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This is socialism. Paying wages that are 50k over the market creates enormous incentives for corruption. The CEO seems to be a devout Christian, and I want to h

by rdancer 11y ago

This is socialism. Paying wages that are 50k over the market creates enormous incentives for corruption. The CEO seems to be a devout Christian, and I want to hope that all the employees are strongly moral people, but to paraphrase the parable of the camel and the needle, it is extremely difficult to be both rich and righteous at the same time. There is a pressure on the people to outsource much of their work at market price, skimming the profit. People are clever, they will find a way. It also puts an immense value on getting the job (possibly by deception or by getting rid of the incumbent in some way), and then staying at that job at all cost. The risk-aversion will be through the roof. There will be absolutely no back-talking. The managers will never be challenged, no matter what they do, by their underlings. Morale and the working conditions will deteriorate as a consequence, with negative effect on the bottom line. All the above used to be the norm in various forms in the Soviet bloc when I was a kid. Those of you who spent some time in a socialist country will recognize the problem. I hope that this experiment stands the test of time, and we can all learn from it how to make employing people more humane. But I won't be holding my breath.

GeoDeV 11y ago
This is definitely not socialism! There is no coercive government intervention here. It is the CEO of a private company paying his employees above market rate. One of the many benefits of a free market is that you will often see experiments like this. Some will fail, some will succeed, but no one will go to Siberia. Socialism is political system, an incredibly irrational and immoral one, but this is merely a business decision taken by a single CEO exercising his own independent judgement.
- rdancer 11y ago
  One of the aspects of socialist economies is that unlike in free-market economies, wages are not set by the market. Whether they are set by the CEO or the Central Committee is a distinction without a difference. You can swap the word "capitalism" in for "socialism" in your comment, and those statements would still work. Socialism didn't fail because it were monstrous. It failed, because we ran out of money and the will to live in squalor.
  - GeoDeV 11y ago
    I couldn't disagree with you more on this point. It's a common fallacy to equate political power (Central Committee) with economic persuasion (any private business). No one is forced to deal with Dan Price and his company - it's up to him and his company to offer value and stay competitive to all stakeholders and customers. On the other hand, the Central Committee's edicts are backed by political power. Disobey, go to jail, or worse. The word "free" in free market capitalism means freedom from political coercion or force.
  - landryraccoon 11y ago
    I don't get it. If I hire a housekeeper and she asks for $10/hr but because I like her a lot I offer her $20/hr, are you arguing that's socialism? It's my money and I can do whatever I wish with it - that's capitalism at it's finest. The CEO owns the company. If he has total control, he could instead of paying his workers more simply buy himself a jet or donate it to a church. (Obviously, if his shareholders object, he'll have to convince them to go along as well). If you want to think in terms of market wage, what he is doing is paying them market wage, then unilaterally deciding to give them a "big tip" at his own expense - which happens to bring their total compensation to $70K a year. That's still capitalist, since it was his money to give away in the first place. He could give it all to Donald Trump instead, if he wanted to - the fact that he happened to give it to his employees is almost arbitrary. The only issue is whether he can afford to keep it up, but that's entirely on him.
    - rglullis 11y ago
      If I understand the parent correctly, the argument is that any artificial method to establish a price to wages will lead to corruption. Your example is talking about one housekeeper: if she notices that she can arbitrage on your generosity, she can pretty much contract someone else to do her job for $10/hour, and not even show up and still earn $10/hour. If you object to it, it is a signal that you value one's work more than the other, and then we are not talking about market-clearing prices anymore, are we?
      - Jtsummers 11y ago
Jtsummers 11y ago
I find it fascinating, using Christianity to justify paying people less. The exact opposite of charity and compassion and generosity. > It also puts an immense value on getting the job (possibly by deception or by getting rid of the incumbent in some way), and then staying at that job at all cost. The risk-aversion will be through the roof. There will be absolutely no back-talking. The managers will never be challenged, no matter what they do, by their underlings. Morale and the working conditions will deteriorate as a consequence, with negative effect on the bottom line. Anyways, I know that my risk-aversion has gone way down as my pay has gone up. Why? Because I'm smart with my money and have more than enough stored away to make it years (literally) without needing a job. I can be an opinionated employee. Of course, my risk-aversion also went down when I was grossly underpaid. Why? Because I didn't give a shit, they weren't paying me what I was worth and I was actively looking for a way out. Being opinionated and effective was the only way to get noticed in a way that might increase my pay at the company. When was I not risk-averse? Precisely when I was making "market wages". I was making enough that I was totally content in that I could afford my lifestyle, but not enough that I could really save enough to get the FU money.

by rdancer 11y ago

GeoDeV 11y ago

This is definitely not socialism! There is no coercive government intervention here. It is the CEO of a private company paying his employees above market rate. One of the many benefits of a free market is that you will often see experiments like this. Some will fail, some will succeed, but no one will go to Siberia. Socialism is political system, an incredibly irrational and immoral one, but this is merely a business decision taken by a single CEO exercising his own independent judgement.

rdancer 11y ago
One of the aspects of socialist economies is that unlike in free-market economies, wages are not set by the market. Whether they are set by the CEO or the Central Committee is a distinction without a difference. You can swap the word "capitalism" in for "socialism" in your comment, and those statements would still work. Socialism didn't fail because it were monstrous. It failed, because we ran out of money and the will to live in squalor.
- GeoDeV 11y ago
  I couldn't disagree with you more on this point. It's a common fallacy to equate political power (Central Committee) with economic persuasion (any private business). No one is forced to deal with Dan Price and his company - it's up to him and his company to offer value and stay competitive to all stakeholders and customers. On the other hand, the Central Committee's edicts are backed by political power. Disobey, go to jail, or worse. The word "free" in free market capitalism means freedom from political coercion or force.
- landryraccoon 11y ago
  I don't get it. If I hire a housekeeper and she asks for $10/hr but because I like her a lot I offer her $20/hr, are you arguing that's socialism? It's my money and I can do whatever I wish with it - that's capitalism at it's finest. The CEO owns the company. If he has total control, he could instead of paying his workers more simply buy himself a jet or donate it to a church. (Obviously, if his shareholders object, he'll have to convince them to go along as well). If you want to think in terms of market wage, what he is doing is paying them market wage, then unilaterally deciding to give them a "big tip" at his own expense - which happens to bring their total compensation to $70K a year. That's still capitalist, since it was his money to give away in the first place. He could give it all to Donald Trump instead, if he wanted to - the fact that he happened to give it to his employees is almost arbitrary. The only issue is whether he can afford to keep it up, but that's entirely on him.
  - rglullis 11y ago
    If I understand the parent correctly, the argument is that any artificial method to establish a price to wages will lead to corruption. Your example is talking about one housekeeper: if she notices that she can arbitrage on your generosity, she can pretty much contract someone else to do her job for $10/hour, and not even show up and still earn $10/hour. If you object to it, it is a signal that you value one's work more than the other, and then we are not talking about market-clearing prices anymore, are we?
    - Jtsummers 11y ago

Jtsummers 11y ago

I find it fascinating, using Christianity to justify paying people less. The exact opposite of charity and compassion and generosity. > It also puts an immense value on getting the job (possibly by deception or by getting rid of the incumbent in some way), and then staying at that job at all cost. The risk-aversion will be through the roof. There will be absolutely no back-talking. The managers will never be challenged, no matter what they do, by their underlings. Morale and the working conditions will deteriorate as a consequence, with negative effect on the bottom line. Anyways, I know that my risk-aversion has gone way down as my pay has gone up. Why? Because I'm smart with my money and have more than enough stored away to make it years (literally) without needing a job. I can be an opinionated employee. Of course, my risk-aversion also went down when I was grossly underpaid. Why? Because I didn't give a shit, they weren't paying me what I was worth and I was actively looking for a way out. Being opinionated and effective was the only way to get noticed in a way that might increase my pay at the company. When was I not risk-averse? Precisely when I was making "market wages". I was making enough that I was totally content in that I could afford my lifestyle, but not enough that I could really save enough to get the FU money.