Valuing Productivity, Not Profession, Could Reduce U.S. Inequality

https://www.citylab.com/equity/2019/12/economic-inequality-jobs-educational-opportunities-rothwell/604099/

by cienega • 7 years ago

61 84 7 years ago

spamizbad• 7 years ago

Isn't this sort of a capitalist's spin on Marx's Labor Power theory? In such a system, a worker's productivity is roughly equal to their "power" in the marketplace.

selfishgene• 7 years ago

How would "productivity" be measured?

And who would measure it?

Assuming that additional government bureaucracy would be created for this (noble) purpose, what guarantee would we have that their decisions would be any more "rational" or "efficient" than the so-called "free market" system that currently exists in the US for determining salaries?

This is not a criticism of the author's underlying arguments, just a question about how he would implement the proposed remedy.

hak8or• 7 years ago

Heck, even as a software developer, which HN heavily skews to, how would we measure productivity? Many fields are very creatively driven, it's incredibly difficult to put a number on it.

Lines of code? That was shown to be a total failure years ago. Jira tickets closed? Some tickets are much harder than others. Hours of butt in seat? Well, sadly that still seems to be a bit in vongue, but is thankfully dying out.

Vlue collar jobs are easier to put a number one, but a lot of white collar jobs don't, and the USA is rapidly shifting to white collar work.

TulliusCicero6• 7 years ago

Exactly. At best you can ask teammates, but as soon as this becomes an important measure, people are incentivized to back scratch. Plus, people would have radically different standards for productivity based on their own experiences.

iguy3• 7 years ago

Blue collar jobs are easier to put a number on

But still very far from easy. The standard story here involves a shoe factory in a communist country of your choice, who met their quota by making only left-foot size-3 shoes... You can plug any particular hole, but the general problem remains.

a3n• 7 years ago

Within a company, revenue/person, weighted by one or more of:

salary

Number of colleagues performing the same function

Percentage of revenue due to a department

TulliusCicero6• 7 years ago

I think we can have a society that rewards people for productive or otherwise socially valuable contributions while also taking care of the poor and those who can’t work. If people were paid based on performance and we removed the political advantages that certain professional elites have carved out for themselves, we’d be much better off in terms of both inequality and economic growth.

What does this actually mean? Sure, a few professions like doctors have managed to protect their high salaries by constraining supply, but programmers are paid very well in the US and have no such protections.

It's hard to think of many more examples like doctors; lawyers, for example, have definitely not constrained their own supply and it's debatable how lucrative the profession as a whole really is, despite still having somewhat of an 'elite' connotation.

jasonsamoa• 7 years ago

Valuing productivity is already reducing U.S. inequality. Lawyers and doctors can’t prevent people from getting better educated nor can they completely bar technological advances. Sure they can take short-term measures like regulating DNA or law-tech companies, etc. But many people have an inherent desire to get higher quality health and legal help for cheaper. Regulators can’t and won’t ever completely stop the decentralization movement.

caseysoftware2• 7 years ago

I think we can have a society that rewards people for productive or otherwise socially valuable contributions while also taking care of the poor and those who can’t work.

I find "socially valuable contributions" to be a disturbing phrase.

First, that implies there's some sort of authority - legal or otherwise - that determines "socially valuable."

Second, quite often society is wrong in what "it" values or finds popular.

Finally, I use "wrong" from my point of view. Obviously there are many definitions of "wrong" based on your ethics, morality, religion (or lack thereof), values, and preferences.

It sounds like yet another social credit system.. whoever runs it wins.

TeMPOraL3• 7 years ago

First, that implies there's some sort of authority - legal or otherwise - that determines "socially valuable."

Not necessarily. I agree that having values dictated by fiat is a recipe for disaster - such arrangements are bound to get corrupted over time. But on the other end of the spectrum, there is some sense of social value - a sense in which e.g. garbage collectors, firemen and doctors do more socially valuable jobs than athletes and entertainers. A sense that's easy to convey - imagine if suddenly, any one of the former three occupations disappeared; the death toll and suffering would quickly overshadow the largest of wars. Meanwhile, even if both of the latter occupations disappeared, the culture would be a bit poorer, but the society would function just fine.

Unfortunately, it seems that this concept of social value is very hard to robustly define. And if we can't define it, effectively optimizing for it is pretty much out of the question.

lordnacho3• 7 years ago

What you are writing is another version of water/diamonds story. Basically WTF happened that diamonds, which nobody needs, are worth a lot, but water, which everyone needs, costs basically nothing?

The answer was something called marginalism. Well worth reading about, and I can't do justice to it in a few sentences.

Of course marginalism itself requires you to think about value in a certain way, often a very technical way (eg von Neuman-Morgenstern) that makes you forget that there are sometimes contradictions in how we think about value.

xkcd-sucks• 7 years ago

Yes, but even these particular values embody subjective urbanist bias. For example, some towns run very effective volunteer fire departments, where the "payment" seems to be mutual aid and masculine pride. In some towns garbage disposal is mostly burn barrels and composting, which is bad for the environment but is not a service which can fail. And personally, having the privilege of education in biology, I feel like manufacturers of drugs and diagnostic equipment manufacturers are infinitely more valuable than doctors who are merely technicians trained in the use of these tools.

Perhaps the concept of "social value" is only useful in the context of societies small enough so that all participants can agree on values?

michaelt2• 7 years ago

that implies there's some sort of authority - legal or otherwise - that determines "socially valuable."

Well, we already have a system that rewards “valuable” contributions: Money.

Just a lot of people don’t like that system much, as it turns out that system places little value on childcare, elder care and teaching; and huge value on executives who are fired for sexual harassment. Which doesn’t line up very precisely with a lot of people’s personal values.

nugget3• 7 years ago

Great childcare and elder care is very expensive and the people who do these jobs well are, in my experience, quite well compensated relative to other jobs available to them.

ars• 7 years ago

Money certainly has it's drawbacks, but it does not have any kind of central authority that values it. It's the most distributed system there is.

Just a lot of people don’t like that system much

Any other system would be more centralized, and even more open to abuse.

As they say: "Democracy is the worst form of government, except for all the others."

It's the same with money.

places little value on childcare, elder care and teaching

Those things have a completely different problem: Those benefiting from them are not those paying for them.

AndrewKemendo• 7 years ago

In fact it's quite efficient, as the feedback time between when the signal is sent from the consumer to when it is received by the producer is very short compared to political systems.

Revealed preferences also show that what people say they want and what they actually want can be quantified very precisely using money as a proxy. And more generally, the vast majority of consumers show they prefer low prices over all other things, including priced in externalities, bad labor and management practices, unsustainable production etc...

More recently however (~100 years) the advertising and marketing industry has shown that preference hijacking is a real thing, so markets are skewed in this way.

clairity• 7 years ago

yes, money is the mechanism we've defaulted to for measuring value, but economists admit that our economic systems, even capitalism, don't yet (properly) price everything that's valuable to humans (as you note).

a charitable reading of the parent comment would find they're mainly against centralization of authority rather than how to value intangibles or how to engineer fairness into economic systems.

but their first assumption that "'socially valuable contributions' [...] implies there's some sort of authority" is wholly unsupported. capitalism, for example, highly values rational resource distribution, but there is no central authority dictating that distribution.

in any case, the crux of the problem is that with concentration of wealth comes concentration of power. we're all very wary of concentrations of power, for good reason. we need to decouple that pairing for a more stable and balanced society.

joe_the_user2• 7 years ago

First, that implies there's some sort of authority - legal or otherwise - that determines "socially valuable."

Are literally saying we should live a society without either values or institutions that make judgements about values?

Right now, the justice system, the zoning system and the operations of private foundations, and beyond are engaging in leadership that makes value judgements about what is socially valuable. That is how society has worked historically and the US in earlier times made those judgements more explicit.

Point blank denying this is actually calling for even more social change than the article.

caseysoftware2• 7 years ago

Are [you] literally saying we should live a society without either values or institutions that make judgements about values?

No, I did not say that literally or figuratively.

neilwilson3• 7 years ago

"First, that implies there's some sort of authority - legal or otherwise - that determines "socially valuable.""

There is. The opinions of other people in your society - generally expressed via the ballot box in a democracy. All authority is, or should, derive directly from that source of truth.

That's sort of what society is - everybody else. Hence why we have social judgments on what is appropriate - like banning guns and the death penalty - and why we have different countries to encapsulate different views on those social judgments (my country bans the former, yours likely doesn't - but we both take a dim view of marrying off 12 year olds, something other societies are quite relaxed about).

There is no objective truth here. It's all a social creation by a set of people who have chosen to co-operate with each other and call themselves a country.

roenxi2• 7 years ago

It remains very frustrating watching people organise against inequality as the evil of this era. Inequality isn't worth railing against and the focus of all this attention should be on living standards.

If everyone doubles their living standards over 10 years, absolute inequality rises (there is always going to be someone with no wealth/income because they want to live that way, so the absolute gap in wealth increases as the wealthiest member of society gets wealthier).

If the amount of wealth is doubled due to some center of extreme productivity (eg, a Silicon Valley) then that center is going to get preferential access to new wealth. Relative inequality rises.

In both of these scenarios, wealth inequality and living standards can raise in tandem. These are perfectly fine outcomes. Inequality is only interesting as a symptom of deeper issues affecting living standards. Should workers be rewarded according to their productivity? That would be nice, but then we would need to be very careful how we decided who got what job. There are jobs that are rare, highly productive and easy to do where the people holding them would be unfairly rewarded. That would be similar to what we have now. Focusing on median & minimum living standards will get much better results. If those are rising, inequality is not an issue.

huntertwo• 7 years ago

But we can ignore the need to increase productivity enough (which is hard) in order to achieve better standards for all if we just take from those at the tippy top who hoard wealth that could be used to help those in need. We have enough resources/wealth and productivity now to help the rest but we don’t. The issue is that despite the continuous increase in wealth and productivity, the distribution is inequal enough to make sure that the worst never reach the conditions that they deserve as human beings. We can solve the problem with resources that exist now and the unequal distribution is getting worse, we shouldn’t keep kicking the can down the road and not focusing on inequality.

CJefferson2• 7 years ago

Over the past 20 years, the amount of wealth has increased substansally, and almost none of the gain has gone to those at the bottom of society. Inequality is growing every year.

refurb2• 7 years ago

That’s clearly not true, at least in the US. Total compensation has outpaced inflation significantly.

underpand• 7 years ago

Don't the bottom of society all have access to the advancements in technology now e.g. 4g, high speed internet, smart phones, mobile apps, video games

Access to technology is a form of wealth.

eli_gottlieb• 7 years ago

The top 1% has taken most of the growth. The top 10% have received some table-scraps. The bottom 90% have lost income.

smallnamespace• 7 years ago

I'm going to speak directly to your point, which is the claim that only absolute wealth matters, but relative wealth does not.

Relative wealth buys you status, position, and power in society. That status protects you when things go wrong, when the system fails to measure or optimize for the things that you care about, or when the music suddenly stops and you find that you're the one left without a chair.

People deeply care about not being on the bottom of the pecking order, because if you look at history, when anything goes wrong, it's always those at the bottom who get hit the hardest - whether it's famine, war, economic recession, or any of the myriad of instabilities and ills that visit our societies from time to time.

Your contention that we should only care about minimum living standards requires a large amount of faith, not just in the system as it stands today, but that the system won't slowly erode those minimums over time because the poor lack the political and social power to keep their minimums. Without the power to protect your own interests, you're at the literal mercy of those who are better off than you to throw you a bone when you're most vulnerable.

And the best guarantor of social and political power is to be necessary - to be a critical component of the means of production. Automation, outsourcing, and foreign competition have all been chipping away at the competitive position of the median American worker.

A look at the path of inflation-adjusted minimum wage, the evisceration of unions, the opioid crisis, the recent Great Recession, the fact that standard housing, schooling, and medical care is becoming increasingly out of reach of the average wage-earners would suggest that in fact, life is not getting better for those at the bottom, despite the very large increase in absolute wealth since the 1970s.

roenxi2• 7 years ago

Your contention that we should only care about minimum living standards requires a large amount of faith, not just in the system as it stands today, but that the system won't slowly erode those minimums over time because the poor lack the political and social power to keep their minimums. Without the power to protect your own interests, you're at the literal mercy of those who are better off than you to throw you a bone when you're most vulnerable.

Yeah, exactly. The focus should be on stuff like that rather than on wealth/income inequality; I can see we are on the same wavelength here. The natural solution to what you are talking about is to find ways to increase the standards of people who are not well off.

The natural solution to inequality is to disenfranchise the wealthy, which doesn't put food on the table (literally, in the extreme China/Russia/Zimbabwe style cases). It works really badly & everyone important tries to migrate somewhere capitalist when it is tried, which is a contributing factor to why it generally isn't the done thing.

If the focus is on inequality, then realising that a policy is not working will take a long time. If the focus is on living standards, feedback will be quick.

iguy3• 7 years ago

Relative wealth buys you status, position pecking order

Some of this can't really be fixed: the top 10% of status only has room for 10% of the people, by definition. The pecking order, by definition, orders people.

and power in society.

This seems like a better focus. How much extra power you gain by being on top varies a great deal between different societies (including earlier and later versions of any one country). This seems like the relevant variable.

I'm not sure that this inequality of power is very well measured by monetary inequality. There is some correlation, because power can usually be turned into material comfort. But I'm not sure how much higher taxes or whatever remedy like that is proposed for moving money around, will move power around.

the best guarantor of social and political power is to be necessary

I hear what you're saying, roughly about changes in the last 50 years in western countries. But it is also easy to think of large classes of absolutely necessary workers who had very little power, in many places and times. So I'm not sure that that's enough.

nugget3• 7 years ago

As I watch pop culture media I can’t help but think that the desire for relative wealth/status is driven primarily by the desire to attract sexual and romantic partners. I don’t think people in their 20s and 30s are as worried about war and famine as they are about being undesirable, unpopular, rejected, and lonely. At least not in the US. I suppose sex tech and AR/VR tech could advance to the point where some of these fears are obliviated and humans begin to deprogram the desire for status within a social hierarchy. That would be quite a radical evolution.

zozbot234• 7 years ago

Relative wealth buys you status, position, and power in society.

Social cohesion (including political involvement, etc.) buys these things far more effectively than money or any market mechanism. "Relative wealth" is a highly imperfect substitute for high social capital.

snidane• 7 years ago

These statements about 'absolute living standards' are utter crap because they absolutely ignore the law of rent. Simply stated the more people in a given city make the higher the rents, fees and cost of living in general. The more the middle class makes the more is taken away from them. Middle class then keeps only paying fees left and right and witnessing ever increasing poverty around them.

The resulting state of prospering areas filled with poverty has been called the paradox of progress and poverty because the more prosperous area you have the more homelessness and disgusting living conditions you find. Whether it is San Francisco with their smelly homeless neighborhoods, Hong Kong with 4sqft apartments or London during industrial revolution as described by Dickens in Oliver Twist.

Sadly the 'absolute living standard' fairy tale is perpetuated by people on the economical right which makes anyone on the left dismiss anything further they say. (I'm on the right myself, but this crap infuriates me).

The relevant items to study in order to understand this effect 1. Law of Rent by David Ricardo 2. Henry George theorem

itiri83njd2• 7 years ago

Inequality in living standards is exactly what they’re talking about when they talk about inequality.

Perhaps you should familiarize yourself with the nuanced discourse of groups tackling these problems directly at the political level, instead of taking textbook definitions of words and none of the context of the broader social movements behind the effort.

“Wealth” is a measure of relative living standards. You’re talking about the same damn thing these groups do but somehow seem annoyed at your own lack of experience with the political conversation.

DRY can apply to more than code. No reason to reinvent definitions and quantify problems when people have already spent a lifetime discussing these things.

Get off HN and engage directly maybe, rather than getting circle and repetitive.

Humanity built bridges and roads and trade before it had any answers like we do about physics and math. We do not need or rely on the uptight definitions in academia. Language is mushed up as needed.

STEM headed nerds would be wise to forget their academia a bit and their propensity for falling into functional fixedness when it comes to language

fnovd• 7 years ago

"Wealth" is a measure of relative living standards.

No, it is not. This is like saying wealth is a measure of how fancy your car is. Correlated, sure, but calling it a measure is inaccurate at best and at worst an attempt to eschew nuance in favor of ideological conformity.

tchaffee• 7 years ago

There is plenty of evidence showing that huge gaps in equality are highly correlated with increased unhappiness at both ends of the spectrum, along with other negatives like increased crime. Humans are social animals, so a part of living standards will always be around power structures and fairness. You can't just give people at the bottom nice things to erase that.

dmwallin• 7 years ago

From a purely macro-economic capitalistic viewpoint, there's a lot of evidence that a high level of inequality actually depresses economic growth. This means a very strong argument can be made that addressing inequality is likely to increase both relative AND absolute living standards in the long run.

chowells• 7 years ago

The reason people care about inequality is that under capitalism, it's the measure that best tracks with quality of life in the lowest standards of living.

Why is capitalism relevant? Because the driving economic force under capitalism is that the rich (capital owners) want to get richer (earn returns on their capital investments).

Why doesn't a rising tide lift all boats, in practice? Because that doesn't maximize return on capital. The people who financed development and operation of a hospital get the best returns on their investments by pricing things out of reach of those with the least. You don't maximize area of a rectangle under an income distribution curve by making the lowest point of the curve the top of the rectangle.

Perhaps the best way to think of it is "a rising tide lifts all boats, but some of them aren't lifted by as much as the water level has risen." Not quite as snappy, is it? It does get the point across, though. Inequality functions as a measure of how many boats aren't keeping up with the rising water level.

That's why so many people care about it. It's the same thing as your goal, but bundled up as an aggregate and easy to track, instead of involving hundreds of subjective measures. No measure is perfect, of course, but it's a lot harder to game than something like the CPI is.

TulliusCicero6• 7 years ago

There's only so much power in society, and when inequality goes up, the power of the affluent rises, while the power of the poor and working class wanes.

This isn't an issue that can be fixed by a rising tide lifting all boats.

jyounker• 7 years ago

Wealth translates to political influence. If most of the wealth in a society belongs to a few people, those people have outsized influence on the those in power. Conversely, the more distributed wealth is within the society, the more representative the government will be.

In a deep sense wealth distribution is about what form of government you want to have. If you want an oligopoly, then you let the majority if the wealth go to a few people. If you want a government that looks after most of the citizens, then you want a more equitable distribution of wealth.

sagarm• 7 years ago

Economic power is leveraged into political power. This power is used to maintain the status quo in favor of the currently economically powerful through regulatory capture, patronage, and increasingly outright corruption.

We cannot remain an egalitarian democracy if economic power continues to concentrate as it has, regardless of median living standards.

hootbootscoot• 7 years ago

Valuing PEOPLE over productivity, could reduce global inequality.

ozim• 7 years ago

Ok, we just ignore bunch of people who don't give a damn about being productive. Bunch of people who don't give a damn about society. Bunch of people who don't give a damn about anything.

For me biggest problem with this interview is ... not everyone wants to be productive, not everyone wants to have a new car, not everyone wants to have an education.

Guess what, society still has to care about those people and still has to allow them to "not give a damn". Pink colored glasses and saying "job hierarchy is to blame, we can all be productive" is foolish. You cannot force people to work "because inequality". (there were people who tried to do that but where I live we call them nazis and commies)

On the other hand I agree, most important thing is economic mobility, if someone wants a new car and he works for it, he should get it. If someone wants to be Phd in physics and she works hard and has results, no one should prevent that. But we are just water bags with silly emotions so we get together with other bags of water to feel important and to prevent other bags of water from having nice things to feel even more important.

cortesoft2• 7 years ago

My feeling has always been that no matter how you decide to allocate resources, some people are going to be 'better' at winning the game we design than others; maybe they have some skill that is highly valued in the system we set up, or they are lucky, or have connections, or have a higher drive succeed, or whatever else might factor into success.

Instead of trying to figure out those factors and mitigate them so everyone has an equal chance, why don't we just say fuck it, and tax the winners more heavily? We don't know why you were able to win in the system so well, but since you did, you get to contribute a lot more to helping the people who don't succeed in the system. Give a universal basic income, tax the winners to fund it, and call it a day.

TulliusCicero6• 7 years ago

This is essentially what social democracies do, like in the Nordic countries, and it seems to work great at achieving good results in a variety of societal dimensions.

The counter-arguments from fiscal conservatives generally take one of two tacks: either a plainly disingenuous one where they argue that this is somehow only possible in those specific countries (e.g. due to being small and/or relatively homogeneous), or an ideological one where they argue that even if this is beneficial to the society as a whole, they're against it because taxing the winners more is fundamentally wrong, taxation is theft etc.

Well, the Nordic countries don't do the UBI part, but taxing the winners heavily and funding policies that are effectively redistributionist because they treat everyone more or less equally (like public transportation or universal healthcare), yeah they do that for sure.

xyzzyz5• 7 years ago

No, the Nordic countries don't really tax the winners more. The marginal tax rates for top earners there are about the same as in the US. The real difference is that they, along with most other European welfare states, tax the middle class much more than the US does.

either a plainly disingenuous one where they argue that this is somehow only possible in those specific countries (e.g. due to being small and/or relatively homogeneous)

No, of course it is possible in other countries too. For example, people of Swedish ancestry in the US not only do better than average American, but in fact do much better than Swedes in Sweden.

xyzzyz5• 7 years ago

Instead of trying to figure out those factors and mitigate them so everyone has an equal chance, why don't we just say fuck it, and tax the winners more heavily?

Because it reduces the incentive to try to be a winner. The government might get a bigger piece of the pie, but the whole pie will be smaller. More importantly, since we live in regime of economic growth, this kind of policy can have extremely significant impact down the line: over 30 years, the difference between 2% and 3% economic growth is really, really large. Thus, increasing taxes today might result in money to redistribute today, but less money to redistribute 30 years from now.

Most governments fortunately understand it, and so in 1980s and 90s significantly reduced income tax rates in top brackets, and are in no mood for raising them. The tax rates for top earners in Sweden and Norway are about the same as they are in the US. The biggest difference between them and the US in terms of taxation is that Sweden, Norway, and other European welfare states typically tax the middle class much, much more than the US does. The welfare state in Germany, France, Norway or Sweden is not funded primarily by the "winners", it is funded by high taxes on people with incomes rather close to the median.

cortesoft2• 7 years ago

I see people make the argument that it will reduce 'incentives to do well' all the time... but why is that so accepted? The net gain for 'winning' is always going to be positive, so it will always be better to win than to not... most people who work really hard to 'win' have that drive in them to succeed regardless of the actual amount of money they make.

Really, after enough millions, the extra money isn't really changing their life... yet many still are driven to keep 'winning'... it clearly isn't about having the money to buy things at that point, it is about an internal drive. That won't change if we tax at a higher rate.

As for it hurting the economy, what evidence do you have of that? If we use the extra tax dollars to provide UBI, this will cause economic growth as there are more consumers with money to spend. While inflation would be a worry, our modern economy has shown that we have a lot of latent productive capacity (and a lot of goods that don't require more resources to produce, like digital goods) that mitigate the inflation risk.

lordnacho3• 7 years ago

There's a new book out by an econ prof with an Italian sounding name that is very relevant to this. It revisits economic ideas about value and reminds us that the path we're down, completely subjective utility value, is possibly not how we ought to think about it. Of course neither is eg labour theory of value, but it sounds like there's some in-depth discussion of the historical idea of value in there. Totally forgot the lady's name.

stevenwoo2• 7 years ago

Thomas Piketty? https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

lordnacho3• 7 years ago

That came out in 2013, and he's a man.

Mariana Mazzucato

https://www.goodreads.com/book/show/29502362-the-value-of-ev...

lacaua• 7 years ago

The Value of Everything - Mariana Mazzucato

refurb2• 7 years ago

This sounds like a great idea. Take away the ability to freely enter into contracts with other people and come to a mutually agreeable price. Rather, replace that with top down price controls.

Never been done before!

sn41• 7 years ago

I feel valuing humanity, not productivity, could reduce inequality still further. Are disabled ("differently" abled) people to be starved because they are not productive enough?

amw• 7 years ago

I have a huge problem with someone who says, "We should just make compensation merit-based rather than based on accidents of birth", because it refuses to acknowledge that we already live in that system. It's just that the "merit" is stuff that happens to correlate strongly to accidents of birth (like IQ, speaking the "correct" dialect, being well-educated, and so forth).

It turns into, "our system is broken, we need to system _harder_", and is just as much nonsense.

black_13• 7 years ago

Start taxing the very wealthy

Valuing Productivity, Not Profession, Could Reduce U.S. Inequality

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