Rewarding people proportionally is a macro-level unsolved problem. Kropotkin wrote it about it and his solution was to throw his hands in the air and say fuck it, labor value is impossible to accurately evaluate, and thus he invented anarchist communism.
Just look at all the weird quirks our world does to labor value: the same exact job in two different locations for a global employer (say, Google), selling to a global market, pays differently depending on "local labor market prices." In 2025 for engineering what on earth is a "local labor market?" An optimization coming from an engineer in Taiwan saves you the same money as if it comes from an engineer in SF but the SF engineer gets 8x the reward for doing the work. Luxury goods and electronics cost the same in both places. Buying property is only slightly cheaper in Taipei vs sf (yes really), vehicles cost more in Taiwan. Food and healthcare is cheaper in Taiwan, and that alone I guess means the Taiwanese engineer is worth 1/8th the SF engineer, to make sure the sf engineer can afford 16$ burritos?
Many other quirks. You point out another one: labor often isn't rewarded based on real value to a company, for many reasons but one of which is that managers often don't understand the job of the people they're managing and so apply management relevant KPIs to disciplines where those KPIs don't make any sense. Engineering, for example, doesn't correlate actual value add to the company via meetings attended or customers met, but that won't stop management from applying those KPIs and thinking it does!
I'm torn between thinking we keep things this way out of ignorance vs we keep it this way maliciously so the management class (which sets the rates) doesn't get written out of labor agreements altogether because they're often useless vs if we didn't keep up this charade, capitalism would just collapse entirely.
Agreed. There's the additional point that I think many people don't appreciate, which is that those managers and many people lower down in the org chart merely exist because somebody else needs to be responsible for a system or a liability regardless of whether they do anything measurably profitable, and aren't necessarily incentivized to do anything more productively; they're just there to take care of it or be blamed if it's not, and have a low ceiling for what that job can possibly be worth with no measurable way to argue for more, and so in the case of managers, try to invent clout-generators at any cost and with no connection to how the assignees might accomplish it.
> An optimization coming from an engineer in Taiwan saves you the same money as if it comes from an engineer in SF but the SF engineer gets 8x the reward for doing the work.
Suppose you have a thousand engineers and those thousand engineers generate ten billion dollars in annual profit. How much do they each get paid? They amount they're worth? Nope, the amount they'll accept.
If you live in the US and you have the wherewithal to be an engineer then you could also have been a doctor or a lawyer or some other high paying occupation. And many of those can't be fully remote because they have to see domestic patients or interact in person with local courts or clients. Which means that if you want someone in the US to be your engineer, you need to pay them an amount that makes them want to do that instead of choosing one of those other occupations. Whereas the one in Taiwan doesn't have the option to become a doctor in San Francisco and is therefore willing to accept less money.
So why don't companies just hire exclusively the people in Taiwan? There are all the usual reasons (time zones, language barriers, etc.), but a big one is that they need a thousand engineers. So they and their competitors hire every qualified engineer in Taiwan until Taiwanese engineers reach full employment, at which point the companies still don't have all the engineers they want. And when the average engineer is making the company ten million dollars, paying San Francisco salaries is better than not having enough talent.
So then why doesn't every smart person in Taiwan become an engineer? Because the companies hiring engineers there are only paying Taiwanese wages, and then they're not any better off to do that than to become a doctor or a lawyer in Taiwan. And if they would pay higher wages there, the local economy would have to start paying local doctors and engineers more to keep them all from becoming engineers, and then you would only get a modest increase in the number of engineers for a significant increase in compensation. Which is still what happens, but only slowly over time, until the wages in Taiwan ultimately increase enough to no longer be a competitive advantage. And companies don't want to make that happen faster because then they'd have to pay higher salaries in Taiwan.
Not everyone who can be an engineer can also become a doctor or a lawyer. Different requirements and tolls on your mind and work style that aren't interchangeable for everyone.
There are two reasons that doesn't matter. The first is that it's untrue more often than not; plenty of people could do both. And the second is that "doctors and lawyers" are just arbitrary stand ins for high paying domestic jobs. They could also become physicists, commercial airline pilots, Wall St. quants, actuaries, etc.
Because here in the real world the barrier to entry in SW engineering jobs is significantly lower than the law bar or med school. Not to mention cheaper.
And yes of course, Americans have the highest salaries in the world for white collar professions, what other new information do you have that we don't already know?
There is a significant correlation between higher scores on one and higher scores on the other.
> Because here in the real world the barrier to entry in SW engineering jobs is significantly lower than the law bar or med school. Not to mention cheaper.
The barrier to either of those professions is getting good grades and then scoring well enough on a standardized test, and the entire premise is that the professions pay well which is how people pay back the loans.
> An optimization coming from an engineer in Taiwan saves you the same money as if it comes from an engineer in SF but the SF engineer gets 8x the reward for doing the work.
An underappreciated difference is that it's hard to schedule meetings between people in SF and Taiwan, because of time zones.
Just look at all the weird quirks our world does to labor value: the same exact job in two different locations for a global employer (say, Google), selling to a global market, pays differently depending on "local labor market prices." In 2025 for engineering what on earth is a "local labor market?" An optimization coming from an engineer in Taiwan saves you the same money as if it comes from an engineer in SF but the SF engineer gets 8x the reward for doing the work. Luxury goods and electronics cost the same in both places. Buying property is only slightly cheaper in Taipei vs sf (yes really), vehicles cost more in Taiwan. Food and healthcare is cheaper in Taiwan, and that alone I guess means the Taiwanese engineer is worth 1/8th the SF engineer, to make sure the sf engineer can afford 16$ burritos?
Many other quirks. You point out another one: labor often isn't rewarded based on real value to a company, for many reasons but one of which is that managers often don't understand the job of the people they're managing and so apply management relevant KPIs to disciplines where those KPIs don't make any sense. Engineering, for example, doesn't correlate actual value add to the company via meetings attended or customers met, but that won't stop management from applying those KPIs and thinking it does!
I'm torn between thinking we keep things this way out of ignorance vs we keep it this way maliciously so the management class (which sets the rates) doesn't get written out of labor agreements altogether because they're often useless vs if we didn't keep up this charade, capitalism would just collapse entirely.