Sunday, September 04, 2011

Suppose we have four currencies:

E$, for the amount of effort a person puts in,
V$, the value of effort delivered,
P$, the perceived value of a product,
M$, the amount of compensation one gets for the effort, and

And suppose it takes M$20 to make a decent living in this country, where

Andrew in an unskilled worker. He puts in E$20 every month to deliver V$20 of work a month and gets by with M$20 every month. To his boss, Andrew's work in worth P$20.

Benjamin is a semi-skilled worker. He puts in E$10 every month to deliver V$20 of work a month. To his boss, his work is worth P$20.

Charles is a skilled worker. He puts in E$20 every month to deliver V$60 of work a month. To his boss, his work is worth V$60.

Andrew, Benjamin and Charles work for Daniel. Daniel is a management-level worker, and puts in E$10 every month to deliver V$5 of work to coordinate Andrew, Benjamin and Charles. Together they deliver a total of V$300 a month. To Daniel's boss, this work is worth P$300.

Edna is an investor. She puts in E$10 of work every month to deliver V$1 of work every month. Andrew, Benjamin, Charles, Daniel and Edna together deliver a total of $V301, but by strategically positioning Daniel's work, she can deliver a product to 10 people, to each of whom the product is worth a value of P$400.

How should society compensate Benjamin, Charles, Daniel and Edna for their contribution?

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