World Poverty Rate Over Last Two Hundred Years

[sc94597]

CosmicSex said:

sc94597 said:

The bolded is the answer for why it is only $2 /day. The majority of places making less than $2 /day have lower costs of living than places where the wages are much higher. Nevertheless, you can't ignore that just two centuries ago 80% of the world made less than this, and the cost of living (on average) was mostly the same. 

I think it is a combination of hard work and smart work. One shouldn't be paid more because they dig ditches and fill them up. They need to help produce a social good that others demand. That is why there are different wages/salaries for different jobs. Not all work is equally valueable. 

This is actually incorrect but you are on the right path.  Labor, like any other good is what is sold to an empolyer.  So basically, when you get a job, your employers is purchasing labor from you.  The idea of social good has NOTHING to do with anything.  There are different things that affect prices (in this case the price you can charge your employer for your labor) but the most basic is supply and demand.  There are more people avalible who can fulfil the job of the ditch digger so the cost of that labor is substancially lower than the cost of labor for a computer engineer who labor isn't natural more valibable, but is more scare and therefore you can demand a higher price for your labor.   There is no moral highground when it comes to labor, only scarity.  Therefore to look down on someone who works hard in a lower paying job is really shitty.  

"Social good" in this context (one in which the market is efficient at maximizing utility) means "good demanded by consumers." An employer (unless they are a government) isn't going to hire people unless they know there is a social good to be made, from which they can make a profit. What I was stating was the same principle you are describing, the problem of scarcity. Nobody demands a person to dig ditches and fill them up, therefore it is not a social good. Now if one believes in market failures that can be solved by government, then social good does not mean what I said it means (in the general context it means a good  which maximizes utility for the most people.)