There is an enormous, invisible river of wealth flowing all around us. An individual can contribute to it, and draw some off from it as it flows by. In an ideal world, each would withdraw in direct proportion to the amount they contribute: A salesman goes out and shares a solution to a problem that a customer didn't know could be solved, and takes a commission for this information distribution, an executive turns a large problem into small ones which can be solved by individual engineers and gets compensation in proportion to the managerial activities involved, and those individual engineers create the solution and receive a salary in proportion to their skill and effort and share in creating that value. Right?
No, this is too often completely wrong. Having utility is only half the battle, you also need leverage to withdraw in proportion to that utility. If the customers all know about the problem and your product, but your company has a near monopoly, the salesmen can position themselves as middlemen where the entire transaction flows past them, and they'll siphon off some nice round number - say 10% - completely disconnected from the minimal or even negative value they contributed to the process. Conversely, the engineers can find themselves completely powerless to negotiate compensation, producing value to the company 10x or 20x their salary, out of view of the customers and with no leverage to extract any more or less from the process.
> ‘Go where the rich and powerful are,’ I’d tell him, ‘and learn their ways. They can be flattered and they can be scared. Please them enormously or scare them enormously, and one moonless night they will put their fingers to their lips, warning you not to make a sound. And they will lead you through the dark to the widest, deepest river of wealth ever known to man. You’ll be shown your place on the riverbank, and handed a bucket all your own. Slurp as much as you want, but try to keep the racket of your slurping down. A poor man might hear.’
This is related to Marx’s concept of surplus value. That capitalism is based on most people being under-compensated for the full value of their labor so that someone else can be overcompensated for their labor.
No, this is too often completely wrong. Having utility is only half the battle, you also need leverage to withdraw in proportion to that utility. If the customers all know about the problem and your product, but your company has a near monopoly, the salesmen can position themselves as middlemen where the entire transaction flows past them, and they'll siphon off some nice round number - say 10% - completely disconnected from the minimal or even negative value they contributed to the process. Conversely, the engineers can find themselves completely powerless to negotiate compensation, producing value to the company 10x or 20x their salary, out of view of the customers and with no leverage to extract any more or less from the process.
> ‘Go where the rich and powerful are,’ I’d tell him, ‘and learn their ways. They can be flattered and they can be scared. Please them enormously or scare them enormously, and one moonless night they will put their fingers to their lips, warning you not to make a sound. And they will lead you through the dark to the widest, deepest river of wealth ever known to man. You’ll be shown your place on the riverbank, and handed a bucket all your own. Slurp as much as you want, but try to keep the racket of your slurping down. A poor man might hear.’
Kurt Vonnegut, "God Bless You, Mr. Rosewater"
https://www.goodreads.com/work/quotes/4076-god-bless-you-mr-...