supply is huge, and the relative productivity of most units are comparable to each other. Most people clean, work the field, etc, at about the same rate as each other, so the output of individuals is quite comparable.
Put them together in the simplest cases and you've got your answer: the marginal value of the field worker/janitor/industrial worker is worth very little to the people with the money on the demand side, and on the supply side, practically everyone (including most of the third world) can basically do it. And most of the third world are desperate to do it, so they'll bargain down quite low.
In a trivial sense, the case of programmers, and then above them, CEO's can be explained in this way as well. Programmers can do things that are relatively valuable to the people with the money. Not everyone can be a programmer. Its actually quite expensive to make a programmer. If you stop paying a certain amount, programmers will just go off and do something else.
In a more complex sense however, things get a bit more hairy. What is it that people with money value? Are they always correct? Why do they value those things? What about in jobs/positions where output/input is impossible to measure? Are they really so rational? Are those without money really powerless? What role do courts/police/judges/democracy/military play in all this?
The earlier provides an understanding of the basic economics. The later questions bring you closer to the truth, but I could barely touch upon them and do them justice in a HN post.
- wturner 13y agoI really liked how you challenged the assumption of the entire post. I was waiting for someone to do that. This post was partially motivated by some personal situations but also because of an email exchange with an entrepreneur that was insisting his economic comfort was due to 'working his ass off'. When I mentioned that field workers work their ass off and are basically poor, he didn't respond. So I guess you had that one sussed.
- ACow_Adonis 13y agoThanks. I dropped out of my CS degree at university and did economics instead, and now i straddle both worlds :P I say with no ego or pride that I've heard just about every economic theory/justification there is from discussions with the rich and the poor. On the one hand its fascinating how most of the world is driven by relatively folksy beliefs. Its also fascinating to me how relatively devoid of economic knowledge most programmers, and indeed people, are. The "I work really hard" is a standard refrain in discussions with relatively wealthy individuals in justifying their wealth. I would place it almost at the level of a basic emotive response. Perhaps its trying to respond to an innate notion of fairness in the human psyche that needs addressing to explain obvious inequality. Either way, it keeps getting trotted out despite being obviously disprovable and also being not the way that entrepreneurs or businessmen pay their own staff, so it was a good bet from you were talking to someone in just such a scenario :P
- dllthomas 13y agoI don't know, there definitely seem to be people 10x as effective at cleaning as I am...