Oh yes, this is a permanent wish / gripe / dissent of mine – Robert Reich’s suggestion that we Just Imagine If People Were Paid What Their Work Is Really Worth to Society. Well yes. Teachers, farmers, people who clean hospitals and hotels and schools, bus drivers, garbage collectors, as opposed to people who massage money or market harmful shit or sell cigarettes.
What someone is paid has little or no relationship to what their work is worth to society.
Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?
On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.
How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.
What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.
Exactly.
Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.
They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.
It’s said that by moving money to where it can make more money, these games make the economy more efficient.
In fact, the games amount to a mammoth waste of societal resources.
They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.
Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society — if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.
Not to mention the fact that the competitive money-massagers caused the entire global economy to tank while making a few massagers grotesquely rich. Not a fabulous arrangement, if you ask me.
Reich suggests canceling the college debts of people who go into useful but underpaid fields. A very tiny band-aid.
Unless the government runs the entire economy there’s no way to control what people are paid – but you could tax them, or their industry, according to their social contribution or social costs.
This would also allow you to tax companies according to the externalities such as costs to the environment.
You’d have to guarantee a minimum income though as an awful lot of people would starve to death if they were paid what they earned.
It’s a little more complicated than that though. It’s arguable that sewage workers save more lives than, say, brain surgeons. If sewage workers were paid the same there wouldn’t be much point in investing time and money in medical degrees when you could leave school at 14 and get a job earning the same money wearing thicker gloves.
I’m not sure how you’d measure the social worth of pure research or, for that matter, academic subjects like philosophy.
And what about people who make massive contributions to society by accident?
Obviously a lot of people make way more than anyone could justify.
On the other hand, it doesn’t exactly make sense even to wish that teachers made seven figures based on the importance of their work. It’s not unlike the paradox of water: it’s utterly vital for life, but a bottle of it only costs $1.00US. A diamond is just a rock, but a small one costs $1,000. Usually, that is. In the desert, someone might trade a sack of diamonds for a bottle of water. This paradox stands more or less at the dividing line between classical and modern economics. The solution was that value is subjective, on the one hand, reflecting things like the importance but also the difficulty of obtaining something–but on the other hand, marginal value decreases, all else equal, so that the first bottle of water is worth a handful of diamonds, but the 100th is worth only $1.00.
So waste disposal, farming, cooking, and other jobs are vital for life–but lots of people are able and willing to do them. Paying one garbage collector six figures makes little sense when plenty of people would do it for half that, and we could then have twice as many garbage collectors.
NOTE! This is not a “libertarian” defense of “free markets.” Nothing I just said should be construed as a defense of the idea of bidding garbage collectors down to a sub-subsistence wage, nor of exploiting economic power to present people with the choice between a non-living wage and outright starvation. I realize that has to be said, because if I don’t close that loop, someone is sure to believe I meant to leave that implication hanging there.
How would you reward people who invent life saving fireproof materials which turn out to cause cancer decades later?
We’ve got a bigger problem. A *much* bigger problem. Two brief examples I’ve observed:
Garbage collectors: Each truck used to carry 4-5 collectors – two in the cab, two hanging off the back, and maybe one hanging off the side. A few years ago, the city issued all-new bins. Now, there is a single garbage collector driving the specialized truck that does it all.
3-4 garbage collector jobs eliminated.
At Walmart, I used to see teams of 3 staff out collecting shopping carts. They’d stack them up, then 2 would push and one would guide. Now, it’s a single employee with a wheeled machine that pushes the carts.
More jobs eliminated through technology.
When I was in undergrad ca. 1978, accounting was held up as an excellent career choice. This was before personal computers made it into the workplace. Perhaps you’ve seen scenes from old movies, showing rooms full of green-visored bookkeepers bent over large ledger books…http://www.moneysense.ca/wp-content/uploads/2013/11/accountant.jpg
And http://thekomisarscoop.com/wp-content/uploads/2008/07/adding-machine-photo-1-joe-hatch-amy-warren-in-bookkeepers-room-photo-carol-rosegg.jpg
Now, accounting is no longer recommended as a good career option. Computers replaced wide swaths of professional workers. That’s when our job market broke – all those out-of-work accountants and other professionals meant that pay no longer needed to rise commensurate with experience. “Not happy with your 2% raise?? Quit! I got 50 people just as experienced as you waiting to take your place.” This is when corporate profits started going through the roof and executive paychecks exploded. And those embarrassing books like that one by Lee Iacocca, where he took credit for single-handedly turning his auto company’s fortunes around. Hence the self-serving myth of the “super-CEO” who is obviously worth more than everybody else in the company put together. The king gets all the credit AND all the wealth, of course.
With ever more people and ever more jobs being eliminated due to technology, we need to figure out how people are supposed to live at all! The elephant in the room is why we, who fought a Revolutionary War so as to govern ourselves and not have to bend the knee to an all-powerful ruler, still allow businesses and corporations to be run as monarchies.
The paper entrepreneurs didn’t cause the entire global economy to tank, the GFC was really a ‘North Atlantic Crisis’.
The solution is simple, socialism. The capitalist system will always provide opportunities for rentiers such as financiers, corporate lawyers and others to parasitise the economy to some extent. It’s also not a zero-sum game as the inefficiencies these predators introduce into the system waste resources to an extent that far exceeds the cost of their ‘fees’.
Western ‘democracies’ are essentially plutocracies.
Blanche Quizno,
There are job opportunities for accounting graduates these days, however they’re usually in those paper entrepreneurial industries or as tax agents, the profession that has disappeared and is now replaced by software is not actually accounting, but bookkeeping.