Quote:
Originally Posted by NewYorkBuck
I have  .
Yes - it could be measured that way. But generally - in regard to incomes - people are compensated by the amount of value that they bring to the market, within the parameters of supply and demand. The first objection people like to cite to this is typically members of the entertainment industry, because they are so visible and add very little value to the economy in the long run. However, these highly paid entertainers are a very small slice of the highly compensated.
To a more applicable example - why do engineers from MIT command much more than an engineer from say Michigan State? Because the perception is an MIT engineer can add more value to the firm than a MSU engineer. Why do (did?) Wall St i-bankers make so much money? Because few have (had?) the combination of BOTH the talent AND willingness to work 100+ hour work weeks that the job demanded. Much smaller pool to draw from for a job that (in the past) has added huge amounts of value to the economy. Same for a consultant from McKinsey. You get the idea. |
This is only a partially accurate depicition, isn't it? Right, I agree that, for certain markets, those that bring the most value earn the most, and, yes, to those who agree to participate in those types of markets, that is completely fair.
I disagree that these are de facto the most valuable workers in society. For example, a high school math teacher may see 100-130 students in one day. If the teacher is very, very good, perhaps 95% of his/her students will become proficient in math and become valuable market participants down the road. In 10 years this very proficient teacher could theoretically add ~1,000 valuable market participants to the economy. Perhaps these students all enter private industry and earn at very high levels due to their relative value, which was at least partially improved by this highly proficient teacher. What does that teacher earn? Whatever the local school district salary is... probably somewhere between $40k-$50k. But to say that this teacher is not among the most productive in workers would be inaccurate.
So take the highly productive investment banker and the highly productive teacher: let's say both are the sole providers for their families of 4, with kids the same age and live the same distance from work. Both people need a car to get to work, both need groceries for their families, both need to pay mortgage or rent, both have to pay for their kids' educations, both need to save for college, etc., etc. Their needs are the same, their productivity is the same, yet the teacher needs >100% of his/her salary to just cover family needs. The investment banker likely needs much less of his/her salary for family needs, maybe only 30%.
My argument on taxes is that, so long as the country has a tax need, it is more fair to have tax brackets because wealthier people have significantly less need, relative to their incomes. In this example, the teacher's family has more than 3x the need of the investment banker relative to their respective incomes.