4 ms·
Collusion leads to artificially suppressed wages, which makes the labor market inefficient, to the detriment of the employees. In general, completely unregulat
by asdfologist 12y ago
Collusion leads to artificially suppressed wages, which makes the labor market inefficient, to the detriment of the employees.
In general, completely unregulated free markets lead to monopolies and price manipulation, among other problems.
So no, collusion is wrong.
- dreamdu5t 12y agoWhat's artificial about wages or prices determined through agreement (the market)? What constitutes an agreement's artificiality?
- asdfologist 12y agoConsider the extreme scenario where all companies collude, sending wages to near zero. Would you still call this "agreement"?
- jessaustin 12y agoI don't agree with GP's argument, but presumably in such a hypothetical new entrants to the market could get the best engineers by paying slightly more than the collusion wage. This phenomenon would tend to raise wages, but we shouldn't imagine that it would raise them back to a "fair" level.
- dreamdu5t 12y agoSure, let's consider it. Let's say all companies form an agreement to not hire from any other company. They're now in a situation where either they must terminate the agreement in order to hire, or bid against other companies for labor that is not currently working for any of the firms. Companies bidding over labor drives wages upwards... not downwards.
- altcognito 12y agoWhat's artificial is that it's based on an agreement between two producer not on market discovery of price by the consumer. Do you understand how markets work?