One can apply the exact same logic to free trade.
The limiting case is telling: an alien race comes and offers all of our goods for 1/10th of their Earth price, made possible by their insanely advanced technology. Is that a good thing?
1. below the competition - predatory pricing, dumping
2. same as the competition - collusion, price fixing, cartel
3. more than the competition - gouging, profiteering
All three are illegal. There's no legal way to set a price.
> then jack up the price when the competition dies.
That never happens, for good reason. Think about all the money a big corporation would lose trying to sell below cost to drive out a mom and pop.
Here's more detail on her thoughts, which I think are kind of silly but are interesting nonetheless:
"It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
A job exists because a business needs it to perform a business function, and that's really the only reason it should exist. But for various non-business reasons, jobs are often favors to be given out and it makes the economy less efficient when you have jobs that don't really need to be done, or could be done better, but exist only as favors to people.
Putting the puritan work ethic on a pedestal directly contributes to this and harms our economy as a result. UBI and some form of guaranteed housing (or guarantee against losing your current housing) would be much cheaper than all the fake jobs needed to deliver favors."
There's another point, which is even more sinister. The unemployed offer liquidity in the employment pool, which offer more flexibility for the growth of the machine. Local communities that are more self-sufficient would want to take care of their own. The emergent properties of the anonymous machine see unemployment as a variable to be optimized.
I'd agree that most workers are not particularly efficient. But I have never seen efforts to make them more efficient succeed.
So, the fact that there are eight employees doing the work of three at the grocery store does not count, because the missing efficiency is not available to the employer.
She really believes any business with more than 50 people has at least 1 or 2 employees of this type, and more so if the culture of the firm tends to skew towards government contracts or older people--but when pressed for data, she said that was just her gut feeling.
> the fact that there are eight employees doing the work of three at the grocery store does not count
If you know three people could do the work of eight then fire 5 people or modify a process. The business is choosing to be inefficient, or there may be other factors. It may not really be inefficient if the cost of the 8 people is lower than the cost of automation or whatever is needed to improve the process. People are expensive in the U.S. so I tend not to assume that but it is possible.
She says a reserve army of labor is great, and that if lawyers and other professionals can receive money for being on retainer and doing nothing, then so should anyone who can be considered a laborer.
I hope you have a response that will make her be quiet. I really need some peace in this house.
Minimum wage laws, on the other hand, mean a lot of employment possibilities are simply out of reach.
Minimum wage laws would not stop you from selling your services as a programmer at any rate you want to.
[0] and yes, current minimum wages in most places in the US are actually far below even this threshold.
I.e. minimum wage produces more of a burden on social services to take care of the unemployed.
My cousin's lovely response:
"So the business paying the insufficient wage and the landlord are not the same entity. The business's job is to run a business, not worry about if landlords are getting paid. It's unfair and inefficient to make businesses submit to the demands of greedy landlords in this manner. Maybe governments could step in and protect businesses but I'm unsure of the best way to do that."
Personally I think if we have a system of private ownership then charging whatever I want for rent is my right and the government should not be able to force me against my will, otherwise all property is really the governments. But I think there are grey areas when we talk about corporate/institutional property owners.
Your own response is similarly simplistic. The meaning of "property" is defined by government, at all times and in all places. The precise meaning varies, but there being limits on what rights it comes with is not a violation of your "property rights" - it is actually the very definition of what property means.
Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
More prosperity but often at a cost to local environments and commons that are not priced into the market. And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
I don't know anyone who prefers to be less prosperous.
This is wildly misleading. Free trade in the 21st century generally refers to trade across national boundaries. Nations represent markets that are not subject to the same basic conditions as each other. Moreover, free trade (the international kind) almost always seems to involve a lack of restriction on the movement of goods, capital and profit, but rarely allows labor the same benefit.
The 21st century version of "free trade" is about expanding the scope and scale of capital markets and the movement of goods and profits across national (and thus market-jurisdictional and -conditional) boundaries. It has almost nothing to with the "old" notion of free trade within a given market.
> It has almost nothing to with the "old" notion of free trade within a given market.
The Law of Supply and Demand has never changed, and never will.
"The Law of Supply and Demand" was unknown to the Romans or various middle Eastern empires (just two examples), whose economies worked in entirely different ways from those that followed the mercantilist period in Europe, and became canonized by Smith et al.
So was the law of gravity, but gravity still ruled their lives.
> whose economies worked in entirely different ways
The Law of Supply and Demand applies to all economic systems.
I expected a better response from you.
> The Law of Supply and Demand applies to all economic systems.
False. Well, false for some well known versions of whatever "the law of supply and demand" is.
There are all kinds of reasons why the retail cost of goods are not an inverse linear function of their supply; ditto for the retail cost of labor.
Why do you feel this need to reduce complex systems to vapid platitudes?
“Free trade” here refers to inter-country globalized trade across borders, not free markets within a confine.
There’s a much stronger case to be made that industrial policy has resulted in prosperity for Asia, ironically the opposite of free trade :)
It's so bizzare that making things more efficient and in effect saving humans from the burden of inefficient labor is seen as negative. Tying people's survival to their ability to sell their labor is such a terrible idea in this day and age.
If your productivity is producing $100 in value for $10 in pay, other businesses will line up to offer you more money.
If your productivity is $9, expect to get laid off.
The Law of Supply and Demand is in effect, as always.
As always, don’t confuse textbook theory with real life!
1. worker pay
2. so-called employer's social security contribution
3. stock purchase plans
4. 401k company benefits
5. employer provided health care
6. retirement plan contributions
7. paid time off
8. other employee benefits
This adds usually around 40-60% of wages.
Another factor is the increasing share of the productivity is extracted through government taxation and deficit spending. Big government is expensive.