If something costs more to produce than people are willing to pay, then the producer just loses money. But a principle that seems obvious, after it has been articulated, may take generations to evolve and be incorporated into our thinking.
Yet here we are, in the 21st century, still talking about whether people are paid more or less than they are "really" worth -- and we are hot to give government the power to "do something" if we don't understand why some people are paid so much or so little.
If ignorance is bad, confusion is worse. Productivity, for example, is often confused with merit.
If Derek Jeter worked like a dog for years to perfect his skills as a baseball player, some might think that he had earned the big bucks he gets. But if he was just born with natural talent and the whole thing is a breeze to him, that would mean he didn't really merit such a huge payoff.
But Steinbrenner is not paying for Jeter's merit. He is paying for his productivity, whether at bat or in the field. Somebody who worked twice as hard and was still only half as good would never get the same money that Jeter gets.
Many poverty-stricken people in the Third World work harder than most Americans work but, for a number of reasons, they don't produce as much. That is why these countries are poor.
Transferring wealth from 300 million Americans and spreading it out over more than two billion people in India and China is not going to do much. But enabling more people in India or China to become more productive can help them and us -- and has.
Multinational corporations are among the biggest spreaders of greater productivity to Third World countries and they usually pay higher wages than local employers. But moral exhibitionists who are hot for the redistribution of other people's money are among the biggest critics of multinational corporations. |