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> Your worth is determined by supply and demand. Supply and demand works in a world with no information/power assymmetry in Econ 101, a.k.a. freshman's dream.

> Your worth is determined by supply and demand. Supply and demand works in a world with no information/power assymmetry in Econ 101, a.k.a. freshman's dream. Even in the most basic case, when a sack of flour is being bought and sold, the buyer wants to buy a sack of flour, the seller wants to sell a sack of flour + a variable number of bugs in it, and the seller's profit margin goes up with the number of bugs. That's why there is a third party necessary which fixes the maximum number of bugs to be included with a sack of flour: otherwise this whole "free market" falls apart or starts killing people.

Aunche 4y ago
Yes. Regulations should exist. Econ 101 is a prerequisite to learning about exceptions to Econ 101, which evidently the general populous has not. This is why people get surprised when the solution of throwing more money at a limited supply of housing and college slots ends up increasing the price of housing and college. You can make a good argument that protections need to be made to protect income workers and that we wouldn't lose much economic efficiency from these changes. On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot.
- John23832 4y ago
  I'll reply down here. > This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry. Supply and demand works best when the data about the market is symmetric. In the job market it is not. Firms know that they are willing to pay, and what they have paid, for work. Workers do not. If a worker takes a penny less than what the firm can bare, that is slippage that is being arbitraged into profit by the firm. Workers are goaded into a cheaper price for their work by firms through the threat of "We will go with another candidate" even if there are no other candidates. Again, asymmetric data. > On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot. Comparatively (amongst workers) well paid workers does not mean that those same workers are compensated fairly by the firm. Workers do work, managers manage. The core question posed by the thread OP was around the value of the work (and the protections afforded to) workers do as opposed to that of management.
  - WalterBright 4y ago
    > Supply and demand works best when the data about the market is symmetric. It works efficiently despite information asymmetry. It's called "risk". Risk always factors into prices. You pay more at a dealership because your risk is less. You pay less for a used car because your risk is more. A job that is more secure pays less. A job that is less secure pays more. The market efficiently prices in information asymmetry.
    - John23832 4y ago
      Hello Walter. Nice to see you. Thanks for D. But this is not true. An economically efficient market is one where goods and services produced are delivered at their most valuable. The job market is the antithesis of that. If there is asymmetric information (and asymmetric risk) AND that asymmetry is known by the side with most information (like it my job example), then the side with more data can price more optimally than the side with less. If we extend that into the tenure of the job, you can be pressured to work longer and harder than you are actually paid for if the risk of losing your job is greater than the risk of you company having to replace you. Just look to Japanese salarymen or Chinese 996 workers. Those are not efficient markets. They are markets skewed towards the owners of capital. Your example of used vs new cars is an example of a risk discount, but it really doesn't fit here, imo.
      - WalterBright 4y ago
        You're quite welcome! Enjoy using D! The risk element goes both ways. An employee factors risk into what salary he'll demand. For example, people going to work for startups are going to demand lots of stock options to compensate for the risk that the startup fails. People accept lower salaries at established companies for the lower risk of the company failing. An employee will demand a higher salary to cover the risk of having to relocate. An employee will demand a higher salary for jobs that entail more personal risk. It goes on and on. Risk is most definitely a factor in all negotiations, and risk is exactly another word for information asymmetry.
  - Aunche 4y ago

Aunche 4y ago

Yes. Regulations should exist. Econ 101 is a prerequisite to learning about exceptions to Econ 101, which evidently the general populous has not. This is why people get surprised when the solution of throwing more money at a limited supply of housing and college slots ends up increasing the price of housing and college. You can make a good argument that protections need to be made to protect income workers and that we wouldn't lose much economic efficiency from these changes. On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot.

John23832 4y ago
I'll reply down here. > This narrative is counterfactual to how capitalism actually works. Your worth is determined by supply and demand. Investors would never agree to paying American developers twice as much as European developers if they knew they would be on the hook for them until their cash reserves bled dry. Supply and demand works best when the data about the market is symmetric. In the job market it is not. Firms know that they are willing to pay, and what they have paid, for work. Workers do not. If a worker takes a penny less than what the firm can bare, that is slippage that is being arbitraged into profit by the firm. Workers are goaded into a cheaper price for their work by firms through the threat of "We will go with another candidate" even if there are no other candidates. Again, asymmetric data. > On the other hand, most people in this thread are intentionally ignorant of the market landscape that gave their their cushy mid-six figure compensation. Instead they would rather make the same tired memes about "short term profits" and whatnot. Comparatively (amongst workers) well paid workers does not mean that those same workers are compensated fairly by the firm. Workers do work, managers manage. The core question posed by the thread OP was around the value of the work (and the protections afforded to) workers do as opposed to that of management.
- WalterBright 4y ago
  > Supply and demand works best when the data about the market is symmetric. It works efficiently despite information asymmetry. It's called "risk". Risk always factors into prices. You pay more at a dealership because your risk is less. You pay less for a used car because your risk is more. A job that is more secure pays less. A job that is less secure pays more. The market efficiently prices in information asymmetry.
  - John23832 4y ago
    Hello Walter. Nice to see you. Thanks for D. But this is not true. An economically efficient market is one where goods and services produced are delivered at their most valuable. The job market is the antithesis of that. If there is asymmetric information (and asymmetric risk) AND that asymmetry is known by the side with most information (like it my job example), then the side with more data can price more optimally than the side with less. If we extend that into the tenure of the job, you can be pressured to work longer and harder than you are actually paid for if the risk of losing your job is greater than the risk of you company having to replace you. Just look to Japanese salarymen or Chinese 996 workers. Those are not efficient markets. They are markets skewed towards the owners of capital. Your example of used vs new cars is an example of a risk discount, but it really doesn't fit here, imo.
    - WalterBright 4y ago
      You're quite welcome! Enjoy using D! The risk element goes both ways. An employee factors risk into what salary he'll demand. For example, people going to work for startups are going to demand lots of stock options to compensate for the risk that the startup fails. People accept lower salaries at established companies for the lower risk of the company failing. An employee will demand a higher salary to cover the risk of having to relocate. An employee will demand a higher salary for jobs that entail more personal risk. It goes on and on. Risk is most definitely a factor in all negotiations, and risk is exactly another word for information asymmetry.
- Aunche 4y ago