On different wages, or differences in wages

\”A story circulating at the time described an English professor’s complaint to him about the high salaries of economics professors. “Perhaps you should consider starting an English consulting firm,” he is said to have responded.\”

Wages are not determined by what people do but what they could earn doing something else.

6 thoughts on “On different wages, or differences in wages”

  1. I was sceptical of this but now I see you’re absolute right. There’s no way an economics professor would be so valued otherwise…

  2. Yep – and people wonder why certain people get low wages, or are offered no wages.

    It is not your value to the employer, but your value per se that means your employer needs to bid up.

    How valuable is a car at auction? A little more than the second highest bidder will pay for it…

  3. I can’t help believing that bankers salaries are high in part because of all the huge flows of money sloshing around in proximity to them. But I’m sure it’s really because they do a difficult skilled job, and definitely get better results than a tossed coin, honest.

  4. commenter: Well, that’s obviously a part of it, especially given a goodly chunk of that money is distinctly Queasy. Money doesn’t transmit around the system with either zero friction or infinite speed, so clearly the banking system (and therefore, bankers) will experience an inflation in salaries. Since the rest of the economy is not so strongly inflated, the obvious happens.

    But stripping out the effects of monetary policy, the point holds true.

  5. There’s no way an economics professor would be so valued otherwise…

    What you value something is often different to what you pay for it. People value drinking water more than diamonds, but normally people pay more for diamonds per gram than drinking water. (Leading us into marginal value).

  6. commenter…..of course bankers are paid in relation to the money swilling around them in the same way that despite their thrilling victory in Australia the England Test side will collectively end up beinig paid about the same as Wayne Rooney. That, frankly, is why a lot of poor but smart people went into banking over the last 20 years; they have personal family and lifestyle ambitions best suited by being close to the money/honey pot. That is also why many people in Journalism and politics hate them…they didn’t make the cut and frankly despite getting a jolly good degree from Oxford it is outrageous that some oik from a comp should be getting paid more than a really important person like them.

    Good pepole that make profit for their employers get paid well,,,that’s capitalism. It’s not a matter of being “approved”. In the same way I think Simon Cowell is a waste of oxygen, he doesn’t rely on me to pay him his millions.

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