Why we can’t have “talent system”: We don’t know how to measure value

In 1999, NASA lost the Mars Climate Orbiter. The cause is then said to be due to a measurement error. While one team working on the project used traditional US measurements (inches and feet), another used the metric system.

It is this same measurement problem that hinders our efforts to assess the value of economic agents in our supposed financial regime, the pursuit of which is best. shown in 2011 of then-presidential candidate Mitt Romney. In a “rewards-based society,” Romney explained, personal gain comes from hard work rather than birthright, while in a “reward society” the fruits of one’s labor who are redistributed to others. This definition reinforced his commitment to free-market capitalism (which he saw as merit-based) as opposed to the welfare state.

In addition to the absurdity of allocations from a candidate who also proposed Eliminate property taxes, Romney’s merit-based society contains a fundamental flaw. It requires a common measure of merit, which we lack.

We are told, of course, that capitalism gives everyone what they deserve. At that time, money becomes the measure of merit. Romney said as much when he stated that one percent includes most successful and those who complain about them simply find a way punish their success get out jealous.

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The problem with such a metric, however, is that it becomes indistinguishable from the metric being measured. It is like saying that one is worth what one is worth. So Jeff Bezos is worth $193.5 billion. How do we know? Because he earned it. The fact that he earned it means he deserves it and we know he deserves it because he earned it.

Furthermore, money is not the universal standard it seems. This is because there are two different ways of making money. Capitalists benefit from portfolio income, which is timeless, unlimited, and potentially limitless. Others are not.

The owner’s income is not limited to the labor they put into the business alone, but is bound by space (a person can only be in one place at any time) and time. Instead, owners receive the profits generated by their entire workforce. They are earned when anyone in the business is working. Therefore, they earn from many agencies in many spaces. They can make money simultaneously in Tulsa, Phoenix, Richmond, Paris and Bangkok. They can also be earned around the clock. They can be earned while eating or sleeping. They can be earned while watching movies or reading books. Thus, their income is separate from their people – from their labor and from their bodies in space and time. They overcame these limits. Their earnings are timeless and timeless.

Furthermore, capitalists can pass these benefits on to heirs, who need to do nothing to receive the privileges. That is the true meaning of entitlement. It refers to the people holding the titles. (Duke and earl are hereditary titles associated with property. If you have the right to own your car, you own it.) Obviously, the poor don’t “own” the stamps. food in the same way. Thus, we have misapplied the word entitlement to refer to government programs for the poor, who by definition hardly own.

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Although equity heirs may choose to work, they are not required to receive a profit from the inherited property. Instead, they continue to be compensated for work that was compensated and work that was done by a deceased predecessor. These heirs can then pass on the same privileges to their descendants, continuing to compensate new generations for the work that has been compensated many times over and the work done by the ancestors. increasingly distant from the beneficiaries. Thus, the return on capital is potentially limitless.

However, workers do not benefit from these privileges. Their income is limited to what their bodies can do in space and time. Nor can they pass on their wage rights to their heirs, who continue to be compensated for their work for generations. In fact, workers can make fortunes of heirs who may never have worked.

Furthermore, worker income is a function of supply and demand, is a power relationship (few workers = market power, while many workers = weakness) and has no value. Think of the miners of the Industrial Revolution, who worked long and hard, took enormous risks and created something basic for the economy, but lived in poverty. hungry. Workers compete with each other in a limbo economic game. Capital watched to see where they could go. To win favors at work, they have to go low. As a result, their incomes may stagnate or decline even as productivity and profits increase.

When we take money as a measure of merit, we compare apples to oranges (or inches to centimeters). It’s as if we judge athletes’ performance based on who scores high; Kareem Abdul-Jabbar succeeded, but Tiger Woods was a failure. Of course, when we add inheritance to the mix, the money measure becomes even more distorted. In sport at least, successful athletes cannot pass their scores down to the next generation.

Furthermore, any exogenous factor exacerbates the disparity between income from capital and labor while increasing the “work” of the former and decreasing the value of the latter. Globalization and mechanization have done just that. They have expanded the number of employees whose labor benefits capital and thus also created a pool of potential labor (including robots), which reduces their market power. Tiger Woods even lags behind, compared to LeBron James.

If we are to pursue a truly merit-based society – one founded on hard work and not innate power – we must begin by developing a measure of merit. exact value. Without it, we would never know if we have the society we seek.

Read more about the real costs of inequality: Why we can’t have “talent system”: We don’t know how to measure value

Huynh Nguyen

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