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To oversimplify, there's two ways of pricing things: what the market will pay, or taking the cost to produce and adding a markup.

We price hours of work by the first method, but I started wondering what it would look like if we used the second.

For both a CEO and a janitor the cost of one hour of employment is one hour of their life. So from that perspective, we should be paying everyone the same.

I can't think of how to make an economic system work based on that, but it was a curious thought.



The answer to al your questions is: in a perfectly competitive market, the two pricing strategies lead to the same price.

However an hour of one person's life does not have the same market value as an hour of another person's life.


What do you do with overqualified people =)




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