A restatement of part of question (4) from Chapter 1: Why do some people make more money, or accrue more benefits, than others, particularly when the work they do does not seem as important as the work the people do who make far less?⁽¹⁾ The answers to this involve both technical or sociological issues and moral ones. I will discuss the technical/sociological aspects first, and then the moral ones.

Of course some people make more than others because they work harder, longer, or more efficiently. When all other things are in some sense relatively equal -e.g., two people are working at the same sort of work under equivalent conditions -- those are not the questionable cases, since essentially if people are being paid by the "quantity" of work they do, i.e., commensurate with the contribution they are making, those who do more in these ways should obviously earn more money because they are producing more. But some people work long hours and train many years for work that does not pay as well as other jobs that may or may not take such effort. The real question is not about individuals so much as it is about work: why is it that some kinds of work pay more than others, particularly when some that pay more seems less important or takes less effort? 

And though supply and demand for the kind of work or quality of skill involved has some relevance, there are too many important kinds of jobs that pay too little, even when the demand for skilled labor exceeds the supply of workers available, for it to be the only or most important factor.

From a technical or sociological standpoint the following are ways to make more money in a society whose economic system is based somehow, at least philosophically, on a principle of just, or deserved, reward for worthwhile contribution to a cooperative, social enterprise -- as opposed to a society that merely distributes benefits and burdens on the basis of power to take and keep what one wants. (I will discuss the "moral" concept of just or deserved reward, following the sociological principles below.)

One way to make more money is to do the kind of work that can be "mechanically multiplied" (i.e., mass produced and mass distributed) relatively inexpensively in regard to the unit cost or the cost of the initial labor. My favorite example of a product in this regard is the frisbee, since it can be mass produced so inexpensively and sold for so little, and is so popular, it nets a handsome profit (I presume) just from the sheer quantity sold. But some services can be multiplied too -- entertainment, for example, or the teaching of certain things-- can be done once and distributed to millions or billions at the same time over television or at any time via video tape, film, audio tapes or compact disks, computer disks, or through books. Hence, a popular "tv minister" reaches far more people than the minister of a small church, though they do "the same thing", Arnold Palmer entertained more people through his sport because of television than Bobby Jones could have, and software programmers who create software of more general use can make more money than those who do specialized work for particular small businesses. Multiplication or mass production of work simply allows more than one person or small group to benefit from (and thus purchase and pay for) work that can be done essentially one time or that can be multiplied each time it is done.

A second way to make more money is to be an investor in a successful enterprise rather than a lender to it or a salaried worker in it. Lender's only receive interest in return; investors receive a percentage of the profits. This is not only true of money investments but of labor investments. An actor, for example, may work in a film for a fee or for a share in the profits. A share of the profits of a wildly popular film is better than the fee; but a straight fee is better than a share in a film that is a flop or only slight success.

Third, one might delegate work to others and receive a share of their profits from each of them. Franchises do that; multi-level marketing plans do that; business owners do that; in an indirect way some business managers do that -- by helping employees increase overall profits that lead to raises for managers.

Fourth, one can earn more than another for the same work if one is fortunate enough to work for someone who appreciates his or her work more and who has (control of⁽²⁾)more money to be able to pay for it. Working for the appreciative poor or the unappreciative or ungenerous rich is not as profitable (per unit of labor⁽³⁾) as working for the appreciative and generous rich. The price-setting aspects of "supply and demand" for labor in fact enters, to some extent, at this point, because the effective or financially rewarding demand is only what people with money or in charge of money (as in the case of managers or boards) are willing to pay for the service; "demand" from an economic sense is not how much something is needed by just anyone, but how much something is wanted or needed by people willing and able to pay for it, whether out of their own money or out of funds they control for an organization. However, even supply does not always affect this factor, since a generous and appreciative boss may retain at higher salary a long-time employee out of loyalty (or favoritism) rather than fire him and hire someone just as good who is willing to work for much less.

A corollary to this is that work in a field that is generally appreciated or believed (whether accurately or not) to be needed --by those who have (access to, or control of the spending of) money-- is more financially rewarding than work in a field that is not so appreciated or felt to be needed by those with (access to, or control of the spending of) money. This is where nurses and school teachers and other people who are generally considered to be common laborers lose out. I have heard one private pre-school administrator of one of the best pre-school programs in the city say that she could not raise tuition to pay her teachers any more or to buy additional classroom materials because the parents would pull their children out of the school. The tuition was not more than a dollar or two a day, and most of the parents drove big Mercedes and Volvos and had car phones (at a time car phones had just come out and were very expensive). Pre-school was simply low on their list of priorities for expenditures. Teachers of older children generally fair little better in the public esteem. Many people feel teachers are overpaid. I personally believe nurses give more patient care than doctors and, in some cases, are even much more medically competent and knowledgeable, but I think the public, and many hospital administrators think nurses are not that important, and that any certified nurse is as good as any other, so if you can get enough nurses to get by and pay as little as possible to do so, that is good enough. Doctors are thought much more important by the general public, and the public is willing to pay more or to pay for insurance that will end up raising the costs of medical care. The perceived importance of practicing physicians, and the fact that people generally seem to put more value in not losing ground than they do in gaining even more ground, also explains why practicing physicians frequently make much more money than research physicians or public health physicians though the latter two may train equally as long and have to know just as much, and even though public health doctors and research doctors may bring about much more total benefit. Public health and research doctors, when they are successful bring us additional health benefits and improve the overall status quo. Physicians in private practice tend to treat those who believe they need treatment to maintain or to get back to their original state of health.

It turns out in practice too, that competition does not generally occur when the supply of services thought important is increased. Doctors do not have to conspire to keep prices high. As long as sufficient patients and insurance companies are willing to pay whatever is asked for services they give a high priority to, even an abundant supply of doctors in one locale can charge as much as they want.

So there are different sociological answers to the original question: people like rock stars or athletes may make more than doctors because they can mass produce their services to a far greater extent. CEO's can make far more than doctors because they can take a share of the profits of many other people's labor. Doctors can make more than nurses because people are willing to pay them more. Similarly Mercedes salesmen can make more than even teachers who teach the children of wealthy people because many people who are able to afford a Mercedes are willing to pay more for a car than for their children's education. (Teachers in general make less than Mercedes salesmen or dealers, however, because there is more money available in proportion to the Mercedes people than there is in proportion to the number of teachers needed, since teachers are needed not only for the children of wealthy people, but also for the children of poorer people as well.) Financial specialists can make more than many other people because they have control over the money that people need, or want, to operate in a market economy. Lawyers can make more money than many other people if they live in a market economy that is operated according to laws, particularly laws that are complex and not necessarily rational in some obvious ways, and that thus require a specialist for assistance. Financial experts and legal experts have skills that generally are needed by people--in a money oriented market economy operated by complex legal rules-- where important sums of money are at stake.

Generally, unless individuals have (access to or control of) amassed wealth, labor intensive, personalized services or customized products cannot generate as much revenue as ones mass produced for the same or lower price. That is, unless someone is working for someone with control of a lot of money or resources, one cannot make as much money or receive as much trading with fewer people rather than with more. The personalized services that generate the highest revenues are the ones thought important by people with (access to or control of) money. The divisibility, "poolability", transferability, ready convertability, and permanence or storageability of money allow insurance funds and taxes, or organizational fees and dues, to exist and to grow and thus pay higher unit costs for services and products thought valuable by the contributors to, or managers of, such funds.

Once this is understood, there are two problems that can be pointed out: (1) the economic system skews or distorts distribution (i.e., rewards for work) by distributing wealth in some cases not for the amount of work or effort or importance, but simply for the kind of work that fits in best with the kind of system in operation. There arguably are times when this reasonably seems backwards -- when the system takes on a life of its own instead of reflecting the values of the society. So that although a rock star or tv producer may generate good entertainment of some value (i.e., providing joy or insight or expression), the financial rewards for that value are out of proportion to the financial rewards for the value of a neurosurgeon or inspiring classroom teacher. And the private practice physician, because of the way the economic system works, may make far more than the research physician or public health physician who may contribute far more to improving more people's health.

Reward is skewed in such a system as well by often being disproportionate to ability, effort, skill, hard work, persistence, long hours, training, knowledge, etc. Such a system of rewards has produced some important good by people seeking riches who knew how to work within the system to achieve them -- people who would not or might not have done that work if the reward for success would not justify the effort or the risks. But that does not necessarily justify not seeking to discover feasible ways to prevent results that are so skewed they defy reasonable values about the relationship between contribution and reward -- distributing more from the public pie to those who contribute less to it than those who contribute more. The fact that relatively free market capitalism has produced much of great value, perhaps more than any other system so far tried, does not mean there are no possibilities for improving it. Fine tuning to prevent harmful excesses or to promote even greater good, as long as such fine tuning is not detrimental, is not unreasonable tampering. Most organizations, financial institutions included, tend to fine-tune and alter policies when flaws appear or when improvement seems likely. The policies are never thought to be more important than the results they cause. The only question is whether changes made in any policy bring about better or worse results. That is always in part an empirical question.

(2) The second problem with a system that distributes income in ways not necessarily consistent with quality of contribution is that because large amounts of wealth can attract and channel available labor, putting large sums of money into the hands of people who understand how to succeed in the skewed parts of the system rather than how to make the system contribute more, is not necessarily helpful. Philanthropy to worthy "causes" ameliorates this problem where philanthropy exists and is pursued wisely. But philanthropy and wisdom do not always guide how skewed fortunes (or any fortunes) are used. Further, wealthy people tend to influence government disproportionately and they also tend to be put on influential boards. It is arguably not helpful in too many cases to have doctors, or rock stars, or bankers making influential decisions that effect social policies, schools, economic programs without some reasonable degree of wisdom and understanding in those areas. Since the way money is used affects so many people's lives, it behooves an interdependent society to try to make certain that large sums are used wisely in an attempt to bring greater benefit. It certainly behooves an interdependent society to try to make certain such sums are not used to cause harm or greater burdens. This does not necessarily mean forced taxation to control such earnings, especially since that only changes who makes the decisions about how to spend the money, not how such decisions are made or how wise they are. It may mean having programs in place to help inform those with fortunes of the economic and social consequences of various possible ways of using their money. To have a total hands off policy is to allow the system to dictate human and social values instead of serving them -- while at the same time using social, political, and governmental policies and forces to feed such a system and make large numbers of people contribute to it and live by it. Insofar as government and society use or permit a particular economic system, they have the responsibility to try to make that system best serve those affected by it instead of simply making certain those affected by it simply serve it to whatever end the system will permit. 

Notice that as long as wealthy persons or organizations invest and/or spend the money they make (or save it with organizations that invest it), it does not matter financially or monetarily how financial fortunes are made or who makes them, because the money continues to circulate to other people in the society. The difference between tobacco companies' making money selling cigarettes, Disney Productions' making money building theme parks, Michael Jordan's making money playing basketball on tv, and the Catholic Church's building hospitals with its accrued money is not a financial difference but one that involves how labor is channeled -- what products and labor are produced. The difference to society is not a monetary difference, but a difference in the amount and kinds of Goods (or products) and Services (or labor) available. When money is spent on labor that does harm or labor that does not do as much good as needs to be done, the money is not lost, but time and important Goods and Services are lost because labor has been channeled into the wrong directions. It is not that we cannot have "guns and butter" (as the proverbial comparison goes) because there is not sufficient money to produce both at the same time, but because there is not sufficient labor to produce both at the same time. So if the entity that has money prefers to buy or invest in guns, then labor will be used to produce guns -- labor that would otherwise have been used to produce butter if the money had been in the hands of those who preferred to buy or invest in butter. 

If beer companies invest their amassed money in televising sports events, the "harm" (if any) they do society is not in squandering money, for the money will not evaporate; the "harm" (if any) they do is in channeling labor away from better purposes it might have been applied to (if any) in order to provide "mere" entertainment. Once the money is dispersed among the labor needed to play and broadcast sports, it cannot be used as powerfully as it could be when it was concentrated in the hands of an entity with the power to control how it is spent. And if other Goods or Services are needed that require concentrations of money in order to be produced, time is lost until money can be (re-)concentrated in the hands of those who would produce the more important Goods or Services. But the total amount of money in society is not lost. If beer companies spent money on medical research and health facilities rather than on televising basketball games, the differences that would show up in society would not be in how much money there is but in which people (with which skills) have money and in what sorts of services and products are available. If the money spent on health care actually produced more and greater health benefits, there would then be a society with greater health but with less entertainment, particularly televised basketball.

The problem with mandating equal or equivalent results is that it removes the incentive to contribute by those who need such an external incentive as some sort of pay for labor. Not everyone needs that kind of an external incentive in order to work, but many people do seem to, at least in a society that does not have a strong work ethic based on religion, ethics, or some other social motivation. Furthermore, it seems unfair to rob someone of payment for work that seems to merit it based on one or more of the criteria listed in Chapter 8. Therefore societies that eschew a type of quid pro quo merit system of earnings for work performed, need to have some other incentive for social (economic) contribution, and perhaps some way of recognizing or rewarding particularly large contributions to the economy. This problem for economic contributions in such societies is not significantly different from the problem market economies tend to have with regard to rewarding people for non-market or non-economic contributions to society. For example, in a Birmingham, Alabama suburb a year ago, two black high school young men went into the burning home of a stranger after they smelled smoke coming from the house to a friend they had driven home after school. They rescued three elderly people who would have died otherwise. This was a social contribution that was neither required by law nor remunerated by market practices. One of the young men even went into the smoke-filled house against his own desires and better judgment because, as he said "I kept thinking I would not want to be left in this house by anyone who might be able to save me." The effort to save the three people was not prompted by free market considerations.

But different sorts of problems, just involving work, arise in a society that allows earnings to "seek their own level" by allowing people to charge simply whatever the market will bear for whatever people are willing to trade: pandering to baser or lower desires in order to sell products or services (and even promoting baser or lower desires that can easily be pandered to), deception, false advertising or sales claims, bribery, monopoly, undeserved power, corruption, real and metaphorical or psychological prostitution, gouging, taking advantage of the plights of the poor or those in other forms of need, etc⁽⁴⁾. Again, these, however, would only occur in societies, or by individuals, that don't have some sort of intrinsic or highly conditioned scruples against them⁽⁵⁾. To make any transaction legal between consenting parties does not mean that bad or immoral transactions would necessarily take place; those only take place where there is not sufficient understanding nor powerful forces or sanctions discouraging them. Markets, particularly in societies where diverse cultures either live together or can influence one another (such as through films or media) often can erode such forces or sanctions, but they don't necessarily have to. But the converse is perhaps more likely in actual practice - although markets don't necessarily erode such forces or sanctions, they often do and perhaps are usually likely to. Hence, governmental laws and/or regulations organizations within markets (such as by boards of trade or professional associations) often are established, to provide extrinsic sanctions against transactions that are considered to be somehow wrong or intolerable.

1. To begin with, I am presuming to talk about an economic system that permits differential earnings and differential accrual of savings based on work and trade. I will also then discuss systems that redistribute earnings (e.g., by taxation or some other form of after-trade fees) and systems where prices or income is not based at all on the work done or the trades made, but on fixed (perhaps relatively equal) salaries. There are not only social/technical and moral factors within each kind of system, but there are also such factors to consider in determining which sort of system is preferable, or in determining the optimal way, if any, of combining such systems.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. I say "control of" parenthetically because the operating factor here is not whether the person for one whom is working is spending his/her own money or not; it is whether they have money available to spend from any source. For example, a CEO or board of a successful company or of a government organization may have control of a great deal of money, even though it is not their own. Similarly, a patient with good health insurance can pay a great deal more for health services than he might be able to afford out of his/her own pocket because s/he has control, in a sense, of a source of money pooled for particular uses. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3. This is a somewhat imprecise way stating this. For example, banks and other companies that lend money to relatively poorer but creditworthy people may make more money from a great number of smaller loans than they do from fewer but larger loans to wealthier people, to whom they may make loans even at less interest. The point is that one can make more money for the same amount of work from people with (access to) more money than from people with (access to) less money, other things being equal. Robin Hood stole from the rich, it is said, because they were the ones with the money to steal; there was no point in stealing from the poor. That is why people work for the rich in some cases as well. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4. The "evil" of all these kinds of transactions are social or ethical evils; they are not evils in any sort of totally free market sense. In a totally free market, if you can get someone to agree to any economic transaction, whether it is buying something, selling something, providing a job, or providing labor for a job, no matter how ethically or socially repugnant that transaction, or the conditions that made it need to be accepted, that is simply the luck of the draw. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5. I have been told there is an office of cardiologists in the Birmingham who do their best not to turn away any patients for lack of money, though they don't have the resources to be able to do this if it were widely known. They performed one normally costly procedure for one man whom they have pay them $5 per month as a token of his respect and appreciation for their helping him out. Law offices that provide pro bono work are also making social contributions for other than economic reasons or market principles. The market is not the only possible source of social motivation, nor is it necessarily a successful force for the erosion of traditional social or cultural practices and beliefs. (Return to text.)