Watch what happens when Marxists set wages

[Seth]

The word 'fair' is definitely subjective, but it is also relative. A wage of $5 per hour might be generous in Indonesia but unacceptably stingey in any western nation. Fairness is generally determined by what is paid close by, in similar occupations. If the common wage in pizza shops pays $20 per hour, and another one pays $15, then the second one will be determined to be unfair.

Um, if an employer doesn't offer you a "fair" wage that's in line with your skill set and meets your needs, then don't go to work for that employer. The marketplace for employees is no different from the marketplace for goods and services. Supply and demand rule and the consumer (in this case the employer) sets the price. If a pizza shop owner can sell more pizzas at a lower price by paying lower wages and make a profit, what's "unfair" about that? If her employees don't like the wage offered, they can go work for the $20/hr pizza shop. Oh, wait, the $20/hr pizza shop isn't hiring because it already has a stack of applications four feet high for non-existent jobs and 90 percent of those applicants have much better qualifications and work histories than the $15/hr shop employees.

The $15/hr shop accepts lower value in its employees because it either believes it can control product quality in other, less expensive ways, or it trains it's cheaper employees more thoroughly so they can still produce quality product at a lower price, or because there are so many workers asking for jobs that the market is glutted and supply far exceeds demand so the employer can cut wages and still get good employees.

It's not "unfair" for a business owner to cut costs wherever possible because their motive and reason for being in business at all is to make a profit, not provide jobs for the proletarian masses at their economic expense.

If an employer undercuts wages below the prevailing rate by too much, either nobody will work for him or he'll get lousy, unskilled and incompetent employees that cost him more than they are worth.

Nobody has a right to work for any particular company for any particular wage. You negotiate with the employer by advertising your skills and value to the company and the employer negotiates with you to get the most value out of your employment he possibly can. If one of you is dissatisfied with the bargain, then that person is free to terminate the relationship without obligation to the other.

Businesses do not exist for the purposes of providing make-work for lazy, uneducated, unskilled dependent class welfare leeches. If you aren't worth $20/hr, you won't get paid $20/hr, nor should you.

It's just that simple.

[JimC]

We've moved a little away from the Venezuela situation. Cost of living increases to minimum wages in functioning economies is not going to cause any major economic woes whatsoever; however, in the case of an economy that is dysfunctional and with inflation spiralling out of control, a huge rise to appease the mob is never going to end well...

[macdoc]

Even Henry Ford understood employees needed to be paid enough to buy his products.

[Blind groper]

We have long past the time where economists believed that the market always delivered the optimal result. It does not. Not for the sale of goods and services, and not for the benefits for employees.

One of the functions of government is to look at what is happening in business and take measures to restore the level playing field and to overcome injustice. That includes injustice in rates of pay.

You simply cannot sit back and let the wages market take care of itself. That is a recipe for human misery, as was seen in coal mining in Britain during Victorian times. You end up with very wealthy employers and very miserable employees. Not smart!

[Tero]

Sell stuff abroad, buy goods there, redistribute wealth fairly. Formula for any small socialist country. Grow some food.

[laklak]

A think a People's Bog Roll Factory would go down a treat.

[Seth]

Even Henry Ford understood employees needed to be paid enough to buy his products.

And if a merchant prices his employees out of the market, then it's at his peril, isn't it? Unless his employees aren't his clientele.

[Seth]

We have long past the time where economists believed that the market always delivered the optimal result. It does not. Not for the sale of goods and services, and not for the benefits for employees.

That depends on your (Marxist) definition of "optimal."

One of the functions of government is to look at what is happening in business and take measures to restore the level playing field and to overcome injustice.

One of its functions is to act as a policeman and prevent the initiation of force or fraud, and that's it. When government "levels the playing field" it's meddling with the markets in ways that favor inefficiency and poor business practices, which is a detriment to the market, which depends on it's "optimal" function being the product of billions upon uncounted billions of individual purchasing decisions that reward those who provide what the market wants, in the best quality and at the lowest possible price and punishes those who are inefficient, ineffective, unwise, poorly trained, and who try to sell inferior products at too high a price.

That includes injustice in rates of pay.

This falsely assumes that the government knows when rates of pay are unjust, which doesn't happen to be the case. Ever.

You simply cannot sit back and let the wages market take care of itself.

Of course you can. And should.

That is a recipe for human misery, as was seen in coal mining in Britain during Victorian times.

Were the workers enslaved? If not they had a choice: to work for the pay provided or not to work for the pay provided.

You end up with very wealthy employers and very miserable employees. Not smart!

And what, exactly, happened when the miserable employees decided they were fed up with being underpaid? They formed labor unions and went on strike. The government tried to suppress labor unions in order to maintain the status quo ante, in favor of the mine owners, and failed miserably. In the end, the workers demonstrated that if they were not paid enough, they would not work and the mine would shut down and no profits would be enjoyed by the mine owners. Better yet for the miners, the supply of coal would diminish, causing the price of coal to go up, thus directly impacting the wallets of the people who actually USED the coal, which made them angry. So they petitioned government to get coal prices back down to affordable levels and the government forced the mine owners to the negotiating table with the unions and everybody agreed on a "fair" wage and compensation agreement that was the product of the miners telling the mine owners what they needed by way of compensation and the mine owners telling the miners why they could not provide everything the miners wanted without going bankrupt, but that they could make negotiated adjustments so that the miners could be satisfied and the owners could be satisfied and the coal could get mined.

All government did, and needed to do, was police the dispute to prevent violence (quite common in those days, both from the unions and the owners) and grab both sides by the scruff of the neck and say "Sit the fuck down and negotiate a solution or the government will shut EVERYBODY down."

And thus the forces of the free market reset the wages of miners and the profits of owners by referencing what the consumers could bear by way of costs for coal.

That's how it works. The workers can go on strike and risk ending up without jobs, and the owners can pay lousy wages and risk not having any employees to mine coal for them. So, through the market forces, the two sides are brought together to achieve a compromise that both can live with.

Unless the government fucks things up by sticking its thumb on the scales of "justice" in the negotiations in order to favor one side or the other (it doesn't matter which) in which case somebody gets screwed big time and nobody's really happy.

[Blind groper]

Seth

You are a little behind the times. Once, economists believed that market forces always led to an equitable and optimal result. Now, they realise that market forces often lead to catastrophe.

The guiding hand of government does not need to be clumsy or over-reactive. But it needs to be there.

[Seth]

Seth

You are a little behind the times. Once, economists believed that market forces always led to an equitable and optimal result.

Again, that would depend on which economists you are talking about and what they define as "optimal."

Now, they realise that market forces often lead to catastrophe.

...for Marxist economic central planning. Yes, true, and rather the point.

The guiding hand of government does not need to be clumsy or over-reactive. But it needs to be there.

No it doesn't, except in a police capacity to prevent and punish incidents of force or fraud. No government bureaucrat, or bureaucrats, no matter how skilled or intelligent, can possibly make rational or accurate predictions of the needs of hundreds of millions of people and then dictate what needs to be produced at what price to make their specious and completely ignorant predictions come true. F.A. Hayek demonstrates how central planning never works and can never work in "The Road to Serfdom."

Free market economies work because they are the product of billions upon billions of individual choices and transactions made by people that accurately signal market demands that suppliers have to constantly monitor and adapt to in order to fill the needs at an acceptable price. No "guiding hand of government" is needed, the market takes care of itself except when any one of, or a combination of three things interferes: Force is used to gain competitive advantage, Fraud is used to gain competitive advantage, or government meddles in the markets by attempting to choose economic winners and losers in the marketplace in order to attempt to achieve some government-desired social goal.

[Blind groper]

You are still on the wrong track Seth.

Government, if good, smooths out the rocky road of economic change. It certainly acts as policeman and stops the psychopathic CEO's who would exploit the hell out of the workers. It also provides a brake on unrestrained union activity that would bankrupt the employers.

Government sets the rules, and polices them. Without that, the unrestrained market forces would be very destructive.

I remember the impact some years ago, of an unrestrained union. Its members were earning $100,000 each per year, with no special skills, while more skilled workers were earning less than $20,000. That was wrong, wrong, wrong. It took forceful government action to even the balance.

You can get distortions in the labour market from either side. Unions forcing excessive payments to people who do not deserve it, or employers screwing their workers. Government is needed to prevent either excess.

[Seth]

You are still on the wrong track Seth.

I'm sure you'd like to think so, but then again Marxist useful idiots think Marx was right...so...

Government, if good, smooths out the rocky road of economic change.

Indeed, if "good" is defined as "stay the hell out of the way of the markets and mind your business, which isn't meddling with them.

It certainly acts as policeman and stops the psychopathic CEO's who would exploit the hell out of the workers.

Unless those employees are physically enslaved, if they get "exploited" it's with their express consent, and who the hell is the government to interfere in a voluntary relationship between employer and employee?

It also provides a brake on unrestrained union activity that would bankrupt the employers.

Peacekeeping is its role, and only peacekeeping. If an employer chooses to go bankrupt (or merely close a particular store or stores) rather than negotiate with the union, that's his absolute right and government has no business interfering. If the union wants to bankrupt the company, it can try, but, absent the thumb of government on the scales, an employer can simply fire all union members and hire non-union employees willing to work at the wage offered.

So, you see there is balance in the negotiations. If the employer refuses to budge, then his business is closed at least temporarily as the union strikes, and his business can be affected by unions picketing and persuading customers not to patronize the business. If the union refuses to budge, the employer can simply fire everyone and hire a new workforce, but in doing so he risks picketing and negative impacts on his customers. Each has something significant to lose, which is motivation to compromise and meet in the middle.

But when the government steps in and favors either side, but particularly the labor side, the scales become unbalanced and somebody suffers more than necessary.

Government sets the rules, and polices them. Without that, the unrestrained market forces would be very destructive.

Yes, I agree, as long as the rules are in place to police the markets and not to interfere with them or to pick winners and losers for political reasons.

I remember the impact some years ago, of an unrestrained union. Its members were earning $100,000 each per year, with no special skills, while more skilled workers were earning less than $20,000. That was wrong, wrong, wrong. It took forceful government action to even the balance.

If an employer is willing to pay them $100,000, why should the government interfere? If the employer doesn't want to pay them that much, he can simply say "fuck off with your outrageous demands, you're all fired!" and then he can go hire cheaper workers. Unless, of course, as is usually the case, the government CAUSED the problem because it regulated in a way that prevented the employer from simply firing all the union workers, thus tipping the balance in favor of the workers, which resulted in unions taking advantage of that government pressure on the employer to accede to union demands or face government sanction, and thus the wages spiraled out of control.

I'm pretty damned certain that is how it happened because no sane, rational, uncoerced employer would pay unskilled workers five times the prevailing wage unless of course there was a desperate labor shortage that created scarcity in the market (like a demand for welders and oil derrick workers in Alaska during the construction of the Alaska Pipeline) that motivated the employers to offer high wages in order to have enough workers to do the work that needed to be done. And if that's how it happened, again, what the hell is the government doing interfering in the labor market?

When I'm the only Uber driver working in Metro Denver at 3 am, Uber automatically jacks the price for my services and I get paid double to triple my normal rate. That's perfectly appropriate because if someone needs a ride, they can choose me or call a taxi (and wait an hour) or hoof it home, but if they want me, they pay more because the market demand is high for my services.

The same reasoning applies to EVERY free-market transaction. Supply and demand set the price and the government has no business whatsoever interfering in that calculation. Ever.

You can get distortions in the labour market from either side. Unions forcing excessive payments to people who do not deserve it, or employers screwing their workers. Government is needed to prevent either excess.

We call that "supply and demand dynamics" and it always, and I repeat ALWAYS works itself out so that the cost of a product remains at a price the consumer is willing to spend on it.

That's as true for the labor market as any other. The ONLY time an employee gets an "excessive" payment is when the government says he does, and likewise the ONLY time that an employer "screws" an employee is when the government meddles beyond its mandate of keeping the peace and policing against force and fraud.

Everything in a truly free market economy is voluntary and the result of a willing negotiation between buyer and seller because no one is compelled by anyone else to do or buy anything if it doesn't suit them to do so. Only government can interfere with an entire market to skew that natural flow and balance and cause widespread economic grief. Only government.

[Blind groper]

Your illogic, Seth, depends on the assumption that the two sides of a negotiation are in balance. Sometimes that is true, but very often it is not. The example I gave you, of union members earning $100,000 per year, happened because those people had their employer over a barrel. If they left the job, a billion dollar plant would close, and the cost to their employer would be $100,000 per day. It would take weeks, or even months to rehire and retrain new people to do the same job. The workers had the power, and screwed the employer.

However, it is very common for it to be the other way round. When jobs are scarce, employers can screw their employees, and do. A third party with power is needed to prevent these wrongful practices, whether it is employer or employees who do the screwing.

[JimC]

Your illogic, Seth, depends on the assumption that the two sides of a negotiation are in balance. Sometimes that is true, but very often it is not. The example I gave you, of union members earning $100,000 per year, happened because those people had their employer over a barrel. If they left the job, a billion dollar plant would close, and the cost to their employer would be $100,000 per day. It would take weeks, or even months to rehire and retrain new people to do the same job. The workers had the power, and screwed the employer.

However, it is very common for it to be the other way round. When jobs are scarce, employers can screw their employees, and do. A third party with power is needed to prevent these wrongful practices, whether it is employer or employees who do the screwing.

Seth's automatic anti-government bias is usually wrong, certainly in this case.

But not always; skepticism about the tendency for governments of any stripe to extend their powers is useful...

[Seth]

Your illogic, Seth, depends on the assumption that the two sides of a negotiation are in balance.

No it doesn't. Who said the sides have to be in balance? Marxists perhaps. But "equality" is not a consideration in the marketplace, nor should it be because that means that some parties have to be unjustifiably advantaged and other parties unjustifiably disadvantaged in order to create this "balance." That's not the function of the market and in fact that's precisely what distorts the markets and causes most of the problems we see with them.

Sometimes that is true, but very often it is not.

Life is not fair. Get over it.

The example I gave you, of union members earning $100,000 per year, happened because those people had their employer over a barrel. If they left the job, a billion dollar plant would close, and the cost to their employer would be $100,000 per day. It would take weeks, or even months to rehire and retrain new people to do the same job. The workers had the power, and screwed the employer.

Yup. Exactly. That's precisely how markets work and are supposed to work. The employer imprudently allowed the union employees to become so vital to the operation that economics dictated that they pay what the market would bear for their labor. Good for the union, bad for the employer. The employer made fundamental strategic and tactical mistakes in his hiring practices, leaving him susceptible to that sort of solution. But even so, he chose to pay the demanded salaries because it would cost him more not to do so. Supply and demand. Pure free market economics. He still made enough money to keep the plant open and decided it was better to pay the workers more and perhaps reduce his profits than it was to fire the lot of them and hire a new workforce. Nobody coerced him into anything until the government stepped in and meddled, which screwed the employees.

Can I guess that this was some sort of public utility or "essential" company that was "too big to fail" and that the government intervened and forced a pay cut because not to do so would directly impact the public, and therefore the votes that politicians in charge would be able to get if they intervened? That's the usual reason for government intervention in business.

However, it is very common for it to be the other way round. When jobs are scarce, employers can screw their employees, and do. A third party with power is needed to prevent these wrongful practices, whether it is employer or employees who do the screwing.

There's nothing "wrongful" with an employer saying "This is how much I am willing to offer you for your labor, take it or leave it."