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Comment by DarylZero | Hacker News Reader

> 2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity.

That's not true at all. Firms can take in monopoly profits and pay workers above their productivity indefinitely.

There's no hard cap, just that workers are unlikely to be powerful enough to negotiate such an arrangement. (NBA players union is good example.)

Shareholders are in a sense workers with 0 productivity, and yet they receive more payment than 0.

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Thank you for that comment. It helped me understand that many people do have their own definition of productivity (getting X done per hour) which differs starkly from the economic definition of it (GDP per hour).

Speaking in economic terms: Being a monopoly potentially increases worker productivity, because they can achieve more revenue per hour worked.

Why would you attribute monopoly rents to worker productivity? It doesn't make any sense from a causal perspective.

It doesn't have to, that is probably the largest take-away and also most important aspect when it comes to career advice: Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking). Your productivity is dominated by the industry and market position of your employer. Don't optimize what shouldn't be done in the first place.

Again: productivity = GDP/working hours. Due to more price control the monopoly can increase the numerator, while the denominator remains the same.

I mean why would you attribute the "GDP" to the worker if there's no causal connection?

> Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking).

That's not the kind of scenario I'm talking about. You're talking about an actual difference in what the worker produces. Not what I mean.

Suppose the worker produces a widget while working for a monopolist who controls the distribution channel. Then the worker's productivity is the price P the customer pays for the widget.

Now suppose the worker's firm is distinct from the monopolist firm. The worker's firm sells to the monopolist at a lower price, P - X, the monopolist marks it up to P.

The worker's causal productivity hasn't changed, the only difference is which people capture the value. If the people capturing monopoly rents are in the same firm as the worker, then the worker's "GDP" is higher. If they're in a different firm, the worker's "GDP" is lower.

In scenario 1 (monopoly): Only one company with worker w1, price p.

prod_1 = punits / hours_w1

In scenario 2 (supplier + monopoly): Let's assume that the second company is not magic, but needs a worker to coordinate with the other company, mark up the price, etc.

prod_1 = (p-x)units/hours_w1

prod_2 = x*units/hours_w2

In summary, coordination between suppliers is an extra job which does not increase GDP. Productivity is decreased, because more hours are required to produce the same GDP.

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