Is it fair to pay bankers more than road sweepers?

This is a report of the philosophy cafe session on 21 October 2009.

Bankers get paid more than road sweepers because of scarcity, that is, supply and demand. But what about hardship (the road sweeper is in the sun all day)? What about education (the banker is better educated)? Both these factors feed into scarcity.

We amend the question: Is it fair to pay bankers so much more than road sweepers?

We again mention hardship. Bankers suffer mental hardship, which often includes sleep deprivation (working overnight on big deals). Road sweepers suffer physical hardship. As a comparison, which would one choose to be: A $28,000 road sweeper, or a $850 banker. Everyone chooses the road sweeper.

How do we establish a fair dollar difference?

It is established on the basis of hardship, industry structure, talent and skill. But all these again boil down to scarcity: how many will endure the hardship, how many vacancies does the industry have, how many have the required talents and skills.

There is also a social issue involved here: How should a person live? How should a person be treated? This brings us to the question of a minimum wage.

Many oppose the idea of a minimum wage because it makes things difficult for companies, and even governments. But there is the nagging idea that people, as persons, are entitled to a minimum level of comfort in life.

Suppose we establish a floor salary to meet this minimum comfort, and allow any salary increase from this floor to be decided by scarcity (ie. market forces)? How can such a floor salary be established?

By referendum. Poll the entire population, and take the modal answer as the floor salary.

This is harder than it sounds. Everyone will respond with some huge number. Where will the money come from to meet this minimum? Will industry still be efficient if it has to pay such salaries? How often should the referendum be refreshed? Who will be eligible to vote?

Yet it is not impossible. There are countries with minimum wage systems -- and high tax rates.

Discussion ends here.

Philosophy cafe sessions are held every third Wednesday of the month at Nook, 15 Chu Lin Road, from 8-10pm. All are welcome. Admission is free, with individual expenses for food & drink. The only prerequisites for participation are curiosity and an open & rational mind. Our next session will be on 18 November 2009. We hope to see you there.