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From: jim@ISM780.UUCP
Newsgroups: net.politics
Subject: Re: (Orphan) Re: Equality through Reagan
Message-ID: <37400011@ISM780.UUCP>
Date: Sun, 1-Dec-85 17:19:00 EST
Article-I.D.: ISM780.37400011
Posted: Sun Dec  1 17:19:00 1985
Date-Received: Fri, 6-Dec-85 20:21:11 EST
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Nf-From: ISM780!jim    Dec  1 17:19:00 1985


>The "availability of cheaper labor" means that there are people willing
>to do the work for less.  Typically it means that the "cheaper labor"
>folks are POORER than the fellow who has the job already.
>
>So you offer the person who has the job a lower wage -- he refuses,
>he "needs" the salary he had.  (This process can be VERY indirect --
>the folks in Michigan, with a per-capita income of $11,466,
>can lose fleet contracts to the folks in Japan with a per-capita
>income of $9,864).
>
>You then offer it to the "cheaper labor", who accepts (You offer it
>first to the people you've been dealing with because that's smart
>business).  The "cheaper  labor" is not some subhumanoid hive-oriented
>creature who may be safely regarded as more compliant, or less
>deserving -- he (or she) is a human being, perhaps living in a poorer
>country, perhaps the victim of prejudice, perhaps simply less-skilled
>(though sufficiently skilled that he/she is useful to you).
>
>Is it so horrible that the free market in this case tends to distribute
>money among the downtrodden and away from those who refuse to compete?

This denies all institutional aspects of market dynamics.  I suggest you read
some Thorstein Veblen.  I am not going to go into a lengthy debate here about
the realities of free markets; I would just like to point out that economists
much better educated in the intricacies than either you or I have argued
against this view.  After Veblen and Joan Robinson Classicism was
widely considered refuted; it is now back in vogue, more, I would argue, for
political reasons than those of theory.

>>The current policy seems to be to
>>create conditions of extreme poverty and then lower the minimum wage for
>>minors.
>
>That's quite a remarkable statement.  Where can I find the
>organization doing this?  Lowering or getting rid of the minimum wage
>WOULD be a good idea -- before the imposition of the minimum wage,
>black youth unemployment was about the same as white youth
>unemployment.  I assume that whoever is administering this "policy" is
>not couching it in terms of "creating conditions of extreme poverty"
>-- what do they (whoever "they" are) actually say about it?

Excuse me, I did not mean to imply that a split minimum wage has been
implemented, but it has been favored by the Reagan administration.

>>The economic conditions force the minors to seek work instead
>>of attend school; the differential on wages gives them a competitive
>>advantage for *existing* jobs, lowering the cost to the employer and
>forcing the higher-paid adult out of work.
>
>Quite a simplistic analysis, this.  I assume that this is backed up
>with some statistics, somewhere?  In particular it seems to imply that
>the role of skill and experience can be neglected.  In some jobs this
>is true -- some assembly-line work, for example.  In other jobs (heavy
>equipment operation, carpentry) this is not true.

This was hypothetical; it was rather shoddy of me not to make that clear.
And I was speaking of the move toward service sector jobs and the widespread
trend for formerly skilled jobs to become clerical due to the lower skill
required due to automation.

>>Since labor is inelastic (something
>>conveniently ignored by free market freaks), the adult ends up unemployed,
>>his children drop out of school to go to work ...
>
>Once you're an "official adult", then it's nasty of Jim@ism780 to tell
>you that you can't have a job because Jim wants to keep employed
>somebody making (say) twice your anticipated wage, and until you're
>that age, you're pretty heavily under the thumb of your parents, at
>least as far as getting a real job goes.

In areas where there is great labor competition there is little competition
among employers in regard to salary.  Without minumum wage or
union-established wages (which are not "artificial" laws affecting a
"natural" market since all market behavior is subject to human laws,
especially the laws of property), if a service sector employer lowers wages
the employee cannot simply shop around for a higher wage.  When the supply of
labor is high relative to the demand, wages drop.  But one cannot simply
switch to a higher-paying field.  The way our society is structured, we have
ignorant or unskilled people without that flexibility.  We can let them reach
poverty levels when the evolution of the markets select against them, but
there is a high societal cost.  It means increased crime, disease, and
suffering; the former two clearly hurt all of us (even libertarians :-).
And if the working force dies off due to "natural selection" and then the
environmental factors change again their unavailibility could adversely
affect the rest of us.

>Labor inelastic (in supply)?  Somewhat, certainly, but do you have any
>figures?  If labor WERE very inelastic in supply, then we would NOT see a
>change in high-school students' behavior because of a change in wages.
>Further, the person in the high bracket (whose job is about to be
>destroyed unless he takes a pay cut) would then not even consider
>refusing the lower salary -- it would be madness.

I would argue (without figures, sorry; but I don't notice too many economic
arguments made with figures) that labor is VERY inelastic *in some ways*.
You have only shown that it is not *totally* inelastic.  The inelasticity
comes from restricted skill or other requirements limiting the jobs a person
is able to take, the costs associated with changing jobs due to search time,
overhead, and especially need to relocate, and the limited understanding that
flexibility is possible (meta-skill, if you wish; again, we can allow such
people to suffer the consequences, but it still is an inelasticity).

>Or perhaps you mean "inelastic in demand"?  This would imply that
>jobs are NOT created in response to offers to take jobs for lower
>wages, nor destroyed in the face of demands for higher wages.  But
>this propensity for detroying jobs in the face of demands for
>continued high wages would seem to be what you're complaining about,
>so I doubt you mean "inelastic in demand".

It isn't what I am talking about, but again you indulge in a logical fallacy.
The correct implication would be that jobs are NOT *ALWAYS* created ....
There is a *range* of inelasticity.

>Besides, it would imply that no jobs were destroyed by the imposition
>of minimum wage.  How many elevator operators, shop girls,
>lamplighters, butlers, and maids, do you see around these days?

Again, it would not imply any such thing, since the term is not absolute.
But I am interested in your demonstration that the loss of those jobs was
due to the imposition of minimum wage, either in whole or in part.

>>Now in the case of immigrants, many of the jobs they take are so bad
>>no one else would take them anyway.
>
>Besides being more than a little insulting to the immigrants involved,
>this contradicts your earlier assertion that labor is "not elastic".
>because clearly if a job that "nobody else would take" will be taken
>anyhow, then the supply of labor is elastic so long as people can
>immigrate.

I was talking specifically about immigrants from below the Rio Grande.
I'm not sure it is insulting if it reflects their desperation, the inability
of illegals to take arbitrary jobs, and the dismal conditions that they have
taken for granted all their lives.  People's expectations are not to be
discounted.  Here in California, the blue collar workers often blame the
immigrants for taking their jobs, and the "you wouldn't take ours" argument
is often proffered by the immigrants themselves.
And again you are treating elasticity as a two-state phenomenon.
I should have said "labor is not perfectly elastic" instead of "labor is
inelastic"; sorry.  Of course immigration is a form of elasticity, but people
whose spines are not already bent from stooping in the fields and who do not
know how to live 12 in a room on beans and tortillas and who cannot go back
to Mexico at the end of the harvest season incur a very high cost in taking
such jobs, reflecting inelasticity.  One of the consequences of the current
economic structure is that employers do not provide toilets for farmworkers,
and then complain that farmworkers are "unsanitary".  I'm not sure how
a totally unregulated marketplace would alleviate that.

The basis for economic structure is politics; regardless of what is
"natural", people will attempt to change the environment in the ways that
appear to satisfy their desires, and that will necessarily lead to group
action.  This is why anarchy, libertarianism, and free markets can at best be
temporary phenomena.  We started out as anarchists, and then we evolved.  An
anarchic society is like the primeval soup: elements group forming cells and
then larger organisms with increasing ability to respond in varied ways to
their environment.  When you develop organisms with enough control over their
environments and enough awareness of how to achieve their ends and when the
desired ends go beyond mere survival, you get concentration of power and
feudalism.  Since power cannot be totally centralized, you get subgroups
which eventually become strong enough to challenge the central authority.
Eventually you get a fairly stable fluctuation between centralization and
localization of power.  The whole process gets warped by counter-selfish
behavior like loyalty, nationality, and the like.  If the central authority
is able to actually control mental behavior (via wires, drugs, propaganda and
conditioning, coercive telepathy (Larry Niven's Thrintun), and the like) then
it can get severely warped in the centralization direction without the
central authority even risking loss of loyalty among armed enforcers.

So you see, you will never have a perfect free market system because there
will always be brain-damaged people like me who do not think it is in their
best interests, and we'll form nasty coops with ugly tariffs and pervert your
lovely pure system.

(For a fictional counterexample, read David R. Bunch's _Moderan_, with
robotized individuals (with "flesh strips" which retain their humanity)
living in individual robotized Strongholds.)

-- Jim Balter