Or maybe all of western culture grew out of the 'old class system' (hint: it did).

Which means that either

1) The free market is not efficient

2) There is some hidden benefit to overpaying clueless PHBs

I'm genuinely curious about this, actually...

Have you seen this? It actually identifies the role of the "clueless" in organisations quite well:

http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-o...

Of course the free market isn't efficient in hiring. Companies do everything they can to hide salaries and, for whatever reason, the culture is such that people generally won't discuss it either.

Imagine if everything you ever bought worked this way. You want some eggs? You'll need to go in the store managers office, he'll make an offer and you can accept it or negotiate. You might not even get the eggs. Once you do, you're afraid to tell anyone else how much they cost. How efficient would that market be?

That's because salaries are not just about economics. They are also a proxy for "what is my status in society?" They are not just another type of eggs, so to speak.

There is a similar thing going on with sex. The difference between a back rub and rub&tug isn't just the target location, it's also the associated taboos and stigmas.

(Circuit IV, for those of you who've read Prometheus Rising...)

I find this argument weak as an "in favor" argument. How much we pay for things is also a status proxy ("You got that for how much? How much did I pay? Hrm, I don't remember...."). And we simply chose it to be this way. We could just as easily insist on transparency so that less people get ripped off.

The real issue is that, bizarrely, workers buy into silly fantasies about "family" etc., instead of realizing that selling your time for a wage is a market action and must be treated as such.

Or that there is nor a free market in operation in these places/industries.

And hence assuming that a free market is more efficient, that you can make more money by trying to make the market more free-er (i.e. hire based on merit, not class, etc.).