Sunday, November 11, 2007

article that says lucrative > altruistic career for society

Here's an interesting opinion by Daniel Akst, that says that a lucrative career is better than an altruistic career, not just for yourself, but society.

He has a thought experiment where 2 friends are compared 25 years later, 1 an investment banking company founder, the other a journalist/novelist. Akst argues that by being a multimillionaire, some millions of which are given to charity, & by giving good jobs to his employees, the investment guy helps society more than the journalist/novelist guy.

It's an interesting take, but I don't agree fully with the premise.

First, Akst is comparing a "best-case scenario" investment guy, with a mediocre altruistic career guy. Akst is comparing the 0.1% investment guy with a mediocre 50% altruistic guy.

The investment guy is given great performance, & great altruism. It's not certain that the investment guy would have the ability to be 1 of the few wildly successful entrepreneurs. Even if he has the ability, office politics or timing might prevent him from that goal. Also, if he does become the successful entrepreneur, treating his employees well, or giving substantially to charity is not a certainty.

In contrast, the journalist/novelist is a mediocre guy. For example, the journalists who exposed the Nixon corruption ending in Nixon's impeachment, did a great altruistic service for American democracy. A social worker who over a long career helps 20 parolees reform into productive members of society, has done a great work for society. The public health scientists who get an effective plan for dealing with avian flu, could potentially save 1000s of American lives.

Second, the premise that one's pay reflects the value to society is bogus. This is another example where I seem to be 1 of the few that recall from Econ 101, that free market capitalism requires many producers & many customers, such that any 1 entity has no meaningful influence on price or quantity of product.

The investment industry is closer to an oligopoly than free market capitalism. A few huge companies control a majority of the market.

American oligopolistic companies tend to source & desire qualified yet cheap labor, whether this means age discrimination of 40+ yo workers, excessively detailed job experience requirements, H1B visas, illegal workers, offshore outsourcing. If a union or union-like worker professional society exists to protect workers & limit supply of workers, the workers will be able to improve or maintain good pay & benefits.

The point is that many industries have artificially reduced the number of employees due to oligopoly, &/or reduce the number of qualified employees available via union/professional society, to make the free market capitalism model inapplicable. As such, Akst assertion is false that pay reflects the value of the work to society.

Like I said, IMHO Akst's argument is flawed, yet interesting. What do you think?

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