[WalterBright]

> the maximum extraction ownership can get

And people demand the maximum pay they can get. It's the Law of Supply and Demand.

Consider this. You hire Bob for $10/hr, and he produces $100/hr in value. What's going to happen? Your competitor hires him away from for $20/hr. Then another competitor hires Bob away for $30/hr. This proceeds until Bob gets paid about $85/hr. The ROI of hiring Bob is somewhere around 15%.

There's a good reason why the vast bulk of the American workforce is paid much more than minimum wage.

[croon]

This is true in a friction-less market with total information symmetry. No such market has ever existed.

[WalterBright]

You are correct that there is no friction-less market.

However, lack of information is called "risk", and risk strongly affects what you will pay for something. A low risk deal will cost you more than a high risk deal.

Risk is part of every transaction in a market economy, and is priced in.

[croon]

Ok, branching from your previous post again, why isn't what you're describing happening?

https://fredblog.stlouisfed.org/2023/03/when-comparing-wages...

[WalterBright]

The article starts out being wrong by using wages rather than total compensation. The latter is the complete pay package, which includes paid time off, health insurance benefits, retirement benefits, etc. These typically add about 40% to the wages/salaries.

[croon]

This doesn't matter when the entire graph uses the same data. The growing divergence isn't because of differing accounting.