Thought Experiment: The Townsman vs. The CEO

Question: Who do you think should get paid more in this situation and why: a townsman working everyday of the week cleaning the community’s toilets in the slums of Jakarta or a CEO working everyday of the week managing a large corporation?

*For more information as to what inspired me to ask myself and my friends this question, watch Inside Bill’s Brain Part 1 on Netflix. Also check out this Ted Talk about involving “the poor” in urban city planning by Smruti Jukur Johari.

*I’d like to give a special thanks to my friends for helping me answer this question, including Sara Zhang, Sophie Foster, Rayhan Hussain, and Ammar Hussain. 

Okay, I’ll take you through everything I have to say about the question I asked you yesterday in regards to the townsman and CEO. (I have to admit, I ultimately realized that there was a flaw in the way I phrased the question. I will reveal the flaw at the end of this text).

There are primarily two different ways in which people value work. Depending on how one values work, that is how they will pay for work.

Value #1: People, regardless of culture or religion, usually argue that a person who works harder deserves to make more money.

If we use this lense to analyze the situation:

  • The townsman probably works much harder than the CEO (in terms of manual labor).
  • The townsman does a job that most people wouldn’t want to do.
  • The townsman brings huge value to his community by cleaning out the toilets (value isn’t a dollars and cents measurement).
  • The townsman’s impact is significantly less far reaching than that of the CEO, but the quality of the “impact” is far better and more meaningful to his community members.
Slums in Jakarta

Value #2: On the other hand, many people argue that someone’s pay isn’t about how hard someone works, but rather the impact of that someone’s work.

If we look at the situation from this perspective:

  • The CEO’s impact is significantly more far reaching than that of the townsman’s.
  • The CEO probably works much harder than the townsman (in terms of mental labor).
  • The CEO’s skillset is not easily replaceable. On the other hand, the townsman is easily replaceable (i.e. with a robot) because his manual work is easy to learn.
  • The CEO brings back more value and money to the company, thus he should be paid more. (value is a dollars and cents measurement).
Slums in Jakarta

But what if we thought about it from a different perspective?

(I want to say that my questions are just for the sake of the argument)

Let’s forget effort and look at it from a situational perspective. The CEO is already being “rewarded more” outside of a salary by living in the U.S. and is thus inherently given a better quality of life (and everything that comes with it, e.g. longer expected lifespan, more reliable and effective healthcare, etc). Would it not make sense to pay the CEO less than the townsman because he is already being partially compensated with a situational advantage? 

Let’s also look at it from a positional perspective. CEOs already receive many intangible benefits outside of their salary, including name recognition, a corner office in a skyscraper in New York, etc. In a sense, he gets his “ego stroked” by being a CEO. Considering this, would it not make sense to pay the CEO less than the townsman because he is already being partially compensated with a positional advantage? 

Even with these two additional perspectives, people typically would still say the CEO should be paid more. Why?

People would likely say no because if the CEO was paid less, he wouldn’t be motivated to do his work and contribute to society in the significant way that he does. A CEO would never want to make the same amount of cash as a janitor, or in our case, the townsman. A CEO would never stand for that. And that makes sense.

Well then that’s the end of the argument. 

Ultimately, I learned that the phrasing of my question was incorrect for multiple reasons.

Flaws:

Flaw #1: There are two different types of work (labor): mental and physical. Right off the bat, you can’t compare the CEO’s “work” to the townsman’s “work” because one is working mentally (e.g. management) and the other is working physically (emptying the toilets). 

  • You cannot and should not compare how much money someone earns for doing mental work with how much money someone earns for doing physical work. 

Flaw #2: What is considered hard work? We’re missing crucial information in the original question. In terms of manual labor, “hard work” is significantly different between an elderly townsman and a young townsman. In terms of mental labor, how “hard working” is the CEO actually? Does he slack off during work? We don’t know. 

Flaw #3: The townsman and CEO bring two different types of value to their respective communities. The townsman brings a qualitative value to society by making his/her community more cleanly and inhabitable. This is known as a utility expense, where the expectation isn’t for him to return profit, but rather just to be used, like a utility. On the other hand, the CEO brings a quantitative value to his company by bringing in more money. The expectation by paying a CEO more is to earn more money. 

Flaw #4: What do we mean by paying “more.” Is the payment relative to societal norms? (e.g. $1 USD = 16,420 Indonesian Rupiah). And a typical CEO in America makes $7.4 million, whereas the typical Jakarta townsman makes $21,813 (in USD). People in the slums of Jakarta make even significantly less than that. Thus, what is even considered “more” between a Jakarta townsman in the slums vs. a CEO in the United States of America?

Flaw #5: I should not have specified the countries in the question. A CEO born in the United States was born there with pure randomness. The CEO did not choose to be born in the U.S., and the townsman did not choose to be born in Indonesia. Thus, the situational and positional viewpoints cannot be taken into consideration during this argument because they rely solely on the idea of being born in one country versus the other. 

Flaw #6: If we consider the issue from a net proportional positive standpoint, e.g. how much “good” the CEO or townsman brings to their respective communities, then we need to know the intentions of the CEO and the townsman. Is the CEO working out of greed? Is the townsman earning money that he will spend on caged animal fighting? Or is the CEO earning money to donate it to nonprofit organizations to help feed starving children across the globe. Or is the townsman earning money to help support his own starving family? We need to know these questions.

If you have read until here, thank you so much for taking the time to help me answer this question. I’ve been thinking about it for days and I finally came to the conclusion that my original question was flawed. A more appropriate question to ask would be: 

Who do you think should be paid more in this situation and why: A single CEO working and living at a firm in the U.S. or a single think tank director working and living at that same firm in the U.S..” 

*Single=not in a relationship

This question, I acknowledge, has its own flaws, many of which I am too tired to point out. Regardless, thank you for your valuable and thoughtful input. It has helped me answer a question that I have been thinking about a lot.

Thanks,

Kyle Shrader

03/29/20

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