
If People Were Paid by Ability, Inequality Would Plummet - dpflan
https://www.nytimes.com/2019/11/08/upshot/inequality-paying-by-ability.html
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anm89
We already pay people on ability. We pay them on their ability to navigate
life and convince someone to give them a job at a certain price.

That is almost certainly correlated to specific "ability" in the task they are
getting paid to do on average although you could argue to what extent.

The subtext here is "things would be more fair if you let me be dictator and
pay everyone based on my subjective perception of their ability which is more
fair than the collective decisions of a free society."

~~~
anotheryou
Add education, family contacts, financial security, financial support and the
non-linear reward for making it to higher positions.

Because the article includes education, let's have a smart kid with good
education from a poor family: They still won't study abroad in europe; won't
take a year to work on their startup; any startup won't be financed by
friends, family and fools; won't be introduced to the CEO of some company by
his uncle; won't be meeting people on the golf course; they probably even
studied longer and are missing relevant job experience because they had to
finance it themselves.

If they are smart they can make it further up, but the inhibitors add up and
they won't make it all the way.

~~~
javajosh
_the inhibitors add up and they won 't make it all the way_

Yes, but they can make it some part of the way up, putting their kids in
position to go a little higher, and so on. Success is largely social, a multi-
generational task, which is why parents push their kids so hard: college, and
then elite college, is the main step that breaks the cycle. Maybe gen 1 goes
to Stanford and joins a FAANG. It's gen 2 who will have the CEO uncle and a
shot at _founding_ a FAANG.

~~~
brayhite
> Success is ... a multi-generational task

Hence the momentum to address the monstrous differences in opportunity that
have been created after many, many generations of treating particular groups
of Americans as second-class if not outright sub-human.

~~~
javajosh
Presumably once the downward pressure is removed, the oppressed group will
recover, no? I am troubled by the impulse to see society as this simplistic
set of oppressors and oppressed. It seems that almost every group got to play
both roles at one time or another in various combinations.

And it seems weird to _want_ to pay back a debt racked up by an ancestor. Or
not even an ancestor, just an ancestor of someone who looks like your
ancestors. Anyway, I don't think you help oppressed people like that, I think
you help them by going in there and teaching and being positive about the real
opportunities available - to go to college, get a job, earn a living. Live in
a bougie neighborhood, maybe.

~~~
BuckRogers
It's not just racial. It's largely class based, which can be tied to race.
It's less oppressors vs oppressed, but more ownership class vs working class.
That's why schemes that involve ownership stakes for the average person work
out so well. People need to have some skin in the game (society,
economically), to feel like a part of it and that they matter. Cut them out
due to ownership-class greed and you have a recipe for disaster. Not just
human suffering, which is bad enough to purposefully enable on your fellow
man, but revolution. Class struggle is the mainstay in societies throughout
the ages.

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wpietri
I think there are two classes of things that run under the term "ability". One
is creating value for others. E.g., a chef who turns raw ingredients into
appealing dishes for other people to eat. The other is to extract cash from
existing value creation. Good entrepreneurs of course do this for the value
they create. But there are a lot of people who get disproportionate gains from
skimming value that others create.

For example, consider the case of Simmons, where a company good at creating
value was bought by private equity people who were very skilled at extracting
cash:
[https://www.nytimes.com/2009/10/05/business/economy/05simmon...](https://www.nytimes.com/2009/10/05/business/economy/05simmons.html)

I see that some people have a "might makes right" view of this. But I think we
over-reward cash extraction, and so under-reward value creation. If we shifted
that, we'd get more value creation, and a fair bit less misery.

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travisoneill1
The article does a poor job quantifying "ability."

> Most low-wage workers are underpaid relative to their measured intelligence
> and personality traits, and many of the highest-paid professionals —
> including doctors, lawyers and financial managers — are overpaid according
> to the same metrics.

This is a ridiculous comparison because low wage workers are not being paid
for their intelligence. Why would anybody ever think that skill at 2 different
jobs should be measured by the same criteria?

~~~
natecavanaugh
Yeah, this article is pretty representative of a general trend to say alot
without actually saying anything intelligible.

Should Michael Jordan have been paid equally as high as a baseball player as
he was when he was on the Bulls? Same person, same intelligence, same
measurable traits.

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imgabe
People are paid by ability: their ability to get people to pay them. In terms
of getting paid, that is the only ability that matters.

It's kind of weird to see "ability" as some monolithic trait that people
should get paid for. Ability to do what? Maybe you have a great ability to
spin plates on your nose. If nobody wants you do that, you're not going to get
paid for it.

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jl6
In law and finance (and probably everywhere) there are winner-takes-all
scenarios where employing someone whose skill is 10% greater than your
“opponents” gives far more than a 10% advantage, and hence the marginally more
skilled people can command disproportionately higher salaries.

~~~
pjc50
That's relatively tame: see football, where Lionel Messi earns about $100m.
Something similar applies to musicians. This kind of "tournament wages" causes
a lot of really high income inequality situations.

CEOs argue that their wages are the result of a similar tournament. The
example of WeWork suggests that it may in some cases just be a better position
for looting money from the investors and staff.

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dolon
I don't accept the assumption that "ability" equals "education", "IQ", "age",
and "personality traits".

1) I've seen too many well-educated co-workers who wont work 2) I've seen too
many people with high IQs who can't lead 3) I wish I could report an HR
violation for the inclusion of "age" on this list 4) The use of personality
traits seemed like an interesting start but left me wanting

For me: it was a swing and a miss

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eanzenberg
“If people were paid by their ability to play basketball, inequality would
plummet.”

“If people were paid by their height, inequality would plummet.”

Hmm...

~~~
rinchik
What about my ability to fit an insane amount of M&Ms in my mouth? I strongly
feel that I should be generously compensated for this ability. It's not fair
otherwise!

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rinchik
Why would I pay someone for their ability? Ability by itself is nothing.
Ability doesn't generate value, action does.

You might be a strong, mighty genius, but if your ass is "chilling" on the
couch 24/7, your exact worth is 0(ZERO)$

~~~
0xcde4c3db
The measure of ability used by the author includes factors like experience,
conscientiousness, and enthusiasm, so it's probably not ranking couch potatoes
very highly.

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zdw
Seems to align well with this study which found that luck and other factors
had much more to do with success that deviated from the norm than moderately
increased intelligence or other factors: [https://hbr.org/2015/11/are-
successful-ceos-just-lucky](https://hbr.org/2015/11/are-successful-ceos-just-
lucky)

------
dadarepublic
I had to switch browsers to get more free articles. An interesting read for
sure highlighting the equality/inequality impact of the local/regional
(S-corp,LLC,etc) vs the national/multi-national (C-corp).

I don't think the aim of the author is to minimize the impact of the later,
but to bring attention to how local/regional business policy and the growth of
this sector, can have a real adverse impact on income inequality.

I like that he also balances some (not all) concerns between the two poles of
US politics: >Beyond a commitment to equality, possible remedies include
expanding access to high-quality public services like early-childhood
education and community health services for needy families. But the evidence
also suggests the need for expanding access to markets and defending their
integrity. Both the right and left right would have to make compromises; it
would seem to be a fair trade, with big gains for all.

~~~
travisoneill1
If you're using Firefox you can just click on the lock in the url bar and go
to Clear Cookies.

~~~
Shorel
Or just open it in another container.

~~~
zozbot234
Screw that, I'm not going to install Docker just to read NyTimes articles.

~~~
Shorel
Firefox multi-account containers.

Absolutely nothing to do with Docker.

Edit: is docker holding such a strong monopoly over the word container?
Dangerous precedent.

~~~
dadarepublic
These replies are fantastic! Thanks for the laugh :)

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VladimirIvanov
It would also dramatically change society as currently valuable social
networks that do not improve ability would be abandoned in favor of groups
that improve ability. The MBA degree would become irrelevant overnight as it's
a very expensive networking and screening process.

~~~
extra88
You know, people do actually learn things at school and a place to practice
skills that, in the real world, there's little opportunity to find and/or
require taking on significant risk.

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notus
No, inequality would skyrocket. The most able people are those who are usually
most privileged because they've been groomed their entire lives to go off and
be useful.

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moltar
How do you measure ability objectively?

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dccoolgai
Perhaps, but someone's latent ability to do anything does not provide anything
of value to anyone whatsoever. Conversely someone of "modest ability" who
takes a risk to actually provide things people want is being, in a way, much
less selfish.

A man digging a hole in the desert that no one wants, regardless of how much
"ability" or "effort" went into the excavation is inherently selfish, but
almost every economic system _besides_ capitalism would see that man rewarded
handsomely.

...and I'm not trying to be glib about inequality, which I think is the most
serious problem of our time. I'm just suspicious that anything we used to try
and replace capitalism with would result in a lot of "holes in the desert".
Read about the surplus of baby shoes in the Soviet Union...

There is something I think of as the "paradox of capitalism" that describes
how capitalism is _simultaneously_ the best system for determining prices and
the worst form of government.

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djohnston
I can't read because of paywall, but I tend to agree. Top earners usually
aren't particularly talented, and I tend to think that the impact of chief
executives is also drastically overestimated on average. That being said, good
luck finding reliable metrics for ability. Those often skew with income, and
many industries, especially software, reward highly skilled personnel by
moving them OUT of their strength and into leadership positions. Kind of
ranty, not sure I have a point.

~~~
remotecool
Do you have any proof of this?

Why would a company pay a CEO millions if they have no talent? If that were
the case, they would just find a random person and pay them minimum wage.

This sounds like the reasoning of a worker that thinks managers don't actually
do anything all day, when the reality is much different.

Paying by ability is foolish. I know many people that have the ability to get
a good job, but choose to smoke copious amounts of weed and instead sit on the
couch all day. It would be like valuing companies based on the idea only.

~~~
wpietri
CEO compensation has risen 940% since 1978:
[https://woww.epi.org/publication/ceo-
compensation-2018/](https://woww.epi.org/publication/ceo-compensation-2018/)

Over the same period, ordinary worker compensation has risen 12%. Is your
theory that CEOs have gotten 940% better in the last 40 years?

I'd say no, not really. (Indeed, I think there's reasonable evidence they've
gotten worse.) They've just gotten better at extracting cash. And if you're
wondering why companies would pay way more, you should think about the fact
that "companies" don't set CEO salaries. Company boards do. And who's on
boards? CEOs and other high fliers. ., I also think there's a positive
feedback loop here. One part is on the payment side. When companies are
looking for a new CEO, it's like somebody shopping for a rare and important
purchase, like a new car or like surgery. If they get it right, everybody's
happy; if not, it could be a disaster. So there's a strong incentive to pay an
above-average amount, in hopes of getting an above-average outcome.

The other part is on the company structure side. An expensive CEO is expected
to Do Things, to be dramatically in charge. That means creating company
structures and a company culture that are very CEO-focused. Then the next time
the board hires a CEO, they have an even stronger need for someone who is
extraordinary. So the next CEO gets an even bigger slice of money that
previously would have gone to investors and the people who do the actual work.

As an alternative, consider that a lot of tech's biggest moneymakers are run
differently. Instead of concentrating power at the top, power is more
distributed. The average worker is not seen as a replaceable cog, but valuable
talent. CEOs are not turning over every few years, but stay around for
decades. And consequently, the pay inequality is lower.

