Skill vs Value: Freakonomics Moment

Why do day-to-day laborers who work in sweltering heat earn as much in a day as do IT engineers in an hour or even less? Why do teachers earn much less than a normal engineer?Even when we understand the amount of effort put in by  a normal IT coolie is less than that of any of the above. It may be disagreed vociferously that we are not coolies and that doing IT work needs skill, etc blah; but my experience tells me that its not a craft, just a checklist of skills to have and make a monkey do the job (well, atleast thats the direction Software Engineering seems to be taking ;)). Hey, anyway but seriously, lets come back to the question shall we?

Its actually not about the effort! Yes, my dears its not at all. Its as they about the skill. Or more specifically to define skill as, its about the value you create or have the skill necessary to be able to create such a value(wealth). Value here is more necessarily about the skill than about the value. So the more you are in a position to create/control value, the more your value is in the chain.

Now the above reason answers only half the question, that of daily laborers, teachers, soldiers getting much less than the IT engineers and they inturn getting much less than the celebrities. The unsaid second half of the question is ‘How can this problem be solved? A laborer can prolly get literate and move to be say a clerk. But what happens to a teacher or a soldier? Their value is irreplacable…’ The answer to this lies in free markets.

As of now the only factor that we talked about that determines the salary is ability to create value. Now the other factor is Supply & Demand. Say if all of a sudden all our soldiers start leaving the army, teachers too and the say the laborers too. Now how do we get all the work done? Pay them more dude. Or pay people who are actually willing to do only at such high price.

Well, this could be a better way to retain the best minds in the teaching field where they are actually creating a lot of value. And the best people on the field in army. As for the day laborers, the value will be evident once they stop doing work ;)

So reiterate how do you retain your best minds in teaching jobs? Pay them more!

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You’re currently reading “Skill vs Value: Freakonomics Moment,” an entry on T3,The Think Tank Chronicles.

Published:
10.10.06 / 11am
Category:
Freakonomics, India, Thoughts
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