The Difference between What You Get and What You Earn

In economic theory, it is claimed that if a market would function perfectly, people would get for their products and services whatever it is they contribute in terms of value. And the same goes the other way: people would pay whatever they find a product or service worthy of. But when you take a look at the real world markets, and all the actors in these real world markets, this principle doesn’t seem to hold. Not at all.

I want to show this by giving one example. That of the banker, and the hacker.

A banker invents all kinds of ingenious derivative constructs, futures and other financial products in order to make money. The more complex the better. For if a product is complex, the layman doesn’t understand it. And if the layman doesn’t understand it, it is easy to lure him into what might seem to be an attractive deal, but which in fact is nothing but a ticking time bomb.

It is generally acknowledged that bankers, and especially the bankers referred to above, are at least partially responsible for the credit crisis we have experienced. It is safe to say that a lot of wealth has been lost during the crisis; people lost their homes, their jobs, and governments had to step in to save the day. In other words: these bankers have, at least over the last couple of years, made a negative contribution to the overall utility of society.

Why then do they get paid so much? Why then do they get a high positive utility for acting in a manner that ultimately decreases society’s utility? Although I am not interested in explaining this phenomenon in this post, one explanation could be that it seems like the bankers contribute a lot of happiness, because they (can) create a lot of money, and – in our capitalist society – money equals happiness. Hence the bankers create a lot of happiness.

Luckily, there are also people who do the exact opposite: they don’t get paid anything while making lots of people happy. They are the modern day equivalent of Robin Hood. An example would be the people contributing content to Wikipedia. But also the people behind Popcorn Time; a digital platform at which you can stream pretty much any movie, and all for free. These people make very many people happy – an exception would be the film distributors of course – but don’t get paid anything. Even though, in contract to the banker, their net contribution to society’s utility is positive.

Although we don’t pay the Wikipedia guys and Popcorn Time geeks in terms of money, we can pay them in terms of a currency that is even more valuable: gratefulness and respect. Something the bankers cannot count on. Because after all: there is a difference between what you get, and what you earn.

But what do you think?

Written by Rob Graumans

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