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Most of those discussions are not quantifiable, not following restrict logical, so they can easily dilute to playing word games. For example: "Wages are not th

• airza 5y ago
  It’s not that complicated. The wage clearly has to be somewhere between the minimum wage in the country and 100% of the value (okay, perceived value) that the worker generates for the employer. Supply-vs-demand _can_ dictate where on the curve this labor is priced, but it doesn’t always- unions, networking, or even the ability to look like you can make the company more money go beyond that.
  • throwdecro 5y ago
    > The wage clearly has to be somewhere between the minimum wage in the country and 100% of the value (okay, perceived value) that the worker generates for the employer. As long as companies can keep finding investors to bankroll them, workers can be paid more than the value they generate.
    • thaumasiotes 5y ago
      Just think of them as generating entertainment value. There is no steady state in which a worker can be paid more than the value he creates. As long as that state continues, value is being destroyed, and whoever is paying the worker will ultimately run out of willingness or, failing that, ability to pay.
      • alisonkisk 5y ago
        Value is being transferred, not necessarily destroyed. VCs subsidized consumers to pay workers to provide a product or service, is value creation.
      • Ericson2314 5y ago
        Capitalism already fails to exist without leverage and with a fixed supply of money. The equilibrium you speak of is already fiction.
    • AnimalMuppet 5y ago
      Adam Smith didn't live in Silicon Valley. That kind of thing didn't happen in his world.
      • dboreham 5y ago
        Kirkcaldy. I grew up there. Not so different from Sunnyvale.. E.g. http://www.xnumber.com/xnumber/microprocessor_history.htm http://www.xnumber.com/xnumber/microprocessor_history.htm
      • dredmorbius 5y ago
        Adam Smith literally hired James Watt, inventor of the eponymous Watt Steam Engine, and created a position for him, at the University of Glasgow. Literally bankrolled the guy who launched the Industrial Revolution. And ... managed to scarcely mention his invention at all in Wealth of Nations. For a book that's considered to be the foundation of modern economics, he utterly misses the major factor driving growth through the 19th and much of the 20th century: coal-fired steam power. Even today, coal-fired steam (through turbines rather than pistons) drives much electrical generation. https://en.wikipedia.org/wiki/James_Watt https://en.wikipedia.org/wiki/James_Watt
        • AnimalMuppet 5y ago
          So? Did James Watt generate more value than he cost?
    • dogma1138 5y ago
      The workers still generate a perceived value which is what the investors are investing in even if the company cannot capitalize on that value fully in a given time.
    • sudosysgen 5y ago
      Only because the investors believe that the workers they are paying are generating even more value than they are comfortable exchanging for it.
• guerrilla 5y ago
  > If bargaining asymmetries are the key, why not low skill workers get paid $1million and the management get paid $1k instead, since workers are out numbers and they can easily win the bargaining fight? The answer here is twofold: First because the state exists and will enforce property rights, protecting scabbing and preventing sabotage with force, if not escalating to outright war as they did in the early 1900s (continuing into the 70s in Kentucky.) Second, a capitalist can live just fine with a closed factory whereas workers will not be able to survive without work. In any case, I encourage people to actually read Adam Smith for themselves. You can not only refine the mental model you have of economics but also learn that the popular Adam Smith that is caricatured is not the one who wrote Wealth of Nations. Did you know, for example, that the "invisible hand" is mentioned only once in all of WON? On the other hand, actual market mechanics and state policy (some of which was later discovered to be wrong) were discussed in great detail. You can find a lot of fun quotes too: "As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." [1] 1. From "CHAPTER VI. OF THE COMPONENT PART OF THE PRICE OF COMMODITIES." https://www.gutenberg.org/files/3300/3300-0.txt https://www.gutenberg.org/files/3300/3300-0.txt
  • kortilla 5y ago
    Allowing scabbing is not protecting property rights, that’s protecting individual liberties.
    • djrobstep 5y ago
      Interesting. Would you also say allowing shoplifting is not protecting property rights, that's protecting individual liberties?
      • kortilla 5y ago
        Do you know what scabbing is? It’s allowing people to take a job at a company.
        • 5y ago
• Mathnerd314 5y ago
  The paragraph about "bargaining is key" is probably the weakest - the others are supported by quotes from Adam Smith. One can of course argue if these quotes are cherry-picked or reflect Adam Smiths' views. I would classify the article as historical revisionism. The conclusion "The concern with the welfare of the laboring poor is palpable throughout the book." means that the author at least read the whole of Adam Smith's book, which is more than what most internet commenters accomplish.
  • alisonkisk 5y ago
    Well, the author insinuated to have read or skimmed it, at least.
  • zwayhowder 5y ago
    I do wonder though if the author had read Smith's first book. I always felt that The Wealth of Nations held true only if you accepted The Theory of Moral Sentiments as true. However if you believe that people's own selfishness is stronger than their empathy to their fellow humans, then The Wealth of Nations arguments are on very shaky ground. Still as you say, most people just cherry pick one sentence fragement from the 1000+ pages of the book to justify "free markets".
• Spooky23 5y ago
  Employee hours are more elastic than wages. My employer can go weeks or months without me; I cannot go months without wages. It’s also, obviously easy to divide and conquer employees. Uber demonstrated that you can pay workers less then they are spending!
  • throw123123123 5y ago
    This is ridiculous, if a driver is not making money they will stop driving.
    • UncleMeat 5y ago
      Not so. They can be saddled with debt on a depreciating vehicle, meaning that although their overall income may be negative when accounting for the debt, the alternative is even worse.
      • slumpt_ 5y ago
        I’m often surprised how long folks can go without understanding the real floor in living conditions a lot of Americans are faced with. I think it’s an empathy gap, but I don’t know how to fix it. Maybe folks need to volunteer in shelters more often. Understand how much closer they are to poverty than they are to Bezos.
        • UncleMeat 5y ago
          I do think volunteering would help. My work at a food bank has completely disabused me of the idea that people on welfare are just lazy or taking advantage of the system.
    • Spooky23 5y ago
      Not at all. I used to run a IT field services division of a big company. There’s a reason why these last mile services use contractors and third party vehicles! A car isn’t just gas - it’s maintenance, depreciation, etc. For normal use, operating a car costs about $0.60/mile. Livery use like an Uber is a little higher due to maintenance needs. When you work out what a driver actually gets paid, in many scenarios the driver is making very little, and in some they are losing money. Driving Uber is really monetizing automotive depreciation, while working for free. It’s a big accounting grift designed to run until the local competitors are out of business.
• deleted 5y ago
  [deleted]
• djrobstep 5y ago
  > If bargaining asymmetries are the key, why not low skill workers get paid $1million and the management get paid $1k instead, since workers are out numbers and they can easily win the bargaining fight? What a bizarre comment. That is literally the exact opposite of how it works - absent collective action, a larger pool of workers weakens the bargaining position, it doesn't strengthen it.
  • temp8964 5y ago
    ? I mean with collective action, not absent.
    • jollybean 5y ago
      Collective action is a complicated thing, and it didn't exist until the dawn of the last century. Remember non land-owning males just got the right to vote about then, along with women shortly thereafter. 'Labour Day' which just happened, is a day to celebrate the rights achieved by Labour in this regard. But even with proper Unions, in most situations, they're not going to be able to compel salaries higher than owners and management - the underlying economic reality of the fact that there are 10 workers to replace every Union worker is a powerful pressure on the fairly artificial nature of Unions. From even the most remotely classically liberal perspective, the idea that 'A factory hires 10 employees, and now those sole 10 employees get to determine the operating terms of the business' is a pretty unnatural construct. Unions have waned at least in part because of much better worker protections and minimum wage, which seems to have solved a great deal of the issues, but of course tension remains and I think the way we do minimum wage (so as to put a floor on the lack of negotiating power of unskilled individuals) is probably not nearly as intelligent as it could be.
• SquishyPanda23 5y ago
  > why not low skill workers get paid $1million and the management get paid $1k instead, since workers are out numbers and they can easily win the bargaining fight? This is explained in the same paragraph. Adam's theory is that the wealthy business owners collude against the workers while at the same time lobbying for laws that make it illegal for workers to combine. He says that these conflicts frequently play out violently and rarely end well for the workers. This is explained in in Wealth of Nations in Chapter 8, "On The Wages of Labour." More generally, Smith seems not to have been read by many economists, or at least his theory is rather different from what is ascribed to him by textbooks.
  • jollybean 5y ago
    The economists have read Adam Smith and the Textbooks are likely correct, they just leave a lot of things out.
    • SquishyPanda23 5y ago
      That does not explain why they frequently mischaracterize his theories.
      • jollybean 5y ago
        Provide some evidence that the textbook makers mischaracterise his theories. More likely you're conflating the issue with writers, ideologues, politicians, journalists, editorialists.
  • temp8964 5y ago
    This does not explain anything. What if "the wealthy business owners collude against the workers while at the same time lobbying for laws that make it illegal for workers to combine" did not happen, will the low skill workers get paid $1million and the management get paid $1k instead?
    • SquishyPanda23 5y ago
• jollybean 5y ago
  I'm sorry but this is upside down. Pricing in Supply and Demand is decided by Bargaining Power, not the other way around. The idea that workers 'outnumber' the capitalists does not give them power, it's the complete opposite. I have no idea why you would think think they have some kind of power in that equation especially when there is probably a labour surplus. If workers merged and formed a coherent Union, and acted as a single monolithic entity i.e. 'all labour in the colonies comes from a single Guild', then they'd possibly have more power, but this wouldn't really be possible obviously. The entire treatise is essentially about the disproportionate power of concentrated wealth and that's what will ultimately drive wages. That it's difficult to quantify doesn't make it false. 'Profit concentration' is literally a measure of value chain power: if you can collect a lot of profit, it's a sign that you have leverage over the other entities: workers, financiers, customers and suppliers. Apple has incredible leverage over vendors, which is why even if you sell some really cool and awesome component to them for their iPhone you might not make Jack in profits, and may find yourself out of business a few years later. Apple makes 100x more margin per device than Foxxcon, which illustrates the capital vs. labour dynamic quite well.
  • temp8964 5y ago
    "If workers merged and formed a coherent Union, and acted as a single monolithic entity i.e. 'all labour in the colonies comes from a single Guild'", will they win a bargain to get paid $1million and the capitalist only get paid the minimum?
    • jollybean 5y ago
      Think of the 'Super Guild' as just a corporation selling it's services aka labour, to other corporations. The more powerful corporations will accumulate more of the profits that are available to be divided. So each corporate participant will get back it's 'costs' i.e. the minimum requirement for equipment (and maybe include very base salaries) - after that, everything is up for negotiation. The 'Super Guild' that had 'All of the Workers in the Colonies' would probably be able to negotiate so that the corporations it sold it's services to didn't make any profits at all. So the 'Super Guild' would accumulate most of the profits, and then they'd have to figure out how to divide those profits among themselves. There are actually is not remotely 'that much surplus' in these systems, and that if workers took 'all the profits' it wouldn't make them rich. Just somewhat better off. So if the 'Super Guild' distributed the profits fairly evenly, everyone would get a nice raise and that's that. Since workers tend to spend most of their income, almost all of that surplus would end up back in the economy pretty quickly, and all businesses would grow. This is Henry Ford's realization: "I have to pay my workers enough to be able to afford my car!" FYI you can see this in action with professional designations, like MD, RN. They keep wages 'artificially' high by limiting the number of those that can do the work. That said, even without their Guilds, because they do work that not many can do, they'd still command good wages. The 'Bad Asymmetries' in the economy happen at either end: the unskilled labour pool, who's wages would be 'barely survival wages' (i.e. workers in favelas, no proper sanitation, no healthcare), and on the other end concentration of corporate and private wealth that gives immense advantage. The former needs something like 'minimum wage' (we can do better than that) and the later needs smarter taxation, getting rid of loopholes, offshore, unfair lobbying etc..
• anigbrowl 5y ago
  Well you certainly played some great word games of your own there.
• dredmorbius 5y ago
  On wages specifically: The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them. -- Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Book 1, Chapter 10 https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_10 https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
• animalgonzales 5y ago
  >BTW, I always think left-wing academics should just go out, open businesses, pay workers twice their market wage. And boom, a big win-win! You win your ideology fight and workers get better pay. wtf are you talking about left-wing, there's no dialectical materialism or class struggle.
• zhte415 5y ago
  > The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.