# What is the relationship between income and productivity? **URL:** \ **Category:** Great Debates\ **Created:** [April 26, 2015, 1:55am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547 "2015-04-26T01:55:50Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [May 6, 2015, 1:24am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/101 "2015-05-06T01:24:16Z")
> [@LinusK](#): > > Actually I’d be surprised if the best surgeon is also the highest paid. > > Not that there’s any way to know. No one, to my knowledge, has come up with an objective way of rating surgeons, based on ability. Probably because it would be difficult or impossible. This was an example _you_ brought up to try to support your point. So now your point rests on speculating that “I would be surprised if”? However, in practice of course there are ways to “rate” heart surgeons. When I needed surgery for my tachycardia condition, my referring doctor told me my surgeon was both one of the most experienced in the country, as well as correcting more than 95% of cases on the first attempt (for this kind of surgery, the main kind of complication is that they cannot isolate the nerve they need to ablate, and have to abort). Were there a free market for surgeons in the UK, probably my surgeon would be able to command a higher fee. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [May 6, 2015, 1:56am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/102 "2015-05-06T01:56:50Z")
Sigh. It’s frustrating to post the correct answer and watch other Dopers continue on, blithely promulgating ignorance, while ignoring my post. :eek: But I will graciously try again. 😃 There is a correlation between income and produced value; I don’t think even **LinusK** denies that. But does an average citizen who makes $100,000 profit with a lucky purchase of AAPL “create” that much extra value for society? And what of a bank robber or embezzler with a million-dollar income? If you argue that the fact of non-prosecutability suddenly turns any morally fraudulent gain into 100% social “value” I think you need to meditate on shades of gray. What is the correlation coefficient between income and produced social value? Is it as low as 0.2 or as high as 0.8? I don’t know; there’s far too many variables and ambiguities to even guess. One thing we can be certain of: the coefficient is not 1.0 exactly. :smack: > [@](#): > > Profit is a measure of the value a person or company creates for society. Transactions between a willing seller and a willing buyer are done at a market price. The amount of profit that the market price generates for the seller, is the amount of value that is created for society, by the buyer. This absolutist dictum goes so far _far_ beyond being merely wrong as to be preposterous and laughable ignorance. Maybe someone is “learning” economics via the worst Hyperlibertarian rants on YouTube. I’ve removed the attribution from the quote hoping to avoid a Moderator warning, and because others in the thread are making a similar error. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [May 6, 2015, 2:52am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/103 "2015-05-06T02:52:47Z")
> [@septimus](#): > > Sigh. It’s frustrating to post the correct answer and watch other Dopers continue on, blithely promulgating ignorance, while ignoring my post. Just FTR, count me among those that considers your answer obviously true. _Of course_ there is a correlation between productivity and income, and _of course_ it’s not a perfect relationship and won’t be true in all cases. For one thing, humans have incomplete information. Maybe I can sack my middle manager and the team would tick along just fine, but I don’t realize that. Or I make use of general indicators such as experience to work out how productive someone is likely to be, when such indicators are of course not perfect. However, **LinusK** ’s position is not your position: he asserted that income and productivity are _rarely_ correlated. And even if I agreed with his position, if he’s defending it using flawed arguments, I’m going to point out those flaws. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [May 6, 2015, 3:57am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/104 "2015-05-06T03:57:31Z")
The advantage of being a radical centrist is that I can argue vehemntly with both sides. 😃 … But in today’s Hyper-amerika, with a huge extreme right-wing drowning out the voices of reason, and the extreme left-wing comprising just one or two hippies in the corner rolling their eyes, it’s easy to see where one’s argumentation energy is best spent. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 6, 2015, 4:20pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/105 "2015-05-06T16:20:35Z")
> [@Shodan](#): > > You are confusing two concepts - work productivity, and return on investment. Both produce income, but they are not the same. > > Regards, > Shodan Sorry I missed this before. I’m not confusing productivity with return on investment. I’m asserting that return on investment is not a form of productivity. In other words, making a profit is not the same as producing something. To take one example, Bill Gates’ ROI is pretty respectably. His ROI on money from selling MS stock is something like 10%. Ironically, it’s higher on the MS stock he’s retained.) But he doesn’t manage any of that money himself. He has another guy (actually, a whole company) that does that for him. In general he doesn’t keep track of what that guy does. He doesn’t often even know what he owns or doesn’t own. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [May 6, 2015, 4:30pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/106 "2015-05-06T16:30:09Z")
[QUOTE=LinusK] To take one example, Bill Gates’ ROI is pretty respectably. His ROI on money from selling MS stock is something like 10%. Ironically, it’s higher on the MS stock he’s retained.) But he doesn’t manage any of that money himself. He has another guy (actually, a whole company) that does that for him. In general he doesn’t keep track of what that guy does. He doesn’t often even know what he owns or doesn’t own. [/QUOTE] So, to put this in more immediate terms, you are saying that I work and that this is ‘productive’…correct? So, the money I earn is part of that production…right? If I invest that money into stocks, bonds and mutual funds (which I do), the money I realize as a return isn’t productive because I don’t manage it myself (I don’t…I’m a network engineer, not a rocket surgeon or investment guru) and don’t really watch each penny or even dime and what it’s doing at any given moment? So…that money is, what? What does it mean that the money isn’t ‘the same as producing something’? I mean, my investments produce more money for me. They produce something for the investment broker and firm I use as well (puts food on their table and Mercedes in their garages). Seems to produce quite a bit, to me, but maybe I’m missing whatever point you are trying to make here. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [May 6, 2015, 4:43pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/107 "2015-05-06T16:43:30Z")
> [@LinusK](#): > > Sorry I missed this before. > > I’m not confusing productivity with return on investment. > > I’m asserting that return on investment is not a form of productivity. > > In other words, making a profit is not the same as producing something. Never mind - nothing ever seems to get thru. Regards, Shodan ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 6, 2015, 7:10pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/108 "2015-05-06T19:10:18Z")
> [@puddleglum](#): > > I don’t play poker but my guess is that it is more fun to play against someone who is good than someone who is bad, so your surmise about the inverse relationship between entertainment and compensation may not be true. I guess you would have to ask a poker player. I’ve played a lot of poker. It’s more fun to play against bad players, than good ones. If you ever see a poker game, look at the face of a person who just won a big pot, and then look at the face of the one who lost. You’ll see who’s having fun. > [@](#): > > Traders provide liquidity. If there were no traders then a stocks would not be a liquid assets and the stock market would not exist. If the stock market did not exist then capital would be misallocated, resulting in enormous costs to the economy. That is basic Coase theorem. Traders who convince others to trade their stocks and probably not as good as those who advise buy and hold but they are better at convincing their clients they are better. That goes back to the expected value versus actual value divergence. What do you mean by “expected value vs actual value divergence”? It sounds like you’re saying good traders (and I think you mean brokers or financial advisers, not traders) make more money because they convince their clients to make more trades, even though their clients would be better off not doing it. If so, what is good about good financial advisers, or brokers, other than they’re good at making money? > [@](#): > > The owner can be said to contribute to production because he owns the land. The government does not contribute to production by getting out of the way because they have no ownership. I know the owner owns the land, but other than that, what is he doing to contribute to production? > [@](#): > > There is a almost perfect connection between the rent of the land and the productivity. Land that can produce a large amount of crops should rent for more than land than that produces a small amount of crops. This ensures every piece of land is being used for its maximum productivity. If land rented for the same amount regardless of productivity then when an alternative use came up, there is no way to assure the most productive land stayed farmland. Prices are information, a higher price means more value will be created. OK, so there’s nothing about charging rent that changes or affects production. In fact, the relationship is entirely the other way around: the more the farmer produces, the more likely it is the owner will raise the rent. And we know the owner will rent to whoever pays the most. But other than raising the rent, what is he doing to increase production? > [@](#): > > You seem to be implying that Barclay’s Bank bribed the top management of Lehman Brothers to accept a smaller price for Lehman’s American assets than they could have received elsewhere. This is the first I am hearing about that. If it is true they breached their fiduciary duty and Lehman’s shareholders should sue to recover their lost investments. I would be interested in where you received this information. That is what I’m implying, and the shareholders did sue. I read about it in this [book](http://www.amazon.com/gp/product/0812983637/ref=pd_lpo_sbs_dp_ss_2?pf_rd_p=1944687782&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=1578564654&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=124XF0TK048CT586GHF2). ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 6, 2015, 7:42pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/109 "2015-05-06T19:42:45Z")
> [@puddleglum](#): > > Income is not related to productivity but to the expectation of productivity. Baseball players are not payed by the home run but by how many home runs the team expects them to hit when they sign their contracts. If a team is bad at predicting how many home runs their players will hit they lose games and money. Same as in any other business. Companies pay their employees what their expected productivity is. Companies that are bad at predicting employee productivity go out of business. Since the future is unclear to even the brightest many people are going to be wrong about their expectation of productivity. This is unavoidable. Lehman Brothers paid top executives $700 million in the year before it went bankrupt. By that time there were plenty of signs the company was going down the tubes. Some people think, in fact, the executives paid themselves so much exactly because they knew the company was imploding: they knew it was the last chance to cash in, and they took it. In other words, it wasn’t that they were bad at predicting what what was about to happen; it’s because they _good_. > [@](#): > > Capitalism and the market are evil because people are evil. If everyone had my values no one would own luxury or sports cars, jewelry, alcohol, or artisan coffee. Yet because people want these things, the market provides them. In order to get a moral market you need a moral people. I’m not sure how much I agree with you. My point is not that markets are evil. It’s that poorly organized or regulated markets are evil; and more importantly, that too often the people who are in charge the rules of the market are also the ones who benefit from bad rules. I agree you need good people. But you also need more than that. You need a system that rewards people who are good and penalizes people who are bad. Otherwise it doesn’t mattter if you have lots of good people. The bad people will still be the ones who make it to the top. And once they’re there, they will naturally make decisions that benefit themselves, regardless of the damage they do to others. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [May 6, 2015, 8:06pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/110 "2015-05-06T20:06:34Z")
> [@LinusK](#): > > I’ve played a lot of poker. It’s more fun to play against bad players, than good ones. > > If you ever see a poker game, look at the face of a person who just won a big pot, and then look at the face of the one who lost. You’ll see who’s having fun. > > What do you mean by “expected value vs actual value divergence”? > > It sounds like you’re saying good traders (and I think you mean brokers or financial advisers, not traders) make more money because they convince their clients to make more trades, even though their clients would be better off not doing it. > > If so, what is good about good financial advisers, or brokers, other than they’re good at making money? > > I know the owner owns the land, but other than that, what is he doing to contribute to production? > > OK, so there’s nothing about charging rent that changes or affects production. In fact, the relationship is entirely the other way around: the more the farmer produces, the more likely it is the owner will raise the rent. And we know the owner will rent to whoever pays the most. But other than raising the rent, what is he doing to increase production? > > That is what I’m implying, and the shareholders did sue. > > I read about it in this [book](http://www.amazon.com/gp/product/0812983637/ref=pd_lpo_sbs_dp_ss_2?pf_rd_p=1944687782&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=1578564654&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=124XF0TK048CT586GHF2). My only experience with poker was reading the autobiography of Amarillo Slim, who said instead of playing against suckers it was more fun to play good players and make them suckers. Generally, traders who are active make more money than buy and hold traders but all the gains and a little more are eaten up by the expenses of trading. So from a client perspective it would be better to buy and hold. However, in order for the market to be efficient, some people have to believe it is not. Thus so while active traders are hurting their clients a little, overall they provide a service to the market as a whole. The only thing the owner contributes to farming is land, but land is what most of farming is about. The high price of productive land does not cause the land to be productive but it does ensure that the land is used for farming. Say I have two plots of land and want to rent one to a farmer and build a house on the other one. If one plot is great farmland and the other one is not then it would be wasteful for me to build a house on the great farmland and rent the bad farmland out. The difference in price assures I build the house on the poor farmland and the great farmland is used for its highest purpose. Coase theorem in action. The Lehman brothers suit against Barclays was thrown out and no wilfull misconduct was found. I have found the author of that books to not know much about finance and to tend to conspiracy theories. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [May 6, 2015, 8:27pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/111 "2015-05-06T20:27:54Z")
> [@LinusK](#): > > Lehman Brothers paid top executives $700 million in the year before it went bankrupt. By that time there were plenty of signs the company was going down the tubes. Some people think, in fact, the executives paid themselves so much exactly because they knew the company was imploding: they knew it was the last chance to cash in, and they took it. > > In other words, it wasn’t that they were bad at predicting what what was about to happen; it’s because they _good_. > > I’m not sure how much I agree with you. > > My point is not that markets are evil. It’s that poorly organized or regulated markets are evil; and more importantly, that too often the people who are in charge the rules of the market are also the ones who benefit from bad rules. > > I agree you need good people. But you also need more than that. You need a system that rewards people who are good and penalizes people who are bad. > > Otherwise it doesn’t mattter if you have lots of good people. The bad people will still be the ones who make it to the top. And once they’re there, they will naturally make decisions that benefit themselves, regardless of the damage they do to others. About half of what they paid senior executives was in the form of stock which became worthless when they went bankrupt. That does not indicate to me they knew Lehman Brothers would fail. More likely an excess of optimism, which is the same thing that caused the financial crisis. The freer a market is, the more likely it is to be good. As you say those in charge try to tilt markets in their favor. Thus the fewer people in charge the better the market. For example, the salaries of people in finance are huge. Some of this is because efficient capital allocation is vital to the economy. Some of it is because whenever there is a Wall Street scandal, the rules get written so they are more complicated and the market for investment banking is less free. Thus the Enron scandal lead to Sarbanes Oxley, which was a huge windfall for the investment banks at the cost to the rest of the economy. The financial crisis led to Dodd Frank which has institutionalized to big to fail. This is not a coincidence. Attempts to change the free market will almost always be for the benefit of the rich and powerful as those are the ones who have the ear of the regulators. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 6, 2015, 9:05pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/112 "2015-05-06T21:05:33Z")
> [@puddleglum](#): > > Why are the lives of the rich more valuable than the poor? Because they produce more. If you are a poor farmer in Malawi with a heart condition you are producing almost nothing. If you are someone in the US or other western country and have a heart condition you are probably producing alot. Thus a heart surgeon in the west is much more productive than one in Malawi. > > This is just in terms of monetary production, not in terms of the intrinsic value of human life. But monetary value is what is being asked about. I’m not asking about monetary production. In fact, that’s the exact point I’m trying to make: that having a large income is not the same as being productive. Being productive has to do with creating goods and services. It has nothing to do with making money. Some people make money by simply transferring it from one pocket to another (from someone else’s pocket to their own). Other people make make money by destroying value: wasting other people’s time, for example, or with frivolous lawsuits, or crooked bookkeeping, or trading fraudulent securitized mortgages. But if they’re not producing anything, they’re not productive, no matter how much money they make. But saving lives - even poor people’s lives, is productive. Even if you make little or nothing doing it. Feeding people - even if it’s only a few people - is productive. Ironically, many of the patients of heart surgeons in the US are not productive. They are recipients of Medicare, Medicaid, and Social Security. But they’re not actually producing anything at all - not even as much as a farmer in Malawi. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 7, 2015, 12:16am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/113 "2015-05-07T00:16:24Z")
> [@RickJay](#): > > Who says it is? > > You are confusing some things. What you’re claiming is that an interior designer is valued more than a schoolteacher. That’s not actually true - interior design doesn’t pay all that well - but let’s pretend it is. > > Let me ask you this; how much money do you think people spend on interior designers, and how much do they spend on teachers? The answer is teachers, by a mile, not even close. There are about 3.3 million teachers in the United States, and the total salary and benefits paid out to them as a group is north of **$200 billion**. To give you some idea of perspective, that is more money than has been paid to all the interior designers currently working in the United States for their entire careers, combined. Even if interior designers made $150K a year (they actually make a little bit less then the average teacher) it would still be the case that Americans would be paying about thirty times more for people to educate their children than they would be for people to decorate their homes and offices. If you decided to raise all teacher’s salaries to $150,000 a year you’d bankrupt entire states. > > Or to compare welders to baseball players, same thing. There are several thousand professional baseball players in the USA and Canada, about 500-600 of whom make almost all the money. There are at least 400,000 welders in the USA and Canada (incidentally, that represents a significant shortage; industry is badly short of welders) whose combined salary is in excess of $20 billion annually, which is more than all the players in Major League Baseball make in five years. So it appears we value welding more than baseball. > > The difference is simply that some skills are rare. While we do not actually value MLB over the welding industry, the nature of the industry is that the skills to play effective major league baseball are unusual and hard to find. The number of living human beings who can play effective major league baseball on a regular, ongoing basis is in the hundreds; the number of people who can fit and weld effectively is in the hundreds of thousands, maybe the millions. So the money we as a society pay to have professional baseball is funneled into fewer hands than the money we pay to have metal things joined through welding. I think what you’re saying is that pay is determined by supply and demand.\* But saying that income is driven by supply and demand is different from saying that it’s driven by productivity. Suppose there’s only one person who can position Donald Trump’s hair exactly how he wants it. He might get paid a lot for that service. That doesn’t mean what he’s doing is especially productive. Donald’s hair is not really that big a deal in the big scale of things. But suppose there’s lots of people who could be could be good firefighters. A good firefighter might get paid less, but that doesn’t mean he’s less productive. If he stops a fire that would otherwise kill someone, or destroy millions of dollars of property, his productivity is irrelevant to his pay. \*I don’t think that’s mainly true. It’s sometimes true, but not always. What mainly drives income is power and wealth, not supply and demand. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 7, 2015, 12:26am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/114 "2015-05-07T00:26:25Z")
> [@John\_Mace](#): > > Excellent analysis, but you don’t even need that. What is the point of comparing a very high paid interior designer with the average teacher? If you compare the average interior designer with the average teacher, I’d be surprised if interior designer wins. Forget about comparing average teachers with average interior designers. Suppose you compared the highest paid teacher with the highest paid designer. (I doubt the highest paid teacher is the best teacher, or the highest paid designer is the best designer, but let’s assume they are, put it aside for the moment.) The highest paid teacher makes what? $80,000? (You can give me a different number if you want.) The highest paid designer makes probably millions. The difference is not that designing homes for rich people is more productive than teaching children: it’s that the designer works for very rich people, and the teacher works for the government. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 7, 2015, 2:10am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/115 "2015-05-07T02:10:14Z")
> [@Mijin](#): > > This was an example _you_ brought up to try to support your point. > So now your point rests on speculating that “I would be surprised if”? > > However, in practice of course there are ways to “rate” heart surgeons. When I needed surgery for my tachycardia condition, my referring doctor told me my surgeon was both one of the most experienced in the country, as well as correcting more than 95% of cases on the first attempt (for this kind of surgery, the main kind of complication is that they cannot isolate the nerve they need to ablate, and have to abort). > Were there a free market for surgeons in the UK, probably my surgeon would be able to command a higher fee. If he had commanded a higher fee, would you have gotten a better result, or merely paid more? In the UK, according to [this](http://www.nhscareers.nhs.uk/explore-by-career/doctors/pay-for-doctors/) website, GPs make between £55,412 and £83,617. Specialty doctors make between £37,176 and £69,325. A pound is worth about a buck and a half, so that’s $60k to $135k or so. In the US, doctors make between $140K to almost $300,000, depending on the kind of doctor. The average is $188k. So the lowest paid US doctors make more than the highest paid UK doctors. Yet outcomes in the UK don’t appear any worse than in the US. In fact, on average, people in the UK live longer. I asked you this question before, but you didn’t answer it: if productivity is closely tied to pay, does that mean US doctors are twice as good as UK doctors? Would the outcome from your UK surgery have been twice as good, if you’d been treated in the US? Or would it just have cost twice as much? Oh wait a minute. You pay anything to see a doctor in the UK, do you? So you got a successful treatment, from what you considered a good doctor, for free. And you’re advocating the US model? Did you know, here in the US, even a minor hospital visit is likely to result in thousands of dollars of bills - and that’s if you have insurance? And not everybody in the US has insurance (although Obamacare has increased the number). If you don’t have insurance, the bills will be many times higher. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 7, 2015, 7:00am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/116 "2015-05-07T07:00:04Z")
> [@septimus](#): > > Sigh. It’s frustrating to post the correct answer and watch other Dopers continue on, blithely promulgating ignorance, while ignoring my post. :eek: But I will graciously try again. 😃 > > There is a correlation between income and produced value; I don’t think even **LinusK** denies that. I don’t. > [@](#): > > But does an average citizen who makes $100,000 profit with a lucky purchase of AAPL “create” that much extra value for society? No. > [@](#): > > And what of a bank robber or embezzler with a million-dollar income? If you argue that the fact of non-prosecutability suddenly turns any morally fraudulent gain into 100% social “value” I think you need to meditate on shades of gray. Vast amounts of fraud caused the 08-09 financial collapse, but no one was prosecuted. No one went to jail. One reason was the wealth and power of the people who perpetrated it. Another is the prosecutors came from the same class as the perpetrators: they went to the same schools, lived in the same neighborhoods, worked for the same companies. Some of them came from Wall Street. Others will go there, after they leave their current jobs. A more pernicious reason is a kind of moral rot: the idea that the rich are better than other people. That their wealth entitles them to a different kind of justice. Even today people refer to Lehman’s as a “victim” of the financial panic, rather than one of the causes. Cerei Lannister said recently: “You and I know how the world works. Too often the wicked are the wealthiest, beyond the reach of justice.” Jesus said the same thing, though more sincerely, two thousand years ago. > [@](#): > > What is the correlation coefficient between income and produced social value? Is it as low as 0.2 or as high as 0.8? I don’t know; there’s far too many variables and ambiguities to even guess. One thing we can be certain of: the coefficient is not 1.0 exactly. :smack: I don’t know either. I do know the wealth of the wealthiest has nothing to do with their productivity. It comes from what they own. The Walton heirs, for example, are worth about $150 billion. That’s $25,000, per minute, from dividends alone. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [May 7, 2015, 8:22am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/117 "2015-05-07T08:22:12Z")
> [@LinusK](#): > > If he had commanded a higher fee, would you have gotten a better result, or merely paid more? Whether I get a good deal as a consumer is an entirely separate issue from your suggestion that income and productivity are rarely correlated. If the best surgeons get the best pay, that runs counter to your point. > [@](#): > > So the lowest paid US doctors make more than the highest paid UK doctors. Yet outcomes in the UK don’t appear any worse than in the US. In fact, on average, people in the UK live longer. > > I asked you this question before, but you didn’t answer it: if productivity is closely tied to pay, does that mean US doctors are twice as good as UK doctors? The answer is no, and furthermore we would not expect the salaries to be the same worldwide. _Of course_ factors such as how wealthy the country is, how costly it is to provide that service (land, resource costs etc) are going to be important. Examples like this are meaningless; I think you should try to find an example _within_ a country. > [@](#): > > So you got a successful treatment, from what you considered a good doctor, for free. And you’re advocating the US model? No. Frankly, I’m not aware of anyone outside of the US advocating the US model. In fairness though, it should be noted that UHC does not always mean cheaper doctors and streamlined healthcare. Though I’m a big believer in “free at the point of use” that doesn’t mean I think all prices and performance should be hidden, and everything should be paid a flat rate. The situation is more complex than free market or not free market, and probably takes us too far afield. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 7, 2015, 5:10pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/118 "2015-05-07T17:10:18Z")
> [@Mijin](#): > > Just FTR, count me among those that considers your answer obviously true. _Of course_ there is a correlation between productivity and income, and _of course_ it’s not a perfect relationship and won’t be true in all cases. > For one thing, humans have incomplete information. Maybe I can sack my middle manager and the team would tick along just fine, but I don’t realize that. Or I make use of general indicators such as experience to work out how productive someone is likely to be, when such indicators are of course not perfect. > > However, **LinusK** ’s position is not your position: he asserted that income and productivity are _rarely_ correlated. And even if I agreed with his position, if he’s defending it using flawed arguments, I’m going to point out those flaws. Yes. That’s my position: productivity and income are poorly correlated. There are certainly some jobs where productivity and income are closely connected (I think I mentioned fruit pickers earlier, as one). Any job where the product can easily be quantified and qualified is likely to belong to the first group. There are other jobs where the correlation is low (doctors and teachers might be examples). There are many jobs where the productivity of the worker is difficult or impossible to measure. More importantly, considering the economy as a whole, the correlation is very low. Specifically, most of everything that’s produced is made by people who are working, middle, or upper-middle class. The few people who are very rich, on the other hand, and whose incomes are orders of magnitude higher, produce, in comparison, almost nothing. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 7, 2015, 6:21pm UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/119 "2015-05-07T18:21:35Z")
> [@LinusK](#): > > But saving lives - even poor people’s lives, is productive. Why? Please show your work. > [@LinusK](#): > > Feeding people - even if it’s only a few people - is productive. Why? Please show your work. If a farmer owns land, buys seeds, then grows food, is he/she being productive? What if he/she hires someone to pick that food, who is more productive? The food as to be shipped, is the truck driver more or less productive than the farmer? The truck needs gas, so are the people in the oil industry productive? To pay for that gas the driver uses a credit card, are the people at Visa and Master Card being productive? Please rank the above mentioned individuals in order of productivity. > [@LinusK](#): > > There are many jobs where the productivity of the worker is difficult or impossible to measure. Yet, here you are trying to measure the productivity of people, and then compare that to their income. > [@LinusK](#): > > The few people who are very rich, on the other hand, and whose incomes are orders of magnitude higher, produce, in comparison, almost nothing. But you just said that there are jobs where the productivity is difficult to measure. I don’t mean this to sound insulting but as far as I can tell you are REALLY bad at measuring productivity, and even worse at defining it. Could it be that you are using your bias to define rich people as unproductive? > [@LinusK](#): > > But if they’re not producing anything, they’re not productive, no matter > how much money they make. What I’d like to know is how you got to be the person that defines who is and is not productive. A poker player isn’t, but a firefighter is? What about a poker player that is also a volunteer firefighter? You don’t seem to realize that your entire thesis here relies on you defining what counts as productivity, and then summarily dismissing those you don’t like as unproductive, and those you do like as productive. And it’s no secret you hate those that are rich and those that own things. It’s all just one big circular fallacy. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [May 8, 2015, 1:43am UTC](https://boards.straightdope.com/t/what-is-the-relationship-between-income-and-productivity/718547/120 "2015-05-08T01:43:56Z")
> [@emacknight](#): > > Why? Please show your work. > > Why? Please show your work. > > If a farmer owns land, buys seeds, then grows food, is he/she being productive? What if he/she hires someone to pick that food, who is more productive? The food as to be shipped, is the truck driver more or less productive than the farmer? The truck needs gas, so are the people in the oil industry productive? To pay for that gas the driver uses a credit card, are the people at Visa and Master Card being productive? Please rank the above mentioned individuals in order of productivity. > > Yet, here you are trying to measure the productivity of people, and then compare that to their income. > > But you just said that there are jobs where the productivity is difficult to measure. I don’t mean this to sound insulting but as far as I can tell you are REALLY bad at measuring productivity, and even worse at defining it. Could it be that you are using your bias to define rich people as unproductive? > > What I’d like to know is how you got to be the person that defines who is and is not productive. A poker player isn’t, but a firefighter is? What about a poker player that is also a volunteer firefighter? > > You don’t seem to realize that your entire thesis here relies on you defining what counts as productivity, and then summarily dismissing those you don’t like as unproductive, and those you do like as productive. And it’s no secret you hate those that are rich and those that own things. It’s all just one big circular fallacy. I’m not the person who gets to define “productivity”. I’m just using the definition from the dictionary. I’ve quoted it a couple of times, but the simple version is: the production, or the rate of production, of goods and services. Imagine two people, identical, both sitting on a park bench, doing nothing. We agree, right, that they’re producing nothing? (Well, technically they’re producing carbon dioxide, but let’s try to think in broad strokes.) I walk up to the one on the left, and give him some property. It can be anything you like… a share of Microsoft, $100, or a winning lottery ticket. But the important thing is they continue sitting there, doing nothing. The guy on the left is now an Owner. By virtue of this transformation, is he now productive? If so, what is he producing? No one has said - and I certainly haven’t said - that a person can’t be both an owner, and be productive. If the guy from the park bench gets up and becomes a volunteer fireman, then he’s doing something productive. Not - and this is important - because he has property, but because he’s fighting fires. The ownership of the winning lottery ticket didn’t make him productive. It was becoming a fireman. Importantly, the fact that he’s a _ **volunteer** _ fireman - meaning he doesn’t get paid - has no bearing on the fact that he’s productive. (Income /= productivity.) Similarly, the fact he has a winning lottery ticket in his pocket does not make him productive. The various people you mentioned are all being productive. (Remember, being productive means producing goods and services.) Growing food, transporting it, refining gas, and facilitating transactions are all services. Sometimes, as I said before, it’s hard to quantify productivity. But that’s not unusual. For example, it’s hard to quantify the literary qualities of a book. The fact that it’s hard to quantify the merits of a book doesn’t mean all books have the same literary merit, or that none of them have literary merit, or whatever it is you’re trying to say. Some books are still better than others. For example, we could have an interesting conversation about whether “The Road” is better than “Infinite Jest.” But we couldn’t have that conversation about whether “The Road” is better than a trashy, formulaic romance novel. Because while it’s sometimes difficult to quantify the relative merits of books, other times the difference is so obvious it hits you in the face. Similarly, we couldn’t have an argument about whether “The Road” - or even some trashy romance novel - was better than a book that was never written. Assuming some people get some pleasure from reading bad novels, even a bad novel is better than one that doesn’t exist. To bring this back around to productivity, I don’t know whether driving a truck or growing food is more productive. But I do know that both are more productive than doing nothing. Even if you’re doing nothing, and you’re rich. Similarly, Jonas Salk invented the polio vaccine, which eliminated polio. Jonas Salk enormously productive. He was more productive than the farmer or the driver. And interestingly, he didn’t patent the vaccine, so he made no money off it. In fact, had he patented it, he would have been less productive, because it would have driven up the price, and at least some parents couldn’t have afforded it, and more children would have died. So despite the fact I can’t quantify it, I can still say that Salk was more productive than either the farmer or the driver. I can also say that his productivity had nothing to do with how much money he made. I’ve said before and I’ll say it again: I don’t hate rich people. In fact, I’d very much like to join their ranks. But if I did, and decided to do nothing, I wouldn’t whine because someone pointed out I was unproductive. One last thing: you should really consider watching Born Rich. (Just google it: it’s on YouTube.) Lest you think it’s some anti-capitalist propaganda, it was made by one of the heirs of the Johnson & Johnson fortune. 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