Underpaid Programmers
When I read the above quote I was incredulous, then furious, then contemptuous, & then I was at peace. I found a frame in which the above statements make sense: the returns to capital versus the returns to labor.
Under the bluster & confusion, Mr. Friedberg’s underlying point is clear—more of the profit of technology companies should go to investors & less to the workers. I disagree, despite my recent bourgeois status.
How did I wait until 61 to become a Marxist? I don’t know. And just when I become a member of the rent-seeking capitalist class, too. Great timing, right?
The “slippery slope” Mr. Friedberg references is one of increasing returns to labor. To qualify as a slippery slope, however, there must be no counter-balancing force short of disaster. If tech compensation was truly a slippery slope, then salaries would have risen so far that the business of technology as a whole would have imploded. The business of technology didn’t implode. QED.
I haven’t seen examples of companies that went out of business because they paid programmers too much. (I have seen plenty that went out of business because they couldn’t actually charge for their product or service, or they couldn’t stick to a reasonable strategy, or they abused employees or customers.) This is a market in search of a margin.
When I was a kid I was aghast at the rise in professional sports salaries. Ricky Henderson gets a million a year for six years? I love Ricky & his steals & his leadoff dingers, but sports as whole is going to vanish if players get paid this much.
What happened? Sports teams in the US now pay out roughly half of revenue as player salaries. The rest of the business of a sports team adapted—merchandise, tickets, media revenue. Sports grew explosively.
What if the market for talent led tech companies to pay out half of revenue as compensation? Less return to capital, more return to labor. My predictions:
We’d see less capital flowing into technology. Would that result in fewer successful companies or more? Companies have been over-funded over the last decade. I’m guessing more success.
We’d see greater emphasis on personal development among technologists & better quality of execution (compare the average skill of a baseball player today versus forty years ago).
We’d see higher diversity & inclusion as companies hunted talent starved of opportunity.
This doesn’t sound like a disaster to me. Maybe I just don’t have enough capital to see the picture clearly, though. I’m ready to experiment.
More capital or revenue can affect the output of a company’s personnel or services both positively or negatively. It can serve as a booster for personal productivity or even attract better personnel to that company or business. On the other hand it can numb developer productivity and proficiency when the business doesn’t have great impact to consumers, or faced with less competition from other businesses . The way to balance the phenomenon is to make sure when hiring the goals and aims of that business or company are clear to the personnel and there should be constant monitoring and evaluation to fish out bad eggs. That said, I see no reason why personnel and investors alike don’t enjoy the proceeds of the undertaking committed to the business or company by both parties.