That is precisely why I equate the present-day manifestation of capitalism as piracy. The employer decrees that an hour of labor he willingly paid $10 for yesterday is only worth $8 today for the sole reason that the employer’s profit from that worker’s labor has decreased $2 and not because of any decrease in quality or quantity of the worker’s production.

1) On Crusoe’s beach only the best workers are retained (true at first); only the highest wages are paid (true at first, in order to lure the best workers); and submarginal workers must remain unemployed (false; they are used to replace the workers who continue to insist on the highest wages). Because of marginal cost (submarginal workers are worth the lower wages paid because they more than offset their lower productivity which is expected to improve with experience. Everybody will catch some fish unless the fish aren’t cooperating), employers will settle for less productivity per employee so long as the expected level of profit is maintained. Employers are fond of playing one group of employers against another to accept lower wages; else why would they go to China?

2.a) “Surely it would be better for those firms to hire the unemployed at much lower wages? And why is it increasingly difficult for graduates to obtain unpaid internships? Why would any firm refuse free labor?”
Now that would be the ultimate in profit maximization!

(2.b) “In reality, firms face the same problems as Crusoe did with his limited capital – they must only employ the most productive workers at the highest wages.”
Why would employers do that, when they are always striving for 2.a? If that cannot be done due to conscience, regulation, or the fact that their fellows would string them up if they didn’t at least pretend they weren’t pirates, then the threat of the submarginal workers replacing them would serve to keep wages from going any higher than the absolute lowest the employed workers would accept.

A fervent believer in truly free-market economics appears to be able to watch his neighbor and his family starve because his neighbor is unable to live decently in the U.S. if he matches the price of a Chinese laborer held in virtual slavery.

A fervent believer in a free-market is hopefully smart enough to see through your bullshit. Your lack of understanding about anything to do with economics and utter misunderstanding of everything that is happening around you.

A fervent believer in a free-market is able to look at the current high unemployment and understand that a large untapped labor force is a valuable resource that in a truly free market would be hired and put into employment regardless of anything happening in China.

I am utterly dismayed that a obsolete merchantist viewpoints and common misunderstandings, misplaced morality, and bleeding heart-style self-delusion that your espousing in your post that have been demolished over and over and over and over and over again is so common.

Your either a idiot or just ignorant. The latter can be fixed, fortunately.

If you want to actually have a voice worth listening to I challenge you to find out why instituting tarifs and sactions against China imports would:
A) Destroy a significant amount of our export business, leading to higher unemployment and falling wages.
B) Lower the standard of living of those you purport to care about.

Understanding these two facts may help you break out of your 1800′s-era delusional mindset.

The cause is not regulation, because the US has been on a deregulation and privatization binge since Reagan took office, when the top income tax rate was 70%. For those of you who are not millionaires and are old enough to have been working at an adult job back then, are you subjectively better or worse off, minus consideration for the “wealth effect” caused by debt?

We have more poor people because Americans are expected to “lower their expectations” and the price paid for labor has dropped relative to increase in GDP enabled by technology. The portion of price devoted to labor cost has dropped, while the portion of price devoted to profit has not. That is the reason for the divergence in real incomes between those who work for a wage and those whose incomes come from investments.

A fervent believer in truly free-market economics appears to be able to watch his neighbor and his family starve because his neighbor is unable to live decently in the U.S. if he matches the price of a Chinese laborer held in virtual slavery. Of course, those who receive the income from capital feel justified in wallowing in their own ever-increasing profit due to choosing the low-cost labor of the Chinese rather than paying a living wage to his neighbor. There does come a time when just the tiniest bit of altruism is desired, no matter what that psychopath Ayn Rand said.

I collected exactly 1 UI benefits check while unemployed. There is a hold on my UI benefits because I turned down a temp-to-hire job offer from a temporary staffing agency in March.

I am definitely NOT the type of person who made six figures before the layoff, who then applies for low wage fast food jobs so they can turn them down and remain on UI benefits and do nothing but collect money at the taxpayers expense. Those people are losers.

The job I rejected was :

1. Out of town. The commute at upwards of $4 per gallon of gas (plus the extensive wear and tear on my old car that already has 100K miles on it) would eat up any earnings I would have made at the $10.50/hour the job was to pay. I believe a job paying 80% of your previous earnings is considered reasonable, but the transportation expenses would have made it extremely difficult (if not impossible) to break even. While the pay was statistically correct, I crunched the numbers for my own budget and decided the job was too expensive for me to take.

2. The job was in a call center. I promised myself I would NEVER take another call center job. Customer service call center work sucks. Anyone who has ever worked in a call center can tell you that. It’s why they have such god-awful turnover. I decided that since the call center was *just* a call center — the company’s HQ and other departments were all out of state, limiting my ability to ever be able to move/be promoted *out* of the call center — and since the offer was only the first position I had interviewed for since my layoff, that I could afford to wait and send out some more applications and do more interviews. I could have taken the job, but since it was *out of town* it would have greatly restricted my ability to set up job interviews closer to home (i.e. there wouldn’t be a long enough lunch break to drive back to my town, go through the interview and then drive back to work without being very late).

Since my UI benefits were suspended, I’ve been living on my savings and some income from a short term temp assignment. I was lucky to get this temp assignment, since it is with a company (well, a local school district actually) where I have already applied for several full time/permanent positions, so it was a bonus to be able to make a little money and semi/sort of get my foot in the door someplace I might be much more interested in working (a far cry from a call center!).

While the government might consider me off the rolls, and statistically that’s making the Obama administration look good, I don’t really feel that I owe the Obama administration a PR success from taking a sucky call center job for less than the even the low wage I was already making before. It’s not like I’m a former financial executive with a six figure lifestyle for Christ’s sake! I was making $13 measly bucks. I really don’t think that 80% of $13 bucks is a living wage for someone with a geriatric automobile to replace. I couldn’t care less about the administration’s problems. I, as an individual, want the right job for me: close to where I live (for as long as gas prices continue to rise), paying enough that I can save money to replace my old car (without going into indentured debt servitude with a car loan), and a job I can actually stomach. I am a former teacher (although my teaching certificate expired many years ago) and I feel that even an admin job in a school system is far better than call center slavery at $10.50 an hour.

Health insurance = cheaper than I ever imagined! As an employee, I had the least expensive, high-deductible insurance through my employer’s plan. I think I was paying at least $60 to $70 a month for that. Since leaving my employer, I shopped around for private health insurance. A Dave Ramsey ELP found a Humana plan with a high deductible which costs me only $46 a month. If I’d known it was that cheap, I would have happily *quit* my old job years ago and temped until I found something I actually enjoyed, around people who don’t gossip about and backstab their coworkers all day long (it was the most toxic environment I’ve ever worked in, and all I can say is good riddance to bad company!). Granted, I’m a 42 year old woman in good health with no chronic or preexisting conditions, so that helps. Still, I don’t think private insurance is as expensive as everyone claims. Shop around, and you can probably get a better deal than your employer is offering you.

I live in a state that is not a right to work state, and I pay both state and local income taxes, as well as property tax (I’m a homeowner with a prime mortgage, believe it or not – but real estate prices where I live weren’t inflated like they were in other parts of the country, so I’ve never been underwater, and I bought my home in 1999, before the housing bubble really started to pick up steam). The city where I live is a college town, and the city government is NOT friendly to new businesses, which I think is part of the reason so many of the job openings that *are* available are out of town and I’m actually struggling to find something with a shorter commute.

Today the issue is not so much about wages being propped up but that the money printing stimulus packages from the Fed has gone into funding the outsourcing of US jobs, factories, technology transfers overseas, military bases and infrastructure spending abroad, speculation into financial assets that is pushing up things like commodity prices and artificial consumption with debt instead of production in the US. If the money created was being used to fund production and industrialization instead of outsourcing; then more jobs in the US would have been created.

The Bank of North Dakota is an example of a model to follow. It places State tax funds into their own State bank that they can recycle to fund services, projects and industrial development within the State. Additionally they work with other private banks in the state with loans and also hold deposits of other private banks and individuals. Instead of having to depend entirely on issuing state bonds, they can create credit to fund development within the State. The state of North Dakota has been successful at regularly maintaining low unemployment and budget surpluses with it’s state bank because they encourage savings and can create credit to fund development. Also, the deposits with the Bank of North Dakota are not FDIC insured but insured by the State which prevents high over leverage on the Bank balance sheet because the State Bank knows it doesn’t have a printing press. So money is not created to fund much speculation.

Strongly Recommended to read:

What’s North Dakota Secret?
http://www.forbes.com/2009/06/30/north-dakota-hoeven-business-energy-economy.html

http://www.epi.org/publications/entry/briefingpapers_bp150/

You need to differentiate between new money and old money. New money, mostly paper profits, I suppose began with Bill Gates, it didn’t hurt him to a have a father who was the richest lawyer in Seattle. Most old family money people are invisible and have never held a real job. The queens of Great Britain and the Netherlands, for example. Do the Rothchilds ever get on the ‘richest’ list? They mostly own hard assets, mines, land, cities . . . .

“Do you mean something along the lines of; ‘I demand that you pay me!’ ‘No!’ or conversely ‘I demand that you work for me!’ ‘No!’??” I would add that, “I have a life that I am trying to make profitable, therefore I am also in competition with the person that employs me and the consumer that employs us both.” Consumer and labor demands on products reduce profit for the entreprenuer and vice versa. I don’t see cooperation as clearly as you do.

Most individuals begin their working life as employees of another. You need to attain capital in order to become an employer or simply independent in a capitalist economy. If your wage is commensurate with your survival alone, you don’t gain capital. Therefore, you never become anything more than dependent on those that have capital.

I would guard against losing my capital jealously. Even though I would arguably be more harmed as a small business owner than as an unskilled laborer with the implementation of a minimum wage, I may try to convince someone that he is better off allowing me a greater degree of economic security than he. I may even call him a statist and a serf if he protests.

“For example, I want to buy a Ferrari for £10, but those bloody b******* won’t give it to me for that! Exactly. Similar to “I want my enormous jar of dill pickles, so why don’t you just stop this bloody talk of unionizing my WalMart and living wages and such, and get back to serving my demands.” You don’t want to, and I don’t want to. That makes for a very harmonious market place.

These comments are getting really long, so I’ll just answer the questions. I should warn you in advance that what I’m going to say may sound very ugly – but I assure you that I’m a well-intentioned human being!

“How would you ever know the reality of the situation if you refuse to violate private property?”

In my mind, you cannot say ‘if you don’t violate private property rights, then you don’t get such and such’. The inevitable question is; why is ‘such and such’ a goal? In this case; why is ‘knowing the reality’ a goal?

“Do employers have a perception problem as well, or do I have a perception problem with this statement?”

No, I don’t think you have a “perception problem” with this statement. I don’t think that the “money illusion” is exclusively reserved for employees. I work on the assumption that it pervades the entirety of the economy. In fact, I think we have good grounds to assume so; because businessmen nevertheless engage in imprudent activities – they fail to anticipate the business cycle.

“I believe that makes combat more frequent because fighting an individual may be more tempting than fighting an enemy that you probably will not defeat. Doesn’t minimum wage, to a certain extent, alleviate the need for combat?”

I don’t really understand what you mean by ‘fighting’ and ‘combat’ here. Do you mean something along the lines of; ‘I demand that you pay me!’ ‘No!’ or conversely ‘I demand that you work for me!’ ‘No!’?? In a private society, people who can’t make deals with one another don’t execute transactions with one another.

Anyway, you should understand that this supposed ‘tension’ is prevalent throughout the economy. For example, I want to buy a Ferrari for £10, but those bloody b******* won’t give it to me for that! I’m thinking of starting a petition and going to the house of commons in London to demand my ‘fair share’ of Ferrari!

Likewise, the Ferrari corporation wants to sell me a Ferrari for £1’000’000’000, but I’m such a bloody b****** that I won’t give it to them. They’re thinking of starting a petition and going to the house of commons in London to demand their ‘fair share’ of my money!

OK, how cheap are you willing to work for? The going rate for Chinese workers is $4 for a 10-hour day. Are YOU willing to do that? Either unemployment hasn’t hit YOU yet, or you are an employer who wants to pay as little as legally permissible because slavery is illegal in the US.

If his only compensation is food and boarding, and he has no prior savings, he will be dependent on his employer to give him sustenance. Allowing him to use transportation or some form of communication would be charitable on the part of the employer and his only means of finding different work outside of his immediate area. There is obvious incentive not to do so because the employer cannot be 100% sure that all of the unemployed would be willing to do the same work at the same rate. This also gives incentive not to go too low in order to retain labor. I am arguing that this isn’t really cooperation so much as it is competition between the employer and the employee.

That is precisely why I said “virtual slave” and “difficult” to find better work. Knowledge of available alternatives is extremely unbalanced in this case and gives a definite advantage to the employer. Virtual isolation may more easily become forced, physical isolation. He shouldn’t expect much help from Libertarians that may see him as gainfully employed. How would you ever know the reality of the situation if you refuse to violate private property?

I might agree that consumers would pressure someone economically to change his treatment of employees …if… it weren’t for racism, sexism, nationalism, religious discrimination and all the other ways that we find to hate each other in the world. Apathy about the less fortunate is a strong demotivator as well.

“Rather I was saying that people’s perceptions about the comparison of dollar amounts – itself – impedes their own and others’ capacities to be employed.” I understand this to be a statement about the rigid attitude of labor concerning nominal wage levels. Do employers have a perception problem as well, or do I have a perception problem with this statement?

I can’t help but notice that employers generally lower employee’s nominal portion of the profits before their own share of the profits. That nominal amount must have some significance or it wouldn’t meet with such resistance. If it were so inconsequential, employers could easily avoid conflict with less sophisticated, less perceptive workers by sharing the future uncertainty of a nominal wage change.
Capital is more important than people, and it still sounds more like a battle than economic harmony to me. Capital means survival, of the business and the individual. It wouldn’t be protected so adamantly if it didn’t.

My understanding of Libertarian philosophy is that you aren’t opposed to wage disputes, you would just rather it be more individually costly than simply casting a vote to accomplish personal agendas. I believe that makes combat more frequent because fighting an individual may be more tempting than fighting an enemy that you probably will not defeat. Doesn’t minimum wage, to a certain extent, alleviate the need for combat? It has become a political fight rather than the physical fighting that was taking place in earlier American history.

I agree.

I don’t know how the reply buttons decide to apply themselves.

Sorry, replying to myself because there isn’t a reply button by your post.

If we assume the ‘major employers control the government’, then I say it’s broadly the same. You’re broadly free to attempt to be an employer, you can move abroad, you can rise up against the government. What I mean to say, is that you can wield your life pursuing whichever endeavours you think most appropriate. You’re a slave to your employer to the extent that you grant him ‘ownership’ of you.

Firstly, you should note that I don’t think that there exists any private property on this planet in the strict sense of the term. What I meant here was that you shouldn’t use tools that violate private property to achieve your arbitrary stated goals such as ‘economic stability’ (whatever that means) and so on.. What I mean is that I say statements like ‘this and that should be like this and that’ based on non-violation of property rights – not based on stated arbitrary economic objectives.

But when the major employers control the government???

>My judgements are based – by and large – on the sanctity of private property.

Say again? Most private property is owned/controlled by the Family 400/government/international corporations (all the same entity under different names). Very few people who work for hourly wages own any property free and clear which is worth much.

First I should say that my use of the word ‘fall’ was intended as a metaphor, apologies. Basically I mean the price goes where it goes (up or down). So, the response to your question is: as low as it needs to go.

Indeed, there usually is at least some unemployment. That doesn’t mean that the employer has an advantage though. Basically, the unemployed are people that haven’t found an employer at their desired wage rate (bar min. wages). There is no advantage. Likewise – at any given time – there are plenty of employers that haven’t got employees at the wage rates that they want to pay. Even if I were to accept your notion that the price ‘falls on labor’: if this is undesirable, the laborer can always try to become an employer. Nobody’s forcing him to do otherwise.

Again, upon what premise would one be a slave to one’s employer? One is broadly free to move, opt out, die, become an employer or whatever else.

I wasn’t really saying that, and I wasn’t really advocating that anyone should do anything. Rather I was saying that people’s perceptions about the comparison of dollar amounts – itself – impedes their own and others’ capacities to be employed. Although I by and large agree with those notions that we shouldn’t fear deflationary spirals (if we seek the truth).

My judgements are based – by and large – on the sanctity of private property. Although I frequently find the economics on this site compelling, the more compelling thing is that we all – by being human and alive – implicitly advocate the notion of private property. Thus, I regard propositions that contradict private property to be somewhat misguided. Notions like ‘economic stability’, ‘increased production’ and so on are value judgements that aren’t the prime thing to be guarded (in my mind). That they happen to align nicely is just a bonus.

One problem with “on line” is that it includes the people in India, most of whom speak better English than the median US high school graduate. A friend works for a nation wide real estate title insurance company. Most of the public records they access are on line. His company has bought an Indian company and commanded that all routine title work be sent to India. Our local hospitals are having our MRIs read in India.

Bottom line is the post WW2 American Dream bubble of a house in the country and a job in the city has popped. But traditional US cities with single family residences are not being built. Another 40 years and most US cities will look like a Japanese city but much dirtier . . . OK, make that a Chinese city.