Another hypothesis: Great people aren’t just motivated by money. They’re also motivated by things like great coworkers, interesting work, and prestige.
In the private sector, you see companies like Yahoo go into death spirals: Once good people start to leave, the quality of the coworkers goes down, the prestige of being a Yahoo employee goes down, and you have to deal with more BS instead of bold, interesting initiatives… which means fewer great people join and more leave (partially, also, because mediocre people can’t identify, or don’t want to hire, great people.)
This death spiral is OK in the private sector because people can just switch their search engine from Yahoo to Google if the results become bad. But there’s no analogous competitive process for provisioning public sector stuff.
Good Marines get out because of bad leadership, which means bad Marines stay in and eventually get promoted to leadership positions and the cycle repeats itself.
Great people aren’t just motivated by money. They’re also motivated by things like great coworkers, interesting work, and prestige. In the private sector, you see companies like Yahoo go into death spirals: Once good people start to leave, the quality of the coworkers goes down, the prestige of being a Yahoo employee goes down
Another fascinating thing that I hadn’t realized here until it was pointed out to me is this also means that Yahoo has to pay more, as a consequence of being able to offer less non-financial compensation. Because great people like working together, this essentially means that you can get a ‘bulk discount’ on them, because part of their compensation is working with each other.
If Yahoo wants to buy the best people, it has to pay more.
But if Yahoo lost the ability to recognize the best people, it can simply pay the same, hire people who are not good enough to get the same salary in a better company, and be unaware of the situation.
(My work experience is mostly in small companies, and there it is not generally true that the shitty ones pay more. They sometimes even pay less, and somehow succeed to get employees that are in my opinion… average… but have a very strong impostor syndrome which tells them that a shitty job is the best they can get. I suppose this happens when you have a company who cannot recognize good people, but can still recognize and fire the bad ones. The bad ones get fired, the good ones with healthy self-confidence leave on their own, and what remains is this.)
Thanks. I buy the death spirals thing. I’m not sure I buy the “OK in the private sector but not the public sector b/c no competitive process there” thing—do you have a story for why the public sector remained okay for ~200 years (if it did)? Also, particular newspapers and academic institutions have competitors, and seem to me also to be in decline.
do you have a story for why the public sector remained okay for ~200 years (if it did)?
I less have this sense for the last 200 years than for the preceding 2000 years, but I think for most of human history ‘white collar’ work has been heavily affiliated with the public sector (which, for most of human history, I think should count the church). Quite possibly the thing we’re seeing is a long-term realignment where more and more administrative and intellectual ability is being deployed by the private sector instead of the public sector, both because the private sector is more able to compete on compensation and non-financial compensation has degraded in relative performance? [For example, ambitious people are less interested in the steady stability of a career track now than I think they were 100 years ago, and more and more public sector work is done in the ‘steady career track’ way. The ability to provide for a family mattered much more for finding a spouse before the default was a two-income family. Having a ‘good enough’ salary mattered more than having a shot at a stellar salary in a smaller world.]
Another thing I note is that there’s variation in cultural push for various sorts of service; disproportionately many military recruits come from the South and rural areas, for example. Part of this is economic, but I think even more of it is cultural / social (in the sense of knowing and respecting more people who were in the military, coming from a culture that values martial virtues over pacifism, and so on). Hamming’s book on doing scientific research, which was adapted from classes he taught at the Naval Postgraduate School, focuses on doing science for social good instead of private benefit, in a way that feels very different from modern Silicon Valley startup culture (and even from earlier Silicon Valley startup culture, which felt much more connected to the national defense system).
It wouldn’t surprise me if there were simply more children who grew up wanting to be public servants in the past because it was viewed more favorably then. It also wouldn’t surprise me if more bits of society are detaching from each other, where it’s less and less likely that there are (say) police officers or members of the military in any particular social group, except for social groups that have very heavy representation of those groups. (Of the rationalists I know socially, I think they’re at least ten times as likely to publicly state “ACAB” than to have ever considered being a police officer themselves, and I predict this will be even more skewed in the next generation of rationalists.) I know a lot of people who wanted to be teachers or professors because those were the primary adults that they spent time around; perhaps the non-academia public sector is also losing that recruitment battle (relative to the private sector, at least)?
My sense is that the detachment between public and private sector salaries is relatively recent, is concentrated in the higher ranks of the organization, and is driven in large part by greater economic integration and expansion; executive salary roughly tracks the logarithm of organization size, and private sector organizations have gotten much larger than they were 200 years ago. Public sector organizations have also gotten much larger, but haven’t been able to increase compensation accordingly.
Well, death spirals can happen, but turnaround / reform can also happen. It usually needs good leadership though.
Sure, they have competitors, but what are they competing on? In terms of what’s going on in the US right now, one story is that newspapers used to be nice and profitable, which created room for journalists to pursue high-minded ideals related to objectivity, fairness, investigative reporting, etc. But since Google/Craigslist took most of their ad revenue, they’ve had to shrink a bunch, and the new business environment leaves less room for journalists to pursue those high-minded ideals. Instead they’re forced to write clickbait and/or pander to a particular ideological group to get subscriptions. Less sophisticated reporting/analysis means less sophisticated voting means less sophisticated politicians who aren’t as capable of reforming whatever government department is currently most in need of reform (or, less sophisticated accountability means they do a worse job).
Public institutions are subject to mandate. You can boycott a company but the shareholders are sovereign. But private corporations are immune to public control short of following the law.
A public goverment isn’t really allowed to bankrupt or fail to exist. The theory under why companies are okay to die is that nobdys life or death is tied to it. Especially for limited liabity even people most invested in will be at worse poor.
If a public institution misbehaves the responciblity of correcting it can be traced back to the will of the people. Staying true to the authority is an okay excuse to make losses etc. If you make a profict but violate policy in the public side of things you are out while in private you might still be in business.
My own story is that much of this is a side effect of (partially, but very much ongoing and needed) successful efforts to reduce discrimination and keep talented, driven, smart people out of many important industries and jobs. When women and minorities just flat-out don’t get hired in high paying private sector jobs, you’re going to get a higher-than-economically-reasonable number of such people working as teachers, postal workers, and lots of other stable-but-not-prestigious-or-lucrative jobs, which are skewed towards the public sector.
We haven’t adjusted our societal expectations to these facts and what they mean for hiring and paying public servants. Any attempt to fix that now ironically runs up against the perception that government is so incompetent that throwing more money at the problem is a terrible waste, whether that’s true in a particular case or not.
Edit to add: I think this combines with what David Chapman’s points about society internalizing the postmodern critique incompletely. This makes it much easier to tear down people trying to lead and reform as intrinsically untrustworthy just for wanting to do that, while we haven’t yet gotten enough metarational people in high enough places to build institutions that can function anyway, and don’t yet know what those could look like.
Another hypothesis: Great people aren’t just motivated by money. They’re also motivated by things like great coworkers, interesting work, and prestige.
In the private sector, you see companies like Yahoo go into death spirals: Once good people start to leave, the quality of the coworkers goes down, the prestige of being a Yahoo employee goes down, and you have to deal with more BS instead of bold, interesting initiatives… which means fewer great people join and more leave (partially, also, because mediocre people can’t identify, or don’t want to hire, great people.)
This death spiral is OK in the private sector because people can just switch their search engine from Yahoo to Google if the results become bad. But there’s no analogous competitive process for provisioning public sector stuff.
Source
Another fascinating thing that I hadn’t realized here until it was pointed out to me is this also means that Yahoo has to pay more, as a consequence of being able to offer less non-financial compensation. Because great people like working together, this essentially means that you can get a ‘bulk discount’ on them, because part of their compensation is working with each other.
If Yahoo wants to buy the best people, it has to pay more.
But if Yahoo lost the ability to recognize the best people, it can simply pay the same, hire people who are not good enough to get the same salary in a better company, and be unaware of the situation.
(My work experience is mostly in small companies, and there it is not generally true that the shitty ones pay more. They sometimes even pay less, and somehow succeed to get employees that are in my opinion… average… but have a very strong impostor syndrome which tells them that a shitty job is the best they can get. I suppose this happens when you have a company who cannot recognize good people, but can still recognize and fire the bad ones. The bad ones get fired, the good ones with healthy self-confidence leave on their own, and what remains is this.)
Thanks. I buy the death spirals thing. I’m not sure I buy the “OK in the private sector but not the public sector b/c no competitive process there” thing—do you have a story for why the public sector remained okay for ~200 years (if it did)? Also, particular newspapers and academic institutions have competitors, and seem to me also to be in decline.
I less have this sense for the last 200 years than for the preceding 2000 years, but I think for most of human history ‘white collar’ work has been heavily affiliated with the public sector (which, for most of human history, I think should count the church). Quite possibly the thing we’re seeing is a long-term realignment where more and more administrative and intellectual ability is being deployed by the private sector instead of the public sector, both because the private sector is more able to compete on compensation and non-financial compensation has degraded in relative performance? [For example, ambitious people are less interested in the steady stability of a career track now than I think they were 100 years ago, and more and more public sector work is done in the ‘steady career track’ way. The ability to provide for a family mattered much more for finding a spouse before the default was a two-income family. Having a ‘good enough’ salary mattered more than having a shot at a stellar salary in a smaller world.]
Another thing I note is that there’s variation in cultural push for various sorts of service; disproportionately many military recruits come from the South and rural areas, for example. Part of this is economic, but I think even more of it is cultural / social (in the sense of knowing and respecting more people who were in the military, coming from a culture that values martial virtues over pacifism, and so on). Hamming’s book on doing scientific research, which was adapted from classes he taught at the Naval Postgraduate School, focuses on doing science for social good instead of private benefit, in a way that feels very different from modern Silicon Valley startup culture (and even from earlier Silicon Valley startup culture, which felt much more connected to the national defense system).
It wouldn’t surprise me if there were simply more children who grew up wanting to be public servants in the past because it was viewed more favorably then. It also wouldn’t surprise me if more bits of society are detaching from each other, where it’s less and less likely that there are (say) police officers or members of the military in any particular social group, except for social groups that have very heavy representation of those groups. (Of the rationalists I know socially, I think they’re at least ten times as likely to publicly state “ACAB” than to have ever considered being a police officer themselves, and I predict this will be even more skewed in the next generation of rationalists.) I know a lot of people who wanted to be teachers or professors because those were the primary adults that they spent time around; perhaps the non-academia public sector is also losing that recruitment battle (relative to the private sector, at least)?
My sense is that the detachment between public and private sector salaries is relatively recent, is concentrated in the higher ranks of the organization, and is driven in large part by greater economic integration and expansion; executive salary roughly tracks the logarithm of organization size, and private sector organizations have gotten much larger than they were 200 years ago. Public sector organizations have also gotten much larger, but haven’t been able to increase compensation accordingly.
Well, death spirals can happen, but turnaround / reform can also happen. It usually needs good leadership though.
Sure, they have competitors, but what are they competing on? In terms of what’s going on in the US right now, one story is that newspapers used to be nice and profitable, which created room for journalists to pursue high-minded ideals related to objectivity, fairness, investigative reporting, etc. But since Google/Craigslist took most of their ad revenue, they’ve had to shrink a bunch, and the new business environment leaves less room for journalists to pursue those high-minded ideals. Instead they’re forced to write clickbait and/or pander to a particular ideological group to get subscriptions. Less sophisticated reporting/analysis means less sophisticated voting means less sophisticated politicians who aren’t as capable of reforming whatever government department is currently most in need of reform (or, less sophisticated accountability means they do a worse job).
Public institutions are subject to mandate. You can boycott a company but the shareholders are sovereign. But private corporations are immune to public control short of following the law.
A public goverment isn’t really allowed to bankrupt or fail to exist. The theory under why companies are okay to die is that nobdys life or death is tied to it. Especially for limited liabity even people most invested in will be at worse poor.
If a public institution misbehaves the responciblity of correcting it can be traced back to the will of the people. Staying true to the authority is an okay excuse to make losses etc. If you make a profict but violate policy in the public side of things you are out while in private you might still be in business.
My own story is that much of this is a side effect of (partially, but very much ongoing and needed) successful efforts to reduce discrimination and keep talented, driven, smart people out of many important industries and jobs. When women and minorities just flat-out don’t get hired in high paying private sector jobs, you’re going to get a higher-than-economically-reasonable number of such people working as teachers, postal workers, and lots of other stable-but-not-prestigious-or-lucrative jobs, which are skewed towards the public sector.
We haven’t adjusted our societal expectations to these facts and what they mean for hiring and paying public servants. Any attempt to fix that now ironically runs up against the perception that government is so incompetent that throwing more money at the problem is a terrible waste, whether that’s true in a particular case or not.
Edit to add: I think this combines with what David Chapman’s points about society internalizing the postmodern critique incompletely. This makes it much easier to tear down people trying to lead and reform as intrinsically untrustworthy just for wanting to do that, while we haven’t yet gotten enough metarational people in high enough places to build institutions that can function anyway, and don’t yet know what those could look like.