Suppose everyone in society seeks to pick the highest paying job, or highest income generating opportunity as choice of career. Clearly, and for obvious reasons this is impossible. Impossibility is evident in the following.
Suppose football were the highest paying job. The entire United States would be divided into several leagues that run say three months each. During the first quarter of any year, a fourth of the population would play football, the rest three-fourths would watch, and on and on through the rest of the year. Everyone playing the same position would make the same amount of money. The only difference in pay by position would be bonuses and profit sharing for winning games, meaning there is incentive for winning and development of skills.
Immediately, however, we run into a conundrum, which is, having spent only US$25,000 watching football, and having made say, US$600,000, in absence of any other services, what exactly to do with all that US$575,000? If everyone is a football player, no other good is produced in society. In actual fact, we run into a pre-existing conundrum, which is, how exactly does society end up with nice football stadiums and broadcasting of football games if everyone is a football player? If people are not able to build their own houses and do not produce their own food, how exactly do people end up with nice houses in which to live, food to eat, and television sets for watching of football games?
The preceding illustration and the conundrum implied show it never can be possible or practical for all of society to do exactly the same things, make exactly the same amount of monies. Practicality of non-reasonableness of everyone doing exactly the same thing is evident in the fact that we all are gifted in different ways. Some are gifted artistically, some musically, some mathematically, some philosophically, some scientifically, some in some ‘humanistic I love to take care of others’ sense (Nurses, Doctors etc.), and on and on it goes.
Given life consists of needs for different things, all of which require different specializations for their actualization, the first thing we must conclude is that all labor, all services required in society have dignity, as such deserve a living wage. If a service is needed for well functioning of society, whether it be provided by the government or by private means, labor required for provision of said service must provide a living wage. Wages for labor never must be allowed to compromise dignity of life. If there exists a service for which society is unwilling to pay a living wage, there is need for building of machines for facilitation of such services.
The first law of labor specialization is, if the service is needed, and requires human labor for it’s actualization and completion, labor needed must attract a living wage. Needed services never should be provided at expense of human dignity.
Given different careers pay different amounts of fixed compensation, and given there always will be people who seek to choose careers on basis of fixed compensation, we arrive at demand for a mechanism via which people end up doing what they most have ability to do. We also further conclude that while fixed compensation can signal ability, it is not a signal of lifetime income.
The dichotomy between fixed compensation as signal of ability and signal of lifetime income is as follows. Suppose a plumber gets a job, makes say US$36,000 a year. Suppose a woman graduates from Harvard Business School with an MBA, starts off at US$80,000. If the plumber gets to own his own business, expands his business, he could end up making US$300,000 a year, can end up with same earning potential as the woman with the MBA. We have then that while level of difficulty of an MBA type career attracts higher fixed compensation, a plumber who can satisfy a large number of people with his or her services can, over his or her lifetime end up with larger income than an MBA. The choice of plumbing as career does not impose a limit on how much money a plumber can make over his or her lifetime. Ability then is not equivalent to lifetime income.
Regardless of differences in fixed components of income, higher ability and higher fixed component of income does not deterministically determine aggregate lifetime income. Everyone has capacity for leveraging their ability towards generation of higher income.
While it does not operate perfectly anywhere in the world, sorting of people into careers by ability is essence of formal Western Education.
When a kid drops out of High School, and it is not based on affordability, he or she makes a statement that future paths likely do not reside in context of white collar opportunities.
If the kid seeks white collar opportunities, there would be need for resumption of schooling, there would be need for resumption of education. If that kid who drops out of High School engages in a blue collar career that is needed in society and works full time, he or she deserves remuneration that qualifies as a living wage.
If a guy acquires an MBA from Harvard, works on Wall Street, probably starts off at what, US$80,000 to US$120,000? A PhD from Harvard who ends up on Wall Street probably starts off at between US$200,0000 to US$250,000. We see then that the fixed component of the compensation increases with level of difficulty of educational attainments. If the PhD is a model tinkerer, and the MBA is a trader, by the fifth year of their respective careers, the MBA may be raking in US$20 million a year in aggregate compensation (fixed pay, bonuses, person-specific profit sharing, company-wide profit sharing), the PhD US$2 million. Again, ability does not deterministically determine lifetime income.
While formal Western education enables estimates of ability, it simultaneously does not create any caps on lifetime income. This sort of system for assessing of ability is credible, fair, and equitable.
Inequity in society is not function of formal Western education, is function of problems of opportunity within work spaces of society.
How then are remuneration to be graded? Ideally remuneration would be graded on basis of level of difficulty, level of ability and skills required for provision of services. Outside of recreational endeavors, such as sports, movies, and music, and as the preceding illustrates, remuneration tends to conform with gradation on basis of level of difficulty.
True there are departures, but most of the departures occur in context of pay of educators, this because education is by it’s very nature a social good, with outcome all professors incur a ‘societal discount’ in order to have opportunity to do what you would hope they love to do, which is, educate society.
The Second Law of Labor Specialization is, absent formal Western education, there do not exist any credible objective mechanisms for ensuring high ability ends up in careers requiring of high ability.
Within recreational areas of life, highest remuneration need not go to persons who surmount highest levels of difficulty. Consider that Samuel L. Jackson has demonstrated less range than Denzel Washington, but is projected to have made a lot more money.
Denzel takes on lots of literary roles that by their very nature have little probability of becoming blockbusters. Think that movie where he was cheating on his wife while a police officer living in some Bahamian paradise (‘Out of Time’, 2003), which actually was in the Florida Keys? The movie needed a Denzel to make it work (Sanaa Lathan was not half bad either), but was not likely to be a blockbuster sell in theaters. Cast a less capable actor in the role, and perhaps the movie bombs royally or never gets made. That movie had me on edge of my seat like the taut thriller it was designed to be. And that to a large extent was attributable to Denzel’s outstanding performance. Samuel L. Jackson likely could not have made that movie work, not because he is not a good actor, which of course he is, but because he lacks the endowment, a face that works like a mask.
It eminently is difficult to make a square jaw look like a sleazy, romantic lover boy.
But it takes a really, really good actor to work a mask quality face into just about every type of conceivable role imaginable. Denzel is not the only actor to have that endowment of a mask quality face, a face that has capacity for channeling just about every kind of emotion you could imagine. In much the same way, not every big guy who has had a chance in the NBA has been as good as Shaq, or Russell, or Hakeem Olajuwon, or Wilt Chamberlain.
Having a natural endowment never has deterministically translated into making the most of it.
Denzel can look angry, look amiable, look sleazy, look romantic, look just about anything a movie can attempt to portray and make it not look like acting. Very few actors have that sort of range. But then movies looking for that range seek to tell a story, are not merely focused on what will draw the largest crowds into theaters.
So then, level of difficulty of selling the movie? High. Remuneration? Not quite as high. In sports, in movies, in music, a lower level of difficulty tends to generate more money, more remuneration. Commercial music tends to do better than literary music. Action movies tend to do much better than literary movies. Basketball and Football, which are both team sports tend to pay better than playing singles tennis, a sport within which winning depends in entirety on skills and fortitude of one person.
If you seek to compare your remuneration on basis of level of difficulty, avoid sports, movies, music. They do not function on that basis. Mass market products tend to generate more income than literary works.
So then, it is impossible for everyone in society to be the same thing, make exactly the same amount of money. Society then cannot function on basis of equality of money, meaning the fact that one person has more money than the other says nothing about dignity of the other. Enter then a need for a credible objective mechanism within which everyone can feel satisfied that their opportunities for making money are consistent with their giftings, ability, and skill. In this respect, there does not exist any system more credible or objective than formal Western Education. Formal Western education grades ability, yet leaves lifetime income potential uncapped.
Finally, within each profession, everyone decides whether to be a producer of mass market items, or producer of literary works. In the days of Michelangelo, literary works made more money because a mass market did not exist. Only kings and extremely rich people consumed art, and they wanted the best that was available.
In today’s world, the demands of mass markets sometimes do not conform with output of literary works, with outcome brilliant works sometimes make much less money than purely commercial output. People tired from working 8.00 to 5.00 sometimes prefer the action flick that does not require much concentration to the literary flick designed for invigoration of the mind, for sensitization of sensibilities.
If you pitch yourself in the literary, as opposed to the commercial genre of services needed within society, make sure to understand that once again, your worth relative to another cannot be a function of how much money you make.
The comforting or compensating thought? Fifty years from now, your literary works still will be valued. Fifty years from now, most of those commercial works would totally have lost relevance, would be seen for what they are, money chasing endeavors. Some differential of money is a small price to pay for opportunity to leave your imprint permanently on shifting sands of time.