Logic Of The Day: 26.06.2018.
Many of us believe that “we get what we deserve”.
Yet, when we examine how our sense of ‘deservingness’ matches real-world salaries, it turns out that they hardly correlate. People feel, for example, that you should be rewarded if you work hard and make sacrifices. In practice, the hardest-working people (such as dishwashers and agricultural laborers) are often paid the least.
So what is the reason that certain work gets highly compensated, while other work does not? To answer that, we must change our focus from how we think that material rewards should be distributed to how they, in fact, are distributed: how does salary really work?
It turns out that our system doesn’t care much for what people deserve. Wages are high because of little labor supply compared to the demand for this skill by those with the money. Wages are low because of much labor supply compared to the demand for this skill by those with the money.
Market prices reflect willingness to pay by those who can: the amount of compensation one receives for a task depends on how badly those with money want to have it done versus how many people can do it.
Often, people who get paid a lot (like football players, consultants and stock traders), get paid abundantly because they happen to come of age in a time and a place where those with money happen to esteem or to need people with their talents. Because, in other words, their skills are fashionable.
And so, the way in which our economic system distributes financial rewards is not so just as you might have thought it was.
~Maarten Van Doorn (The Startling Truth About “What We Deserve”)