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High disdain, from sense of injur'd merit

By Owen Paine on Wednesday August 13, 2008 01:58 PM

I occasionally read Doctor Mark Thoma's "Economist's View" blog, which recently contained a nice-guy smart-market advocation by the Doctor himself. The gist of Thoma's post was that its a possible win-win if we repair free-range markets -- build in some regs and refs and optimize the inter firm scrap for profits. That way we get more efficiency and more equality. Thoma ends by saying that creating smart competitive markets "helps to ensure that labor is rewarded according to its productivity."

What's not to like, you say? Well, "Ninja Zombie," one of Mark's commenters, offered this confident piece of under-a-toadstool Ubermensch nonsense:

I'm not sure this is necessarily a good idea... The inequality in productivity between people is huge, often much larger than the inequality in wages.

One example:

I spent a month recently building an OCR system, which replaced some data entry people. My productivity is about 216x that of the data entry guys: a system I built in one month does the work that 18 people do in a year, and 18*12=216. My wages are only about 7x the wage of a data entry guy.

This cubicle-farm unappreciated arrogance nicely blocks out the basic contradiction among our job classers -- a contradiction lovingly cultivated by the tower trolls, ever since Reagan bobbleheaded his way to the atomic-button end of Penn Ave. At its core, this Aspergerish gimp's vision is nothing but the Enlightenment notion of merit pay -- i.e. pay according to worth of work, whether by effort or talent achieved. Obviously, here it's talent that seems to be the implict self-preening focus.

It all fits together so well, given the vast and persistent attempt in the media to misdirect any discussion of our fast and furously polarizing household incomes gap. The official story is that the basis for the gap is changing -- away from property income versus work income, to growing differences in the rewards of different levels of skill, talent, effort, training, etc.

Add to this an alleged iron law of technical progress -- a "long-term innovational tilt" away from creating more skill-less jobs and toward ever greater demand for more-skill jobs. That is, innovation itself supposedly requires ever more skill-intensive employments, and our global path forward implies magnified differences between various jobblers in the "market value" of their hours of hired-out toil.

Hmm. You got a problem with that, Paine?

I do. No such iron law exists. In fact, the net is probably the other way. And even if there were such a tilt, it won't govern job compensation.

Let's use Herr Zombie's anecdote. His reasoning displays not only a lack of empathetics, but an even smaller dose of actual economics. Rule One in a market system exposed to even the most imperfect of competitive winds: The reward to the inventor of any productivity enhancement is almost never in line with a full compensation for her innovation's incremental welfare impact on its ultimate beneficiaries, its users. All master Zombie's innovation could do is lower the relative product price commensurate with the total reduced labor costs -- and even that's only if the inventor actually owns the rights to his innovation. In this present corporation-dominated regime, where even brains like Zombie's here are hired out to the tower trolls, what the marketplace -- smart or dumb as it may be -- ultimately rewards is the owning corporation, through said corporation's various rent traps and other market bending methods. That is, whatever rents the corpration is able to retain in the form of higher margins and isn't forced to piss away in lower prices, goes to the corporation's owners and top managers, not -- not -- not! to the jobbled geeks, not to hired pus-heads like undead office toon Ninja here.

What's Ninja worth -- ultimately? He's worth what his replacement fresh out of programming school over at Torpedo Tech in Bangalore might cost his corporation to hire.

Comments (10)

plato's cave:

Thanks for spotting this looming cultural shift toward a merit-pay world. Instead of regarding the shocking income-gap as a sign of the mal-functioning of our economy, the merit-pay approach takes it as a nudge toward a more efficient concept of labor. This will either become an important ideological battleground, or it is already a slick detour around what should have been a shock encounter with harsh reality.


i botched this post badly

my point

the burgeoning income share
of the property owning
pedator class
-- correctly measured --
is the real culprit in our growingincome disparity
not relative demand and supply shifts
among various skill levels and types

not the bottom 80 vs top 20 gap
in rates of income growth
between job holders

but the bottom 95 vs top 5 % gap
in net worth growth rates

among wealth holders its hugely skewed toward the top
and positively
among the top one percenters


exhibit a :

"All master Zombie's innovation could do is lower the relative product price commensurate with the total reduced labor costs -- and even that's only if the inventor actually owns the rights to his innovation"

should read

in the long un z's innovation
would lower the relative price blah blah blah....in the short run if he owned
the IP rights to his innovation
he might get a patent and earn a royalty stream
or keep it secret and make super profits
again if he owns it can exclude others from it
and no one else figures it out etc etc

but regardles

ninja's "work product"
is not owned by him
it's owned by his corporate employer
so ....even if
he produced it
the gains go else where
and he's only worth what he'd cost to eplace
and in a global where his sort get produced cheap in south asia...


even if the corporation captures all
the savings as earnings increment
ninja would need to come up with
one of these 18 man year savers
every month
to even bgin to justify his
216 x the pay
of the data imput clerk jobs he torched

then again if he discounted
that same net earnings stream
by the corporations market p/e ratio
he could put in for a one time bonus
equal to some part of the present value ....

ahh hell
come to me ith that
and id have him "replaced" just as soon
as HR had a paper trail to bust him with

Peter Ward:

One way or or another elites endeavor to plunder the rest of us--economic theory, if anything, mainly serves to provide a rational for this plunder and give what really amounts to theft the appearance of a law of physics. In reality, what change over time are not "society's values" so much as the rationalizing philosophies--the concrete reality of a few stinking rich and a broad suffering has been more or less a constant since the dawn of civilization.

...I spent a month recently building an OCR system,

Most times this would be a codeword for integrating or implementing as opposed to custom build designing (coding from scratch). I find it incredibly hard to believe that a solution was developed and implemented in one month from scratch without the use of pre-existing tools.

In my line of work, I see this attitude all the time, and really prevalent from people only marginally more productive then the data-entry people they're displacing.

People use this attitude as a way of whistling through the dark woods, knowing that but for a change in circumstances, there go they.

plato's cave:

Good point, Peter. However, there are objective differences (real world consequences for workers) between the different philosophies/ideologies elites use to justify their privileged position. Noting a shift in ideology (though apparently this wasnt the point of OP's post) can be a clue to noting a change in real world practices toward labor.

Louis Proyect recently reviewed "How the Univeristy Works" by Marc Bousquet, in which he shows how TQM theory has been adopted by American universities as an ideological guise for shifting from tenured to un-tenured faculty, a policy that pretty much consigns all current PhD hopefuls to a hard-scrabble life without benefits, tenure, or dignity.


"One way or or another elites endeavor to plunder the rest of us"

in the case
of a corporation for profit mediated production system
language can be made much plainer
and the object of "the plunder" game
stated more direct-ly precise-ly
and operational-ly

the elite managers of a corporation
who's sole mission is profit
have obviously
only one
sure fire ultimate task

the exploitation of the corporation's
job force

max the gap between
any one employee's notional "value added"
and her real compensation

any rent seeking success
any "earnings " beyond those extracted
from the "intrnal "
production process itself
are best treated
as ...a one time wind fall


angry one :

i suspect as much

btw theory in keeping with the
next best notion
society should reward the innovator
by the amount
the time stamp on the innovation
may hve brought forward in time
the moment of effective utilization
of the innovation

not so silly in algebraic form
in keeping with the formalism fetish
of the dismal science

what's that worth ????
gets thorny
if we can't put a value
on the innovation itself
because its not a proces improvement
---like with ginja geek here ---
but instead a whole new end product
with use novelty


here's a good speimen of the state of the science as "verbalized"
by the second giant from gary

cousin it
joe stiglitz


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