The world cannot function solely on the fruits of debates and negotiations between middlemen. Ditch diggers have to exist. What we have to determine is if we will continually have the debate between whether they will be guaranteed to be paid enough to live, or whether the market determines that we should reduce their living conditions and liberties in order to bring their cost to a rate that keeps certain products and businesses viable.
I would also argue that we need measures of human progress other than productivity per person. For one example, with each generation pay ditch diggers more to do less work, and by that standard we are woefully regressing.
Someone posted this the other day, which I'd never read before but I thought was quite an eloquent argument for the same. Bertrand Russell, In Praise of Idleness: http://www.zpub.com/notes/idle.html
You're implying that we're becoming less productive, that's totally untrue. The same argument has been made about the motor vehicle, cotton gin, etc.
Of course, that time is not here today, or terribly soon.
I'm not certain this is really true. Certainly the number of people required to dig a ditch has plummeted over the last 200 years. A few skiploader drivers can do the work of thousands. As robots get cheaper and more capable, it's not too hard to imagine a future where humans stop doing purely physical jobs entirely.
I also think the thesis of "everyone should be respected" is inconsistent with the thesis of "education is good". If knowledge and education is good, then lack thereof is inherently not-good. This doesn't mean you should spit on the binman, but it does mean you will probably steer your kids away from that career path.
Also, knowledge is good, education is only good to the extent that it brings you knowledge, and neither mean that you don't drive a garbage truck.
If it helps, replace ditch-diggers with skiploader drivers. Replace assembly line workers with robot repairmen. The point is that somebody will have to be doing something, rather than just directing and allocating people who are doing something.
In my experience, the folks who don't respect ditch diggers are not the so-called 1% (either finance or MDs) but the so-called "New Class", as discussed in http://volokh.com/2011/10/31/the-fragmenting-of-the-new-clas... .