The Value of Everything

I was on the periphery of a heated political discussion about wealth and income inequality, and, as one might expect, the bickering turned to executive salaries at large corporations, and whether or not such people "deserved" the size of their paychecks. Also, as one might expect, no one bothered to define their terms. As a neutral observer, it was clear to me that both people were using different understandings of how value is determined, but neither of the interlocutors seemed to understand that they were, in fact, not on the same page.

"Value" is a subjective term. You cannot take an object and use some sort of physics experiment to determine some ironclad value for it. And this means that different people can come to different determinations of an items value, without either of them necessarily being "wrong." And in the political argument I was lurking in, very different determinations of value were in play.

There is a way of understanding value that seeks to place everything within a consistent framework with fixed and/or bounded ratios, so that it becomes possible to make a statement such as "A is worth $10," or "B may be worth ten to fifteen, but not twenty times, C." In this sense. value is viewed, at least partially, as an objective value that allows for comparisons between things. On the other hand, there is a way of defining value simply in terms of what someone has paid for something, so if Alice pays $20 for X, then X is worth $20. Likewise, if Bob is willing to trade twenty-five of Y for Z, then Z is twenty-five times more valuable than Y. And even if we hold that those valuations are only valid for Alice and Bob, in that Carol would have paid $30 for X but only traded five of Y for Z, they still cannot be assailed as "wrong," provided that Alice and Bob freely chose what they were willing to give.

As far as I'm concerned, either understanding is equally valid, but a discussion of value works better if people at least understand that they may be talking about different things, and that was missing from the discussion I was watching unfold (and, to be sure, become increasingly acrimonious). What impressed me the most was that the participants, perhaps because they had become so emotionally invested in the debate, didn't seem to know that they were operating on two very different models on how to valuate things. Looking back on it, it shouldn't have stood out for me, because so many arguments are hamstrung by the same issue.

Perhaps, in order to make progress, American society needs to have a better understanding that not everyone understands the details of the world in the same way as themselves. Although one might make the point that if American society were prepared for that understanding, it wouldn't be in the place it's currently in.