1. 28
  1.  

  2. 22

    It doesn’t seem like there’s any need for the concept of “risk premium” to explain that labor market prices are influenced by the presence of high-paying companies. If there are high bidders for something, prices will naturally go up.

    1. 6

      One could draw a reasonable analogy to the Baumol effect. i.e. so long as there are sufficiently large Googles and Apples who can extract a sufficiently large multiple of employee compensation as productive value, employee compensation will rise at other firms that see no increased productivity. All consistent with what you’re talking about, but just interesting to see analogously.

      1. 1

        It’s surprising to me that the Baumol effect was seen as surprising. If you have a simple model of companies bidding for employees, of course companies paying more would raise the prices. It would be weird to believe the opposite - that wages track productivity in a particular firm. Why limit it to just one firm when, clearly, all companies are bidding for all workers? This cross-sector allocation of both workers and capital seem like pretty standard economics to me.

      2. 2

        The more interesting thing about FAANG is how they were simultaneously bidding for high pay and fixing labor prices at one point.

        1. 3

          That was AANG like the Airbender, perhaps. Facebook famously decided not to play. Though if I recall, it may not even have been that. Apple/Google/Intel I thought.

          1. 1

            Thanks for the correction.

      3. 8

        I think the conclusion doesn’t go far enough. As an employee it’s preferable for your friends and family to buy any tech product, including a product that directly competes with a product you might be working on. Although this might hurt your short run stock, demand for any tech product means demand for you.

        What’s bad for tech employees is if friends and family do their holiday shopping in a non-tech domain.

        1. 3

          So farmers should encourage their friends and relatives, to shop in vegetables or meat domain for the holiday season? Buying clothes or phones as a present is bad for the farming industry workers? Honestly, this is pure nonsense.

          Tech products should serve needs to have organic need for them, if there is no need, thus no need for your service, as well as you can “learn to code” you can also “learn to plumb”, instead of persuading people to buy stuff they may not actually need, because the effects will trickle down to you. They won’t.

          1. 5

            To be clear, I’m not advocating actually doing this, I’m saying that if the article’s reasoning is right, it’s conclusion could go further. When providing advice to friends and family, my advice isn’t trying to be self-serving; that would make me a bad friend and/or family member.

            People who actually know me know I’m a bit of a tech skeptic who happens to work in tech, and I’d be the last person telling friends and family to deploy today’s tech products which appear to be expensive, vendor controlled, surveillance systems.

            1. 1

              Oh I see then. Sorry, I slightly misunderstood your point.

              I’m also in a similar situation, I’m more and more tech skeptic myself, disillusioned about rapidly approaching dystopian future, yet kind-of being a cog in the infernal machine.

            2. 3

              Malxau is being principled.. You might ask: Do you think the extra demand for any tech product that you could encourage leads to so much extra demand for you that it increases your salary by one cent per year?

              Arguing about effects below the noise floor is great fun. Sometimes.

              1. 0

                Still I don’t think that demand should be manufactured for products.

                Sidenote: I also don’t like the umbrella term tech for stuff that is mostly domestic surveillance technology.

                1. 3

                  Still I don’t think that demand should be manufactured for products.

                  Then lets make all advertisement into a sin: All movies, TV shows and games will perish as a result.

                  The entertainment industry is a manufactured market. If all advertisement suddenly stopped then that industry would only be able to survive due to the already conditioned consumers.

                  Very few products do not need a manufactured demand:

                  • food
                  • housing
                  • healthcare
                  • transport
                  1. 4

                    Entertainment is also a basic demand, even ancient civilizations had forms of it, without much advertising.

                    Also advertising is ideally a tool informing the customers of available goods, it does not necesseraly mean manufactured market. (Nowadays it mostly does, with ads working with Goebbelsian tricks)

                    1. 1

                      advertising is ideally a tool informing the customers of available goods

                      ideal for whom? Many consumer-facing markets, including all non-FOSS software (and in many domains, most FOSS software too), operate on the basis that the customer has zero information about the product. In such a situation, “this product exists” is not the goal of advertising: “your life is incomplete/meaningless/unfulfilling without this product” is the goal. Because that’s the only information I’ll have on which to decide whether to consume the product.

                      1. 2

                        ideally

                        the idealized model/role of advertising in economics is to provide consumers information about the products, services, and their prices, which lets them make informed decisions. Its role is to enable demand and supply to find each other. Not to create demand for supply. Of course the reality is not a model, but this wasn’t so polarized all the time, this worsened gradually during the 20th century.

                        1. 1

                          I think the word “idealised” is doing so much heavy lifting here that the argument loses value (pardon the pun): advertising has never been about rational producers informing rational consumers. Despite the wishes of economists, very few transactions fit that model.

                  2. 1

                    In that case you’ll probably be happy if you agree with me that our individual ability to influence others is not enough to manufacture actual demand. Personally I even suspect that the instagram influencers don’t have that. They can make us look at their boobs, maybe they can shift demand from one brand of lipstick to another, but making new demand? Feh.

                    Side note: My office window looks onto an IMSI catcher manufacturer. I know where the marketing department for the Middle East sits, and that’s the floor that’s most often lit at night. Depressing. At least their boss shifted his screens around so I can’t possibly read them any more, which I take as a personal compliment.

                    1. 1

                      I agree on that not everybody is capable for that, but some people are very persuasive. I totally agree on your diagnosis about Instagram influencers.

                      Regarding those poor lads working office-rat surveillance supplier jobs at night, I also find it depressing. :(