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That only seems to work if there is infinite demand. If workers at company A are producing 10x their cost, then company B could hire them at twice that and sti
by akvadrako 9y ago
That only seems to work if there is infinite demand.
If workers at company A are producing 10x their cost, then company B could hire them at twice that and still make 5x returns.
But what if there is only enough demand for 20 output units (2 workers) and there are 2 workers in the pool, why would company B ever pay more than company A?
- WalterBright 9y agoB can offer a lower price than A and take their business away. High margin businesses (like A) attract competitors. Everybody wants to be in a high margin business.
- akvadrako 9y agoHow will lowering margins drive wages up?
- WalterBright 9y agoCompany A employs people and gets 10x on their work with high prices, they have a margin of 9x. B entices them away by offering them 2x their pay, and cuts prices 1x. B now has a margin of 7x, and all the business.
- akvadrako 9y agoWhy not just hire the unemployed available workers at the same pay and then have more margin?
- WalterBright 9y agoThen you'd need to lower prices (margins) to attract customers from the other business, and then you aren't getting 10x from the workers. Any way you want to slice it, making 10x off of workers is unstable in that there are market forces acting against it.
- akvadrako 9y agoSure, margins can go down. I thought the claim was wages could rise.
- WalterBright 9y agoGo back 2 posts and you'll see I showed how the wages rose.
- akvadrako 9y agoMaybe you think you did, but I don't even see a hint of the explanation in your posts.