One of the most significant passages from Thomas Sowell’s Basic Economics:
“Even among those who are conventionally called workers or laborers, much of what they contribute to the economy is not labor but capital—“human capital,” as economists call it. It is not so much physical exertion as job skills that constitute the contribution of a machinist, or entertainer. Most American workers today do not contribute merely work but skills, which is why their incomes increase substantially over their lifetimes. If it were their physical exertions that matter, their capabilities would be greatest in their youth and so would their incomes. But, where it is human capital that is being rewarded, then it is this is far more consistent with their incomes rising with age. As their human capital grows, the profit they receive on that capital grows, even though it is called wages.
A failure to understand the importance … Read the rest of this article!