I would love to sit in a room with a few sharp people like yourself (with whom it seems I often sharply disagree but allow that you're quite intelligent) and participate in a week long casual verbal brawl on all this. Well so long as everyone was civil and all.{preceding was last. -moved by Billy T}...
Me too, but here will do.
I disagree on the basis that different places lead to different costs for both employer and employee. While the 'added value' may seem equal, it is not. Sure perhaps both simply laced the shoe, but the cost for the guy who did it to buy a sandwich in either place is also different. As such, there is no means of direct comparison between two different workers.
You drifted into cost discussion. I said the value added was the same. Set of laced shoes has same increment of value, that is constant over the separated unlaced shoes and laces, at least as fraction of total value, but admittely shoes do have different costs that need to be recovered in the price in different sales locations.
... But you see that's just it, how someone else divides their rewards among their workers simply isn't anyone else's business (IMO) so long as the workers are there voluntarily....Doesn't the person making or accepting the offer determine the fairness? Is it 'fair' to impose your own sense of fairness onto one party or the other?
This gets to the heart of our different POVs. You think it best to have the least possible government interference in the agreements that may freely arise between labor and capital. "Freely" meaning no slave workers or threats to their children, possibly a minimum age for the workers? (not sure you want that limitation) etc. If this results in most citizens living hand to mouth with high death and crime rates (more police and prison costs), that is unfortunate, but not enough so as to promote government intervention in what "should" be a private agreement between workers and capital. (Correct me if this is wrong.)
I think the first priority is the greatest good for the greatest number, (i.e. MAKING THE BIGGEST POSSIBLE "PIE" TO DIVIDE) and that that goal be can ONLY be approached with substantial government interference. Here is why I think that:
There is a natural tension / conflict between workers and the factory owners at any one factory, A. (Every extra dime more in their take home pay reduces the ROE, return on investment.) However, more pay at factory A can increase the ROE at factories, B, C, ... Thus, within reason; all ROEs can be greater with some government intervention. This is a version of the classic "problem of the commons" {Long ago towns had a common pasture. It was to the advantage of every "A" to put another cow in the common pasture, but all suffered more than he gained so regulation made for greater gain total.} I do not think you realize that even factory A can be better off (greater ROE) if the government solves (or tries to) this "problem of the commons." That was what Henry Ford understood and forced others to pay their workers more by doing so himself.
Surely, excessive government interference can be very bad. A case in point is modern France's "spread the work around" to avoid unemployment with a mandatory 35hour work week, longer vacations etc. that added so much to costs of production that they could not be completive: unemployment rose, instead of fell and then the 35 hour work week was only "recommended." This past summer, just after the elections, the government tried to make it easier to hire young people by making it easier to fire those that were not producing their cost etc. The student protested in the streets and forced the government to back down. France has serious problems with excessive government interference IMHO.
I may have mentioned "fair" but that is not my goal - much too subjective. I want government inference up to the point where ROE no longer increase
on the economy as a whole. Some factories individually would benefit with less interference, especially those that mainly export, as making greater good for those not buying their products does have costs they must bear. Thus, to keep them completive, in some FEW cases tariff and or export subsidies may be desirable, but usually it is better to let "constructive destruction" do its work.
Krugman just got the Nobel in economics and mainly for something closely related to this. All economists since Adam Smith have known trade benefits all but he noted that who makes what is often a matter of historical accident, not climate etc. I.e. economies of scale make it desirable for countries to trade. (I visited Hungary shortly after the wall came down. The light bulbs for all of the Soviet Union were made there. - Even the communist knew about economies of scale.) France makes good safe nuclear reactors - a world leader - should let some other industries fail and gain economy of scale. (They are in India now trying to sell their designs. - I bet they do as US has not made one for ~40 years.)
...A business that runs low margin/low volume simply couldn't do as you say {pay government set minimum wage etc.} and stay in business, but if it is allowed to continue undisturbed, it can quite efficiently satisfy its niche. So should we, by demanding businesses adopt the 'Henry ford attitude', put that business (which say, provides economic opportunity and fair exchange amongst a few hundred people or something) out of business?
Yes or grow them bigger for economy of scale. Free up the resources they are using or put more in. For example, immediately post WWII, Japan was a mess economically so the government interfered massively - targeted the steel and ship building industry with essentially free loans and laws that helped them take coast line they needed. It also put some other under burdens they could not bear. Japan with zero natural resources is the Number 2 economy in the world with life expectancies of 90+ years, - all because of that evil "government interference."
...IMO, the point of an economy is: the most efficient satisfaction of demand (disribution of resources) allowed by real constraints (of which there are far too many to list for any product or service). Technically, I think this is satisfied most efficiently by absolutely no regulation. Of course that's probably unpalletable for most people, as our cultures have developed moral standards and such. ... Regardless to me it seems like 'letting nature do its thing' with intention directed toward minimizing regulation (while maximizing its effectiveness toward the goal stated above) is the wise policy, mostly due to unintended consequences that arise from trying to control people's behavior. ... Well unfortunately I don't think your 'best solution' is at all realistic,
I hope my prior comments (and the current economic collapse inadequate regulation, which even Greenspan* today recognized was wrong and the origin of the current troubles) help you see that no regulation (or excessive regulation) guarantee either the destructive effects of the "problem of the commons" (lower ROE for almost all and certainly for society as a whole) or in case of excessive regulation, the destructive effects of central planning. It is hard to beat Adam Smith's invisible hand, acting with wise government regulations - sort of like the high life styles, high education level, long life expectancy, low rates of crime, personnel liberties, etc. one finds in the well regulated Scandinavian countries but they have been "fine tuning" their system for about 100 years. They are "realistic" are they not? Tiny populations with huge global impact for their size. (Electrolux, Volvo, NovaNorsk, Knokia, Shipping, etc. very stable democratic government and currencies.)
...The most disappointing aspect of the economy to me is a seeming lack of regard for a sense of fair exchange of goods and services. ...
That, I think, is because of your ideology that DEFINES "fair" as unregulated mutually agreed contracts between labor and capital. I want to avoid defining "fair" and only note that some regulation INCREASES the ROE of the society's capital. Putting adequate purchasing power into the hands of the workers is the best way to make their ROE greater, especially in a democracy. - Henry Ford was correct. The modern Republican right wing's "no regulation is good regulation" is wrong both logically (problem of commons unsolved) and a demonstrated "trillion dollar failure" (see footnote) now (and IMHO/ expectation the cause of the worst depression ever, in less than a decade, probably only a few years more now.)
I hope you can see some of this or at least will think about it.
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*“That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' - Greenspan acknowledged he was partially
wrong for opposing the regulation of derivatives over the years. Firms that bundle loans into securities for sale s
hould be required to keep part of those securities, Greenspan said in prepared testimony. Other rules should address fraud and settlement of trades, he said.
Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $660 billion in writedowns and losses tied to U.S. subprime mortgages. {Please add to my above point that adequate gpvernment regulations can not only make the society's ROE grow faster, be bigger, but also can avoid these extreme losses.}
Greenspan, 82, reiterated his ``shocked disbelief'' that financial companies failed to execute sufficient ``surveillance'' on their trading counterparties to prevent surging losses. The ``breakdown'' was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.
{I heard other parts of his talk. He expected the banks to act in their own self interest - Thus no need for regulations etc. What Greenspan missed, IMHO, is that the banks were run by people - CEOs etc looking out for their self interest. Can you say "100 million dollar bonuses" plus "golden parachutes" in one breath? But that is all "fair" and desirable by your POV.}
Except for blue text, above is from:
http://www.bloomberg.com/apps/news?pid=20601087&sid=an8vy29bsXk8&refer=home
