Why is it unethical? I'm both a freelance engineer and a business owner that sells software, and I've both sold my labour for equity/revenue share, and for a flat hourly rate.

If I charge a client $50k for some software and they made $1 million profit from it, good for them? As long as they pay our mutually agreed upon rate on time and there was no hostile negotiation, why should I feel suddenly entitled to more money if that wasn't in our contract? How do I know how much of the value is from my work and not their marketing or idea?

What you're saying seems as crazy as me saying that someone who bought my software for $99 and used it on a multi-million dollar project is being unethical unless they give me more money. How on Earth does that make sense? Should I be forced to switch to a royalty model? What if I make more selling copies at a flat rate, what if I don't want to have to investigate the finances of thousands of customers and have to deal with that whole trouble?

For me it's the same thing regardless of whether I'm selling my labour or a product. I can choose whether to accept a flat hourly rate, equity, or a mix of both, and usually the better deal is the hourly rate.

If I find a way to hire a software engineer for market rates (say, $200k/year in the US) and get $2M revenue from their work, good? They can ask for a raise or a bonus, we can renegotiate, they can leave if they're unhappy, but I'm not obligated to give them more money than was in our agreement anymore than they're obligated to give me their salary back in the project fails.

There's an argument that if someone agrees to a bad deal, that's their own fault. Where I think it becomes unethical is where there's a significant power imbalance that disadvantages one side.

Suppose I buy a painting from a flea market for $100, get it evaluated by a specialist, and then discover it's actually worth $100,000. In this example I have no inherent advantage over the seller; neither of us knew the value of the painting at the time it was sold.

Now suppose a famous TV antique dealer stumbled across that painting instead, and immediately realizes its true value. The seller recognizes the dealer, and the antique dealer offers to buy the painting for $25. The seller, trusting the antique dealer's judgement, agrees to the discount.

Would you say in both examples everyone acted ethically? This is a genuine question, as I can certainly see the argument that using the assets you possess to secure yourself the best deal possible is just business, and yet I would personally see the antique dealer in the second example as being exploitative.

When it comes to companies there's a similar disparity in power. An employee requires money to live, while someone founding or investing in a company often has enough of a financial safety net that they won't starve if the venture fails. Equally, any would-be billionaire is explicitly looking for employees who generate vastly more value than their cost. You don't get rich by paying people what they're worth; you get rich by underpaying them and pocketing the difference.

The other problem, and one you've touched on, is how do we assess the value of an individual employee? This is obviously not easy, and businesses also have no incentive to work it out or reveal that information to their employees even if they knew. On the contrary it benefits employers to keep their employees as much in the dark as possible.

Aside from the ethical problems there's a practical one. The very existence of billionaires implies that a significant number of people are undervaluing their work. It's a pricing problem that the market isn't solving, and is only getting worse.