People are over-moralizing this. Why do CEOs get paid so much? Why are salesmen often better paid than engineers? Does a ditch-digger deserve less money than a lawyer? The market is basically amoral. People get what they can get, not what they 'deserve'. Founders get more money because they have ownership, and in a capitalistic system profits accrue to capital. There's no point in constructing an elaborate moral architecture to justify how a social structure developed to maximize financial gain also somehow optimizes for socially-desirable outcomes.
Yet people support it and sleep at night. The world is not fair, people are unfair, and it's a damn good cause to try to make it fairer.
Sure I expect there's a serious correlation between putting effort in, but a huge part of how valuable your efforts are to your life is decided by where you were born, who your family are, who fucks you over and how you are parented.
I'm sure there are Muslim women in Saudi, or prostitutes in Liberia, or Chinese farm workers who'd (aside from cultural bias) work twice as hard and have just as many good ideas as Mark Zuckerberg or Bill Gates given the education and upbringing they have, but they simply don't have the opportunity.
Many socialists I talk to have it wrong in that they don't recognise that yes, effort is a factor in your life's success, but many of the capitalists I talk to fail to acknowledge that effort is simply one of many factors that influence it.
If you could choose your DNA, your parents, your upbringing, your interests, and your talents, the market would be the perfect arbiter. The problem is that people, for social signalling reasons, cannot internalize that they are not in control of these things, or that they matter. Thus, through the lens of our cognitive biases (hiding all these influencing factors from us), capitalism looks like the best system we've tried so far, and all the other systems don't "feel" right (because, for example, they force those of low social status to acknowledge that fact.)
Amoral does not mean immoral. I think you're confusing the two.
Nature is amoral too. That means it does not have any sense of morality, it functions based on a different set of rules. Immoral is against morality. Amoral is without morality.
I agree you get what you can get based on the market and it has nothing to do with anything else. It doesn't matter how "smart" you are, or how "hard" you work, that really doesn't correlate directly with what you get paid.
But I think your second point (Founder get more money because they have more ownership) is tautological. The article is really asking, should the founders get such a great proportion of ownership?
I think that equity % is just like normal income. You get what the market will let you get.
Founders get a lot because the right combination of qualities, risk taking, and luck are rare. Being an employee of any kind makes you more common than a founder, and thus the market will always pay less.
I basically agree with you. My response was more directed at the comments in this thread glorifying the intestinal fortitude of founders. Founders don't give much equity to employees because the successful ones don't have to, and the failures never have the chance. It doesn't have much to do with founders bravely trading risk for an equivalent measure of reward.
Another reason - 90% (my guess) of founders end up with nothing but a good story about the business they tried to launch.
90% of the guys who try to climb the corporate ladder to become CEO do distasteful work, and lots of it, and ends up a 50 year old middle to upper management type who gets made redundant the minute his company restructures, and hasn't got the skills to do anything else.
Also, moralising prigs (especially journalists and high school teachers) dissuade a lot of people from seeking a high paying job (unless it's in medicine), so the few people (many of whom are quite greedy) who do go for the top job get paid more money.
Word, it's all about bringing in the money. If you can convince people to give you more money, you get that money, and if you can't, you don't. Sales guys are well-respected in most corporate hierarchies because the sales guys are the people going out there and actually getting customers that bring in cash. It doesn't matter if you write the most beautiful program ever, the reality is there has to be a way to monetize that program if you want to run a business off of it (and obviously, your employer does). If an engineer can't do it and a sales guy can, the sales guy deserves a bigger cut of the pie.
You can see great examples of this by looking at basically any celebrity. Do Oprah and Brad Pitt really deserve billions of dollars for their contributions? Most people would say that morally their contribution to society is minor (or even negative), but the market doesn't seem to agree, and they are rewarded with money far exceeding the income of many business leaders. They get this money because they chose to do something people are willing to spend money on.
Why do thugs that play football, whose moral contributions are, again, minor or often negative, make millions of dollars each year? Because millions of average people pay $30/wk to watch them run into each other, $100/yr in team merchandise, etc. If you don't like that, convince people to stop spending money on football.
"I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."
> It doesn't matter if you write the most beautiful program ever,
> the reality is there has to be a way to monetize that program if
> you want to run a business off of it (and obviously, your
> employer does)
On the other hand, you could have all the charisma in the world, but you'll have a hard time selling something that doesn't exist (unless you want to cross onto the wrong side of the law and dabble in fraud / being a conman).
Not really commenting on 'who deserves more,' but I just don't think that you're logic really stands up.
Exactly. Not everyone in a company can be focused on directly getting money from the customers. IMO, it's not a problem if sales people get paid somewhat more than engineers.
However, if the ratio of pay of a sales guy to an engineer gets distorted too much, no one will want to be engineer any more. If that was the case, technological advance will stagnate. Everyone will be fighting to get the biggest part of an ever decreasing pie, instead of actually creating value.
There's plenty of people willing to give you something to sell.
Programmers and salesmen deserve compensation proportionate with the value they provide. I am a programmer myself and believe that engineer-centric companies are usually better than companies with MBA management. The dynamics of each company vary -- my comment was merely in the vein of "why do people that provide little moral value make money?" They make money because they do things that generate money even if those things are of relatively little objective value.
Its actually easier to sell vaporware than a real product. Vaporware never has any bugs or problems. Or as one of my colleagues during my equipment selling days said "The brochure never fails to boot up". We were selling Pentium100 based equipment at the time.
At some point you do actually have to deliver something. You can pitch vaporware and get people interested. You might even get some people to give you money, but at some point you do have to deliver something. People pitching vaporware and never delivering can't be said to be a 'good' thing for the economy.
There's no problem moralising it while keeping in mind that the current system indeed is amoral. I think the point is whether it should be.
Personally, I'm of the opinion that no job worth doing is worth less than any other job, but I recognise there's “some” ways to go before that thought becomes in any way mainstream again…
I don't think it's amoral. There are "world-shakers" in this life who aren't satisfied with how the world looks and they strive to change it. They develop an idea that provides value to others and they build a beast from nothing. With out people like this there would be no change, no progress. Founders create the world as we know it.
And, a slight adjustment to the original phrase will correct it. Founders, in general, are not 1,000 more valuable than their employees. Successful founders are 1,000,000 more valuable than their employees.
I'm of the opinion that no job worth doing is worth less than any other job...
Following this reason would end up with a world in which no job is worth doing. The value of a job is in how much value it provides to others. If one person's 8 hours produces 100 times as much value for others than another person's 8 hours (e.g. 100x time saved, 100x food produced, etc.) then the first person's job is worth 100x more than the second, and by your logic the second person's job isn't worth doing. But if there's nobody or no machine to replace the second person, then that job doesn't get done. If the second person's job was originally worth doing until the 100x person came along, why would it no longer be worth doing if it's now worth relatively less to others?
That doesn't follow, at all. Let me reformulate: any job whose existence isn't necessary (most of the financial sector, for example) can be terminated and the remaining jobs, all being necessary, are of equal value.
1. Who decides which jobs aren't necessary, and by what reasoning?
2. Why is a job (such as software development) that can multiply x hours of work across thousands or millions of users equally as valuable as a janitorial job that provides value to the dozen or so people who use the facilities?
I'm not saying either person is more or less valuable as a human being just by virtue of their job, but that their work itself can be more or less valuable to society as a whole. So how do you reconcile that fact with the binary idea that all jobs are either valueless or of equal value?
Couldn't agree more. If you think you're getting a crap deal as an employee, quit and start your own company. If you can't find 340 bucks (incorporation fees) to drastically change the rewards of your contributions then I don't have any problem with that person making 1/1000th of the returns.
I totally agree that people are paid what they can get. The problem is, a lot of the people who justify their enormous salaries by saying that the market is amoral then try to argue that they 'deserve' every last penny they made come tax time.
Well they're greedy. No two ways about it. Sure they probably do want to look after their employees and probably do give money to charity, but when you're making more money than most of us could conceivably ever dream of (and 700x more than their bottom rung employees) and shoving it in offshore account so the country they made it in can't tax it, they're fucking assholes.
