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.
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:
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.
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.
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.
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.
[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.
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.
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.
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.
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.
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.
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.
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.
If he had commanded a higher fee, would you have gotten a better result, or merely paid more?
In the UK, according to this 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.
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.
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.
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.
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.
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.
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.
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.
