split from "sometimes I feel that" thread

[Aetherous]

How do you think they decide on the rate of pay?

 

In some businesses, it's what the laborer is worth as decided upon by demand for the product or service. When business is good, the employee can be paid more.

 

In other businesses, it's what they can get away with paying the laborer.

 

How is it that those that work for them voluntarily accept that rate? Why don't they go elsewhere?

 

Because there is competition for how low one can pay laborers without losing the necessary labor to operate...increasing the profits of the business is the smart choice for that business, rather than catering to the hourly worker's lifestyle...therefore most unskilled jobs pay a similar amount: close to minimum wage. So for that unskilled worker, they look at jobs available to them, and none are really different from that rate...that's why they accept the job.

 

If there was a better option, they'd take it...how is that fact lost on the Libertarian?

 

Just like the ideal you have, where businesses would compete for good employees by paying more than the other companies...there is also the reality, where businesses compete for how little they have to spend on labor so as to increase profits.

 

How is that a McDonald meal costs whatever it does, or the materials they buy are so much ?

 

There are some of the real costs of running a business, of course. McDonalds workers aren't paid what they are due to these costs being too high, as would happen in a small business run with integrity...but they contribute to the decision.

[Brian]

So a 10 year dissolution of the minimum wage law is still too sudden? I don't like misinterpreting people...but you have argued against having the minimum wage...

Have no clue, and it is fundamentally mistaken to attempt to manipulate this according to any preconceived timeline.

 

What I have said, repeatedly and in many threads, is that the objective of "leaders" should be to educate and instill virtue in the population in order to slowly & steadily decrease the need for government manipulation. Ten years? A hundred years? A thousand years? I don't know. Moving in the right direction rather than the exact opposite direction should start immediately. Like that old saying about the best time to plant a tree was 20 years ago and the second best time is today.

 

As to the minimum wage, what I have pointed out is that artificially manipulating the value of labor (according to Marxist principles) is counter-productive in the long-run; there is often a short-term bump until the dynamic system reaches a new balance but everything is left worse off as a result of that manipulation. This is well documented across decades (FDR started playing this game, remember, so we've got a deep data history) and this is not a secret. The policymakers have access to this same information yet they continue to make political hay from the empty promises. This is why I recommend questioning the true objectives of those in power who call for minimum wage adjustments regardless of which side of the aisle.

 

BTW, do you know how many people actually make minimum wage (and how many make less than minimum wage), what industries they are in and what demographic fills them? You might be surprised...

[Aetherous]

If you wish to pay more than market rate then something else must give.

 

Well, that's only if your profits are so bad that the business is barely making it. But yes, something must give. It isn't necessarily the following list, much of which would likely hurt the business unless done in smart ways:

 

Perhaps you employ fewer people and automate. Maybe you buy cheaper ingredients, reduce size of meals, have less pleasant stores. Whatever, you have to balance your business model. If you fail to do this adequately the market will punish you. Ultimately your business may fold and all the employees are out of a job.

 

Of course. If the free market is so good no matter what it does to people, then this is acceptable, right?

[Aetherous]

Have no clue, and it is fundamentally mistaken to attempt to manipulate this according to any preconceived timeline.

 

Fair enough...I would also agree that if the free market eventually harmed no one, or was the least harmful option, then there would be no problem with it.

 

As to the minimum wage, what I have pointed out is that artificially manipulating the value of labor (according to Marxist principles) is counter-productive in the long-run; there is often a short-term bump until the dynamic system reaches a new balance but everything is left worse off as a result of that manipulation.

 

From the links you gave in the other thread, what I saw was that there's actually the opposite of a short term bump...they were saying there's greater unemployment due to job losses in the short term. Didn't see any proof that individuals or society are worse off because of minimum wage in the long run.

[Karl]

In some businesses, it's what the laborer is worth as decided upon by demand for the product or service. When business is good, the employee can be paid more.

 

In other businesses, it's what they can get away with paying the laborer.

 

 

 

Because there is competition for how low one can pay laborers without losing the necessary labor to operate...increasing the profits of the business is the smart choice for that business, rather than catering to the hourly worker's lifestyle...therefore most unskilled jobs pay a similar amount: close to minimum wage. So for that unskilled worker, they look at jobs available to them, and none are really different from that rate...that's why they accept the job.

 

If there was a better option, they'd take it...how is that fact lost on the Libertarian?

 

Just like the ideal you have, where businesses would compete for good employees by paying more than the other companies...there is also the reality, where businesses compete for how little they have to spend on labor so as to increase profits.

 

 

 

There are some of the real costs of running a business, of course. McDonalds workers aren't paid what they are due to these costs being too high, as would happen in a small business run with integrity...but they contribute to the decision.

 

'If there was a better option then they would take it'

 

Companies have to compete with other companies for labour in the market place, just as they do for space, energy, raw ingredients. They are also competing-as the worker does-for customers. People who eat in McDonalds are not generally the wealthy in society so competition is tough. There are plenty of other fast food companies competing for the customers money, there are also hundreds more companies competing for that cash that's aren't in that business.

 

The biggest opener of my mind was the understanding that everybody is not fixed. The company owner is customer and employee of the customers. The employee is simultaneously boss, customer and employee. The customer is boss and employee. Each person swaps position. This is the market place.

 

 

[Brian]

Actually, there's no need to speculate. Several large and Progressively run US cities have just voted for significant minimum wage increases so we can just wait and watch.

 

My prediction is that these same city leaders will be calling for legislation to prevent Roboburger from taking the jobs of burger flippers and self-checkout kiosks from taking the jobs of cashiers.

 

We recently had a case in which a "big-box store" was being forced to offer additional benefits (I've forgotten the details now) so they did a cost-benefit analysis and decided to close the store. The municipal leaders tried to force them to keep the store open under threat of financial penalty.

[Karl]

Well, that's only if your profits are so bad that the business is barely making it. But yes, something must give. It isn't necessarily the following list, much of which would likely hurt the business unless done in smart ways:

 

 

 

Of course. If the free market is so good no matter what it does to people, then this is acceptable, right?

 

Firstly, the entrepreneur risks his capital and gets paid last. The worker gets paid first with no risk to his capital. He gets paid regardless of the business being good or bad. His profit margin is 100% compared to a fraction of that for the business owner.

 

How would you feel if McDonald's just shut down ? All stores boarded up and the workers out on the streets ?

 

The free market it just voluntary trading. Everybody pays what they believe something is worth. It is this system which correctly allocates scarce resources-including labour. It's not some ideology or invention by some capitalist goons, it's just how we trade with each other and decide value. Have you ever wondered why Gold and Silver became money in the first place ?

[Karl]

Actually, there's no need to speculate. Several large and Progressively run US cities have just voted for significant minimum wage increases so we can just wait and watch.

My prediction is that these same city leaders will be calling for legislation to prevent Roboburger from taking the jobs of burger flippers and self-checkout kiosks from taking the jobs of cashiers.

We recently had a case in which a "big-box store" was being forced to offer additional benefits (I've forgotten the details now) so they did a cost-benefit analysis and decided to close the store. The municipal leaders tried to force them to keep the store open under threat of financial penalty.

There is a huge list somewhere on the web showing the destruction of jobs and businesses due to recent min. wage hikes in some states. We are all the poorer for it.

 

Minimum wage is no use if no one actually gets paid it.

 

Walmart are laying off a thousand jobs already.

Edited August 10, 2015 by Karl

[Brian]

Fair enough...I would also agree that if the free market eventually harmed no one, or was the least harmful option, then there would be no problem with it.

 

Exactly!!!

 

Marx lied (in my opinion, or was at least fundamentally mistaken) when he said that the root of societal discord is disparity between haves and have-nots. The root of societal discord is a lack of virtue and a loss of the Dao (pick the name which resonates with you...)

 

While there can be value in treating symptoms, an ailment is not removed until the root cause is addressed. In this case, treating the lack of virtue is the cure and current regulations & manipulations are first-aid remedies.

[Aetherous]

Firstly, the entrepreneur risks his capital and gets paid last. The worker gets paid first with no risk to his capital. He gets paid regardless of the business being good or bad. His profit margin is 100% compared to a fraction of that for the business owner.

 

If the business owner has a personal income from that profit which they can live on, they're also getting 100%.

 

The free market it just voluntary trading. Everybody pays what they believe something is worth. It is this system which correctly allocates scarce resources-including labour.

 

I question whether it correctly allocates. It's not a super-intelligent being. I also question whether people pay what they believe things are worth, or whether they pay what they can get away with paying. I also question whether beliefs about worth reflect the reality of true worth...for instance, we all depend on farmers. Their work is worth a lot to us...but their pay isn't so great, is it?

 

Basically...lots of flaws in free market philosophy, in my view.

 

It's not some ideology or invention by some capitalist goons

 

Oh of course the market is not an ideology. But your view of it is.

Edited August 10, 2015 by Aetherous

[Karl]

If the business owner has a personal income from that profit which they can live on, they're also getting 100%.

 

 

 

I question whether it correctly allocates. It's not a super-intelligent being. I also question whether people pay what they believe things are worth, or whether they pay what they can get away with paying. I also question whether beliefs about worth reflect the reality of true worth...for instance, we all depend on farmers. Their work is worth a lot to us...but their pay isn't so great, is it?

 

Basically...lots of flaws in free market philosophy, in my view.

 

 

 

Oh of course the market is not an ideology. But your view of it is.

 

No they are not. They are risking capital that is deferred consumption. They do this in the hope that the business they run will be profitable ( income vs expenditure ). There is no guarantee that the outcome of this outlay will produce any income. Most businesses fold within 2 years. Most entrepreneurs have 5 or more businesses fail before they get one which runs profitably. Every business requires debt for several years before breaking even, never mind running a profit.

 

Capital can maybe understood by the idea of a locked box containing £100 dollars. If you had to bid for the key to the box what would be the maximum you would go to $90 maybe as high as $99.99 if you could justify the time to make a cent. Now, same box, same money, but this time you won't get the key for 5 years. Now how much would you bid ?

 

Yes, the market is not only a super intelligent mechanism, it is the only super intelligent mechanism. Billion upon billion of transactions ever minute of every day create the price. This is termed the price discovery mechanism. It's bloody wonderful and something that no one person or group controls, it's completely organic and natural. It's amazing. Think of any product you buy to see just how many people are involved in its manufacture and each stage is determined by market demand.