[xux]

>Pay should be commensurate to value an employee provides to a company.

I don't think that's how capitalism works. Your pay doesn't scale with your value, otherwise teachers and firefighters would be making bank. It's completely guided by supply and demand.

[jstanley]

In an efficient market, those two are equivalent.

EDIT: Let's consider that "supply and demand" has artificially increased the price of programmers above their value. It's now a losing proposition for a company to continue to employ a programmer as the company is losing money, so the demand goes down and with it the price.

Conversely let's consider that the price of a programmer is artificially lower than his value. Any new company can come along and pay a bit more (but still less than actual value, for now!) and attract the best programming talent. Other companies must keep up in order to keep the talent, so the price returns to the actual value to the company.

[derf_]

> Other companies must keep up in order to keep the talent, so the price returns to the actual value to the company.

Uh, no, that is not how supply and demand works. See <http://en.wikipedia.org/wiki/Economic_surplus>.

The gap between what people are willing to pay vs. what people are willing to sell for is often substantial. People spend a lot of time fighting over the distribution of the value in that gap between consumers and producers (see, e.g., price discrimination).

[knome]

Is "in an efficient market" the economic equivalent of the programmers' "with a sufficiently smart compiler"? It seems to be used in the same manner in arguments.

[dtech]

You need the concept of perfect market (or other models) to reason about things. "In a perfect market, x happens. y is not in line with the perfect market, so eliminating y (c)/(sh)ould bring us closer to x".

Replace x with "fair salaries" and "y" with "Tech companies making non-poaching agreements"

[dllthomas]

You seem to be confusing "demand" with "quantity demanded", at least in your wording.