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Bad Climber
Trad climber
The Lawless Border Regions
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Oct 13, 2018 - 12:08pm PT
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I seem to recall that the very first instance of gov't regulation of industry was in forcing the railroads to make the job of braking the cars safer. Rich folks in their shining Pulmans were getting annoyed/horrified at brakemen falling off the cars as they worked to crank down the brakes on each individual car. Can you imagine going over the Rockies in an icy storm and having to claw your way up a ladder on the outside of a car and turn a big wheel to engage the brake? And this had to be done individually for each car--ugh. The net result of the reg was not only worker safety but more efficient trains. Not all gov't regs are so salutary, but sometimes private industry does need a kick in the pants.
BAd
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Lorenzo
Trad climber
Portland Oregon
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Oct 13, 2018 - 12:59pm PT
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Pullman passenger cars didn’t have brake wheels on the roof. They were on/in the vestibules at either end of the cars.
Rich passengers would only have been annoyed by dead carcasses on the tracks from brakemen falling off the roofs of freight trains.
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DanaB
climber
CO
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Oct 13, 2018 - 01:22pm PT
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Richard, I don't know anything about economics, trying to learn. You wrote that the value of labor is determined only by the market? Isn't possible the market could be unfair? I understand that the term unfair is imprecise and can't be definitively nailed down.
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madbolter1
Big Wall climber
Denver, CO
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Oct 13, 2018 - 04:41pm PT
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Isn't possible the market could be unfair? I understand that the term unfair is imprecise and can't be definitively nailed down.
You raise a really good point, imo. The standard attack on capitalist markets is that they can drift in and out of "efficiency," sometimes for somewhat extended periods of time. But even "efficiency" is a really slippery concept that means different things to different critiques.
Perhaps it's easiest to think of "the market" as the sort of "transactions" that have always existed between individuals, regardless of the "economic system" governments foster or enforce.
The USSR tried to enforce an economic system in which there was NO "market" in anything like the sense we take for granted. What happened? And I mean, what happened INSTANTLY? Well, a "black" market emerged to handle the individual transactions that the government disallowed. And when (literally) that "black" market had to include "luxuries" like pantyhose, it became crystal clear that the "black" market just was "the market."
A really good book discussing this, written by a former "State Security" agent who defected is: "I Chose Freedom," by Victor Kravchenko, 1947. Upon getting settled in the US, he writes about his awe to discover countless stores with shelves stocked with everyday items that were either not available AT ALL in the USSR or were only available on the black market (or, of course, available to high-ranking officials). He was also in awe of the RANGE of options for "a" product; different brands and styles were unknown in the USSR. Capitalistic competition simply produces "a market" for the simplest things that was UNKNOWN in the USSR.
We see the same emergence of the "capitalistic market" in China, which is ALL that has kept that economy solvent.
So, "the market" really transcends governments and economic systems. And when governments manipulate "the market," all they really accomplish is to ensure "black" markets and/or create "unfair" distortions in "the market."
We see this EXACT point emerge in the labor "black market" in the United States today, where millions of "black market" laborers sell their labor for FAR less than "minimum wage," and they do this because the government has manipulated the labor market, both in establishing a "minimum wage" and in establishing WHO is ALLOWED to work for wages in the USA. Imagine a completely open labor market. Imagine "illegals" instead allowed to work for WHATEVER wage they wanted to negotiate.
Ironically, people on this very thread would be wildly divided about that! One one hand, some would be saying, "Yayyyy.... Yes! Let EVERYBODY compete on the labor market, without regard to borders or minimums." Others would be saying, "Uhhh.... Wait! They would need to get paid minimum wage for this to be fair." Others would say, "No WAY! The last thing the American economy needs is a GLUT of minimum wage workers all competing for the fewer and fewer such jobs that are going to be available." Still others would say, "But more such workers will tend to push the minimum wage DOWN rather than UP, and that's not good for ANY minimum-wage workers!" Others will say, "But more such workers will push the minimum wage UP rather than down, because a larger pool of such workers will have more negotiating power." And it goes on and on.
Now, in that context, let's revisit your "fair" question. ANY of the above scenarios could be argued for! And intelligent people could reasonable believe in any of those scenarios and even more. So, what "fair" means is going to vary wildly, depending upon which scenario you believe results from allowing even MORE open competition on the labor market.
I don't have any brilliant answers, and, frankly, I don't think that anybody else does. What I do believe, though, is that the only successes we've seen in human history emerge when government's role is extremely limited and typically consists of rigorous "anti-trust" sorts of "manipulation." (On both "sides" of the "equation".) Whether price-fixing and monopolies are manipulating profits, or national unions are manipulating wages, "unfair" markets emerge, and the results speak for themselves. And WHEN they emerge, you end up with "black" markets that are themselves CORRECTIONS of the manipulations.
The Market is what it is. Human beings ARE GOING TO get what they want, which establishes a market for whatever they want. Period! If somebody WANTS to work for $3 per hour under minimum wage, they WILL find a "black" market for their labor. And if that labor is ALLOWED rather than made "black," there will be an increasing market for it. If you artificially say, "Well, but that's abusive, and we WON'T allow it," well, as we see for ourselves, you DO NOT eliminate that labor market. You simply push it underground and marginalize those laborers.
If "fair" means "equal outcome," then there is no such thing as "fair," and there cannot in principle be. If "fair" means "equal opportunity," we can get nearer and nearer to that and perhaps even achieve it on and off.
I'm deeply suspicious of fine-grained governmental manipulation of "the market," because I believe that the jury is FULLY in on this point: It doesn't WORK, and "fixing" one "unfairness" just produces another and typically worse one. Other than "anti-trust" enforcement, governments simply create "black" markets, to the detriment of everybody involved. They exist when government makes the "unfairness" of the "black" market a better alternative than the "unfairness" of the government-mandated market. And this is true across products and services, as well as labor.
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AP
Trad climber
Calgary
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Oct 13, 2018 - 04:58pm PT
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The govt interferes when there are legal rulings against unions and for a system of "contractors" who are basically employees.
They also interfere when they buy businesses like the Trans Mountain Pipeline assets up here in Canada or invest in Bombardier to ensure votes in Quebec.
Governments should restrict their role to environmental protection, labour standards, safety standards, health safety, protecting the public against fraud, etc.
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AP
Trad climber
Calgary
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Oct 13, 2018 - 06:04pm PT
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There is a class of people who love a huge military but don't want to pay for it.
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DanaB
climber
CO
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Oct 13, 2018 - 06:47pm PT
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If "fair" means "equal outcome," then there is no such thing as "fair," and there cannot in principle be. If "fair" means "equal opportunity," we can get nearer and nearer to that and perhaps even achieve it on and off.
Certainly, I agree, fair does not mean equal outcome, not at all.
Discussing profit, wages, capital, labor, resources, and so on is beyond me. But, all of those aforementioned concepts, issues, and actions occur when people are dealing with people. They are human interactions - even though other forces are at work - and it seems reasonable to ask, as these interactions happen or as we plan them: how are we treating each other?
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climbski2
Mountain climber
The Ocean
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Oct 14, 2018 - 04:25am PT
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Fair should also mean that attempting to circumvent such requirements by hiring part time employees for full time positions causes the same penalty
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Bad Climber
Trad climber
The Lawless Border Regions
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Oct 14, 2018 - 06:18am PT
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Great post, MB1. Are you here all week? :)
I've been reading about what Andrew Yang calls "the Great Displacement," which designates a coming wave of unemployment driven by big tech advancements, which in many ways is already happening. He cites something like 4 million manufacturing jobs lost over the last 10 yrs. due to automation as only one example. Self-driving trucks are going to be a nightmare for employment. It turns out that truck driving is the most common job in 29 states! Anyway, Yang argues for universal basic income (UBI) as a way to combat this. He makes a pretty compelling case. To fund it, he suggests a 10% VAT. Yang does not address, however, how to deal with the current and building giga-debt that the US is running, which scares me more than anything re. the economy. What are your thoughts on UBI?
BAd
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Dave
Mountain climber
the ANTI-fresno
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Oct 14, 2018 - 06:43am PT
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"your wages should pay enough that 25% of your salary will afford reasonable housing within 20 minutes commute"
Why not 20% or 40%?
Why not a 10 minute commute or a 60 minute commute?
And what the hell is "reasonable housing"?
Your privilege sitting behind a comfy screen allows you to make these arbitrary designations. Someone living in a rural community or in a downtown lives a completely different life - that is the problem with setting some arbitrary criteria. Eventually you end up with the government micromanaging the economy.
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 12:19pm PT
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There is a class of people who love a huge military but don't want to pay for it.
Fact!
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 12:23pm PT
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Great post, MB1. Are you here all week? :)
I don't usually get that. Thanks, Bad.
It's crazy complicated stuff, no doubt. I don't claim any special insight. Seriously. But building a business from scratch does make me recognize that "just give 'em a living wage" is woefully simplistic. I truly sympathize with the intuitions that drive that sentiment. But I just don't believe that that approach can produce the desired results.
And, yeah, I'm going to have to check out the book! Thanks for mentioning it. I love that sort of read.
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Gary
Social climber
Desolation Basin, Calif.
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Oct 14, 2018 - 01:17pm PT
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Eventually you end up with the government micromanaging the economy.
Or maybe you end up with the people managing the economy.
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 02:22pm PT
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^^^ My employees are not minimum-wage workers. But labor is by far our largest total expense, and we operate on tight margins. If our employees suddenly decided that they needed twice as much as we pay, well, we simply couldn't do it.
Of course, they know that. Moreover, we create an environment and ethos that has them saying things like, "Maybe I could get a job at Google for twice as much, but it wouldn't be worth it."
There are lots of intangibles that go into a desirable working environment more than just wages. And we really can't map the psychology of skilled labor onto that of minimum-wage labor.
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 02:33pm PT
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^^^ I don't know what "at a loss" means. They don't make as much (in wages) with us as they might make elsewhere.
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 03:00pm PT
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^^^ I don't know how that works for labor. What does it "cost" you to work for an hour as opposed to, say, picking your nose?
Let's say that a person's only skill is picking their nose. What does it "cost" such a person to offer that skill to the market? How should the market value that skill?
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Reilly
Mountain climber
The Other Monrovia- CA
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Oct 14, 2018 - 04:58pm PT
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they cant be adverse to evil...
But maybe they can be adverbs to evil?
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madbolter1
Big Wall climber
Denver, CO
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Oct 14, 2018 - 06:04pm PT
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^^^ Come on now. You're being intentionally obtuse. Some "labor" just isn't worth anything. So, "doing it" will always be "at a loss." Other labor is "dime a dozen," and that will also be done "at a loss." Nothing can be done for it except to encourage education and/or retraining. You can't artificially pretend that some labor is worth more than it is.
You understand this. Don't play hard to get.
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Dave
Mountain climber
the ANTI-fresno
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Oct 14, 2018 - 06:45pm PT
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" Do any of your employees work at a loss?"
That is a loaded question.
Do my employees make horrible choices with their money, get divorced 5 times, buy sh#t they don't need? Absolutely. Is that my business? No.
Should I / we pay them more because of their bad choices? No.
Could they live well with what I pay them if they made "good" choices? Yes.
Is it up to me as their manager to dictate those choices? No.
See how that works? Now extrapolate.
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