Comment by dmurray | Hacker News Reader

Comment by dmurray | Hacker News Reader

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Well, we can also say that we expect air traffic controllers generate at least their $132k/ year in value. Crossing guards seem to have a similar role and in theory could be generating the same value, but at the margin they're probably not - you'd expect hiring another one would be worth some significant fraction of the $132k to railway companies, but they're not competing to hire more of them.

So if AI enables every unskilled worker to produce $132k of value instead of $33k, who gets the $99k surplus? Marxist economics teaches us that in a capitalist society, without additional state intervention, the employer gets all of it. Too bad for the worker.

The good news, though, is that most labour economists wouldn't go as far as Marx. In modern societies the working man seems to get at least some benefit from productivity gains that don't come directly from him working harder. And even if you do believe Marx, note the caveat about "without state intervention". The modern state has many tools to intervene and is not afraid to use them: taxes, minimum wage laws, mandating bullshit jobs. In this scenario, doubling minimum wage wouldn't hurt economic productivity - the workers are all producing $132k of value, so not a single one will be laid off if they need to be paid $66k each.

Of course, there are some coordination problems to solve...

>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.

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

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.

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.

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)

>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.

>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.

>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.

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.

>software has no economic value until it is put into use

This is exactly my point. This ^ is categorically false.

>If you could quantify fundamental research's value to the economy

It seems like you're committing the https://en.wikipedia.org/wiki/McNamara_fallacy

Please explain how shelfware provides economic value. Imagine I make some wizbang software capable of increasing GDP by 50%, but it never gets used. What value did that bring to the economy?

I think you are misunderstanding the fallacy you linked. I've already said multiple times there are multiple dimensions to value. The economy is specifically about goods and services sold, so yes, we should measure production. It says nothing of other dimensions. You can have a job that is of immense social value (e.g., clergy or dog fostering or whatever) while only having marginal economic value. So what other non-productive economic dimensions do you suggest? I suspect anything you name would go into a different category than economics (e.g., quality of life). That's fundamentally misunderstanding my point.

You seem to be saying "See that idle factory over there!? Look at everything it's contributing to the economy!" and I'm saying "It's not contributing anything because it's idle." And there may still be other dimensions to its value. Maybe the architecture has artistic value, or it's history has cultural value. But none of those domains move the needle at all for economic value. I have been very clear in constraining my argument to economic value for a good reason, and it's not about your linked fallacious argument.

Since this discussion concerns wages, my claim was that economic value addition is the most highly correlated with pay. You may say we should compensate people more for what they bring to society rather than just what they bring to the economy, and I would probably agree. But that's not the system we're working under and that is my point.

>You seem to be saying "See that idle factory over there!? Look at everything it's contributing to the economy!" and I'm saying "It's not contributing anything because it's idle."

I'm saying that factory has value - sometimes quite a lot of economic value.

The specific example you chose is actually interesting because in the west we largely do view idled factories as valueless and have shifted to a just-in-time manufacturing philosophy whereas Russia has taken the opposite approach of building in a lot of slack into their industrial capacity so that they can scale up quickly.

The practical upshot of this is that our differing conceptions of value are a large part of why we are no losing the largest land war in Europe since WW2. We simply don't have the capacity to scale production to necessary levels.

This is an aside, though.

>Since this discussion concerns wages, my claim was that economic value addition is the most highly correlated with pay.

Yes, this is still false. It correlates with leverage, of which your ability to give the impression of economic value addition is just one part.

>building in a lot of slack into their industrial capacity

This is exactly what I was cautioning against. Slack in a system is not economically productive. It is risk mitigation. You're conflating economically productive value with risk-reduction value. For the same reason, insurance is considered a liability, not an asset. That doesn't mean adding extra capacity isn't warranted from a risk perspective, but it doesn't mean you can add that excess capacity to the plus side of your ledger. It really seems like we're talking past each other because you aren't able to parse the different types of value I'm talking about.

>It correlates with leverage

I've already conceded this point. I used economic leverage because it is the most generalizable method to get leverage. Sure, you could instead blackmail the boss or date the boss's daughter to get leverage. But I don't think those hold as a general rule for a good strategy so we're mainly left with providing differential economic value. It's like quibbling that offense/defense doesn't matter in football, only points matter. In the same way, harping on leverage is both true and not particularly distinguishing in its helpfulness. Or to tie this into the OP, adding value to society does not give you much leverage in a capitalist system. Adding economic value does. And I think people focus on the wrong value system and get frustrated when the expected results don't follow.

> In modern societies the working man seems to get at least some benefit from productivity gains that don't come directly from him working harder. And even if you do believe Marx, note the caveat about "without state intervention". The modern state has many tools to intervene and is not afraid to use them: taxes, minimum wage laws, mandating bullshit jobs.

That may have been the case 30, 40 years ago in the US. In reality, the minimum wage in almost the entire US (unchanged since 2009, to add!) is not enough to afford to have a family [1]. Companies and the ultra rich aren't taxed shit - when you have people like Warren Buffett calling to tax him and his ilk more [2], it's obvious that the situation is clearly out of control.

[1] https://www.investopedia.com/terms/l/living_wage.asp

[2] https://www.reuters.com/article/idUSBRE8AP0LZ/

Why would you expect a person to be able to afford a family on minimum wage? Why would you even want that?

If you raised a minimum wage to that level, you would eliminate a lot of low-level jobs completely, and leave people who don't aspire or need this non-trivial level of achievement without jobs.

> Why would you expect a person to be able to afford a family on minimum wage? Why would you even want that?

Society needs children to survive - someone has to pay the pensions after all, at least in common "societal contract" systems, otherwise people will have to literally work until they die.

For that in turn, society needs at least a replacement fertility rate, and usually there is a close negative correlation between wealth and amount of children (i.e. the wealthier people get, the less children they have), so it makes sense to strengthen the ability particularly of the lower classes to have children.

> Society needs children to survive

This is true. However, what society definetly doesn't need is

> the ability particularly of the lower classes to have children

That's how you breed poverty and other systemic problems that you later have to deal with. People should only have children when they can afford to invest into real care for them. If a person earns a low wage, he shouldn't be able to afford children because he shouldn't have them.

> If a person earns a low wage, he shouldn't be able to afford children because he shouldn't have them.

The right to found a family is enshrined in Article 12 of the European Convention on Human Rights [1] and Article 16 of the Universal Declaration of Human Rights [2].

I agree it's a bit of a stretch, but at least the UDHR definition explicitly states that "the family is the natural and fundamental group unit of society and is entitled to protection by society and the State"... for me, that clearly implies economic protection, i.e. a society has to make sure that people can actually exercise that right - because how useful is a theoretical right to something (be it to found a family, or to have the right to due process and fair treatment before the courts, or whatever else), when large swaths of the population cannot exercise that right, or have access to it effectively denied by circumstances outside of their but inside the government's control?

[1] https://www.echr.coe.int/documents/d/echr/convention_ENG

[2] https://www.un.org/en/about-us/universal-declaration-of-huma...

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