Monday, July 9, 2012

The Wealth Producers

H. J. Heinz factory workers, 1909
In a recent post I described how many American workers have enormously strenuous jobs, and yet are compensated poorly because of the low skill level and low status of their labor.

According to Wikipedia,
Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.
An assumption commonly made by those not progressively inclined is that labor compensation ought to follow productivity.  In other words, pay ought to reflect one's productive contribution.  This is a reasonable enough proposition.  But what is often overlooked are the unseen factors involved in production.  There is a tendency to view those who's productivity is associated with larger quantities of production as being more productive than they actually are.  Thus, a manager of 100 employees is seen to be much more productive than a single employee, as he is responsible for the net production of one hundred people, rather than one person.  His contribution is less the creation of goods, but rather the management of structures involved.  To the extent that he creates efficiency, he is adding value.  But it is a mistake to measure his value by the end product, as his role is much more limited.

Because productivity is a combination of what the worker brings to the table, as well as the structures at their disposal, man digging a ditch with a shovel is less productive than a man using a backhoe, even though his work is much harder.  The man with the backhoe has the advantage of the structure which designed, developed, purchased, etc. the backhoe.  What he brings to the table might be his skill with operating it, yet that depends on the structures that trained him.  His increased productivity is thus a result of larger social systems.

This is the thinking underlying progressivism, that there are systems in place that facilitate and allocate different levels of production and capital (human/societal/financial).  These systems tend to solidify inequality in very real ways, ways that create an unfair distribution of capital, which results in rewards not being just.  All manner of factors conspire to limit freedom of individuals to access agency-increasing capital.

There is a moral case here for progressive redistribution.  But there is also an economic argument, in that a degree of redistribution of capital lubricates individual agency and promotes innovation.  For instance, libraries, public schools, health care, minimum wages, etc. all redistribute capital in ways which promote human agency by more evenly spreading it around society and allowing more creative enterprise to develop. 

The last thing you want is capital stuck in the hands of the few, with fewer opportunities for it to be leveraged into growth.  The meritocratic argument assumes that the high levels of inequality and wealth concentration we currently see are a function of those best able to allocate, manage and create growth.  Yet this is a post-hoc justification of power structures that are often not a function of merit at all, but rather systemic privilege.

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