Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: $Revision: 1.6.2.16 $; site inmet.UUCP Path: utzoo!lsuc!watmath!clyde!burl!ulysses!mhuxr!mhuxt!houxm!vax135!cornell!uw-beaver!tektronix!zehntel!vlsvax1!qantel!lll-crg!ucdavis!ucbvax!decvax!yale!inmet!nrh From: nrh@inmet.UUCP Newsgroups: net.politics Subject: Re: Orphaned Response Message-ID: <7800870@inmet.UUCP> Date: Sat, 7-Dec-85 15:13:00 EST Article-I.D.: inmet.7800870 Posted: Sat Dec 7 15:13:00 1985 Date-Received: Fri, 13-Dec-85 06:29:08 EST References: <7800672@inmet.UUCP> Lines: 397 Nf-ID: #R:inmet:7800672:inmet:7800870:177600:22014 Nf-From: inmet!nrh Dec 7 15:13:00 1985 >/* Written 5:19 pm Dec 1, 1985 by jim@ISM780 in inmet:net.politics */ >>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. Does the statement "Water tends to run downhill", "deny" the existence of pumps and siphons? No. I do not argue here that classical microeconomics is "the truth", merely that some of its conclusions remain true. Among these conclusions (or are they postulates?) is the notion that one will (where one can) buy cheap and sell dear. If this is not what they still teach in business school, please tell us all about it! >>>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. But Jim! I'm only somewhat interested in your statement about minimum wage -- I'm MUCH more fascinated to learn which government agency has set off to create poverty, and perhaps, what those agencies call their activities. > >>>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 minimum 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. Oh please! Let's avoid the question of what is "natural"! As a matter of approximate definition in this context, "artificial" involves things imposed from outside the system of economic trade and physical laws, and "natural" involves those conditions reached without "artificial" restraint or stimulus. A natural market reaction to flooding is one thing (food goes up, insurance stocks go down). An artificial stimulus to food prices (people are taxed and the tax money used to buy food, raising its price) is another. I absolutely concede that the imposition of property laws by a government is "artificial", similarly that injunctions against force or fraud are also artificial. I don't argue that ONLY "natural" forces should be allowed to operate, merely that unnatural ones should be applied with the greatest care. Your mileage may differ :-) -- what other folks regard as "natural" and unnatural is interesting, but not all that important to the question of what to do in a given situation. >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. > I'd be very surprised if the market for unskilled labor was so very inelastic in supply as that of, say, carpenters. If you need a ditch-digger, or a field hand, it takes a few minutes to show someone what to do. It doesn't matter whether the person was a farm laborer, a hobo, or a doctor -- the basics of unskilled labor are very easy to get across, even if you don't speak the language. This means that essentially all the cost of changing jobs in unskilled labor is the cost of moving around (they aren't called "migrant farm workers" because they can't move around, by the way), and the harder-to-evaluate cost of hearing about and deciding to take an alternative job. This is not "nice". This is not "good". This is not what I would like, but it DOES mean that there's relatively easy movement between unskilled jobs, which means in turn that aggregate demand for unskilled labor must go down before we have the spectacle of a fieldhand unwilling or unable to take a job as a ditchdigger when that of a ditchdigger is the same amount of work and pays more besides. If you're worried about computer programmers being unable to become librarians, then we're talking retraining. If you're worried about fieldhands becoming ditchdiggers, we're talking about moving. I don't argue this is EASY for farmworkers (I concede a certain amount of inelasticity) but I don't see it as the obstacle in TIME that retraining is. >>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. It is you who made the bald statement "Since labor is inelastic....". and stated that this was ignored by free market types. I think the two statments are both false. Labor is SOMEWHAT inelastic, but there are things less elastic than labor (the supply of art by Da Vinci, and the supply of orbital vehicles, to name two very extreme examples, (yes, I could come up with less extreme examples, but since the discussion is non-quantitative, I'm avoiding a side argument by not doing so)). >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). No argument there -- except that you're ignoring compensatory factors like people who have more than one skill, entry of new people into the market, and the presence of substitutes for labor. (Labor demand is more elastic if one can replace a particular sort of laborer with a particular sort of machine). Another point to make is that any alternative involving artificial support of an industry hides the advantages of having different skills from people who might want them. >>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 destroying 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. Quite correct. My mistake to have taken from your statement that labor was inelastic the implication that you thought labor was inelastic. I should have phrased it a little differently. Of course, to the extent labor demand IS inelastic, jobs are NOT created or destroyed in response to the fluctuating supply of laborers. >>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. I suggest then you take a look at "Minimum Wage, Maximum Folly" in Walter Williams' "The State Against Blacks", in which he talks about another set of low-paying jobs. Also, try Milton Friedman's "Free to Choose" pages 226-228, and "The Unheavenly City Revisited" by Banfield, pp 107-108. Finally, Benjamin Page, in "Who Gets What From Government" has this to say: The minimum wage, for example, is supposedly designed to ensure a decent wage level for all workers by forbidding any wage payments below a certain hourly rate. But those hoping for an egalitarian result fail to take account of how employers respond to the minimum wage: they simply refuse to hire anyone who cannot produce more than the minimum wage's worth of work. Those who have jobs get paid the minimum, but many other jobs are abolished. Unemployment in certain industries (e.g., retail trade) and among those with low skill levels (e.g., many black teenagers) rises alarmingly. [pp. 170] > [discussion of immigrant labor -- Jim was talking about those from > "south of the Rio Grande"] >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. And of course, I never claimed, (nor did any free-market advocate I know of make the claim) that the labor market (or any market, for that matter) is perfectly elastic. Let's avoid one-sided emotional overtones here -- inelasticity in supply doesn't always mean bending your spine and giving up your native land. It can also be reflected in going to medical school, or joining a trade union. >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. Perhaps by making it profitable to do so. Right now, if you're an uneducated illegal immigrant, not currently capable of producing a minimum wage value (hence, you are employed doing piecework or employed illegally), your job-path upward is more than a little restricted. If there were no such thing as an illegal immigrant (because immigration was free), and no such thing as "minimum wage" there'd presumably be fewer artificial "chokes" on (say) registering for courses, getting a government job, joining the US Army, registering for various aid programs, getting jobs as lamplighters, shopgirls, elevator operators, movie ushers, butlers, maids, cooks, (and, hell, let's throw out licensure) hairdressers and social workers. I specifically do NOT hope that this would provide a toilet in whatever place you saw that lacked one. Nope -- in a free society, you're free to be a son-of-a-bitch. On the other hand, you're also no longer one of the very few places immigrants from south of the Rio Grande could work -- and why work for a son-of-a-bitch when they can work for pussycats? I can't (and won't try to) argue that a free economy eliminates the wretched: it merely provides them the widest range of opportunity. So what to do about the toilet problem? Well, we could REQUIRE toilets, but, as Milton Friedman points out in a 7/27/70 Newsweek column, that isn't necessarily the way to help the farm workers: A recent Wall Street Journal story gives a striking example-- the effects in Michigan of stricter federal and state standards for housing migrant farm workers. The intent: to improve the conditions of a group of low-paid workers. The result: to hurt the workers, the farmers, and consumers. "Higher labor costs," says the story, "have prompted many growers ... to switch to mechanized havesting in recent years, lessening demand for migrant workers. That trend has been intensified in the last two years as government agencies have implemented stricter housing regulations for growers participating in their migrant-worker placement programs.... "State and federal officials estimate that mechanization could eliminate from 6000 to 10,000 jobs in Michigan this summer that were previously done by migrants.... License applications [for migrant camps] are down 11 percent so far this summer.... "Nonetheless, approximately 50,000 migrant workers, mostly Mexican-Americans from Southwest Texas, are expected to come into Michigan looking for work this summer. That's about the same number as came through last year." Mechanization is a good thing if it is a response to a decline in the number of persons seeking jobs as migrant workers at low wages. That would mean that the former migrant workers have found better employment opportunities. Mechanization is a bad thing if it is a response to higher labor costs imposed arbitrarily from the outside. That simply wastes capital to replace people who are forced into unemployment or even less desirable jobs. *Migrant workers* are clearly hurt. It is small comfort to an unemployed migrant worker to know that, if he could get a job, he would have better housing. True, the housing formerly available may have been most unsatisfactory by our standards. However, the migrant workers clearly regarded it, plus the accompanying jobs, as the best alternative available to them, else why did they flock to Michigan? It is certainly desirable that they have better alternatives available to them, but until they do, how are they helped by eliminating alternatives, however unsatisfactory, that are now available? That is simply biting off their noses to save our faces. >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. Such as theft? I don't think that we'll ever be rid of it, but to argue that BECAUSE we'll never be rid of it, it should be SANCTIONED *would* be a mistake. Similarly, to argue that politics is always with us, and THEREFORE we must have a dynamic, expanding, allowed-to-meddle government *would* also be a mistake. By the way, history abounds with examples of trade without government (trade between nations) and government without trade (communes, families). Neither is the "basis" for the other -- rather the pursuit of goals is the basis of both. To argue that the basis for economic structure is politics is to argue that the basis for water structure is the riverbed. I think the comparison is apt. A riverbed may lead a river among alternatives, but it can't lead it uphill, it can't prevent the river freezing over, and it can't prevent it from drying out. Similarly, you may use political means to affect the market, but not to cause it provide "free lunches", not to suspend the laws of supply and demand. >This is why anarchy, libertarianism, and free markets can at best be >temporary phenomena. We started out as anarchists, and then we evolved. Huh? This doesn't fit in very well with what I've heard of primate evolution, or are you going back to non-social creatures altogether? The stability of a libertarian society is of course a matter of debate. By some standards, the US is a libertarian society (less so nowadays) and it has lasted 200 years. There have, as Murray Rothbard points out, been quasi-libertarian societies in the past that have lasted for some time. Another discussion, another time, I think -- but (and here we come to the promised comment) to simply state that politics is a useful way of garnering power and therefore no non-political system will be able to withstand it is to underestimate the tolerance of a libertarian society for (say) local governments, and to overestimate the power of politics. >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. Now, Jim! I suspect you of deliberately baiting me! Do you recall my asking for a "perfect" free market? No? Perhaps you recall my saying (many times) that "Utopia is not an option"? You are, of course, WELCOME to form coops and live communally in any society where I find myself dictator. You'd even be free to have tariffs among people who've agreed to this. No sweat. You'll lose by it, of course. The people in the agreement will have to pay more than the folks outside it. Correspondingly, the people inside the agreement will be able to internalize externalities in ways not open to non-members (members would be able to correctly handle a free-rider situation involving only themselves). I object to none of this, provided that you initiate neither force nor fraud against those who didn't sign your agreement. >(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.) I've read (and very much enjoyed) "Moderan". Funny, I don't seem to recall it seeming much like an anarchy at all -- much more like the vast, purposeless, profitless, sort of project a government comes up with. Of course, at the time of "Moderan", the terms could be quite meaningless.