
“Information asymmetry” cuts both ways - luu
http://yosefk.com/blog/information-asymmetry-cuts-both-ways.html
======
whybroke
The thesis of the article makes two assumptions: 1\. that pay differences are
due to merit and 2\. employees do not want a merit based system so if they
discuss salaries they will intentionally dismantle that system

Both of these assumptions are in error. It is the job of every business man
(and likely the instinct of every human) to buy value as cheaply as possible.
Thus an employer will tend offer the lowest amount possible regardless of the
employees productivity. We know this happens in practice because salary
negotiation is at least as critical as technical skill.

Additional evidence is that changing jobs results in much higher wage increase
than staying put, if wages were connected to skill this would not happen.
Likewise fiscal desperation of the employee results in accepting lower wages
but if salary is merit based, why were those lower wages were offered in the
first place. And of course we know that race, gender, marital status, religion
and age were or still are factors in salary.

The second assumption is also thoroughly untrue. Typical human behavior is to
want compensation proportional to productivity and to live in a system that
allows this. The contrary has words like "dishonest", "cheating", "theft" and
"unfair" associated with it and is almost universally socially deprecated. It
is exactly why grinding in video games are is popular, it taps this very
fundamental desire. Which desire is exactly not being met by work so players
seek simulated work after hours.

~~~
asgard1024
While I agree with most of your post, I am not sure this:

> Typical human behavior is to want compensation proportional to productivity
> and to live in a system that allows this.

is entirely true. I think humans want "fairness" and in many ways it's
different than raw productivity. Two main problems I see:

1\. Other things than people (usually called capital) have productivity on its
own (unless you believe in labor theory of value, which leads to logical
contradictions). If you are paid for your productivity, you are not paid for
the excess, things produced by the capital. For example, a new automation is
invented which makes you more productive, but you now do less work. How should
the surplus be distributed? In fact, I am of opinion that if I would be paid
for my actual productivity (my contribution to it as a human being in contrast
to contribution by machines and know-how) in modern society, I would be
homeless next month. Yet, here I have an above average salary (maybe even
global 1%).

2\. Totally meritocratic system (say efficient free market, if such thing
exists), even if we deal with the above problem, lacks one important things
that humans have - forgiveness. Sometimes disasters happen or people are just
plain stupid. Without forgiveness or outside help, a single disaster like that
can affect you for life. So I don't think "meritocracy based on productivity
only" is a desirable system and I am sure I am not alone.

~~~
whybroke
That is very true. Indeed we know fairness is an innate value for us and all
primates [1]

Likewise "meritocracy" is a very imprecise word depending a lot on what you
want to maximize and so, if not focusing on net benefit to humanity, could
produce horrendous outcomes. Blindly maximizing wealth creation could be such
a mistake but given how much good prosperity usually does for people, it looks
like a good starting point.

But I believe the article and I are referring to fairness among employees
rather than employee vs employer (which is of course also interesting).
Specifically, employees comparing wages would create quite appropriate outrage
between employees when some individuals receive more for less work. And this
regardless of how much or little of the company's produce goes to wages (a
separate issue)

[1]
[http://www.nature.com/nature/journal/v425/n6955/abs/nature01...](http://www.nature.com/nature/journal/v425/n6955/abs/nature01963.html)
or tldr;
[https://www.youtube.com/watch?v=lKhAd0Tyny0](https://www.youtube.com/watch?v=lKhAd0Tyny0)

------
lkrubner
This is untrue:

"All very true, except that with a share of Google, they're all the same and
you arguably know what you're buying..."

We've had many, many corporate scandals over the years: Enron, WorldCom, Tyco,
etc. We know that corporations can lie. The lies are of 2 kinds:

1.) deliberate falsehoods

2.) lies of omission

We also know there are many facts that can not be known about a corporation.
What is the real value of the software? What is the real value of a patent?
Does the software contain a serious bug? Is the patent open to legal
challenge?

Regarding the danger that Citibank got into, and the near extinction it faced
during the financial crisis of 2008, Robert Rubin (who had been director and
senior counselor of Citi, during the bubble years) said: "It is not easy to
know how much risk is building up on the trading floor." Here you have one of
the top people of the company claiming he had no idea what condition the
corporation was in. Was he lying? If he was lying, then how can you trust any
information you have about the corporation? If he wasn't lying, how can you
trust that you know anything about a corporation, when the people who run the
corporation have no idea?

So how can you ever really know what a share in a corporation is worth? It's
at least as much of a mystery as the question of "How much is a computer
programmer worth?"

~~~
IanCal
> So how can you ever really know what a share in a corporation is worth? It's
> at least as much of a mystery as the question of "How much is a computer
> programmer worth?"

I think the point is that one share in google is worth exactly the same amount
as another, and this fact is easily verifiable by the buyer and the seller.

You won't buy a share and then find out that it's actually only worth half of
someone else's share, or for some reason costs you money rather than earning
you dividends while everyone else is raking it in.

~~~
fragmede
> one share in google is worth exactly the same amount as another

Pedantically, they're not. There are 3 public classes of Google stock,
publicly traded GOOG and GOOGL, as well as Class B stock, which doesn't have a
public ticker symbol.

[http://economix.blogs.nytimes.com/2014/04/02/the-many-
classe...](http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-
google-stock/?_r=0)

~~~
IanCal
That is very true, thanks for the clarification.

If I said "one share of GOOG" would that uniquely identify one class of the
stock?

------
jonathanwallace
I'm not sure I follow the author's argument. However this is a definite
fallacy:

"Cause goodness knows that the easiest way to raise one's compensation in the
knowledge economy is to simply space out more while getting paid the same."

There's an opportunity cost to being stuck in a chair "pretending" to work.
And my compensation does not go up if I'm "pretending" to work.

Instead, I choose to work at places that don't value my time by my presence
but instead value my results.

~~~
darkmighty
He meant all workers are concerned to some degree in demonstrating their job
as invaluable to managers/employers -- even (or specially) if they don't
actually believe it is, or if they don't believe to be on top of the knowledge
of skill ladder.

~~~
jonathanwallace
Focusing on creating perception of value vs. actual value sounds way too much
like job insecurity for me.

------
formulaT
They key point here is that workers are not identical. If you are getting paid
less than your colleagues, that could be because you got a raw deal, but it
could also be because you aren't as good as them.

Even within a job title, there are good reasons why pay should not be the
same. For example, the job ladder represents both authority and technical
ability, and these sometimes need to be decoupled. A very talented individual
might have technical ability that deserves high pay, but not the industry
experience to hold a position of leadership or authority. So they get hired at
a lower job title, but with higher pay than their peers.

~~~
_yosefk
My main point in the article was that employers cannot measure productivity
and hence often get a raw deal themselves.

------
mark-r
Funny, these comments play right into Patrick's latest venture. He's trying to
quantify programming ability, or at least get a usable ranking. See
[http://www.kalzumeus.com/2015/03/09/announcing-
starfighter/](http://www.kalzumeus.com/2015/03/09/announcing-starfighter/)

------
MCRed
This article is very insightful. One of the interesting things about jobs, and
a source of frustration and the reason I'm much more interested in being a
founder than an employee-- is that so many companies are run by people who
don't know what they're doing.

I've seen this from 20 year old startup "founders" who don't know their
industry, to 50 year old billionaires who have lots of business experience,
and thus opinions, but no wisdom about running a software company.

Even with our industry being around for 40 years or so, there are very few
companies where programmers are managed by programmers who understand
programming. Too much of the time its "Business" people.

So, not only are you going to be incentivized by how well you're paid vs the
problems you're given, you're also going to be affected by the quality of the
environment ("open plan office? sigh, I can't wait til I have been here long
enough to quit.") to the amount of interference and straight up hassle
(sometimes even harassment) you are getting from management.

Let me give you an example: Last year I worked in an office run by an ex-navy
Seal. He cussed, all the time. His motivational technique was to threaten
violence- literally. He was a bundle of barely contained psychotic violence
and you were just waiting for something to set him off. I half expected he was
going to come in some day and shoot up the office. I don't know what his
problem was but he was not right in the head. Needless to say, he knew nothing
about programming, software, or even business- his entire career had been in
the military. Certainly every 5 minutes he wanted to have a meeting about
something.

He thought it was funny to bring in bongo drums and a cowbell... and if we
were too quiet, he would bang on them. For awhile he was showing up at 4pm and
trying to get us drunk. I guess that's how they bond in the military.

I am not making this up.

That company is now on their third team-- they've had %400 turnover in
employees over the past 2 years, with the average employee lasting less than 6
months. And they still haven't figured out what the problem is.

There's no way to know when getting hired that you're going into an office
like that-- and while that's an extreme, over the past 30 years, most of the
places I've worked have been dysfunctional to one degree or another.

So, you're negotiating your salary, you're also having to figure out how much
combat pay premium you need to tack on.

And if you're in the business of hiring people, give them meaningful equity
and a real vesting schedule if you want them to stay at your startup-- then
show them you have the skills to turn the company into a success. You can
start by producing a healthy environment for work. (and I don't mean giving me
a year supply of Pabst Blue Ribbon.)

~~~
poof131
As a veteran, I’m sorry to hear about your experience. I’ve a lot of respect
for the people I’ve met from the Special Operations community, some incredibly
talented people, but it sounds like one found himself leading a team he
shouldn’t have been leading.

I agree that programmers should be managed by programmers. You need to learn
to fly jets to lead a fighter squadron and you need to be an operator to lead
a SEAL platoon, it’s a mistake to think programming is so different.

The article made a great point that even when you do know how to program it’s
incredibly difficult to manage other programmers. My current director, who is
a programmer, is only concerned with commit counts and bug counts. He doesn’t
like to interact with other people, maybe have a one-on-one once a year.
Unfortunately, this mentality is driving quality into the ground as senior
engineers grab easy bugs, don’t bother testing their work, and just hit the
metrics with many working as little as possible. The irony being we’re a hyper
growth unicorn.

Creating things and leading people are tough. Doing both is even tougher.
Agreed that starting your own thing is the way to go. That’s pretty tough too
though.

And drinks with coworkers is definitely prevalent in the military, but I think
it is also pretty common everywhere. It’s good to relax outside the work
environment, but that’s obviously tough to do with threats of violence. Again,
apologies, that is entirely unprofessional behavior and tarnishes the
reputation of other former military members so I’m sad to hear it.

~~~
MCRed
Sure, I'm not generalizing to all military people, one of the people on the
team was also ex military, and I've worked with ex military in the past. This
was just a bad hiring decision.

IT's sad that you have to start your own thing-- I would have switched over to
people management quite awhile ago if I could. I effectively did it here
because nobody respected or listened to the official boss. So I had to lead
without authority... I'm totally ready for that role.

The problem is, in my experience, companies are looking for MBAs or business
people to lead engineers, not engineers. Too often anyway.

No problem with drinks, we did like to drink outside of work. Just did't like
him interrupting us in our work screaming at us to start drinking. (And the
"don't be a pussy drink more" attitude was not compatible with the culture.)

------
michaelochurch
Much of what keeps programmer salaries from going up as fast as they should is
that managers know that, even if you're a genuine "10x" or even 100x engineer,
you don't _stay_ a 10x-er unless you get interesting projects, which tend to
be rare in most companies. Since they control the allocation of interesting
work, there's often an implied either/or: you can get interesting work and a
cost-of-living bump _or_ you can get a 20% raise.

For some examples: (1) frequent job hops can improve your salary, but they
reduce your ability to stick with a long project and become good at anything;
(2) if you're looking to make the case for a move into management, you do
better to take on an ugly-but-necessary project where you'll delegate most of
the work, than to stick with the technically interesting stuff and get a
reputation of someone who only wants to work on the "fun" stuff; (3) Haskell
engineers make about 40% less than Java engineers at the same level of
engineering ability. (The difference in medians is only a few percent, but the
median Haskell engineer is equivalent to ~95th percentile in Java.) That's
because Java engineers can set up multilateral bidding wars every 2 years and
get huge pay bumps; in Haskell, that's nearly impossible because it's a small
community.

Personally, I tend to go for interesting work. That's because I think, in the
long term, it'll play out better for me to have spent my 30s well than to have
ratcheted up my salary but not really know anything.

If we want to see engineers paid what they're worth, though, we've got to get
political enough that we can actually run companies (let's be honest; 98+
percent of VC-funded startups are run by Guys With Connections Who Therefore
Call Shots, not engineers) and take control of the work allocation processes
as well.

~~~
eropple
_> frequent job hops can improve your salary, but they reduce your ability to
stick with a long project and become good at anything_

This is a major reason why I went into platform engineering and devops.
Projects are very accelerated (usually because you end up starting too late,
relative to the best time to change a dev team, its culture, and its
practices) and you really can learn quickly and get better at a rapid pace. It
helps, too, that the state of the art is changing quickly enough that
effectively nobody is an expert at everything.

 _> Java engineers can set up multilateral bidding wars every 2 years and get
huge pay bumps_

...and this is the other reason. Best of both worlds, in my view.

~~~
michaelochurch
_This is a major reason why I went into platform engineering and devops._

I can see the appeal of that. It also makes you less exposed to changes in
window dressing and to political changes.

 _..and this is the other reason._

Sure, but it's also bad for the world that "market signals" are encouraging
engineers to use bad languages for reasons having nothing to do with
productivity. We know the real reason why there's so much Java in the software
world: middle managers want headcount (they'd rather manage a team of 50
mediocrities than 5 elite engineers doing just enough work) and Java is such a
low-productivity language that it forces teams to be big if anything is to be
accomplished.

If an engineer who'd be nothing special in the Haskell community can take home
$400k per year slinging Java, then what is a half-decent Haskell engineer
(who, most likely, makes a lot less than $400k) _really_ worth? $700k? $3
million?

~~~
mrchicity
Is Haskell really that much more productive for a team? What are some large-
scale projects written in it? It may make recruiting harder and take new
joiners longer to get up to speed. You may not have easy access to as many
libraries. A lot of "PL enthusiast" types would rather show off how clever
they are than solve real problems. There are many valid concerns a manager
could have that aren't headcount-related.

~~~
eru
Actually, it makes recruiting easier. The ratio of good people eager for
Haskell to Haskell jobs looks pretty favourable to employers.

You are right about some of the other concerns.

