The Myth of Being Paid What You’re Worth

23 Things They Don't Tell You About CapitalismI’ve written before about 23 Things They Don’t Tell You About Capitalism. But last night, I came upon a lecture that Chang gave in support of the book at the London School of Economics. I’ve embedded it below. If you haven’t read the book, you should at least listen to the lecture.

In the lecture, he talked about something I quite remember. He made the point that it was a myth that people were paid what they are worth. You hear this kind of nonsense a lot from the likes of Ayn Rand and Friedrich Hayek and really any free market absolutist. The idea is that the market is never wrong. If you are paid $20 million per year, it is because that’s what the economy — more or less God the way these people see it — has decided what you are worth.

And really, since the late 1970s, I’ve heard this nonsense from a lot of people. It is very much a matter of faith. Because there is absolutely no evidence for it. And there is plenty of evidence that it just isn’t true. But Ha-Joon Chang provided a great thought experiment regarding two bus drivers: one in Sweden and the other in India. Bus drivers in Sweden make 50 times as much as bus drivers in India. Is the Swedish bus driver really worth 50 times as much as the Indian?

Well, I know what the free market absolutists would say: yes! You see, the Swedish bus driver is transporting people who pay more money. Therefore, this bus driver is worth the greater amount. But this is a very abstract view of the world. It is something that the free marketeers don’t much want to discuss: value is meaningless. In this way of thinking, the bus driver is not primarily driving but rather conning people to pay him for transporting them.

As a matter of reality, it is almost certainly the case that Indian bus drivers are better because they have worse and overcrowded equipment and drive on worse roads. If you transported the Indian bus driver to Sweden, they would have no trouble doing the job. Moving the Swedish bus driver to India would not work out nearly as well.

It got me thinking. Ha-Joon Chang doesn’t speak English all that well. He has a very bad accent. But his writing is great — certainly as good as mine. Now he also happens to be one of the best economists in the world. So I don’t have to compete with him for writing jobs. But if he can write English so well, there must be plenty of other people from South Korea who can write English as well as I can and who would be willing to write 2,000 word articles about XML for less than I charge. And that’s one country — one that doesn’t even have a history with the English language; imagine what it must be like in India!

By American standards, I’m still pretty poor. But even still, I get by very nicely. Compared to people in other countries, I’m rich. And that’s an accident of birth — just as surely as it is for Donald Trump. Not that I’m comparing myself to Donald Trump. We are quite different. First, I’m actually good at my job (even if over-paid) and Trump is not. Second, I do understand my privilege (even if I’d likely still be very surprised just how much my standard of living would go down in a truly fair world).

There are other things to think about, of course. Most measures of health and happiness are based upon local inequality, not global or absolute inequality. But I think it does us all good to remember just how talented the human family is, and that we should feel good about being part of that. We are all special in our way. But that’s not something that we Americans need to be reminded about.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

13 thoughts on “The Myth of Being Paid What You’re Worth

  1. Weirdly I first heard about this theory during a discussion on minimum wage from the opposite end. The person opposed increases because he didn’t think that the average Joe receiving the increase was going to be worth the increased amount otherwise he would already be paid that.

    There will always be someone who is willing to be paid next to nothing or nothing just for the opportunity to be working. However that does not mean we should just accept poor treatment of humans merely because some of them are willing to do anything to get work.

    • That’s exactly the argument. If it gets down to it, people will work for their keep. That means that people will accept slavery if the economic conditions demand it. And that is exactly what the libertarian “utopia” would become. I’m still waiting for an answer from a libertarian as to how an orphan manages to be anything but a serf in a world where all the land is owned. Why would anyone pay that orphan more than their keep? They have no answers because they never think that deep.

      • Nope, thinking about the logical conclusion of their ideas makes them uncomfortable because then their rosy view of reality crashes down. So they get mad at you and start yelling.

        • I don’t generally find the libertarians getting mad. It is more that they can’t hear you. They are convinced that if you just understand their logic, you will believe. Most of them really are caught in a fantasy land.

            • Well, I am a shorter-than-most-of-them male. But I don’t usually talk to libertarians. I engage with them online. There aren’t enough of them to run into them often. I actually talk to conservatives.

              • I run into them at public events so I have had them explode at me before. I am not short, for a woman, but I am smaller than they are. For some reason they think it is okay to use size to try to get me to shut up.

                • As someone recently commented here, there is a fair overlap between libertarians and MRAs. So it might be a lot of misogyny too.

                  • Yep-there is a lot of overlap between the two camps. Which is why most of them are anti-choice unless it is their decision.

  2. Chang is so fabulous. And he’s terrible at English. I’m terrible at every language besides English. You really have to be skilled at picking up languages to get them. Some of us do, most of us don’t.

    • I know from studying Spanish that I could be like Chang: I could become a good writer of it. But I am not good verbally, so I would always have a terrible Spanish accent. Of course, Samuel Beckett was teased greatly by his French friends for his apparently terrible accent. Yet he was a great French writer. Very different skills.

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