[jwoq9118]

> The biggest problem is that we have no idea how to value most of the work people do. I mean, we might know that what a developer should get paid for a year’s work, but how much is that work worth? The majority of the work done in modern corporations is incredibly hard to value, which is partially why companies are so inefficient and make so many bad decisions.

> That brings up an even bigger problem - companies today hire workers to make money from their labor. In other words, they generate profit because they pay their employees less than they’re worth. If everyone could trade their labor for exactly the amount of money it was worth, the corporations that employ them would have a much harder time making money.

Anyone else see an issue with this comment? We don’t know how to value the work of a corporate employee but we’re simultaneously all being paid less than we’re worth.

I like this article but I do feel the author leans too much into theory and what I hope is hyperbole. What I do love though is the admission at the end that we’re in a tough spot with modern capitalism and there’s no easy way to fix things by some “just do xyz” solution.

[vitus]

There's definitely some aspect of hyperbole, just from the wording there: "the biggest problem is [...], but wait, there's an even bigger problem [than the biggest one]!"

Comparatives overriding superlatives aside, I don't necessarily see these two issues as at odds with each other. We are bad at assigning dollar amounts to units of work, or even the productive output of a specific individual, but in aggregate companies can know how much revenue they bring in, and how much they spend (on labor, among other things), and in order to be profitable, revenue must exceed costs by definition.

So taken in aggregate, companies are still able to exploit the gap between cost and value of labor. A highly productive individual might be significantly underpaid, but on the flip side, a less productive individual might be overpaid at the same company.

[feedforward]

> We don’t know how to value the work of a corporate employee but we’re simultaneously all being paid less than we’re worth.

A number of people do work and create wealth, and then every quarter a dividend is sent off to some heir. "Being paid less than we're worth" as you characterize it. There are people who work, and heirs who parasitically expropriate surplus labor time from those of us who work. Workers work and create wealth, and then whatever remains of that after external expenses is divided into wages for the people who did the work and created the wealth, and the heir who does not work expropriating their profit. This is the being paid less than they are worth part - if the heir was not sent their dividends, the workers who created the wealth would not send off those dividends and that portion of the division would go to wages as opposed to dividends.

That they don't know how to value the work of a corporate employee doesn't trouble me in regards to the just mentioned fact.

If two workers create $240 of wealth in a day, and $60 is sent off as a dividend, and the one who worked 8 hours made $120 in wages, and the one who worked 6 hours makes $60 in wages - then there are methods that might approximate their actual work. One would be to take the $60 going to the heir and give $20 more to who worked 4 hours and $40 more to who worked 8 hours.

[pvdoom]

> Anyone else see an issue with this comment? We don’t know how to value the work of a corporate employee but we’re simultaneously all being paid less than we’re worth.

Think of it as a general rule of thumb, a statistical average. You will for example find that often managers and executives make a crazy amount of money, but are all but useless, but are only a small part of the bigger company.

[jajko]

The may be often useless to people under them, but that's irrelevant for company itself. Owners look from very different perspective than bottom employees, and companies have a single purpose - make money to the owners, academic discussions be damned.

Should each owner run around and tell each employee globally how to do their job, what is the goal, budget, restrictions, rules, timelines etc? This is a massive vacuum that needs to be filled, and managers fill it. Some better, some worse, just like any other profession.

Generally weird article to be polite, probably put together in a haste to give benefit of a doubt to the author.

[Viliam1234]

> This is a massive vacuum that needs to be filled, and managers fill it.

One problem is that the amount of "vacuum" that needs to be filled is often also decided by the managers, and many of them start creating work for themselves. Suddenly every team and every project needs to have a separate Jira and Confluence instance, there are meetings every day but most of the meeting is just reviewing the same information you have reviewed yesterday, etc. And the budgets, yeah, with so many managers there is hardly any money left to hire anyone else.

[pvdoom]

> Should each owner run around and tell each employee globally how to do their job, what is the goal, budget, restrictions, rules, timelines etc?

Of course not, but there are many useful ways to organise this. Hell you can still have managers, but make them elected from the body of workers. It's more that because of the first thing you said (with which I agree) these managers are basically cops or wardens.

[randomdata]

> You will for example find that often managers and executives make a crazy amount of money, but are all but useless, but are only a small part of the bigger company.

They are all but useless, sure, but much, much more valuable people as they hold a scarce property that nobody else working for the company has: Trust. Value is defined by the relative scarcity of something desired.

[FrustratedMonky]

Since he is a founder that built the business, I'd say he is someone that has a lot of practical knowledge beyond theory. He saw both sides, and sees the flaws in both.

How many times to do talk about the sales guy that earns too much, or so-and-so, that got promoted for being nice. Everyone is always complaining about others getting paid more, and that wouldn't happen if the pay was equal to value.

Or, how about in Software, there are a lot of teams adding features, which one was worth more? It is hard to tell, but everyone seems to agree the guys at the top didn't contribute much. So, it seems like the math would work, the guys at the top don't produce much value, but get more money than the teams adding value. Even if how to calculate each individual value is difficult.

[JamesLeonis]

I'll take a stab at it.

I think we can get to this answer by looking at a couple of questions from an accountant's perspective. The first: Where does profit come from? Somewhere there must be an arbitrage. Next question: Why isn't that arbitrage competed away? Further to the point, there must be some universal arbitrage available to all industries to create "profit" in every single case. There are very few commodities that are universal across industries, such as electricity, land, and workers. Because of the universality of profit (or else all businesses would not exist long term), some universal input would be a prime candidate for a source of such universal arbitrage.

The next step is to think about Commoditize Your Complement [0]. Given that selling work is a universalized commodity, and sheer numbers of workers competes away all profits, what is the complementing field? Employment. Employers monopolize Work to extract the value away from their complement; workers. With being a commoditized complement brings with it the cutthroat competition just to keep the lights on, while value floats to all the businesses in the complement.

However none of this is permanent in the Macro. During boom times all boats float. All firms hire from the same pool of workers, driving available workers down and prices/wages up. This drives employers into the arms of productivity machines to control the spiraling costs of labor. This is a trap. While you might gain productivity, it shifts more of your investment away from the Universal Arbitrage (workers) towards productivity machines, thus becoming the commoditized complement of the makers of productivity machines.

Finally, I want to point out that these are general forces and not destiny. Also Reality is fuzzy, and none of this addresses stuff like Bailouts and other extra-economic interventions. Just because something is profitless in the long term does not mean it can't be profitable to you in the short-to-medium.

[0]: https://gwern.net/complement

[CPLX]

Those two observations are not inconsistent.

We can have essentially no idea what each contribution to the whole is worth while being certain that the whole must, over the long term, be less than value X.