A great American statesman - I forget which (whether Hamilton or Madison) stated:

If you control a man’s income, then you control him.

Nobody is immune. Consider some examples:

US Grant’s Income

Even General US Grant, at the height of his fame (saviour of the Republic, leader of the victorious Northern armies) feared for his income when the Republican party began to woo him for the presidency: he would have to forego his cushy post as “General” (a newly minted title, in the seat of Washington) along with an annual $20,000 stipend. He felt that the presidency would not give him the security he desired to relinquish his current post: perhaps he feared some future accident would reduce him, again, to abject poverty. (Ironically, this was exactly what happened).

This bears repeating: even one of the most powerful human beings in the world, feared for his income, and this fear governed his subsequent actions. If such a person responds to incentives so dramatically, how much more so, a person with a smaller income and lesser status?!

The Medical Profession

Medical professionals, by law, require a license to practice.

This policy belies a sinister problem: who governs the administration of these licenses? Who finances them? If the government can exert influence on the financing of a medical profession, and if they can control the granting or suspension of licenses, then surely they can control them! The control of a group of people, indirectly via their income, is a dangerously anti-republican policy: special interest groups may exert control, through the edifice of government, or worse, a bureaucrat themselves may exert his control, for his purposes.

What is the sinister cost of such a policy? The first casualty is the truth. The doctors credo: “do no harm” is thrown out the window - it cannot be successfully prosecuted when candid discussion is not possible. Doctors who don’t toe the official line may fear being ostracised, being cashiered from the profession. The second casualty are patient outcomes, and costs.

The point? Everyone responds to incentives and incentive systems. They are everywhere.

Thus far, we have focused on negative advantages. Let us consider the positive:

The Modern Day Employee

In ancient times:

• record keeping was difficult and cumbersome.
• labourers were paid a daily wage to keep administration simple.
• slavery was profitable, and desirable outcomes were easily measurable: e.g. how many lbs of cotton did you pick today?

In modern economies:

• slavery is not profitable (for most industries), because cheap machines can do the labour of a 1000 slaves, at a fraction of the cost,
• most jobs require: creativity and innovation, yet, despite this, we still cling dearly onto old forms of remuneration: that of a daily wage.

Why?

What incentive is there for a glorified day-labourer, wearing a suit and paid a daily wage, to innovate? Given we have powerful databases, and given that we can dispense enormous emoluments at the click of a button, we can create complex and powerful incentive systems where people can earn more than just their wage!

For example: we can record customer satifaction over long periods, we can record time lost due to mistakes, pay bonuses, and we can tie all of these factors into a powerful remuneration model which can drive improved outcomes much better than a daily wage ever could!

Such mechanisms can drive innovation and higher quality work. Web apps, and simple relational databases, when applied to incentivising people, can change the world. And I think it will.