Home Finance Economics Economic Rent- The Influential Switch in Excess of Talent and Skill
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Economic Rent- The Influential Switch in Excess of Talent and Skill

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Boy! Did we do a day’s work! They give the job all they’ve got!”- The slogan of Domestic Operations Branch at the Bureau of Special Services from the year 1941 thru 1945.

Occupation plays a vital role in every human life. Doubtless to say is the same for other primate with a variance that, in their case is not referred to it as “the occupation”. The words- skill and innate talent would suffice in describing their workload. For a human being holding a job bring about providing amenities using skillsets learned and accumulated throughout the lifespan. Upon amassing of skills in an organized bundle the purpose of facilitating personal recognition within a group, such as profession, specialty or sub-specialty; the humans are able to create employment rolls by constructing and glamorizing them under a new term referred to as “The title”- like Gardner, carpenter, physician, parenthood, lawyer, engineer, etc.

Some jobs are content by way of the monetary compensation; others remunerated through instinctual gratification and betterment of the life itself and loved ones. Everyone must work utilizing their given mental and physical resources to carry out given career requirements or tasks. Hence must stay employed, volunteer or independently part as a business. People call for a wide range of skills or abilities that are associated with each occupation. Some may be included under a given designation, but oftentimes not! In the real world what matters are the skill underwritten for the certain occupation depiction for a particular title, even one may be furthermore adept at one or more of skills from an unlike title. True also, the other way around, as one may be presumed skillful for a specific task under a particular heading but conflictingly flops to do to the satisfaction of the recipient, or the amount of money earned exceeds that which is economically, personally or socially essential for that work. For the sake of convenience— every job description emanates with the least level of skill sets. To succeed we need to keep that degree of aptitude before we are designated as qualified. The way by which the skills are gathered and utilized confide to the grade of competency and ability; also known as “The talent”. In theoretic finish an aptitude is the determining factor of quality, hence the value of a deliverable by one person at a given time. An operative would logically be inclined to ruminate as to the value of overhaul should be at least proportional to the creativeness of its deliverance to a client or customer by offering required expertise. But on the reverse side is not the same!

The Microeconomic concept

Besides the microeconomics concept of supply and demand; the economic framework of determining the face value of service in a given market clasps other factors within the existing system. The factors that invariably but artificially influence the values of any skill delivered through a variety of avenues. Considering, Supply and demands as postulated- holding all else equal, in a competitive market, the unit price for a particular good, or other traded items including labor or liquid financial assets, will vary until it settles at a point where the quantity of a service or product at the present value demanded would equal the quantity supplied at the existing price, aiding in an economic counterbalance of price and quantity transacts.

In the world of 21st-century, the sequence of supply and demand are often manipulated heedlessly of how gifted and skillful individuals. This leads us to the notion of reimbursing carefully chosen groups of people holding a given title more than its true face value; also called the economic rent. In this slice; I would like to expand on the value and compensation for the skills.

Occupation and the job market

Employment is indispensable for the responsible, as our lives bank on it to thrive and societies prosper. Unless physical or mental restraints, occupation will serve as a mode to exchange skills within a society to achieve or have access to services or products that we are not personally capable of attaining. To a greater magnitude, the more finesse we get, the further vantage we hold over others, thence the probability of someone demanding our services would be colossal given the right environment, if we make the deliverable available sprucely and to the optimal satisfaction of clients. Skills make us competitive, where talents give every soul the unique. We all have distinctive dexterity, and such individuality can be appreciated among people with like skill sets. Singularity makes us competitive, and ambition helps us deliver better results each time. Hence, the birth of quality is within a rival environment. In other words, quality is the determination of the way one can offer a service or a product to customers so they appreciate its exceptionalism paralleled to those delivered by others. As previously pointed out; is regrettable to say- the value does not always adapt to the pattern of unprecedented outcome. Today the worthiness of a person’s skill is in part the spin-off of sociopolitical influences. As societies move towards stringently organized systems, legislative upshot of the formation rests within the hands of groups that have consolidated to protect the market and legitimize their vision and mission headed for higher fiscal gain in exchange for analogously scarcer skills. In certain situations, we can’t oversight to witness those getting paid for lower quality oeuvre. Societies, organizations and consolidations exist today by way of creating their own domain of skill sets. Thence, in one way or another shaped overtly monopolized environs through which they could curb folios of citizenry permitted to learn, arrogate particular skills and give service utilizing the versed skills. Today’s organizations have mastered prompting the base pay for occupations. It’s done by crafting a fictitious environment of supply and demand pliancy; a touch that would so decodes into who should earn more for what!

Disparity between quality and work

Evidently disparity between the quality and quantity of work and how much a person should earn is significant. Perhaps; a general internist by way of skills shoved under its given designation covers a much larger knowledge base and work hours than a dermatologist. Or; a general surgeon may well spend more strenuous workload and hours than an ophthalmologist. Yet the Internist and general surgeons’ compensation are generally lower and much less “lucrative”. By the same grounds those with “lucrative specialty titles and skill set” argue- the higher pay must have got to do with the number of years dedicated to the education as subspecialists. The retort quarrel would be; the high cost of gaining a skill carries the monopoly of its own as it is the topic of a separate discussion. Plus- some engineering and legal professions spend much a lesser amount of time in school and lesser tuition fees; yet earn higher than any physicians out there in the job market.

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The major question is compensation of labor- how much; why on what basis, and system of logic?! – This is the questions that cause to be answered before we can ponder the actual problem.

Although the answers may be apprehensive, historical facts point towards the self-indulgence driven monopoly and control over the economic sovereignty of skilled and talented by those who fear the clarity of competitiveness and value of individual reign.

An article published on PayScale not overly long ago describes how the reinforced pay system is for jobs and what encompasses the concept of skill premium. According to the issue source skill premium, also referred to as skill hightail is the divergence between how much someone’s pay is compared to another party when they partake of the same title without sharing the same attainment. The intention is to outline the fact that not all skills need a premium. Also, the value of every skill under different circumstances will variegate from one job to another. Types of skill acquisitions are categorized as; “Assumed” or Skills that necessary for doing a task that companies automatically presume prospect has these skills from the title given; “Essential” (specialized) or must have Skills so candidate come through in a job, but cannot be assumed;

“Useful” Skills are not required, but aids to get the job done efficiently and in some other fashion even better; “Irrelevant” Skills are unnecessary for the given job and do not meliorate the efficiency or execution of the applied job. To explicate further the author of the publication exemplifies the data analyst vs data scientist Roles. In the context acquiring machine learning skills by data analyst could add $10,500.00 to their compensation. The PayScale categorizes the data analyst mastery under the negative premiums. (fig.1) Authors assumption in contrary to what some believe companies don’t necessarily ding their workers for having skills that they need but justifies it by the first rule of data analysis. The correlation does not always translate to causation- he said. Instead, correlation is the number one wood of the skill value. The PayScale assumes that the value of skill depends on which intensities are assumed, essential, irrelevant or useful for given positions and the spots they hope to secure in the future.

It’s my understanding, Pay Scale presents another sample suggesting over appositeness of factitious theorem and criteria that rely on abounding variables with complex theoretical accounts resembling fishing from the murky water. Of course; the sophistication of later concept is convincingly impressive to an average bystander, but in reality, flounder to portray the value under failing to expound on the quality of work staged. It uniquely relies on a firm well organized manipulated theory of supply and demand microeconomics.

skills
(fig.1)

The ultramodern salary rating models appear to follow the root concept of multifaceted government sway over licensing and certification. The societies and associations lobbying power and reimbursement control along with corporate recruitment monopoly have created pockets of vacuum on certain skill sets within the system designed to be selectively occupied by chosen prospects.

Forming pseudo-famine of labor and competence has been around for some time. It by far is the side-shoot of consolidating overtures to the job market and Labor relationships. Although in the mainstream organizations like unions and associations were formed to protect the members maintaining like skills and occupations from the government bureaucracy, even so, they by themselves resemble another needle in the stack of lowdown hay within the system harvest. The trade unions have been historically developed to secure their members rights to work, protect them from unjust wage practices; but their track record on promoting Labor monopoly is overwhelmingly perceptible. Trade‑unionism is no more clean-handed than any other institution of integration, thus one must discuss it on the like footing as all other groupings in the economy and that whatever rules apply to others should apply to unions as well. It’s difficult to rid unions of already secured privileges, as top-down nullification of unions is difficult, yet the standard entities are constitutionally held to must change. It starts with stripping the personification of unions and ability to lobby. They must be treated as a group of people seeking opportunity to manipulate the job market through the loopholes of legalized hidden kickback practice from end to end legislative giveaway.

Historical perspective

Adam Smith FRSA was a Scottish economist between 1723 and 1790. He was recognized for bringing the moral philosopher and the pioneer of political economy served as a key figure during the Scottish Enlightenment. Also, known as ”The Father of Economics” Once said- The Wealth of Nations is a precursor to the modern academic discipline of economics. Throughout his professional career, He developed the concept of division of labor by expounding upon how rational self-interest and competition can lead to economic prosperity. Smith famously argued that the difference between a street porter and a philosopher was as much a pick of the division of labor at its cause.

A more recent article published by David Joselin January 2014 entitled “Breaking down monopolies in the medical profession”. In his note he postulated that a “monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate.”

Adam Smith also wrote in 1776, pointing to corporations and statutes of disciplines such as the Royal College of Physicians in mind. He placed the United Kingdom (UK) Governments at the center of the monopoly control over key parts of the health sector, public as well as private. The consequences of state planning being responsible for a disastrous outcome, creating fake physician shortage in the nation and low expecting immigrant physicians and emigration of home doctors. According to the author, six decades of state monopoly produced fewer physicians, general practitioners, too inexperienced doctors, worse clinical outcomes than those of other countries, and the need for numbers of foreign medical graduates.

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History of monopoly is an ancient one, as it can be traced back to 1950s in the United Kingdom. As the offshoot; “Monopolies Commission” was originally appointed on 1 January 1949 in response to the recommendations of some committees on particular cases of restrictive commercial activity. Between 1956 and 1973 commission was registered and functioned under designations like Competition Monopolies Commission, Monopolies and Restrictive Practices Commission, Monopolies and Mergers Commission. In 1999 the agency was dissolved and entirely operated under competition commission thereafter for unclear grounds of omitting the word monopoly from its vocabulary.

In January1967 the Board of Trade requested the Monopolies Commission to report on restrictive practices affecting professional services which at the time seemed to be the cause for increasing perinatal infections and pregnancy complications in UK hospitals. Until then, the Commission had employed on investigating trading monopolies and restrictions in some commercial organizations, so that the prerequisite to contemplate the professional scenery posed some unacquainted glitches, adding some ambiguity about its intention. The Times magazine declared the core of the allusion laying in a mini campaign by Labor backbenchers (i.e. a member of the UK parliament (MP) or a legislator who holds no governmental office and is not a frontbench spokesman in the Opposition) in the earlier parliament.” At the time was assumed not to propose that Conservatives in power would have indicated any greater reason for the differences between restrictions for personal profit and restrictions for the patient’s help. But the Commission itself was manifestly puzzled by what should be its field of inquiry and decided to restrict a detailed summary of the evidence to that provided by no fewer than 130 bodies.

On Tuesday, February 23, 2010, the foundation of economic equality shed light on the modern era healthcare monopoly by characterizing it as merely the derivative of “artificial inflationary forces”. Among such powers, are the crucial ones which serve as incentives in the payment dynamics along with the organization of medical care those source physicians, hospitals and other medical care facilities to concentrate more on income and gain than on meeting the needs of patients! Such an economic scenario is to offer an inducement to the system and induce the delivery of more services irrespective of the quality of care. Hence, Speculated, driving healthcare expenditures high without limits. Accordingly, Physicians, who supply the services, control most of the decisions to use medical resources. Of course, one resolution to this particular problem through empowering the doctor-patient relationship, ideally coupled with a retainer or direct pay. That’s merely the substance of personalized care model that was once referred to as “lodge practice”. Since then, later model has been challenged by the insurance companies in some states including New York under the “unlicensed insurance policy act. One of the protuberant challenges was the John Muney of AMG medical group that introduced an updated variation of lodge practice in 2009. Forthwith; challenged by” the New York Department of Insurance by reasoning of; because AMG is a fixed-rate plan and doesn’t charge more for “unplanned procedures, it would be considered an unlicensed insurance policy. It sure seems like the State of New York is forcing a modern-day lodge practitioner to charge more, thereby keeping the medical and insurance cartels happy, all in the name of “protecting the public.”

Another narration from United Kingdom focuses on the construct of “economic rent” and how this idea can be applied to the UK healthcare system dominated by a large public service monopoly including National Health Service (NHS) and how this social program acts in conducts to weaken competition and create barriers to fair opportunity in the provision of the U.k. healthcare system. Technically speaking, economic rent is the difference between what people’s earnings may be, and what they would have to be compensated do their labor, capital, land (or any other inputs into production) to stay in their current usage. According to the writer, in a competitively ambitious free initiative, economic rent would be nonexistent, but – seeking which may or may not be illegal let in forming cartels and lobbying for regulations that help entities at the expense of competitors and customers. The NHS appear to be inflicting its own “ economic rent ” by the provision that allows lobbying through Trade unions and the infliction of regulatory standards through bodies like NICE (National Institute for Health and Care) and SIGN(Scottish Intercollegiate Guidelines Network).

skills

The American Medical Association (AMA) along with other consolidated organizations with in the United States, in the past have organized their adaptation of economic rent by lineal lobbying to congress limiting physicians with selected skills by falsely rationing of impending physician surplus. Thus, they took the prerogative of convincing Congress to take ascendance of price setting for medical procedural codes that would create a highly controlled environment dictating on how a procedure should pay up; to which skills and at what rate. Today’s AMA from yesterday is claiming that the country is facing an acute shortfall of doctors. In realism- neither former propagators are sensible.

Convenience and job

When it comes to job and pay we can oftentimes experience the hidden human gluttony taking its toll by dominating rain of his or her ambitions. Not infrequently we may hear someone use phrases like “Less work more pay” or “. “Work smarter not harder; But in veracity, unless there’s some form of economic rent there would be no other choice but for the person with a skill to constitute compensated based in pure transparent supply and demand, quality-driven value of conveyed services. And as far as the Peril and liabilities concerned; one must also recognize that every job has its peculiar risks and liabilities, and every risk is accompanied by a set of randomness. Thus, those skilled and talented that can surmount liabilities and complications utilizing their innate endowment, and have set themselves apart from competitors, have secured higher quality and value of delivered effort.

Shortcut, greed and passive attitude are the common traits among people who throughout history have developed a scheme to bear on dominance over others. Arrangements that have started within individuals ego, developed and propagated via consolidations serving as a safe-haven.

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Every skill is valuable and needed. It is the creativity that simplifies the chore. Paving a road is as urbane, if not intricate as removing gallbladder. And, vice versa. Merely having the correct skills for the right task to the gratification of the receiver of the service is central. Today redundantly deceptive slogans such as certain jobs are luxurious, certification is to make sure public health and safety, society’s role is to protect workers and professionals. Such vision is greed-driven, and is envisioned to draw one group subordinate to others with the 3rd patty aid.

Control is the magic word.

To institute a high earning to deliverable proportionality organizations including the governments have used tools and strategies to fudge the business market. Government intervention has been utterly essential to see legato fluctuation of the workforce. Licensing, certification and even re-certification have been historically utilized to exploit who can and who cannot do given tasks. In contrast to the Receptive job market where every person has the opportunity to absorb skills, apply without preconception, the close job market is rigorously regulated with some earmarked for the formally elected first-class citizens who are affiliated with proper radical labeled criteria. To succeed in today’s labor turmoil, one must first be able to play the game of monopoly; then a skill comes second. Status, title, license, degrees and affiliations make up for an of import persona. Unionism- or the conception of; “if you are not with us; then you must be against us” without a doubt applies for today’s career market. Among those is the practice of medicine which brings about one of the most corner the market systems in the world. As physicians with diverse qualities of skills must cohere to what they are dictated through the boards of medical specialties and accept pays determined by the AMA, insurance companies and like entities.

Not overly long ago I wrote a narrative about nurse practitioners requesting to have permission to execute some skills which have traditionally been reserved for the medical doctors. Expected, created a series of backlash from medical organizations as well as controversies from the opposing such a radical top-down reform. Through another write up I talked about The State of Cosmetic Surgery; The Health, Vanity and Politics around the medical turf war between cosmetic surgeons and plastic surgeons that have served one of the fiercest clangors in the world of monopoly. Both articles describe approaching the concept of economic rent from a variety of angles.

Let’s turn the table for a minute!

How about instead of focusing on titles and bundling skills under certification and licensing we focus simply on the exchange of talent and skills?

skills

skills

Why not fill the skill gaps instead of cutting short by way of creating another gap in the job market as a result of overriding the personal quality service with the social factors?

Ability along with its unique influencer so-called talent is personal phenomena. They are the determinants of how well someone is able to perform against another person at a solitary moment. Environs and societal factors including credibility and popularity are potent influencers of how and to what extent an individual should be perceived and respectively reimbursed for the efforts put, but the bottomline, the competence of the hand and the satisfaction of the client is the finish line. All other variables are to a lesser extent relevant, hence subject a particular mission to manipulation by third party initiatives and diversion from the core of what a person can extend to another in exchange for something of fair value. Likewise, over-reliance on societal incentives is prone to bar the opportunity for those individuals who hold perfect talent to learn and use a natural given skills while trying to ease up the same learning opportunity to those with lesser ebullience because a particular job is somewhat “lucrative in pay grade”. The lucrative pay job types sporadically shift through the requirements of autocratically empowered groups, organizations, societies, associations or boards.

On balance solution

Solution is a challenging one. Because it involves one of the most vital necessities of human survival; as in work and make a living! A person without a job and essential financial support would be unable to focus in reforming as otherwise he or she must endure. Hence, with hopes to get what they deserve workers take recourse to the government, organizations, unions that put them in the unfair berth in the first place. Hence a typical soul is slaved by consolidations run by legal kickbacks through schemata of governance partnership. Still, the resolution lies within the grassroots. Like most other solutions, individuality of any person lies within what they know and how they share their knowledge. Citizens must take their own information into their own hands and use between each other without 3rd party influence, be it government, unions or societies.

Top down approach will flunk over and over. It will create pockets of vacuum within job market solely benefiting the designated. And Yes! Your skill may be better than mine but for a given undertaking, at a given clock time delivered to a given client. And not for the titles or bundles of skills given by the bureaucratic summons fueled by depravity and graft.

Everyone deserves to discover their own Stance within the free accessible job market. On the same grounds, one and all must be able to compete, share and able to turn over their knowledge to one another in exchange for recompense.

Establishing free-market opportunity for education, job, skills and talent show is essential for impartial income; and accounted service deliverance.

The government’s job must appertain principally to ensuring fair access to free trade of skills, creativity and talents without legal prejudice. The administrations must ban monopolies and kickback of all kinds by dint of its verbatim footing (not descriptive principle for un-subdivided referral of clientele).

Governments must penalize non-human entities that are guided by a group of crooked people instead of blocking the way for the average citizen. On balance, “for the people by the people” are the strongest but has been weakened in the hands of the corrupt.

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Adam Tabriz
Dr. Adam Tabriz is an Executive level physician, writer, personalized healthcare system advocate and entrepreneur with 15+ years of success performing surgery, treating patients and creating innovative solutions for independent healthcare providers. He provides critically needed remote care access to underserved populations in the Healthcare Beyond Borders initiative. His mission is to Create a highly effective business model which alleviates the economic and legislative burden of independent practitioners, empowers patients and creates ease of access to medical services for everyone. He believes in Achieving performance excellence by leveraging medical expertise and modern-day technology.

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