You see this with teachers and nurses a lot too. A lot of people interpret this sort of thing as society not "properly valuing" these contributions. Since this is public employment, that might play some role. But when you look at things from a marginalist perspective, you quickly realize that if you think the problem is not nearly as easy as getting everyone to "properly value" public servants or any other class of worker.
One cannot know whether military pay is too high or too low, there is no market in this particular area. The pay will be arbitrary no matter what one's personal opinion is on the subject. Also, military pay isn't all that bad. As an E5 with 4 years I was pulling in over $40k a year *after* taxes. Granted, the job kind of sucks, but you don't have as many expenses, so that $40k goes a long way. Of course, the pay is higher today than it was when I was in.
ReplyDeleteI also find it strange when people elevate certain jobs to some sort of high status while disregarding the interconnectiveness and interdependence of the market. A soldier certainly could not exist without food, shelter, clothing, weapons, etc, yet we don't hear calls that the craftsmen in these areas should make more than a football player.
In fact, thinking back on it, the only time in my life that I have had over $30k in my savings account was when I was in the military. Granted, that occurred while I was deployed.
Delete"One cannot know whether military pay is too high or too low, there is no market in this particular area."
DeleteCould you explain why 'the market' will get it right without circularity?
It isn't about the market "getting it right", it is about whether the price is indeed a market price, or if it was chosen arbitrarily. Obviously, if one of the parties to the exchange doesn't actually own the resources to be exchanged and such resources are procured in a non-voluntary manner, the price that results must necessarily be arbitrary. There is no rational valuation in the economic sense on the part of one of the parties.
DeleteI believe the circularity problem that Unlearningecon is referring to is connected with wealth distribution.
DeleteHe's saying that if the distribution of wealth were different then there would be different demands on the market. As a result, various skills would be valued differently to what they are now. I generally agree with that.
Market prices are about the world as it is. If there were more or less redistribution then that would affect different groups in different ways. Some skills would be much more highly valued, some far less. It's a very complicated problem figuring out which is which, an intractable problem I'd say.
Well, I did answer his question without "circularity". Also, I don't think that one could determine which is which due to the fact that labor is heterogeneous.
Delete"it is about whether the price is indeed a market price, or if it was chosen arbitrarily."
DeleteThis contains elements of what I was talking about. You're assuming a 'market price' is special and non arbitrary, with a supposedly neutral baseline that you don't seem to have explored or argued for (?)
I'm going to reinforce and attack Unlearningecon's point at the same time.
DeleteLet's suppose that everyone in, say, the US had equal wealth at their disposal tomorrow. That would completely change the structure of future demand. Some skill-sets that are well rewarded now would be poorly rewarded afterwards (at least immediately afterwards). Makers of luxury goods for example. But, some would be rewarded much more highly. The same is true, though with a different wealth distribution, if the redistribution of wealth were to end tomorrow.
What I don't get is why Unlearningecon thinks this is so important or why it holds a great left-wing lesson. Sraffa's presumptions about what this means are dealt with in Bob Murphy's article "The Production of Fallacies by Means of Fallacies".
But social prestige does play a role, in that it's related to whether the state enacts barriers to entry. For instance, it's the high prestige of doctors that makes it politically impossible to challenge the AMA. And the low prestige of teachers makes them the easiest public employees to fire in a recession. Similarly, veterans' prestige is high enough that most people feel that no veteran should have a lousy, low-wage job or go without benefits in hard times: the fact that so many beggars play up their supposed service is proof, not contrary evidence.
ReplyDeleteThe author of this post could just look up your stuff about search frictions on the gas line stuff Daniel. That's how you get around supply/demand curves.
ReplyDeleteMy initial thought when I saw this was, "Yeah, that's *exactly* what we need... folks killing folks for the money"
ReplyDeleteGood point. As your brother often likes to say, "incentives matter". He's correct. There already exist many incentives to be in the military, both positive and negative, one can only imagine what would happen if we upped the salary to $20 million a year.
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