Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
A quick guide to market capitalism
Published on September 5, 2003 By Draginol In Politics
People on the right tend to have an almost blind faith in market capitalism.  But people on the left tend to have a blind faith in the government's ability to distribute "Fairness". Nothing shows the perils of fairness more than when you talk about how much different professions pay.

After all, what kind of world is it where a basketball player can make $10 million a year while a teacher only makes $30,000 a year? That, on the surface, strikes many people as a reasonable question.

But the problem with that is that you end up having to make a value judgment on which jobs are more worthy than others.  Basketball players make a lot of money because professional basketball, as an industry, generates a great deal of money for the owners of basketball teams. Those owners make their money largely based on how good their team is. Therefore, they must compete against one another for the best players in the world, the price for the world's best players drives the price up.

In contrast, teachers, a worthy profession, are much more common. And because the government runs schools via tax dollars, there is no "profit" in the education "business". Therefore, it's a simple supply demand equation. The number of teachers or potential teachers is very high and therefore their salaries reflect that.  Those who wish teachers to be paid more should demand that the government get out of the education "business" and let private industry run a highly regulated education industry. There, schools would compete against one another to get the best scores in various areas. That in turn would create competition for getting the best teachers.

Now before someone emails me telling me of the dangers of making education a private enterprise, my point isn't that we would be better off as a society, only that teacher, or at least good teachers, would very likely get paid more than they do at present. Any goal is going to have negative side effects.

I personally don't have a problem with the public school system. It works adequately. But then again, I don't have a problem with teachers not being paid as much as professional basketball players. 

Comments
on Sep 06, 2003
Oh I don't agree with you at all there.

Basketball, as a "industry", generates billions of dollars. Teams generate their money from audiences (TV and live). That money is dependent on the quality of their team -- i.e. their winning a lot.

There are something like 30 pro basetball players competing for those dollars. The quality of their team is based on the players. Therefore those 30 teams compete for those top players which drive up their salaries.

In contrast, there are millions of teachers and a very finite amount of money to spread around. In turn, a school district doesn't get more money for having better teachers. Therefore, teachers get paid less.
on Sep 06, 2003
I think one issue you are forgetting (or at least not refering to) is scalability.

Because of television basketball games reach a far greater public than groups of teachers do. And this will never change because our society has (rightly) decided that groups of customers for teachers (aka groups of pupils) should be kept small (less than 30 or so) and that groups of customers for basketball should be kept big (thus: basketball in television).

As for the economic theory of the two contexts, the difference is the inefficiency created. Because of its low supplier/customer ratio basketball is a lot more efficient than schooling, thus it is possible to include artificial inefficiency which shows itself as profits for television stations, club owners, and wages for players.

And as for the free market relationship too that, I think you got that wrong. The differences between schooling and basketball described above are not natural results of a free market, they are the natural result of government interference on behalf of society's will. Artificial inefficiency is almost always created by government. In fact, I cannot now think of any such inefficiency that is not created by government. In this case the inefficiency is a result of copyright (which allows for basketball on television to be profitable) and real property (which allows for stadiums to make money for their clubs). Both are more or less necessary government regulations, but they are not elements of the concept "free market" per se.

(To clear up possible confusion: "free market" is a concept introduced at a certain baseline, meaning that certain regulations are already present and accepted. Property and copyright law are not elements of the free market, they are elements of a certain political system that might employ a free market system above that baseline.)
on Sep 07, 2003
Blargh. Great article, but don't get sucked into describing the problem this way - comparing a high school teacher with a international-standard sportsperson is NOT comparing like with like.

Heard of Tony Robbins? - He is a 'teacher' who gets much more than 10 mill pa. How about Zig Ziglar? etc etc etc. Similiarly there are plenty of (professional) sports people who only scrape by - check out your local gym instructors, school phys ed teachers, and the golf pro at the local golf course.

While the exact figures vary of course, in general in EVERY profession about 5% of the people make 95% of the money. You just have to make sure the way you are defining the profession doesn't exclude the comparision group.

So, seperate the issue into:
(a) Is the way society rewards different professions 'right'? If not, is that the result of government intervention, or is it an inefficiency in the market economy that might justify government intervention?
( Is the degree of income inequality within a profession 'right'? If not, is that the result of government intervention, or is it an inefficiency in the market economy that might justify government intervention?
(c) How can I move up from being one of the lowly paid slobs, and be a highly paid superstar?

IMHO, (a) is wrong, as a result of high intervention government ( is usually right, although I sometimes wonder about the barriers preventing people moving up the scare within their profession, and whether in some cases it needs work... (c) I'm working on it - I get triple what I made 5 years ago...
on Sep 10, 2003
With the internet I think it's only a matter of time before we see online learning and lessons. I could easily imagine cases where well known 'teachers' attract a few thousand students to an online lechure or broadcast. Currently the lecture tour is a way that well known teachers can generate large amounts of money. We already see this in some cases with single lectures by famous scientists often attended by thousands of people and broadcast online to even more. Perhaps these are our superstar teachers of the future. Those that have the talent and have proven it could indeed generate huge incomes from teaching.

Paul.
on Oct 09, 2003
I am doing a editorial for my school magasine. When i saw your article I thaugt it was perfect. It gave me all the information on thing i never knew. Thank you very much.
on Oct 30, 2003
I think some of that money should go to Children homes.
on Nov 07, 2003
It already does. The tax rate on basketball players (state + federal + misc) is about 50%.
on Nov 24, 2003
children homes is full of hypocricy,and selfishnes.