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Comment by Artistry121 | Hacker News Reader

How is entering into a voluntary contract with someone taking advantage of them?

And what is your proposed solution? Amazon raise prices on the goods they sell to their workers and the rest of the population? The government step in and coerce different forms of contracts?

If you do care about this I have a suggestion - create a fund where people who feel as you do can give the money they save from shopping at Amazon (or other earnings) to these people. If you believe they are undervaluing themselves invest in them. Or place blame on companies that through voluntary exchanges are changing the world.

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In our society it is very difficult (though not entirely impossible) to survive without money. If you are not in a position to withhold your labour, because you have no money, then you have no bargaining power when determining your wages. In this case, a prospective employer can essentially offer you any wage they like - will that be a truly "voluntary" contract, even though you have no choice other than to accept it?

Simplistic solutions like "just move elsewhere" ignore both the inherent difficulties that moving poses when you are living in poverty, and the situations encountered by many people who take that option. As a new arrival you face the prospect of high initial costs trying to find a place to live and trying to find work, on top of the living costs you would have faced anyway, coupled to the fact that you are likely to have a reduced support network to help you deal with any problems you might face, and help you get on your feet. This is all after the initial expense of actually moving.

You asked your parent for a proposed solution, mine is simply for Amazon to more equitably distribute revenue within the company, to spend more on low-level wages, less on high-level wages, and less on other projects if there is a shortfall. In general I suspect that some kind of employee ownership goes quite far to alleviating many problems of this nature.

As a footnote, the only sense in which a market exchange is voluntary is that all parties agreed to it, which follows from the definition, and is therefore useless: "market exchange" will suffice. It is simply a disingenuous attempt to make the idea of a market exchange sound more humane, and to suggest an absence of coercion, without ever providing evidence that this is the case.

To your first paragraph your point only holds if there is absolutely no competition for workers (which may be the case). And yes, it still is voluntary. I once bought a phone off craigslist. It was a decent phone, worth probably $50 but I got it for $35 because the seller needed cash right away. Just because he was illiquid does not mean it was wrong of me to buy the phone from him. Or was that immoral of me and should I have been required to give him $50?

I agree moving is difficult - but so is creating efficiencies like Bezos has done. If your social views include the view that life should be easy for everyone, no matter their contribution, then we have a fundamental difference in what is realistic. If that is your view though maybe a better solution would be for those with money who share your view to support those without jobs or working with Amazon (or pay them to not work for Amazon). It is very easy to ask Amazon to change their policies, but that's because it isn't your money. (It's also worth noting that Amazon is not even profitable and runs in incredibly competitive industries. And, for every dollar they have to raise in costs they need to raise in profits.)

Your solution might work but has some concerns. Although the market for unskilled work is very heavily weighted towards companies the market for skilled leadership is very competitive. There is a reason top executives at Apple, Google and Amazon are paid well. Paying 10,000 workers $1 an hour more means $20,000,000 less yearly to spend on upper level talent in a highly competitive marketplace for that talent.

I am pointing out the human respecting nature of the market exchange - that it respects human choice (no matter how bad or good an individuals choice may be) rather than implying the idea that someone else knows what is best. Coercion is "the practice of persuading someone to do something by using force or threats". I have never heard a story of Amazon threatening someone to work for them or using physical force to entice them to take a job. Taxes, military drafts and certain types of crime are coercion - posting on a job board is not.

> It was a decent phone, worth probably $50 but I got it for $35 because the seller needed cash right away. Just because he was illiquid does not mean it was wrong of me to buy the phone from him. Or was that immoral of me and should I have been required to give him $50?

I was coercive of you: you used the fact that he essentially had no bargaining power to extract value in your favor. Whether or not you want to call that immoral is your business.

> I have never heard a story of Amazon threatening someone to work for them or using physical force to entice them to take a job

Amazon makes job offers which wouldn't be accepted without coercion, and uses the fact that benefits from social programs will be cut if the person uses the job to co-opt government coercion. They effectively threaten your current social program income to get you to accept a job you otherwise wouldn't.

Is that entirely Amazon's fault? No. Is Amazon using a messed up government policy to coerce people to take jobs they otherwise wouldn't? Yes.

> There is a reason top executives at Apple, Google and Amazon are paid well.

Because they're friends with the board of directors which sets their salaries, which are paid for not out of the directors' pockets but from shareholder profits?

Or maybe it's because the board wants the company to look like it's in the big leagues, and gee whiz, we're not in the big leagues unless we pay like we are, regardless of how the executives actually perform.

http://www.slate.com/articles/business/the_dismal_science/20...

Are Google executives paid well? Last time I heard about it, they received $1/year salary, and tons of company stock. That ties their income directly with company performance (through stock price).

Larry & Sergey - $1

Eric Schmidt - $7,628,620

Patrick Pichette - $38,741,100

Nikesh Arora - $51,145,900

David Drummond - $31,301,900

http://www.reuters.com/finance/stocks/companyOfficers?symbol...

Everyone's salaries come from shareholder's profits - including the factory worker's.

I don't think either reason holds - and if it does then those companies will fall to the wayside. If you think Google, Amazon and Apple are wasting millions of dollars of year overpaying for talented leaders then share your plan with the world to do better and take them out of business.

I think it's actually because within 10 years a company can be absolutely destroyed if they don't get the right leaders. Look at Blackberry, Nokia and Microsoft. All were leaders in their fields ten years ago and now have competitors that are outpacing them (in the case of the two latter ones) or simply erasing them (in the case of Blackberry). If Blackberry discovers multitouch first and puts out an iPhone or if Microsoft makes tablets work in a consumer friendly way by hiring Jony Ive - then the whole landscape changes.

Also in large companies workers making $200k+ aren't usually buddies with the board but there is a highly competitive market for them which allows those salaries to be the norm. It's a skills economy and for people without skills a comfortable, not flashy, life is a good and available option.

Your market-based challenge "share your plan with the world to do better and take them out of business", which seems to be a fairly common retort to anyone who takes issue with the way any particular company is run, is not a valid argument, because it is predicated on the market operating correctly.

If the market does operate correctly, as you suggest, then someone could, indeed, start a company, and "take them (Google) out of business", unless of course their hypothesis about overpaying top earners was faulty, in which case they would be outcompeted. If, instead, the market does not operate correctly, then such an attempt might fail because of other unspecified market failures. There is no way of determining whether a challenger's failure to displace the market leader is caused by (in this case) their false belief that companies are overpaying their top earners, or whether the failure is caused by the market not operating correctly. Unless you can devise a way of distinguishing the two, then this type of argument is inherently uninformative.

On a slightly different note, I agree narrowly with your point that companies need talented leaders, though I am not as convinced that the leaders of the companies you list determined their fate as much as you appear (to me) to suggest. For example, Blackberry couldn't simply "switch" to producing iPhones, for a whole variety of reasons.

"If your social views include the view that life should be easy for everyone, ..."

That is a gross mis-characterization of the liberal worldview. The social contract in most modern capitalistic states is that we allow a winner-takes-all economic model as long as we ensure equal opportunity and social mobility. However, wealth and income inequality are at all time highs, and many people on the lower economic and social rungs are stuck in a poverty trap. This isn't about giving people a free lunch, it's about reforming the system to provide more opportunity to those in dire circumstances.

Regarding your craigslist exchange, you took advantage of someone's dire economic situation in order to improve your own. While not illegal, I would argue it is immoral, and this is happening on a much larger scale with Amazon. It is immoral to employ an individual for less than a living wage, regardless of what the market dictates should be the prevailing wage. It might not be Amazon's fault that poverty exists, and no one can blame them for exploiting it to their advantage, but they are benefiting enormously from our capitalistic economic system, and it is entirely reasonable to impose regulations and reforms on the winners in order to restore mobility and opportunity.

Bargaining power is limited both by competition for jobs, and by fundamental necessity, which was more my point. A group of workers who do not have the freedom to engage in competitive tender, because they are forced to address their fundamental needs, are in a much worse bargaining position irrespective of whether or not they have "skills to offer to society".

The wider point is that structure matters: an organisation that is run dictatorially by a small central group is, by my estimation, fundamentally more illiberal than an organisation that is run cooperatively by its members. I fail to understand why those people who are enamoured with free market principles are such staunch defenders of organisations that internally suppress those principles almost absolutely.

I am skeptical of the limited definition of coercion as only persuasion that takes place by force or threat; in my opinion there are many other, more 'polite' ways of influencing people that are just as pernicious. Indeed, I agree with both pyoung and DerpDerpDerp that your craigslist exchange was coercive in the sense that you exploited that person's situation to your own advantage. A basic test for whether or not an exchange is non-coercive is whether or not both parties would happily reverse the exchange. If not, then there was probably some element of coercion involved, even if it was simply an unaddressed asymmetry of information. Remember that perfect market information is one of the assumptions necessary for market Pareto optimality.

>In this case, a prospective employer can essentially offer you any wage they like - will that be a truly "voluntary" contract, even though you have no choice other than to accept it?

"Bargaining power" is misleading because that is not how a market works. It's not two party's haggling over what they think a "fair price" is, it's a lot of parties and prices tend towards supply and demand. Unlike the bargaining model, supply and demand still works even if one party doesn't have a choice.

For example, you have no choice but to buy food. But farmers can't force you to pay extreme prices because you have no choice. They have to compete amongst each other and the price of food falls towards what it costs to produce.

Messing with the supply and demand price can create problems like unemployment. It's too expensive to hire new workers at the minimum wage, or there is a much higher incentive to outsource and automate work, or just not do it at all. To continue the food analogy, if you set a maximum food price, farmers would just stop producing if it cost more than the maximum price.

Your argument seems compelling, but there are several problems I find with it. The first is that it rests on the usual assumptions of a competitive market, and we are discussing situations where this isn't the case: people are looking for work where there is none, or very little - there is no competition for their labour.

The second problem is that your analogy is imperfect, because it switches round to the demand side rather than the supply side. A better analogy, I think, would be if you were a farmer who had produced a sufficient supply of food, but you had to sell it because it was going to spoil. In this case buyers, assuming that they don't strictly need your food, could apply pressure to you to lower your price fairly indiscriminately. This is a much better analogy to the original case: companies (often, and in the case we are talking about) don't need your labour, they will simply be less productive without it, but you do need a wage, or you will starve to death.

>The first is that it rests on the usual assumptions of a competitive market, and we are discussing situations where this isn't the case: people are looking for work where there is none, or very little - there is no competition for their labour.

And this is the root of the problem I am trying to get at. The demand for labor is pretty low. Blaming the few companies that are hiring workers isn't fair, and forcing them to raise wages doesn't fix the problem.

>The second problem is that your analogy is imperfect, because it switches round to the demand side rather than the supply side.

I think that people thinking of supply and demand sides separately is where a lot of people get confused, especially when discussing labor markets. There really isn't any difference and the same economic principles apply to both sides.

>companies (often, and in the case we are talking about) don't need your labour, they will simply be less productive without it, but you do need a wage, or you will starve to death.

Another good point and what I am trying to get at. The problem I think is that people depend on the value of their labor for their income. That's hardly fair to begin with (some people are simply worth more economically than others), but it's especially problematic if some people's labor becomes almost worthless due to automation or whatever. A basic income would be an ideal solution.

> And this is the root of the problem I am trying to get at. The demand for labor is pretty low. Blaming the few companies that are hiring workers isn't fair, and forcing them to raise wages doesn't fix the problem.

I essentially agree with that.

> I think that people thinking of supply and demand sides separately is where a lot of people get confused, especially when discussing labor markets. There really isn't any difference and the same economic principles apply to both sides.

I think that there genuinely is an asymmetry between supply and demand, indeed especially when discussing labour markets. If labour demand is higher than labour supply, then very crudely we can say that wages will go up to the maximum that the wage-payers can afford - but it won't go higher than that, because if it did they would run out of money, go out of business, and demand would go down. For the converse case, when labour demand is lower than labour supply, then, again very crudely, we can say that wages will fall, but there is essentially no lower limit, because there is no feedback (in pricing terms) until so many people have died of starvation that supply starts going down. Obviously both of those 'end game' scenarios are ridiculous, but it demonstrates the asymmetry - excess demand provides a rapid natural cap on price, whereas excess supply doesn't.

> Another good point and what I am trying to get at. The problem I think is that people depend on the value of their labor for their income. That's hardly fair to begin with (some people are simply worth more economically than others), but it's especially problematic if some people's labor becomes almost worthless due to automation or whatever. A basic income would be an ideal solution.

I absolutely agree with this part, and your proposed solution.

The contract is only voluntary if both sides have other reasonable options. This is very important point and the biggest hole in American Libertarian view of the world. There is a reason slavery contracts are illegal as well as there is a reason for worker rights (wouldn't be necessary and could be negotiated for every contract by logic of voluntary contract - workers just wouldn't agree to worse conditions).

It's still voluntary. I may have no choice but to eat food, but it isn't farmers that are forcing me to buy it.

Signing an agreement with a gun to your head is not voluntary. This is, after all, the normal complaint of the libertarian regarding the extortion of taxes, no?

Well the same logic applies when the "gun" is not physically a gun: If your set of viable choices has a size of 1 then you cannot be honestly said to have any "voluntary" choice.

As I said, the same is true of food or any other necessity. But we aren't going around claiming farmers are exploiting us.

The problem with the person holding a gun to your head scenario, is that they are abusing your rights in the first place by putting a gun to your head. We don't want people to do that for various reasons. But in this scenario it isn't the employer or farmer holding the gun, it's mother nature. They are just offering assistance from that.

The problem with that is that you see property rights as part of "mother nature". So if one side controls all the resources and can coerce the other to w/e they please you see it as "mother nature" on the other hand when I put a gun to your head it's no longer mother nature it's "abusing rights".

I didn't say property rights were part of nature, but hunger is, which is what I meant.

So in demand surplus, the farmer is exploiting consumers.

Does that mean that in supply surplus, the consumer is exploiting the farmer?

Phrasing world in the terms of zero sum game is really not the best idea.

> How is entering into a voluntary contract with someone taking advantage of them?

Why does the existence of a contract automatically rule out the possibility of taking advantage?

If the contract is voluntary it is advantageous to both or else it wouldn't be entered into.

Take this trade off. I create a system whereby I can make $100 for every hour someone works. I tell you I'll pay you $10 an hour to work. If you are better off working those hours you will take it and I will receive $90 and you $10. If you won't I'm out a lot of money, so I will probably revise my offer upwards.

These workers are individuals capable of making decisions. If they decide working for Amazon for $13 an hour is better than alternatives they should take it - if not they should pursue a more valuable alternative.

I understand the economics. But that doesn't answer my question: why does that rule out the possibility of taking advantage? How do you get from point A to point B?

There is an implicit assumption in your thinking that I'm trying to tease out.

A contract is not a zero-sum game. The expected outcome of a contract is that both parties take advantage of each other and they both win.

That's a bizarre definition of "take advantage."

Then I assume you mean that one party is better off and the other party is worse off (taken advantage of). Sure, that can happen. But in the case of Amazon, the workers are better off or they wouldn't work there.

No, "taken advantage of" does not require one party to be made worse off. That is not the way the phrase is ordinarily used in the English language.

Sure it is. If I am taken advantage of, I am not better off for it.

You could be "better off", but still have been screwed out of being "even more better off". That's still being taken advantage of. Consider the legendary story about how Steve Jobs screwed the Woz.

Either definition works. You can take advantage of (exploit) someone at their expense, or your can take advantage of (leverage) their capabilities to mutual gain.

Frank took advantage of Amazon's 2-day shipping to do his last-minute Christmas shopping

Yes, but when someone says "Bob took advantage of Amanda" they likely do not meant Bob leveraged Amanda's capabilities to mutual gain.

htf is right as well.

The only assumption is that people will make the decision that is in their best interest. Amazon can only attract workers if it is the best option those workers have.

You're both assuming that offering someone the best option they have rules out the conclusion that you're taking advantage of that person. But that does not necessarily follow.

Then yes, everyone is taking advantage of everyone. My cell phone provider is taking advantage of me because they make profit off of me. I'm taking advantage of them because they spent $1,000,000,000 building the infrastructure so I can use that cell phone. Apple is taking advantage of me by making a profit off of their cell phone. I am taking advantage of Apple by using that phone which they put millions of dollars of research into and shipped to my door.

So we both gain an advantage.

Jack gets a job with Amazon - he is able to afford a color TV and internet at home. Amazon hires Jack - they get their orders shipped to homes on time for Christmas.

Everyone is getting an advantage in all of these situations. No one would ever make an agreement that doesn't provide an advantage.

I assume you're asserting there is a power difference between Amazon and Jack that makes Amazon get more advantage from Jack. This may be true. Amazon, however, has a power difference with customers who ultimately decide whether the billions of dollars worth of infrastructure they are building is worth it or whether competitors will win.

Is it wrong if I decide to not buy from Amazon? Am I taking advantage of them by buying if their product is $10 but not buying if their product is $12?

"Taking advantage" does not mean "getting an economic benefit out of a transaction with someone." It's a moral judgment, defined in terms of conformance with social norms and expectations.

It is in their best interest. It also sucks.

You have a nice life. Someone comes up to you and holds a gun to your head. You are now about to die. They say "I won't shoot you if you give me all your money".

Suddenly, giving away all your money is in your best interest. Therefore it's voluntary, and by your argument, fair and reasonable and nobody is being taken advantage of because it's all by choice and in best interests. Right?

That is incorrect. By holding a gun, that person has initiated force against you. Initiation of force is a proactive action that requires volition on part of the perpetrator.

Amazon is not initiating force against anyone. If they provide higher than market wages for the workers, they will be violating the rights of their shareholders who will lose money and will be worse off due to the deal. In an industry with as tight margins as Amazon, it can result in flight of capital, loss of shareholder value and layoffs.

comments I haven't verified state that the people had a welfare state income keeping them alive, and that by merely extending an offer of work - at any salary - Amazon causes that to be revoked.

This isn't literally "initiating force" but if it is true then it is very similar in effect to the mugging scenario, and having the mugger use unseen but still present power to "make an offer you can't refuse" is still not a fair and ethical way to egg people to voluntarily enter into contracts.

You forget that in Germany, unemployment insurance requires you to not bypass any offers (and you're required to seek work as well).

By "choosing" not to be employed by Amazon, if that's offered to the worker and happens to be their only choice, they "choose" to lose unemployment benefits.

Sounds like a faustian bargain.

Well, if some offer is not good enough, Germany is welcome to pass stricter minimum wage laws, so that the 'minimum viable job' would pay more.

If the contract is voluntary it is advantageous to both or else it wouldn't be entered into.

I think the fundamental disconnect here, is the people you are debating with believe that Amazon should have made it more advantageous for the workers, because as the workers have no other options it would be the nice thing to do.

> If the contract is voluntary it is advantageous to both or else it wouldn't be entered into.

If your grandfather gave all of his money willingly and right away to his physician, don't you feel the physician acted unethically? And don't you feel your grandfather might be impacted negatively by that decision?

>>How is entering into a voluntary contract with someone taking advantage of them?

Just because the contract is voluntary does not mean it's not exploitative. See: sex workers.

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