Comment by bcassedy | Hacker News Reader

Comment by bcassedy | Hacker News Reader

This is an interesting article, yet I believe it largely misses the issues people have with income inequality. The article seems to focus on pay discrepancies between people with the same role, missing a lot of the big picture.

Completely missing from the article are any references to differences between jobs with easily measurable output and those with difficult to measure value.

Software engineers and management are two great examples of professions where value is very difficult to measure. In the opinion of many, software engineers tend to be underpaid compared to the value they produce. Managers on the other hand, tend to be viewed as overpaid or at least better compensated compared to the value the produce. I believe that managers do a better job of capturing their value primarily because they (or someone just like them a step up the chain) hold the purse strings.

Back to what the article focuses on for a moment. Sure a superior producer might be able to capture more of their value than their low-producing counterpart. That's a drop in the bucket compared to C-level compensation vs salaryman pay.

In summation, people aren't upset that the guy in the next cubicle makes 20% more money because he's more productive. They're upset that the CEO makes 100x more than they do even in bad times for the company.

Yeah, agreed - the main point of income inequality is missed.

Beyond the employee who makes 100x less than the CEO, it's also the people who have little to no hope of even getting a job at such a company, because they weren't lucky enough to be born into an environment that allowed them to develop to a certain degree of their potential.

Are you saying that there's no way of for the poors to dig them out of their poor-holes? How do you explain all the penniless immigrants and third-world inventors?

The problem with your rationale is that this type of thinking allows lazy people to blame their situation for their lot in life.

They're saying that the odds are stacked against people born into less well-off backgrounds. A lucky few might have the natural ability or freak opportunity to increase their livelihood; that doesn't justify environmentally influenced wage inequality.

No, I'm not saying there's no way to achieve social mobility. I'm saying that it's just very unlikely. There's always exceptions you can hold up as examples. Also, the idea that everyone living in the "third world" is penniless is ignorant. In every developing country, there is an elite whose children will have the same benefits during their upbringing as in any other country. The idea that because an inventor came from a developing country means that everyone has the same chance at social mobility is laughable.

Lazy people, indeed people in general, are experts at rationalizing away their problems. They don't need the help of my rationale. Of course, everyone should believe that they are capable of achieving anything they set their minds to - research shows that those who believe they are in control of their own destiny tend to be more successful in life. But from a statistical standpoint, there's no denying that people from a tough upbringing have a much harder time than otherwise.

>software engineers tend to be underpaid compared to the value they produce

I think comparing salary to the value produced is a slippery slope. Software engineers are certainly not paid below the average or median salary. Their "value" is just a function of the job, not a measure of its worth.

> comparing salary to the value produced is a slippery slope

Can you elaborate? Surely the efficient-market ideal is that everybody gets paid an amount equal to exactly the amount of value they produce.

I understand your point, but there's a glaring error in what you said. People need to get paid less than the value they produce, otherwise their employer would just be a passive participant gaining no advantage from their employment.

If the employers produce no value, then we should get rid of them. If they are producing value, then the overall value produced should be greater than the sum of the value produced by their employees.

Alternatively, get rid of the overhead of value leeching wigs by contributing to worker owned coop / collectives, or similar endeavors.

That's only true if you believe the you can add up the value every employee produces to get the value the company produces. But the company produces more than the sum of its parts. Or should, anyway.

If the employer provides any value (which he clearly does), he would receive payment equal to the value he provides too.

That's why efficient markets are only considered to be an ideal.

Note in edit: I suspect what I remember as the Econ 101 explanation is probably accurate enough for most purposes: Both the employer and the worker have temporary, local monopolies: The employer has plenty of money, but a shortage of time, and the worker has plenty of time but no money. So each is willing to trade with the other. The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill.

> The employer could make money in excess of the value added by the employees, by exploiting other kinds of effective monopolies such as patents, trade secrets, even things like brand recognition and goodwill.

Exactly. That's why the ideal case is for the employee to be paid for the value he provides, and the employer also paid for the value he provides (i.e. he provides patents, trade secrets, brand recognition, ...).

> Their "value" is just a function of the job, not a measure of its worth.

There are two kinds of value. The first is economic, and is measured in money. In a market economy, where scarce resources are allocated to the one who values them most (and therefore will pay the most for them), that is the definition of value.

The second kind of value is social or moral. People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.) And jobs have value in this sense, too, that is different from their economic value. (Perhaps one sees the difference most starkly in the social value vs. economic value of elementary school teachers.)

I think you are comparing salary to social or moral value, which is not just a slippery slope, but is a meaningless comparison - a category error. Comparing salary to economic value, on the other hand, is completely reasonable.

>People have value or worth by virtue of being human, completely apart from their economic value. (For example, this is why it's illegal to murder poor people.)

Ohhh... thats why we dont murder poor people? Never knew that.

"Their "value" is just a function of the job, not a measure of its worth."

I think we need to be careful with terminology here. I'm defining value as return on investment (and sometimes I'll be using the expected return on investment interchangeably).

An employer hires an engineer because they want product x. If the employer thought they could receive $100k selling product x, they'd be silly to pay >= $100k to the engineer. So at the very least, we can agree that the upper bound for salary depends on the value the employee provides.

Salespeople in particular are great at capturing the value they produce. It's extremely easy to measure the production of someone in sales. This is why it's common in many industries for the compensation of a salesperson to be an extremely high percentage of the margin on a sale. By virtue of their value being so easily measurable, salespeople are able to capture a much greater amount of their value than many other professions.

All I'm saying is that comparatively, software engineers do a poor job of capturing their value.

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