TIME

Time and How to Use It

PNRJ core principles, ethics, personal , , , , , , , , , , , , , , , ,

Nov 5 JDN 2460254

A review of Four Thousand Weeks by Oliver Burkeman

The central message of Four Thousand Weeks: Time and How to Use It seems so obvious in hindsight it’s difficult to understand why it feels so new and unfamiliar. It’s a much-needed reaction to the obsessive culture of “efficiency” and “productivity” that dominates the self-help genre. Its core message is remarkable simple:

You don’t have time to do everything you want, so stop trying.

I actually think Burkeman understands the problem incorrectly. He argues repeatedly that it is our mortality which makes our lives precious—that it is because we only get four thousand weeks of life that we must use our time well. But this strikes me as just yet more making excuses for the dragon.

Our lives would not be less precious if we lived a thousand years or a million. Indeed, our time would hardly be any less scarce! You still can’t read every book ever written if you live a million years—for every one of those million years, another 500,000 books will be published. You could visit every one of the 10,000 cities in the world, surely; but if you spend a week in each one, by the time you get back to Paris for a second visit, centuries will have passed—I must imagine you’ll have missed quite a bit of change in that time. (And this assumes that our population remains the same—do we really think it would, if humans could live a million years?)

Even a truly immortal being that will live until the end of time needs to decide where to be at 7 PM this Saturday.

Yet Burkeman does grasp—and I fear that too many of us do not—that our time is precious, and when we try to do everything that seems worth doing, we end up failing to prioritize what really matters most.

What do most of us spend most of our lives doing? Whatever our bosses tell us to do. Aside from sleeping, the activity that human beings spend the largest chunk of their lives on is working.

This has made us tremendously, mind-bogglingly productive—our real GDP per capita is four times what it was in just 1950, and about eight times what it was in the 1920s. Projecting back further than that is a bit dicier, but assuming even 1% annual growth, it should be about twenty times what it was at the dawn of the Industrial Revolution. We could surely live better than medieval peasants did by working only a few hours per week; yet in fact on average we work more hours than they did—by some estimates, nearly twice as much. Rather than getting the same wealth for 5% of the work, or twice the wealth for 10%, we chose to get 40 times the wealth for twice the work.

It would be one thing if all this wealth and productivity actually seemed to make us happy. But does it?

Our physical health is excellent: We are tall, we live long lives—we are smarter, even, than people of the not-so-distant past. We have largely conquered disease as the ancients knew it. Even a ‘catastrophic’ global pandemic today kills a smaller share of the population than would die in a typical year from disease in ancient times. Even many of our most common physical ailments, such as obesity, heart disease, and diabetes, are more symptoms of abundance than poverty. Our higher rates of dementia and cancer are largely consequences of living longer lives—most medieval peasants simply didn’t make it long enough to get Alzheimer’s. I wonder sometimes how ancient people dealt with other common ailments such as migraine and sleep apnea; but my guess is that they basically just didn’t—since treatment was impossible, they learned to live with it. Maybe they consoled themselves with whatever placebo treatments the healers of their local culture offered.

Yet our mental health seems to be no better than ever—and depending on how you measure it, may actually be getting worse over time. Some of the measured increase is surely due to more sensitive diagnosis; but some of it may be a genuine increase—especially as a result of the COVID pandemic. I wasn’t able to find any good estimates of rates of depression or anxiety disorders in ancient or medieval times, so I guess I really can’t say whether this is a problem that’s getting worse. But it sure doesn’t seem to be getting better. We clearly have not solved the problem of depression the way we have solved the problem of infectious disease.

Burkeman doesn’t tell us to all quit our jobs and stop working. But he does suggest that if you are particularly unhappy at your current job (as I am), you may want to quit it and begin searching for something else (as I have). He reminds us that we often get stuck in a particular pattern and underestimate the possibilities that may be available to us.

And he has advice for those who want to stay in their current jobs, too: Do less. Don’t take on everything that is asked of you. Don’t work yourself to the bone. The rewards for working harder are far smaller than our society will tell you, and the costs of burning out are far higher. Do the work that is genuinely most important, and let the rest go.

Unlike most self-help books, Four Thousand Weeks offers very little in the way of practical advice. It’s more like a philosophical treatise, exhorting you to adopt a whole new outlook on time and how you use it. But he does offer a little bit of advice, near the end of the book, in “Ten Tools for Embracing Your Finitude” and “Five Questions”.

The ten tools are as follows:


Adopt a ‘fixed volume’ approach to productivity. Limit the number of tasks on your to-do list. Set aside a particular amount of time for productive work, and work only during that time.

I am relatively good at this one; I work only during certain hours on weekdays, and I resist the urge to work other times.

Serialize, serialize, serialize. Do one major project at a time.

I am terrible at this one; I constantly flit between different projects, leaving most of them unfinished indefinitely. But I’m not entirely convinced I’d do better trying to focus on one in particular. I switch projects because I get stalled on the current one, not because I’m anxious about not doing the others. Unless I can find a better way to break those stalls, switching projects still gets more done than staying stuck on the same one.

Decide in advance what to fail at. Prioritize your life and accept that some things will fail.

We all, inevitably, fail to achieve everything we want to. What Burkeman is telling us to do is choose in advance which achievements we will fail at. Ask yourself: How much do you really care about keeping the kitchen clean and the lawn mowed? If you’re doing these things to satisfy other people’s expectations but you don’t truly care about them yourself, maybe you should just accept that people will frown upon you for your messy kitchen and overgrown lawn.

Focus on what you’ve already completed, not just on what’s left to complete. Make a ‘done list’ of tasks you have completed today—even small ones like “brushed teeth” and “made breakfast”—to remind yourself that you do in fact accomplish things.

I may try this one for awhile. It feels a bit hokey to congratulate yourself on making breakfast—but when you are severely depressed, even small tasks like that can in fact feel like an ordeal.

Consolidate your caring. Be generous and kind, but pick your battles.

I’m not very good at this one either. Spending less time on social media has helped; I am no longer bombarded quite so constantly by worthy causes and global crises. Yet I still have a vague sense that I am not doing enough, that I should be giving more of myself to help others. For me this is partly colored by a feeling that I have failed to build a career that would have both allowed me to have direct impact on some issues and also made enough money to afford large donations.

Embrace boring and single-purpose technology. Downgrade your technology to reduce distraction.

I don’t do this one, but I also don’t see it as particularly good advice. Maybe taking Facebook and (the-platform-formerly-known-as-) Twitter off your phone home screen is a good idea. But the reason you go to social media isn’t that they are so easy to access. It’s that you are expected to, and that you try to use them to fill some kind of need in your life—though it’s unclear they ever actually fill it.

Seek out novelty in the mundane. Cultivate awareness and appreciation of the ordinary things around you.

This one is basically a stripped-down meditation technique. It does work, but it’s also a lot harder to do than most people seem to think. It is especially hard to do when you are severely depressed. One technique I’ve learned from therapy that is surprisingly helpful is to replace “I have to” with “I get to” whenever you can: You don’t have to scoop cat litter, you get to because you have an adorable cat. You don’t have to catch the bus to work, you get to because you have a job. You don’t have to make breakfast for your family, you get to because you have a loving family.

Be a ‘researcher’ in relationships. Cultivate curiosity rather than anxiety or judgment.

Human beings are tremendously varied and often unpredictable. If you worry about whether or not people will do what you want, you’ll be constantly worried. And I have certainly been there. It can help to try to take a stance of detachment, where you concern yourself less with getting the right outcome and more with learning about the people you are with. I think this can be taken too far—you can become totally detached from relationships, or you could put yourself in danger by failing to pass judgment on obviously harmful behaviors—but in moderation, it’s surprisingly powerful. The first time I ever enjoyed going to a nightclub, (at my therapist’s suggestion) I went as a social scientist, tasked with observing and cataloguing the behavior around me. I still didn’t feel fully integrated into the environment (and the music was still too damn loud!), but for once, I wasn’t anxious and miserable.

Cultivate instantaneous generosity. If you feel like doing something good for someone, just do it.

I’m honestly not sure whether this one is good advice. I used to follow it much more than I do now. Interacting with the Effective Altruism community taught me to temper these impulses, and instead of giving to every random charity or homeless person that asks for money, instead concentrate my donations into a few highly cost-effective charities. Objectively, concentrating donations in this way produces a larger positive impact on the world. But subjectively, it doesn’t feel as good, it makes people sad, and sometimes it can make you feel like a very callous person. Maybe there’s a balance to be had here: Give a little when the impulse strikes, but save up most of it for the really important donations.

Practice doing nothing.

This one is perhaps the most subversive, the most opposed to all standard self-help advice. Do nothing? Just rest? How can you say such a thing, when you just reminded us that we have only four thousand weeks to live? Yet this is in fact the advice most of us need to hear. We burn ourselves out because we forget how to rest.

I am also terrible at this one. I tend to get most anxious when I have between 15 and 45 minutes of free time before an activity, because 45 minutes doesn’t feel long enough to do anything, and 15 minutes feels too long to do nothing. Logically this doesn’t really make sense: Either you have time to do something, or you don’t. But it can be hard to find good ways to fill that sort of interval, because it requires the emotional overhead of starting and stopping a task.

Then, there are the five questions:

Where in your life or work are you currently pursuing comfort, when what’s called for is a little discomfort?

It seems odd to recommend discomfort as a goal, but I think what Burkeman is getting at is that we tend to get stuck in the comfortable and familiar, even when we would be better off reaching out and exploring into the unknown. I know that for me, finally deciding to quit this job was very uncomfortable; it required taking a big risk and going outside the familiar and expected. But I am now convinced it was the right decision.

Are you holding yourself to, and judging yourself by, standards of productivity or performance that are impossible to meet?

In a word? Yes. I’m sure I am. But this one is also slipperier than it may seem—for how do we really know what’s possible? And possible for whom? If you see someone else who seems to be living the life you think you want, is it just an illusion? Are they really suffering as badly as you? Or do they perhaps have advantages you don’t, which made it possible for them, but not for you? When people say they work 60 hours per week and you can barely manage 20, are they lying? Are you truly not investing enough effort? Or do you suffer from ailments they don’t, which make it impossible for you to commit those same hours?

In what ways have you yet to accept the fact that you are who you are, not the person you think you ought to be?

I think most of us have a lot of ways that we fail to accept ourselves: physically, socially, psychologically. We are never the perfect beings we aspire to be. And constantly aspiring to an impossible ideal will surely drain you. But I also fear that self-acceptance could be a dangerous thing: What if it makes us stop striving to improve? What if we could be better than we are, but we don’t bother? Would you want a murderous psychopath to practice self-acceptance? (Then again, do they already, whether we want them to or not?) How are we to know which flaws in ourselves should be accepted, and which repaired?

In which areas of your life are you still holding back until you feel like you know what you’re doing?

This one cut me very deep. I have several areas of my life where this accusation would be apt, and one in particular where I am plainly guilty as charged: Parenting. In a same-sex marriage, offspring don’t emerge automatically without intervention. If we want to have kids, we must do a great deal of work to secure adoption. And it has been much easier—safer, more comfortable—to simply put off that work, avoid the risk. I told myself we’d adopt once I finished grad school; but then I only got a temporary job, so I put it off again, saying we’d adopt once I found stability in my career. But what if I never find that stability? What if the rest of my career is always this precarious? What if I can always find some excuse to delay? The pain of never fulfilling that lifelong dream of parenthood might continue to gnaw at me forever.

How would you spend your days differently if you didn’t care so much about seeing your actions reach fruition?

This one is frankly useless. I hate it. It’s like when people say “What would you do if you knew you’d die tomorrow?” Obviously, you wouldn’t go to work, you wouldn’t pay your bills, you wouldn’t clean your bathroom. You might devote yourself single-mindedly to a single creative task you hoped to make a legacy, or gather your family and friends to share one last day of love, or throw yourself into meaningless hedonistic pleasure. Those might even be things worth doing, on occasion. But you can’t do them every day. If you knew you were about to die, you absolutely would not live in any kind of sustainable way.

Similarly, if I didn’t care about seeing my actions reach fruition, I would continue to write stories and never worry about publishing them. I would make little stabs at research when I got curious, then once it starts getting difficult or boring, give up and never bother writing the paper. I would continue flitting between a dozen random projects at once and never finish any of them. I might well feel happier—at least until it all came crashing down—but I would get absolutely nothing done.

Above all, I would never apply for any jobs, because applying for jobs is absolutely not about enjoying the journey. If you know for a fact that you won’t get an offer, you’re an idiot to bother applying. That is a task that is only worth doing if I believe that it will yield results—and indeed, a big part of why it’s so hard to bring myself to do it is that I have a hard time maintaining that belief.

If you read the surrounding context, Burkeman actually seems to intend something quite different than the actual question he wrote. He suggests devoting more time to big, long-term projects that require whole communities to complete. He likens this to laying bricks in a cathedral that we will never see finished.

I do think there is wisdom in this. But it isn’t a simple matter of not caring about results. Indeed, if you don’t care at all about whether the cathedral will stand, you won’t bother laying the bricks correctly. In some sense Burkeman is actually asking us to do the opposite: To care more about results, but specifically results that we may never live to see. Maybe he really intends to emphasize the word see—you care about your actions reaching fruition, but not whether or not you’ll ever see it.

Yet this, I am quite certain, is not my problem. When a psychiatrist once asked me, “What do you really want most in life?” I gave a very thoughtful answer: “To be remembered in a thousand years for my contribution to humanity.” (His response was glib: “You can’t control that.”) I still stand by that answer: If I could have whatever I want, no limits at all, three wishes from an all-powerful genie, two of them would be to solve some of the world’s greatest problems, and the third would be for the chance to live my life in a way that I knew would be forever remembered.

But I am slowly coming to realize that maybe I should abandon that answer. That psychiatrist’s answer was far too glib (he was in fact not a very good fit for me; I quickly switched to a different psychiatrist), but maybe it wasn’t fundamentally wrong. It may be impossible to predict, let alone control, whether our lives have that kind of lasting impact—and, almost by construction, most lives can’t.

Perhaps, indeed, I am too worried about whether the cathedral will stand. I only have a few bricks to lay myself, and while I can lay them the best I can, that ultimately will not be what decides the fate of the cathedral. A fire, or an earthquake, or simply some other bricklayer’s incompetence, could bring about its destruction—and there is nothing at all I can do to prevent that.

This post is already getting too long, so I should try to bring it to a close.

As the adage goes, perhaps if I had more time, I’d make it shorter.

How we sold our privacy piecemeal

PNRJ cognitive science, heuristics and biases, market failure, public policy, Uncategorized , , , , , , , , , ,

Apr 2, JDN 2457846

The US Senate just narrowly voted to remove restrictions on the sale of user information by Internet Service Providers. Right now, your ISP can basically sell your information to whomever they like without even telling you. The new rule that the Senate struck down would have required them to at least make you sign a form with some fine print on it, which you probably would sign without reading it. So in practical terms maybe it makes no difference.

…or does it? Maybe that’s really the mistake we’ve been making all along.

In cognitive science we have a concept called the just-noticeable difference (JND); it is basically what it sounds like. If you have two stimuli—two colors, say, or sounds of two different pitches—that differ by an amount smaller than the JND, people will not notice it. But if they differ by more than the JND, people will notice. (In practice it’s a bit more complicated than that, as different people have different JND thresholds and even within a person they can vary from case to case based on attention or other factors. But there’s usually a relatively narrow range of JND values, such that anything below that is noticed by no one and anything above that is noticed by almost everyone.)

The JND seems like an intuitively obvious concept—of course you can’t tell the difference between a color of 432.78 nanometers and 432.79 nanometers!—but it actually has profound implications. In particular it undermines the possibility of having truly transitive preferences. If you prefer some colors to others—which most of us do—but you have a nonzero JND in color wavelengths—as we all do—then I can do the following: Find one color you like (for concreteness, say you like blue of 475 nm), and another color you don’t (say green of 510 nm). Let you choose between the blue you like and another blue, 475.01 nm. Will you prefer one to the other? Of course not, the difference is within your JND. So now compare 475.01 nm and 475.02 nm; which do you prefer? Again, you’re indifferent. And I can go on and on this way a few thousand times, until finally I get to 510 nanometers, the green you didn’t like. I have just found a chain of your preferences that is intransitive; you said A = B = C = D… all the way down the line to X = Y = Z… but then at the end you said A > Z. Your preferences aren’t transitive, and therefore aren’t well-defined rational preferences. And you could do the same to me, so neither are mine.

Part of the reason we’ve so willingly given up our privacy in the last generation or so is our paranoid fear of terrorism, which no doubt triggers deep instincts about tribal warfare. Depressingly, the plurality of Americans think that our government has not gone far enough in its obvious overreaches of the Constitution in the name of defending us from a threat that has killed fewer Americans in my lifetime than die from car accidents each month.

But that doesn’t explain why we—and I do mean we, for I am as guilty as most—have so willingly sold our relationships to Facebook and our schedules to Google. Google isn’t promising to save me from the threat of foreign fanatics; they’re merely offering me a more convenient way to plan my activities. Why, then, am I so cavalier about entrusting them with so much personal data?

 

Well, I didn’t start by giving them my whole life. I created an email account, which I used on occasion. I tried out their calendar app and used it to remind myself when my classes were. And so on, and so forth, until now Google knows almost as much about me as I know about myself.

At each step, it didn’t feel like I was doing anything of significance; perhaps indeed it was below my JND. Each bit of information I was giving didn’t seem important, and perhaps it wasn’t. But all together, our combined information allows Google to make enormous amounts of money without charging most of its users a cent.

The process goes something like this. Imagine someone offering you a penny in exchange for telling them how many times you made left turns last week. You’d probably take it, right? Who cares how many left turns you made last week? But then they offer another penny in exchange for telling them how many miles you drove on Tuesday. And another penny for telling them the average speed you drive during the afternoon. This process continues hundreds of times, until they’ve finally given you say $5.00—and they know exactly where you live, where you work, and where most of your friends live, because all that information was encoded in the list of driving patterns you gave them, piece by piece.

Consider instead how you’d react if someone had offered, “Tell me where you live and work and I’ll give you $5.00.” You’d be pretty suspicious, wouldn’t you? What are they going to do with that information? And $5.00 really isn’t very much money. Maybe there’s a price at which you’d part with that information to a random suspicious stranger—but it’s probably at least $50 or even more like $500, not $5.00. But by asking it in 500 different questions for a penny each, they can obtain that information from you at a bargain price.

If you work out how much money Facebook and Google make from each user, it’s actually pitiful. Facebook has been increasing their revenue lately, but it’s still less than $20 per user per year. The stranger asks, “Tell me who all your friends are, where you live, where you were born, where you work, and what your political views are, and I’ll give you $20.” Do you take that deal? Apparently, we do. Polls find that most Americans are willing to exchange privacy for valuable services, often quite cheaply.

 

Of course, there isn’t actually an alternative social network that doesn’t sell data and instead just charges a subscription fee. I don’t think this is a fundamentally unfeasible business model, but it hasn’t succeeded so far, and it will have an uphill battle for two reasons.

The first is the obvious one: It would have to compete with Facebook and Google, who already have the enormous advantage of a built-in user base of hundreds of millions of people.

The second one is what this post is about: The social network based on conventional economics rather than selling people’s privacy can’t take advantage of the JND.

I suppose they could try—charge $0.01 per month at first, then after awhile raise it to $0.02, $0.03 and so on until they’re charging $2.00 per month and actually making a profit—but that would be much harder to pull off, and it would provide the least revenue when it is needed most, at the early phase when the up-front costs of establishing a network are highest. Moreover, people would still feel that; it’s a good feature of our monetary system that you can’t break money into small enough denominations to really consistently hide under the JND. But information can be broken down into very tiny pieces indeed. Much of the revenue earned by these corporate giants is actually based upon indexing the keywords of the text we write; we literally sell off our privacy word by word.

 

What should we do about this? Honestly, I’m not sure. Facebook and Google do in fact provide valuable services, without which we would be worse off. I would be willing to pay them their $20 per year, if I could ensure that they’d stop selling my secrets to advertisers. But as long as their current business model keeps working, they have little incentive to change. There is in fact a huge industry of data brokering, corporations you’ve probably never heard of that make their revenue entirely from selling your secrets.

In a rare moment of actual journalism, TIME ran an article about a year ago arguing that we need new government policy to protect us from this kind of predation of our privacy. But they had little to offer in the way of concrete proposals.

The ACLU does better: They have specific proposals for regulations that should be made to protect our information from the most harmful prying eyes. But as we can see, the current administration has no particular interest in pursuing such policies—if anything they seem to do the opposite.

The Warren Rule is a good start

PNRJ public policy , , , , , , , , , , , , , ,

JDN 2457243 EDT 10:40.

As far back as 2010, Elizabeth Warren proposed a simple regulation on the reporting of CEO compensation that was then built into Dodd-Frank—but the SEC has resisted actually applying that rule for five years; only now will it actually take effect (and by “now” I mean over the next two years). For simplicity I’ll refer to that rule as the Warren Rule, though I don’t see a lot of other people doing that (most people don’t give it a name at all).

Two things are important to understand about this rule, which both undercut its effectiveness and make all the right-wing whinging about it that much more ridiculous.

1. It doesn’t actually place any limits on CEO compensation or employee salaries; it merely requires corporations to consistently report the ratio between them. Specifically, the rule says that every publicly-traded corporation must report the ratio between the “total compensation” of their CEO and the median salary (with benefits) of their employees; wisely, it includes foreign workers (with a few minor exceptions—lobbyists fought for more but fortunately Warren stood firm), so corporations can’t simply outsource everything but management to make it look like they pay their employees more. Unfortunately, it does not include contractors, which is awful; expect to see corporations working even harder to outsource their work to “contractors” who are actually employees without benefits (not that they weren’t already). The greatest victory here will be for economists, who now will have more reliable data on CEO compensation; and for consumers, who will now find it more salient just how overpaid America’s CEOs really are.

2. While it does wisely cover “total compensation”, that isn’t actually all the money that CEOs receive for owning and operating corporations. It includes salaries, bonuses, benefits, and newly granted stock options—it does not include the value of stock options previously exercised or dividends received from stock the CEO already owns.

TIME screwed this up; they took at face value when Larry Page reported a $1 “total compensation”, which technically is true by how “total compensation” is defined; he received a $1 token salary and no new stock awards. But Larry Page has net wealth of over $38 billion; about half of that is Google stock, so even if we ignore all others, on Google’s PE ratio of about 25, Larry Page received at least $700 million in Google retained earnings alone. (In my personal favorite unit of wealth, Page receives about 3 romneys a year in retained earnings.) No, TIME, he is not the lowest-paid CEO in the world; he has simply structured his income so that it comes entirely from owning shares instead of receiving a salary. Most top CEOs do this, so be wary when it says a Fortune 500 CEO received only $2 million, and completely ignore it when it says a CEO received only $1. Probably in the former case and definitely in the latter, their real money is coming from somewhere else.

Of course, the complaints about how this is an unreasonable demand on businesses are totally absurd. Most of them keep track of all this data anyway; it’s simply a matter of porting it from one spreadsheet to another. (I also love the argument that only “idiosyncratic investors” will care; yeah, what sort of idiot would care about income inequality or be concerned how much of their investment money is going directly to line a single person’s pockets?) They aren’t complaining because it will be a large increase in bureaucracy or a serious hardship on their businesses; they’re complaining because they think it might work. Corporations are afraid that if they have to publicly admit how overpaid their CEOs are, they might actually be pressured to pay them less. I hope they’re right.

CEO pay is set in a very strange way; instead of being based on an estimate of how much they are adding to the company, a CEO’s pay is typically set as a certain margin above what the average CEO is receiving. But then as the process iterates and everyone tries to be above average, pay keeps rising, more or less indefinitely. Anyone with a basic understanding of statistics could have seen this coming, but somehow thousands of corporations didn’t—or else simply didn’t care.

Most people around the world want the CEO-to-employee pay ratio to be dramatically lower than it is. Indeed, unrealistically lower, in my view. Most countries say only 6 to 1, while Scandinavia says only 2 to 1. I want you to think about that for a moment; if the average employee at a corporation makes $50,000, people in Scandinavia think the CEO should only make $100,000, and people elsewhere think the CEO should only make $300,000? I’m honestly not sure what would happen to our economy if we made such a rule. There would be very little incentive to want to become a CEO; why bear all that fierce competition and get blamed for everything to make only twice as much as you would as an average employee?

On the other hand, most CEOs don’t actually do all that much; CEO pay is basically uncorrelated with company performance. Maybe it would be better if they weren’t paid very much, or even if we didn’t have them at all. But under our current system, capping CEO pay also caps the pay of basically everyone else; the CEO is almost always the highest-paid individual in any corporation.

I guess that’s really the problem. We need to find ways to change the overall attitude of our society that higher authority necessarily comes with higher pay; that isn’t a rational assessment of marginal productivity, it’s a recapitulation of our primate instincts for a mating hierarchy. He’s the alpha male, of course he gets all the bananas.

The president of a university should make next to nothing compared to the top scientists at that university, because the president is a useless figurehead and scientists are the foundation of universities—and human knowledge in general. Scientists are actually the one example I can think of where one individual trulycan be one million times as productive as another—though even then I don’t think that justifies paying them one million times as much.

Most corporations should be structured so that managers make moderate incomes and the highest incomes go to engineers and designers, the people who have the highest skills and do the most important work. A car company without managers seems like an interesting experiment in employee ownership. A car company without engineers seems like an oxymoron.

Finally, people who work in finance should make very low incomes, because they don’t actually do very much. Bank tellers are probably paid about what they should be; stock traders and hedge fund managers should be paid like bank tellers. (Or rather, there shouldn’t be stock traders and hedge funds as we know them; this is all pure waste. A really efficient financial system would be extremely simple, because finance actually is very simple—people who have money loan it to people who need it, and in return receive more money later. Everything else is just elaborations on that, and most of these elaborations are really designed to obscure, confuse, and manipulate.)

Oddly enough, the place where we do this best is the nation as a whole; the President of the United States would be astonishingly low-paid if we thought of him as a CEO. Only about $450,000 including expense accounts, for a “corporation” with revenue of nearly $3 trillion? (Suppose instead we gave the President 1% of tax revenue; that would be $30 billion per year. Think about how absurdly wealthy our leaders would be if we gave them stock options, and be glad that we don’t do that.)

But placing a hard cap at 2 or even 6 strikes me as unreasonable. Even during the 1950s the ratio was about 20 to 1, and it’s been rising ever since. I like Robert Reich’s proposal of a sliding scale of corporate taxes; I also wouldn’t mind a hard cap at a higher figure, like 50 or 100. Currently the average CEO makes about 350 times as much as the average employee, so even a cap of 100 would substantially reduce inequality.
A pay ratio cap could actually be a better alternative to a minimum wage, because it can adapt to market conditions. If the economy is really so bad that you must cut the pay of most of your workers, well, you’d better cut your own pay as well. If things are going well and you can afford to raise your own pay, your workers should get a share too. We never need to set some arbitrary amount as the minimum you are allowed to pay someone—but if you want to pay your employees that little, you won’t be paid very much yourself.

The biggest reason to support the Warren Rule, however, is awareness. Most people simply have no idea of how much CEOs are actually paid. When asked to estimate the ratio between CEO and employee pay, most people around the world underestimate by a full order of magnitude.

Here are some graphs from a sampling of First World countries. I used data from this paper in Perspectives on Psychological Science—the fact that it’s published in a psychology journal tells you a lot about the academic turf wars involved in cognitive economics.

The first shows the absolute amount of average worker pay (not adjusted for purchasing power) in each country. Notice how the US is actually near the bottom, despite having one of the strongest overall economies and not particularly high purchasing power:

worker_pay

The second shows the absolute amount of average CEO pay in each country; I probably don’t even need to mention how the US is completely out of proportion with every other country.

CEO_pay

And finally, the ratio of the two. One of these things is not like the other ones…

CEO_worker_ratio

So obviously the ratio in the US is far too high. But notice how even in Poland, the ratio is still 28 to 1. In order to drop to the 6 to 1 ratio that most people seem to think would be ideal, we would need to dramatically reform even the most equal nations in the world. Denmark and Norway should particularly think about whether they really believe that 2 to 1 is the proper ratio, since they are currently some of the most equal (not to mention happiest) nations in the world, but their current ratios are still 48 and 58 respectively. You can sustain a ratio that high and still have universal prosperity; every adult citizen in Norway is a millionaire in local currency. (Adjusting for purchasing power, it’s not quite as impressive; instead the guaranteed wealth of a Norwegian citizen is “only” about $100,000.)

Most of the world’s population simply has no grasp of how extreme economic inequality has become. Putting the numbers right there in people’s faces should help with this, though if the figures only need to be reported to investors that probably won’t make much difference. But hey, it’s a start.