Basic Economics: A Citizen's Guide to the Economy

By Thomas Sowell | Go to book overview

Chapter 9
Productivity and Pay

Do you pay your secretaries less than your engineers because you like the engineers better, or because the secretaries don't need the dough?

- Thomas W. Hazlett

So far, we have been discussing the prices of goods -- present and future, consumer goods and capital goods. But people are part of the economy too, and not just as consumers. People are a key part of the inputs which produce output. Since most people are not volunteers, they must either be forced to work or paid to work, since the work has to be done in any case, if we are to live at all, much less enjoy the various amenities that go into our modern standard of living. In a free society, people are paid to work.

Simple as this may seem, its implications are often not fully understood or accepted. The very idea of buying and selling human labor is vaguely unsettling. The Clayton Act declared in its preamble: "The labor of a human being is not a commodity or article of commerce." Perhaps the long history of slavery, which has plagued the human race on every inhabited continent, has left this uneasiness with the idea of selling human labor, or even renting it. Nevertheless, most Americans earn their livings by renting their time and talents -- and live much better than people in many other countries where most adults own their own land and work only for themselves.

Stories about the astronomical pay of athletes, movie stars, or chief executives of corporations often cause journalists and others to question how much this or that person is "really" worth.

-127-

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Basic Economics: A Citizen's Guide to the Economy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgements xi
  • Chapter I - What Is Economics? 1
  • Part I - Prices 5
  • Chapter 2 - The Role of Prices 7
  • Chapter 3 - Price Controls 21
  • Chapter 4 - An Overview 39
  • Part II - Industry and Commerce 57
  • Chapter 5 - The Rise and Fall of Businesses 59
  • Chapter 6 - The Role of Profits -- and Losses 73
  • Chapter 7 - Big Business and Government 89
  • Chapter 8 - An Overview 105
  • Part III - Work and Pay 125
  • Chapter 9 - Productivity and Pay 127
  • Chapter 10 - Controlled Labor Markets 149
  • Chapter 11 - An Overview 167
  • Part IV - Time and Risk 173
  • Chapter 12 - Investment and Speculation 175
  • Chapter 13 - Risks and Insurance 193
  • Chapter 14 - An Overview 207
  • Part V - The National Economy 213
  • Chapter 15 - National Output 215
  • Chapter 16 - Money and the Banking System 223
  • Chapter 17 - The Role of Government 237
  • Part VI - The International Economy 267
  • Chapter 19 - International Trade 269
  • Chapter 20 - International Transfers of Wealth 283
  • Chapter 21 - An Overview 297
  • Part VII - Popular Economic Fallacies 303
  • Chapter 22 - Non-Economic Values 305
  • Chapter 23 - Prices and Purchasing Power 315
  • Chapter 24 - Business and Labor 329
  • Chapter 25 - An Overview 343
  • Sources 347
  • Index 359
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