There used to be people who would go out hunting for gold, in mountains or deserts or wherever else gold is found. Probably many countries have gold prospector stories. In North America there were at least two world-famous gold rushes, where scads of people went out hunting. One was in the San Francisco area starting in 1848 and another in the Klondike area of Yukon Territory of Canada, in 1898. While very interesting, the details of these important historical events is not relevant to the discussion here. Instead, the question is, what is the value of a gold prospector, or rather a year of a gold prospector’s time?
This is tenuously connected with the idea of Just Deserts, that people should get something proportional or at least related to their contribution to society as a whole. The other half of the Just Deserts idea, that this value is automatically determined by some sort of unencumbered free market, is not of interest today. We simply are breaking the concept of Just Deserts into its two halves, as they don’t necessarily have to be fit together, but can stand on their own separately.
The second half of the Just Deserts concept, that of some market figuring out value and then transferring it, is also composed of two intertwined ideas: That there is some value that can be deduced, somehow, for a person’s time and effort, and then that some sort of market actually transfers this amount. Consider the figuring out part. If that can be done, then perhaps there are other, perhaps multiple, ways of transferring that exact amount of remuneration to a person for his time and effort, which would then satisfy the first precept of Just Deserts, that people should get this proportional reward.
Gold prospecting is a good illustration, as it introduces the factor of chance into the mix. Consider two gold prospectors, both of whom have equivalent everything, backgrounds, education, motivation, intelligence, care for details, vision, and whatever other qualities can be attributed to a person. They both go out prospecting for exactly the same amount of time, and they are both identically equipped. Their starting points are chosen randomly in an area believed to have gold deposits. Because they are identical examples, they work identically hard, sleeping just the same amount of time, taking exactly the same amount of break time, pushing themselves at the identical pace, and doing everything else the same, except with different starting points in the gold area.
At this point, it would seem that Just Deserts would indicate that they should get exactly the same rewards, if that theory is used for calculating and transferring benefits. This example was set up so that there is nothing that can be found to discriminate between the two as far as effort or capability goes.
As for results, the first prospector, Arthur, finds an immense deposit of gold during his year of prospecting, and if the ownership rules of the gold rushes were used, he would get all of it for himself. The second prospector, Bertram, finds nothing. If those same ownership rules were used, Bertram gets nothing for his year of work. Just Deserts would say that they should both be rewarded equally, which is the exact opposite of what might be called gold rush rules of ownership, which is a gamble.
Asking about the contrast between what might be seen as two equally justifiable concepts of remuneration can lead to some interesting features of remuneration, all of which are well known in economics and even to those of us uneducated in economics. One is motivation. It is possible to be single-minded about some task, and devote all your attention to it, and strive to maximize your effect on accomplishing this task. It is possible to be reluctant in performing some task and to put as little attention to it as possible, and not give a fig about whether it was accomplished or how well it was accomplished. This calls into question what the task actually consists of.
Some tasks are extremely well-specified, such as an assembly-line worker. The assembly-line moves at a particular speed, and each worker has a task to be accomplished on the line. Some measure of accomplishment exists, such as the tightness of a certain nut that is attached by a particular worker, and the rate of accomplishing the repetitive task is governed by the rate of movement of the line. Someone other than the assembly-line workers has figured out the task breakdown, the best rate of movement of the line, how many workers are required and the specifications for each of the multitude of tasks that are performed on the line by the line workers.
The other end of the spectrum on specification might not exist. If a task has no specification at all, it is not a task. There is no threshold that says if it is done or not done, or if it was done well or poorly, or if it was done once or twice or not at all. So as we move away from the example of assembly-line worker, we get to a forest of possibilities, where the task is partially specified, quality is partially specified, and rate is to be determined. Some trigger must be pulled to know when the task is done, so value can be measured, and that trigger might be somewhat vague. The gold prospecting task was like this, in that we used time expended as a measure of effort, and assumed away all the differences that always exist when only time expended is used as the measure. There are indeed specifications for gold prospecting, but they might not be codified, or be passed only by word of mouth or by partnerships.
Suppose Prospector Arthur knows some secret clues to finding gold, and Prospector Bertram does not. This does not eliminate the randomness of result, but it does tilt the odds. If these clues are valid and with few false positives, then Prospector Arthur might have ten times better odds of finding a gold deposit than Prospector Bertram. What does Just Deserts say about this?
It might say that there are two tasks that the prospectors have to do. One is learning the secret clues and the other is prospecting based on these clues. If the clues are published, and both Arthur and Bertram read them and follow them identically, we are back to the case where Just Deserts indicates they should get identical rewards. But if they are secret, finding out what the clues are is a separate task, and so we have to re-phrase the question. What would Just Deserts say about rewards for Prospector Arthur who has done this extra job of finding out the best clues, as compared to Prospector Bertram, who only did the prospecting task?
Does secret knowledge imply that the value of Arthur’s work is much higher than Bertram’s? It is clearly true that Arthur is much more likely to be successful and to locate very valuable gold, provided he has the secret clues and uses them. But the work involved is the same in the prospecting task, which means that the whole difference in value comes from the obtaining of the secret clues. This might take ten minutes of effort in talking to a friend or come from making a bribe or by threatening the life of someone who knows the secret clues. It could result from a lifetime of investigating geology as a research scientist, who happens to be the Arthur’s brother. These examples merely serve to show that learning some secret might involve almost no effort, yet the value of it is very high. Does Just Deserts say that being born as the brother of a good geologist is worth a great deal of reward?
It can not, as any measure of that work, of obtaining the secret clues, by comparison with other similar tasks, turns out to be small. It might involve essentially no work at all, just an accident of birth, or a willingness to perform a criminal act. It might also involve working as a partner to more experienced gold propectors for years on end until they share the clues they use. If Arthur served as an apprentice for twenty years in a subordinate position, enduring hardship and deprivation, but Bertram did not, does Just Deserts say that some benefit is appropriate for Arthur that Bertram does not merit. This may seem appropriate, but if random luck works the opposite way, and Arthur, after twenty years of apprenticeship, gets his secret clues, but it happens to be Bertram who accidentally finds the huge gold deposit, what does this appropriateness imply?
If there is any economic theory or policy that has a justifiable end result, such as Just Deserts claims to be, it will have to take into account these three things: randomness of results, secret clues obtained either from diligence or from chance of birth or some other way, and motivation. It will also have to take into account something not yet mentioned here: efficiency. A good economic policy should also strive to be efficient for the society, so that the maximum of benefits can be obtained, no matter how they are distributed.
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