Discussion: The Pay Ethic
From the forum: Sam's Essays
This thread was started by: spitty.
Discussion start time: 2010-12-29 06:06:12.
From the forum: Sam's Essays
This thread was started by: spitty.
Discussion start time: 2010-12-29 06:06:12.
I didn't see a thread for this yet, so I figured I go ahead and start a new thread to comment on Sam's article The Pay Ethic.
Sam makes a good point about not short-changing hard work with cheap wages, but then goes on to equivocate between the generosity of paying good wages for good work, and generosity in the case of insurance and warranties.
The first case is what Ayn Rand would call trading "value for value." If a worker offers more value than the bare minimum, then his employer should reward it, if he wants to keep reaping the benefits of hard work.
I remember when I read Atlas Shrugged that Hank Rearden didn't short change his employees, in fact they were paid far better than competitors paid theirs. In return he expected the best from his workers. I do not think Ayn Rand would oppose this first meaning of generosity.
However, the second case is trading value for need, which I don't think Ayn Rand would like very much...
For one thing, insurance is a service where the company agrees to cover certain things for a certain amount of money. Why should an insurance company exceed what it has agreed to pay, to a client who hasn't exceeded what he has agreed to pay? Why can't the consumer just buy a better insurance policy if the cheaper one doesn't cover all his needs? Why can't the consumer just buy an extended warranty if the factory one isn't good enough for him, instead of pleading for better customer service because he needs it?
Consumers always want to pay as little as possible for the goods and services they buy. So why should they expect generosity and excellent service in return? Why doesn't the Pay Ethic apply to them the same way you apply it to employers?
Sam makes a good point about not short-changing hard work with cheap wages, but then goes on to equivocate between the generosity of paying good wages for good work, and generosity in the case of insurance and warranties.
The first case is what Ayn Rand would call trading "value for value." If a worker offers more value than the bare minimum, then his employer should reward it, if he wants to keep reaping the benefits of hard work.
I remember when I read Atlas Shrugged that Hank Rearden didn't short change his employees, in fact they were paid far better than competitors paid theirs. In return he expected the best from his workers. I do not think Ayn Rand would oppose this first meaning of generosity.
However, the second case is trading value for need, which I don't think Ayn Rand would like very much...
For one thing, insurance is a service where the company agrees to cover certain things for a certain amount of money. Why should an insurance company exceed what it has agreed to pay, to a client who hasn't exceeded what he has agreed to pay? Why can't the consumer just buy a better insurance policy if the cheaper one doesn't cover all his needs? Why can't the consumer just buy an extended warranty if the factory one isn't good enough for him, instead of pleading for better customer service because he needs it?
Consumers always want to pay as little as possible for the goods and services they buy. So why should they expect generosity and excellent service in return? Why doesn't the Pay Ethic apply to them the same way you apply it to employers?
It all makes better sense if you think of desert island economics. The abstract basics of economics shouldn't depend whether you're in a nation of 300 million or an island with 40 people. Now suppose you're on the island. "Insurance" basically comes down to, the islanders contribute food to the island doctor when they're in good health, so the doctor doesn't starve before they need him; if you want, throw in a middleman whose job it is to take those contributions from the other islanders to the doctor (and eat some of it himself). In that scenario, it doesn't matter what ailment you come down with, the island doctor will do whatever he can to help you, and certainly won't argue that it wasn't covered.
Precise coverage contracts are an unfortunate side effect of living in a more complicated world filled with liability issues and such, but the basic principle ought to be the same. We value the doctor's knowledge, we ensure he lives comfortably even when we don't need him because we're healthy, then when we get sick, he does what he can to help out.
That isn't how it works in our culture, we have a messed up system but it's been normalized. Normalized to the point where it seems natural and sacred, even though the folks on the island would just shake their heads like you're crazy for suggesting it.
Precise coverage contracts are an unfortunate side effect of living in a more complicated world filled with liability issues and such, but the basic principle ought to be the same. We value the doctor's knowledge, we ensure he lives comfortably even when we don't need him because we're healthy, then when we get sick, he does what he can to help out.
That isn't how it works in our culture, we have a messed up system but it's been normalized. Normalized to the point where it seems natural and sacred, even though the folks on the island would just shake their heads like you're crazy for suggesting it.
I see this as more having to do with the virtue of justice, which pertains to ethics, rather than economics. If I were an employer I would have a standard to which I would expect all employees to meet in order to remain in their jobs. If someone were to exceed that standard, I would be morally (but not legally) obligated to give him a pay raise, a bonus or a promotion. Practically speaking, if I didn't reward him, what motivation would he have to continue doing more than what was asked of him? Especially if he saw his lazy co-workers get paid the same as him for their minimal effort?
And there is still the difference between the above example, and the example of a company exchanging some out-of-warranty product even though it didn't have to. He didn't contribute anything more to the manufacturer than the sale price of the product. All things break after a while, so they have to draw a line somewhere or go broke. If it breaks before the expiration date, they replace it, if it breaks after, they don't. How is this unfair or unjust?
If a company did decide to go ahead and exchange an out-of-warranty product anyways, that wouldn't be an instance of the pay ethic. It would be charity.
And there is still the difference between the above example, and the example of a company exchanging some out-of-warranty product even though it didn't have to. He didn't contribute anything more to the manufacturer than the sale price of the product. All things break after a while, so they have to draw a line somewhere or go broke. If it breaks before the expiration date, they replace it, if it breaks after, they don't. How is this unfair or unjust?
If a company did decide to go ahead and exchange an out-of-warranty product anyways, that wouldn't be an instance of the pay ethic. It would be charity.