What If There Were Mutants?

Suppose Magneto exists. Or Superman, or Jean Grey, or Green Lantern. There’s a population of people with unusual gifts that allow them to be extremely productive. What happens? As Tyler Cowen might say, solve for the equilibrium. (Ignoring for a moment the offensive potential of these gifts. A Magneto or Superman could bring a nation to its knees or destabilize an existing global order. Pretend for a moment that these gifts make certain individuals more productive without allowing them to be offensive. That's not what this post is about.)

These people would be vastly more productive at certain kinds of jobs. Moving very large objects with surgical precision, without having to move in heavy equipment (cranes and the like) could make big construction projects a snap. Sure, we still need architects and engineers to direct the work. But “put all of these giant girders in their places” and “move a thousand tons of earth, okay now another, now another” becomes easy.

These people are likely to be highly paid. If your construction firm can build a tall building in a few days, while the other developers are still taking months or years for similar projects, you can get a lot more done and earn a lot more money. So your firm should be willing to bid a very high price for the unique talents that allow you to accomplish quick production. The Green Lanterns and Magnetos will be at least millionaires if not billionaires.

What happens to the rest of us? Do hundreds of thousands (millions?) of displaced construction workers languish in permanent unemployment? Is there a super-rich society of mutants who do everything in the economy? (And do they thus own everything?)  And the rest of us can only eat by sifting though their garbage for scraps? Of course not. Comparative advantage is still in play. If Magneto is doing the work of thousands of people, he’ll likely want to come home to an already-cooked meal, or an already-cleaned home. Maybe he could do these tasks himself better than any mere mortal simply by using his powers, but it is better still for him to spend more hours at work and use his massive pay-check to hire some servants. Having some very rich, productive people nearby creates employment opportunities.

Or let me put it another way. For whom is all this production happening? Suppose a small group of mutants are responsible for half the world’s production. What exactly are they doing? Are they simply building gigantic homes for other mutants? Are some mutants mass-producing consumer goods for other mutants, who repay them with thousands of tons of bulk materials? No, this production is bound to benefit everyone, even if highly productive individuals get compensated for their contribution. Transportation, food, consumer goods, and housing get cheaper in general.  

Or let me put this yet another way. In 1800, 83% of the US labor force was in agriculture. 

Today it’s around 2%. So compared to 1800, each agricultural worker is doing the work of about 40 people. Mutants indeed! Do they own everything? Did this 2% take over the economy? Is it even remotely sensible to say that today’s agricultural workers are doing 4/5^th of America’s production? Again, of course not.  The people who would have been farmers in an older economy found other useful things to do. Like become telephone operators, photographic film developers, and video-store workers. Oops, and then those jobs basically disappeared. Are former telephone operators and video-store workers languishing in permanent unemployment? Again, no. Most people have a very bad intuition about what happens when production get automated, when a few people can now do what used to take many people. And it leads to some very silly commentary.

A tangential point. Suppose there are a lot of good CEOs of various construction firms. If you tried to throw an average person in that role, they would flounder and fail and ruin the business. But there’s a wide enough pool of talented CEOs to pick from. Now, suppose there is one who is uniquely skilled at management for a particular firm. He knows that particular market really well, he can forecast demand just slightly better than any of his competitors, he’s slightly better at keeping his workers motivated and his managers on track. Maybe there are 10 or 100 people who could do the job reasonably well, but the very best guy for the job will build one more medium-sized building each year with the same amount of resources. This person’s unique contribution to the world’s production is one building per year. But for this individual, we’d be short one building per year of his/her working life.  That’s quite a lot for one person to accomplish. It’s like having a mutant superpower. Of course, he’s not literally moving the building materials with his mind, shaping raw steel and cement into a structure. He’s doing it by making hundreds or thousands of workers just a little bit more productive, efficient, and focused. It’s no less impressive for that.

There are people who like to turn the topic of CEO pay into outrage-porn. I think they are deeply mistaken and there is nothing to be outraged about. These executives really are very productive, pretty much in line with their enormous paychecks. There are some “respectable”, “academic” attacks on CEO pay. Some academics have attempted to “prove” that CEO’s aren't particularly talented or good at their jobs. I admit I do not know this literature, so maybe it’s more convincing than I’m giving it credit for. (On the other hand. Perhaps something is happening in the world that’s hard to measure? Perhaps the difference between the very best candidate and the second- or third-best is something ineffable? It seems to me that the people shelling out for top talent have skin in the game and make decisions based on things that are hard to measure or define. Particularly at the very top, decision-makers have to be a little speculative. Contrast this with academics, with no skin in the game and who are only good at discussing things that are externally visible and measurable.) This post by Steven Landsburg says it well. It’s really important to have the very best person in the top spot. Some critics draw exactly the wrong lesson from CEO screw-ups. “See, these guys don’t know what they’re doing!” But a big screw-up is a big deal. If the best person has just a 1 or 2% lower chance of making a big screw-up, that can be worth millions of dollars. Watching someone pour over spreadsheets and grill his staff for information for 12 hours a day might not be quite as sexy as watching a telepath move hundreds of tons of material with his mind. But the outcome is no less impressive.