Question for those in charge of hiring employees

So Stacey Lou (you invention) isn’t bearing any risk, she’s being paid a salary rather than whatever surplus the business earns, she isn’t the driving factor for the business, she gets her direction from some other person. She isn’t doing what the owner does. Owner-managers add more value than managers.

But your claim is that it’s a better deal to be the owner. If all it takes to avoid exploitation is a calculator and a pad, what’s the problem? Anyone who doesn’t like to be exploited can just start a business and be their own person!

The answer, of course, is that this isn’t true. Business failure rates are high, profits for most business owners are low, starting and running a business takes a lot of work and it’s difficult to do well, and we know that because lots and lots of people try to do it and fail.

Every time anyone voluntarily exchanges dollars for goods or services, they believe they are getting more value in goods or services than they are giving up dollars. And simultaneously, every time anyone voluntarily exchanges goods or services for dollars, they believe are getting more value from the dollars than they are giving up in goods or services. That’s what makes economic transactions happen: both parties believe they will be better off after the transaction.

Silhouette, I don’t see anything I really disagree with in what you’re saying. But I also don’t see you blaming A for paying B what B’s labor is actually worth. There’s no suggestion that it’s unethical that A makes rational choices about running his business, only that it’s unfair.

And I agree, it is unfair. The most unfair part about it is that A’s labor is actually more valuable than B’s. It’s not that A is getting paid more because he’s rich, it’s that because he’s rich, he has human capital that actually lets him contribute more to society. It’s obvious if we turn his parents into doctors who put him through medical school, right? There, he’s got a very clear skill, backed by character traits absorbed from being raised in a financially stable household, likely surrounded by a community of financially stable households, all of which instilled in him habits of mind and character that made it possible for him to focus on studying, invest in education, and come out as someone who can save lives, while B’s precarious upbringing left him capable of factory work.

That’s truly, deeply unfair. But it’s not A’s fault any more than it’s B’s fault, and it’s not best solved by pretending that B’s labor is worth more than it’s worth.

Continuing with the medical school hypothetical, suppose we have A the doctor and B the factory worker, and K the doctor and C the factory worker who are a parallel set of twins. And B hurts his back at work, and needs to go to a doctor. And K has a practice in town, and C also decides, what the hell, to give doctoring a go, despite not having gone to medical school. And so B is looking to employ K or C, who are asking the same price for their services. And obviously even B recognizes that K’s services are worth the price and C’s services are not.

Economic decisions are often seen as moral decisions, but they aren’t, they’re rational calculations. Treating it as somehow unethical to recognize and act as though different people’s time and effort is worth different amounts of money is going off the same fallacy.

[lots of typos fixed]

That’s right, I didn’t blame A for acting rationally within the system he is in. I also don’t believe employers regard their employment decisions as unethical when they are deemed rational.

What say you to the idea that rational choices can be unethical? - in the cooperative sense of morality.
The competitive reality of the Capitalist system requires that the comparative advantage of paying less and getting x amount of tradable productivity is higher than paying more and getting x+y amount of tradable productivity. Does real constraint necessarily permit ethical behaviour? Or is ethical behaviour tempered to apply relatively within real constraints?

The latter is the attitude of pro-Capitalists, in my estimation. Do you agree? I would say that the former is the question of anti-Capitalists.
It may be the case that all the good that emerges from Capitalism in practice outweighs all the good that can emerge from an alternative economic system that is not ethically constrained by the reality imposed by Capitalism. Enquiring minds want to know! So far the alleged and apparent evidence indicate not only that this is the case, but overwhlemingly so - again, in the cooperative sense of morality, which I think it is safe to assume we are all assuming. The push and pull to negotiate how to pursue or abandon further experiments continues…

The key to the conundrum, I find, lies in voluntary trade - as I mentioned it’s an emotionally wholesome notion and one is potentially a fool for arguing against it in the same way that one is a fool to argue against free speech - lest they themselves have their freedom to argue against free speech revoked. But there is less of a contradiction in speaking against action and speaking against speaking - free speech itself is bounded by law to not be free to incite violence: to inspire certain kinds of action. What then of being free to trade, altogether on a different level to being free to enact violence and I find the notion that actions that are not physically harmful are “violence” to be trite.

To then challenge voluntary trade within reason: it is already accepted that trading “rationally” in the purest sense of free trade is ill-advised, lending possibility to practices of defrauding, fooling, scamming others. It is a question of extent: to what degree do we restrict the freedom of trade?

Politically, it seems that a lack of fairness draws a great deal of support - there is attraction to the motivational idea of winning, for good reason psychologically speaking, and there is also attraction to the motivational idea of others losing on a much more tacit level. However, from what I have learned from Zizek’s commentary on ideology, there is psychological value that cannot be overlooked in forbidden pleasures that everybody knows occur, but nobody wishes to explicitly admit. I take a great deal of pleasure, for example, in destroying my enemy in a gaming environment - not least in the knowledge that their means to live are not impacted through doing so. Forbidden pleasures, yes, but to what extent? Yes to the motivational power of competition, but no to extent of it affecting the loser’s means to live - especially when losses are likely to spiral. The allure of equally spiralling gains ought not to override this, not only ethically, but also due to their diminishing returns. It appears to be accepted that “winning” in terms of means to live positively impacts happiness only to a certain point, after which it becomes more of a burden and perhaps an oppressive obsession not only at the expense of others but also at the expense of oneself.

So, rationally and ethically not constrained by the realities of Capitalism, I am looking primarily to the concept of motivation and only consequently well-being - as a whole, but by taking into account the individual as best I can within the context of a cooperative effort. I am not looking to the value of high ideals in themselves: the attractive notion of nobility in the attribution of individual blame and judgment unto people as they are, as though they were islands whose current positions we merely accept without any question other than “what next?”. I believe the latter to be the battle-ground of pro-Capitalists, and I would have the battle-ground expanded.

Yes UBI is the most sensible solution since then no one is forced to work for the profit of another in order to survive and we could then assume that all work is voluntary. Wages could be regulated by the amount of UBI, antiquating min wage laws. UBI should be the amount of money required to at least live a meager existence or else it wouldn’t fulfill its purpose of making all work voluntary.

Only the capitalists make that argument. I don’t see many socialists hollering taxation is theft lol. It’s only the pirates proclaiming pirated loot is proprietary.

But that’s still leveraging someone’s dire predicament against them which is exploitation.

I mean, companies have recent begun hiring felons and druggies in order to escape raising the wage to attract quality employees. They are using someone’s situation as leverage to minimize wages.

A guy I know working for a Berkshire company said there are 30 jobs open perpetually that pay almost twice the minimum wage. I say raise the wage and people will stick. Instead of doing that, he’d rather characterize the people as lazy bums who won’t knuckle-down and work for the peanuts he’s offering. And that same company has stopped drug testing in order to hold wages down.

“What??? No one will hire you because you’re a crackhead??? What fortuitous circumstance be this; no one will work for me because I’m a greedy prick! Welcome aboard!” :evilfun:

Yes it’s unrealistic, but my point isn’t to fix the system, but illustrate what’s going on and how the rich are getting that way.

I suppose that’s true. I paid a fair wage and workers were better off working for me than not, but it still wasn’t right, evidenced by the fact that I had to hide what I made and pretend I was just as poor as they were.

Management and executives are the ones overpaid to start with. They don’t do anything commensurate with their pay which is a disservice to shareholders and society.

For whatever reason, american workmanship used to be the standard of quality, but now it’s a mark of shame that I seek to avoid when making a purchase because I know, for whatever reason, the american worker doesn’t care about quality. Obviously there is no incentive for him to care, and that’s especially true in unions where employees can’t be fired.

It might be a better technique of persuasion if we concede a few points in favor of the capitalists. Running a business is a gigantic pain in the ass! Although, admittedly, most of it is self-imposed. I had to be a jack of all trades just to do one trade. I had to juggle employees who may or may not show up on time, or at all. I had to predict the weather, repair tools, repair damaged property, console customers, learn accounting, insurance, legalities, I was human resources, sales, mechanic, accountant, etc all rolled into one, plus being a worker and it drove me crazy! I just wanted to be left alone and work without dealing with a bazillion variables zooming in random directions, but if I wanted the money, then I had to do it. Not everyone can do that kinda thing. It requires a drive and motivation to get ahead.

My complaint isn’t against the small business owner, but the ceos, managers and executives who don’t do anything, except play golf and fly around in private jets, while exploiting those who do all the work to support their opulence.

I don’t know. Who is the state? On what merit did they come to power? And does that merit convey creative genius?

Doritos used to have more sprinkles. I emailed FritoLay and told them they’re not putting enough flavoring on their chips, so they sent me coupons for free bags of bland chips. To date they still haven’t fixed the problem and I hate the totalitarian control they have over a staple of Americana. But if the gov seized the company, would I have anymore influence than I do now?

That’s a good point.

It’s not to come up with the ideas, but to go to the effort of the pain in the ass of running the business.

The capitalist would say that no one forced anyone to get a degree, especially in something silly like philosophy. They would say it’s a gamble that didn’t pan out.

Makes sense.

consumers who buy things value the things they buy, and couldn’t care less what ‘risk’ is taken by a company or what the ‘driving factor’ is, or who gets what ‘direction’ from who. a consumer is not going to value the broom they just bought more because the owner of the company that made it stayed in the office and extra thirty hours and experienced five headaches.

the capitalist across the street makes brooms too… and he stayed an extra forty hours and experience seven headaches. should the consumers who bought his broom value him more than the other capitalist across the street? no. they don’t care anything about that shit. they care about brooms.

we are talking about the TANGIBLE value prescribed to the market by those who participate in it by buying. what i’m saying is that the REAL value of any given form of labor is worth what it is, based on to what extent it is part of the production of things consumers buy. this means that when capitalist does x, it is no more ‘valuable’ than when stacey lou does it, because x has no tangible value other than what it contributes to production.

what all this means (and this will address your comments too, dipper) is that we are either just talking about capitalism, or creating arguments that are being made to defend and justify it. and the above argument does no such thing. rather it’s just something the capitalist tells himself after a careless and uncritical examination of what ‘value’ means. no special feature is given to the capitalist for all the headaches and struggles and risks and whatever else he has/takes when we are asking about the value of his actual labor… what he actually, physically does in the chain of production. and if any of those things can also be done by a worker, then those things are not special forms of labor that require a capitalist to be ‘done’.

so to say ‘capitalism is necessary because there is a special kind of work that only an owner can do’ is nonsense. and to further say that capitalism is good because it creates a context in which a class of people will exist to be able to do that special work, and be needed to do that special work, is an extension of the same nonsense.

if we are merely describing capitalism, then yeah, these points being made in this thread are fine. but if these points are being raised as some kind of defense for capitalism, it ain’t workin’.

very true, but here’s the difference. and it has to do with how ‘profit’ is defined here. of course, both the wage worker and the capitalist are content with their transaction insofar as each believes it will bring them into a state of greater satisfaction. but it’s the nature of the satisfying thing that is different; a worker cannot buy anything with the happiness he just got from accepting the job… but a capitalist can buy something with the profit he makes from selling the worker’s products. the worker’s profit is the satisfaction he experiences… a mental and emotional abstraction. the capitalists profit is money… a real, concrete thing… that, incidentally, can be used to purchase more forms of satisfaction. but a worker can’t use a mental and emotional abstraction to purchase anything.

different kind of profit.

Silhouette, I lean towards seeing morality as something that flows from reason, so I’m tempted to say that rational choices cannot be unethical. However, that invites a lot of post-hoc rationalizing about how anything that look immoral is really irrational on some other level.

Another way to say what may amount to the same thing is that whenever the market creates outcomes that seem immoral in a utilitarian sense, it’s a market failure, almost by definition. If market transactions are voluntary, the parties are going to be made better off or unaffected – the choice is the evidence. Third-parties can be hurt by transactions, and that is one type of market failure.

But I see the market as primarily about information: it aggregates and disseminates information about peoples wants and the ability to meet them, and that enables the production of significant value. As such, we can learn some things we might not like, for example that people don’t actually value privacy, or that the market for porn is bottomless. In that sense, I take what you call the “pro-Capitalist” attitude: if our ethics are utilitarian, we’re revealing our utility through the market, and we should hesitate to label the outcomes unethical in the absence of evidence that the information is being distorted. And, by the same token, we should hesitate to intentionally distort the information.

That said, we know a lot about certain market failures, certain areas where the market doesn’t accurately aggregate information, e.g. because the people affected don’t get a say on the price, or because the individuals who do affect price are behaving in strictly irrational ways (i.e., their preferences aren’t self-consistent).

To me, the cooperative effort is structuring the market toward the end on minimizing those failures, and maximizing the information processing power of the market. I think this is not quite capitalism, though it often aligns with it. There’s space for things like redistribution, which can improve information by pricing in the common good of a well structured market, and by shifting some buying power from low marginal utility spenders to high marginal utility spenders.

I think making work more voluntary is good, but I don’t think the minimum is survival; I would support a very low UBI. If we can afford that, and we can maintain productivity through automation, all the better, but that isn’t a given. I think it should be about giving people a real dividend of the positive spillovers of a well-functioning economy, and pricing in the value of that cooperative effort.

Well, your boy Daly was a tax protester. Socialism bleeds into anarchism at certain extremes. Given horseshoe theory, I would not be surprised to see a similar sentiment expressed by extreme socialists (though maybe you would not call them socialists).

But in any case, I don’t get the impression that most capitalists make that argument. Capitalism requires a certain amount of market regulation and enforcement of contracts and private property rights, it has to accept some mechanism for funding those things.

And my point is that the question doesn’t really do that. If it’s unreasonable for both the company and the employee to ask for the equivalent information, it tells us more about what’s reasonable for any party to a market transaction to expect, rather than about any inequalities in bargaining power between parties.

Come now, you don’t care about shareholders!

But I mostly disagree. The value produced by management and executives is hard to quantify, but that cuts both ways. I would argue, and the market certainly indicates, that managers are valuable. However, it does seem likely that top executives are overpaid, ironically due in part to a discontinuity in information availability: the salaries of CEOs of publicly traded companies is public, which tends to drive up the price of CEOs! I strongly support making everyone’s income public, though that would need to follow implementation of a better social safety net.

Sure, but the things they buy don’t exist without someone taking the risk. If consumers want things to buy, they also want the people who take the risks to take the risks. They want someone to be the driving force on bringing a product to market, and someone to direct the whole operation to make it run. And so, because those activities result in the things that the consumers buy, the consumers do care, they just don’t know that they care.

There’s a bit of survivorship bias in your argument here. Lost of companies go under, because consumers don’t want what they offer. But what consumers want is an unknown until they are offered things to buy and either choose to buy them or not. You can’t choose to only propose true hypotheses, you can’t only run experiments that will vindicate your hypotheses, and you can’t only create products that are exactly what consumers want. You need the failures to have the successes, and you need people to take the risk to provide both.

This is a weird argument. Workers are literally paid in money.

EDIT: words

Ah but a wage/salary is not a ‘profit’, see. These are agreed upon amounts of money to be paid in exchange for a certain period of performed work or a certain unit of production. And this amount is always less than what the product is worth (what the capitalist gets for it)… so there is no profit being made here. If anything, it’s negative profit. I’m in a burger king at the moment so im’a holla atcha later.

But the relevant ‘product’ here is the labor the worker is providing. And the wage is always greater than the value of the labor from the perspective of the worker. So the worker trades her labor for money, and the difference in value to the worker is the worker’s profit. The employer trades money for labor, and the difference in value to the employer is the employer’s profit. And both the employer and the worker profit because economic transactions are positive sum.

The value of the labor for the laborer, in that moment, perhaps gambling.

I have crawled to the edge of the desert nearly. Yes, I take out my wallet and pay the demanded 1000 bucks for the bottle of water from the opportunist tourist I bump into just before going unconscious. Of course I make that decision and survive.

But was the value to me in that situation the value of the bottle of water?

Was the value of my labor - given I have a family, given the economic situation, given…etc. - the value it was to me given a situation - a situation perhaps encouraged by the firm I am working for - the actual value of my labor?

The laborer is often making a gamble - certianly many miners were, for example - given situations that were shaped to a much greater degree by the people offering them a certain wage for their labor.

Well, you showed up, so that means you are getting what you consider your labor is worth, plus something…

I don’t think that holds.

Did it hold for sharecropper southern blacks?

The options by those in power to make a society with certain characteristics that then in turn allow for very limited choice which allows for wages at a level that is very low.

At what point between sharecropper south and now and in what industries did fairness become the rule?

The first sentence looks like modus ponens, but the distributivity looks like “I form”, and the second sentence seems to be an admission of a propositional fallacy if you try to affirm the consequent.

That is to say, if morality is something that flows from reason, does that mean that immorality cannot also flow from reason? Further, cannot morality flow from something other than reason: say irrationality? Or do you wish to deny the antecedent as well?

This whole area of thought seems to be trespassing on the realm of the Naturalistic fallacy, or the Is-ought problem. However I am inclined to think of certain rational decisions as resulting in something that looks like morality close enough to be taken for it e.g. giving to others because you reason that it will create a better atmosphere, even beyond the direct relationship between giver and givee. Haha, I like that term, “givee”: “taker” seems too tainted by its possible usage as someone who is taking advantage of another’s kindness in a competetive context rather than as part of the event of giving in the cooperative sense. But I also think morality can come irrationally, and that immorality can be both rational or irrational.

So if it were accepted that the market creates outcomes that seem immoral in a utilitarian sense, necessarily, then it is by definition a failure. Not a complete failure though, since not all outcomes are immoral, but when it functions as it does without equity of opportunity, that is immoral.

I agree that the nuanced information that the market provides is a huge strength. And if nothing else, its results do open up social questions that may not have otherwise been given credence, such as your examples of whether people really do value privacy and to what extent they do porn. This is most certainly progress and I would not hesitate to give the market its due for all the good that it does, but it is without ungratefulness that I still ask whether or not we can do better. Computational power, particularly enhanced by AI is an unprecedented injection that is lacking in previous experiments to do without it, and it cannot be overlooked.

However I do think we have evidence that the information that the market provides is being distorted. One way is what I’m intending my argument to convey: that voluntary transactions compromise the degree of consent between the two transacting parties - in favour of the one with more power. If we really wanted to know how much something is mutually worth, both of those transacting must have the same to lose and the same to gain prior to the transaction. As it is, we only learn what it’s worth within the context of prior inequality. There’s an overall correlation between the two, which is why the market is not useless and still serves a useful purpose and provides information that is not without validity.

In large part the market requires complete rationality in order to function optimally in the ethical sense, however it also permits the practice of advertising that operates almost purely to encourage irrationality. So we have at base a system that results in lack of equity of opportunity, in favour of those with more opportunity and against those with less, causing growing inequality, only enhanced by the effects of the advertising industry that it allows. Growing inequality in favour of the powerful tends towards monarchy whether or not it can finally reach it - and I wouldn’t be so quick to say it can’t. So not only does the market result in doing away with itself, it tends towards the centralisation of power. Is that ethical?

Yes, it’s possible to cooperatively minimise the failures of the market alongside Capitalism - but not aligned with it: the opposite in fact. Redistribution directly counters Capitalism and we can improve information and shift buying power from low marginal utility spenders to high, but with the tide against us. Just think how many industries exist whose sole purpose is to allow Capitalism to continue, that nobody would miss if they were removed from the world excepting of their value that exists only because of Capitalism. I am talking not only about advertising, but the financial services, so much admin - all the red tape that is passed off as a result of the enemy of Capitalism, when in fact it would not be necessary if not for Capitalism in the first place. Who is a high marginal utility spender? Someone like Elon Musk (used to be?) or Bill Gates before him when he was helping create the world’s most popular operating system rather than simply renting it like he does now - these are figureheads of bringing technologies that empowered humanity in a very real sense. There have been countless more with less attention afforded to them who have contributed to such successes as these - these are the people that we want to be working. Does the world really need another recruitment agency to drive it into the future, or do these people only have jobs in order to maintain the necessary foundation for voluntary trade: that everyone has a job and can thus warrant money being paid to them? These people are employed to dig holes and fill them back up compared to the real innovators of the world - get rid of them. The free market it becoming more of a crutch than a liberation.

I don’t know if most people who describe themselves as capitalists make that argument, but if the argument is made, it could only be by a capitalist lest a socialist undermine his own social aspirations.

Anarchical communism is not a teleological goal per se, but an inevitable outcome of technological progression transitioning from feudalism to capitalism to socialism and finally the government falls away like rotary phones and communism has arrived once scarcity has been eliminated. So still, no “taxation is theft” argument need be advanced by a socialist having ungoverned communism as the ultimate goal since money will have been antiquated once scarcity is gone.

Yes it does. It illustrates how the employee did not agree to the division of the productivity, so the exchange was not voluntary, and involuntary exchanges are theft. So therefore, the taxation of that theft is simply stealing back what was stolen.

That doesn’t refute anything I said. Sure, ask me how much I need to live, but it’s irrelevant to the discussion about the division of the productivity. How the pie is sliced is not contingent upon how much I need to survive. How the pie is sliced is dependent upon how each party sees what is fair. Offer me a job and tell me what my service is expected to net, then we’ll hash out and agree to a fair split of the profits. At that point, taxation could be considered theft since “who gets what” was agreed to and nothing was stolen.

I care more about shareholders than ceos.

If the market really determined the value of managers, then a job would not come with a specific salary, but instead would take bids. When you want to put a roof on your house, do you announce that you will pay $10,000 for a roof and then interview for the job? No. You call a bunch of roofers and take bids. So if someone wanted to hire a manager in the spirit of the free market, then they would take bids from applicants and probably take the lowest offer. That would be a free market.

It’s like my local walmart paying $250k for a store manager. I bet I could find someone to do the job, almost certainly better since he’s an idiot, for half as much.

In the case of ceos, why pay some drooling moron like John Stumpf $20 million to NOT be aware his bank is ripping people off? I could find someone to be just as inept for $100k.

I don’t see how publicity changes anything. “Hello, I saw publicly that you’re paying your ceo $20 million. Well, I can save your company $19 million right now: hire me and I’ll do the job for $1 million.” The reply would be, “I’m sorry sir, but we like giving shareholder money away and we’re only interested in saving money if it comes at the expense of a grunt.” I’ll retort, “Ok fine, I’ll do the job for $300 million; is that better?” They’ll quip, “Well, you realize you’ll be expected to do certain favors… wink wink… and your nose doesn’t seem to have enough brown on it to be worth $300 million.”

okay sure, but this point isn’t something that’s gonna prove the necessity of capitalism, because those same risks would be taken in a socialist society. that’s all i’ve been saying. all this praise for the capitalist is hollow and transparent.

but the wage isn’t greater than the value of the labor, because the value of the labor is equal to the price of the product/service when it is sold. that’s the real, tangible value. and arguments like ‘well the worker took the job because he must have valued his minimum wage’ means only ‘he’d rather take minimum wage than be jobless and living under a bush somewhere’.

the system forces workers into a corner, then argues that the system must be reasonable because the worker took the job… because he willingly accepted the minimum wage. but what other choice did he have? he picked the lesser of two evils, that’s all.

in any case, i’ve never known a worker who thought ‘his wage was greater than the value of his labor’. that’s ridiculous. i’ve been a wage worker for over twenty years, and anything i’ve ever produced was sold for at least three times what i was paid to make it. and that’s at best. i wrapped an exposed ceiling truss with poplar trim a month ago that my boss bid at $2,000. it took me all of two hours. i made $40 dollars, he made $1,960… and didn’t do a damn thing but get in my way.

even deducting his overhead from that profit - cost of tools, insurance, materials, etc. - he still made a grand.

now i’m not complaining, but that’s disgusting. i’m not going to call it immoral or unfair or any bullshit like that. i’m gonna simply call it ugly, and i’m gonna ask myself why workers still continue to allow this nonsense to happen.

" because the value of the labor is equal to the price of the product/service when it is sold."

But then you have to count the labour of the people that transport it, that design the logistics, that coordinate the different stages, all the way up to the businessmen that get the whole thing cracking.

N’est-ce pas?

I no speaka spanish, but that’s right. All those things are part of the chain of production, and all those people are being paid a wage/salary that will be less than the value of the fraction of labor they provided in that chain. Now who’s the guy that isn’t being paid a wage? Where does he get his money if he isn’t being paid? He skims the surplus value off the top, and ‘skimming’ is not a form of labor.

Well a lot of people get paid by commission, some truck drivers for instance. I find the name you give to the pay they get is more or less irrelevant, it is the amount the person is able to get for that labour.

You say skimming. Again, I find what you call it pretty much unimportant. The question is, why does that person get to “skim?”

Also, by what you just said before, it is not “surpluss value,” as it is contemplated in the final price of the product and/or service.

and also

I don’t see the distinction between “value to me” and “actual value” (or “real, tangible value”). In the water bottle example, it seems like maybe you’re looking for an average value over time, i.e. I’m willing to pay $1000 for it after crawling out of the desert, but only $1.95 when choosing between bottled and tap.

And I think there’s a couple ways to look at this. In one version, your decision to pay $1000 is strictly irrational. Say we replace the water with food, and you’re on the brink of starvation from your time in the desert, and you are offered nutritious but bland gruel for $1, and equally nutritious but very flavorful steak for $1000. If you choose the steak, that’s probably irrational, because if you take the gruel you will survive and you can buy a steak for $12 later. Taking the steak is irrational in the sense that it isn’t consistent with all of your preferences, and you choose it because you’re blinded by hunger and not thinking clearly.

On the other hand, if the steak is the only option, and you die if you don’t take it, then $1000 is a steal, you’ll gladly pay $1000 to avoid death, and that choice is consistent with all your preferences and not a product of hunger-blindness.

In the first case, we should say that the value of the steak isn’t $1000, and in the second it is (or rather, that the steak is more valuable to you than $1000).

The fact that in different circumstances you would choose differently doesn’t mean that the exchange isn’t a real reflection of the actual value. “The” actual value is always just a value to a specific person in a specific situation. And all any transaction tells us is that one party values one thing more than the other, and the other party feels the other way. So, you might actually have been willing to pay $10k, or $1m for the steak, and the person selling it to you might have been willing to accept $12.

So too with an exchange for labor. The only reason the employer is willing to trade money for labor is because she values the labor more. The only reason the worker is willing to trade labor for money is because he values the money more. The actual spread between what the employer would be willing to pay and what the worker would be willing to accept is unknown. But it is known that the employer and the worker disagree about the value of the money and the labor, and that disagreement is what makes the transaction possible. If they both agreed, or if they were prohibited from accepting an exchange at anything but the maximum price the employer would be willing to pay (which is what it seems Promethean is suggesting), the transaction just wouldn’t happen.

Yes, given the constraints that were placed upon them. There were legal restrictions on where they could work, both on them and on employers, which suppressed demand on their labor. Cultural taboos and prejudices also restricted their options, but the legal and quasi-legal restrictions were the more pernicious (by quasi-legal, I mean enforcement of the status quo by groups like the KKK, which were not technically the law but operated with its tacit protection and blessing). Without these, the price of black labor would have been artificially low, and enterprising business owners could take advantage of the suppressed wages, which would work to counteract the prejudice and raise black wages over time (and simultaneously suppress wages of white laborers towards an equilibrium).

That appears to be what was happening, as evidenced by the introduction of minimum wage laws that were expressly advocated as a way to price out black laborers: because racism artificially reduced the value of black labor, requiring that the minimum amount that could be paid be above that value would eliminate competition. But if racism wasn’t creating opportunities for non-racist employers to get comparable labor at below-market rates, such a cartel wouldn’t have been appealing to the racist majority.

I’m not sure how to think of morality in the context of the market. A market economy takes values as inputs, so it seems like the concept of trying to decide our values about such a system generates the messy problems of recursion. What oughts can be offered about a system that takes oughts as inputs and generates is’s as outputs? That is not entirely rhetorical, but it is not something I have an answer for.

Suffice it to say that the market is as morally pluralist as its participants, that most of the outcomes are a-moral, and that rationality for the purpose of economic analysis is scoped to preference self-consistency.

While I agree with the general point that a certain amount of redistribution can improve the information the market generates, I don’t think it’s true that participants needs to be equals in order to generate a ‘real’ value. As I argue above to Karpel and Promethean, there is no such value independent of the participants, and economic exchanges require that the participants value the things exchanged differently. Decreasing inequality will decrease the spread between people, but only up to a point, so there are diminishing returns in terms of information. And redistribution is itself distorting, so significant redistribution to drastically reduce inequality will at some margin eliminate more information than it produces.

There’s a lot of wiggle room in “almost purely”, but to offer a small defense of advertising as a rational and pro-social enterprise: advertising reduces search costs, which benefits consumers by making it easier to find the goods they want to buy. The internet has obviated this a bit by decreasing search costs across the board, but advertising is still a reliable signal of legitimacy, it strengthens brands, which in turn incentivize quality. Where it’s intentionally deceptive, it’s bad, and you’re right that it can encourage irrationality even when it isn’t lying. But it is not without benefit for rational consumers.

I kind of agree with this, and in fact so do many of the most free market people I read. Libertarianism takes for granted that governments will be captured for the benefit of the rich, and proposes the solution of sharply limiting government powers, such that any action that exceeds the limit is immediately recognized as illegitimate. That prevents the rich from buying too much influence by capping the value of that influence.

The problem is that government needs to be the most powerful enterprise, it needs to be more powerful than every company it oversees, or else the rich can succeed in capturing society by capturing the largest companies. But if government is more powerful than every company, then it will always be worth capturing.

But I don’t see the alternatives doing much better here. Centralizing power away from the free market just seems to expedite the process. And other solutions seem to depend on the idea that people just magically won’t do that anymore. I think there is no solution, it’s a balance that must continue to be fought for.

This is an interesting suggestion, not at all what I had in mind but I can see the line of thinking and I think there’s some merit to it. When I think of high marginal utility spenders, I’m thinking of the people struggling to make rent or feed their families. An extra dollar to those people is very, very valuable. An extra dollar to Musk or Gates seems wasted, given how many dollars they’re sitting on. By moving excess dollars that lay idle with the rich (or that the rich use for another car or another vacation or another molecular gastronomy meal) to the poor who will immediately put it to use in ways that will measurably improve their lives, we can increase the effective value in the economy, and get better information about what things are worth.

But it’s true that some desperately poor people will put the money into drugs or gambling, and Musk has at times leveraged himself to the hilt to create multiple enterprises that have immense social good. Still, I think that’s the exception. Most successful people, even when they generally use money wisely, are also comfortable and consume wasteful luxuries. And most poor people, even when they generally make financial mistakes, will use more money in socially positive ways. On average, I would expect the marginal dollar to be more valuable in the hands of the poor than in the hands of the very rich.

See, this is why I think socialists are not as far from “taxation is theft” as you suggest. I would argue, and I think it’s consistent with capitalism (even required by pragmatic capitalism) that even when the split of the profits between two parties is absolutely fair, there’s perfect information and no asymmetry of bargaining power, taxation is still not theft, because the transaction is only possible in a world in which tax-funded institutions support market transactions.

Taxation isn’t punishment, and shouldn’t be thought of that way. As I pointed out to Silhouette above, we shouldn’t be blaming the lucky for making rational choices in the context of their luck. It should be used to price in the cost of market-supporting institutions and to price in harmful externalities (as with carbon and sin taxes), and more generally to raise the funds necessary to fund the commons and stabilize society. That’s not theft, it’s the cost of doing business, and it’s justified even when the business is as fair as it can be.

But both sides of the exchange lack that information. The exchange is labor for money. The employee doesn’t know the complete picture of how that labor will be used to generate profit for the employer, and the employer doesn’t know the complete picture of that money will be used to satisfy the employee’s preferences. Both parties to the transaction lack information. Moreover, they both know they lack information, and they voluntarily engage despite that lack of information. Perfect information isn’t necessary for a transaction to be voluntary.

Let me propose a similar situation that may get on what we actually disagree about. Consider two firms negotiating. One firm is buying services from the other firm. The buyer will use the services to turn a profit, the seller is turning a profit on the sale. They both know this, and they’re both OK with it. They don’t need to open the books to each other to make that exchange fair.

To me, this exchange is comparable to the employer-employee exchange. It does not seem so for you.

By this argument, the market doesn’t determine the price of consumer goods, since they come with a specific price tag and 7-Eleven doesn’t take bids for soda.

This seems to rely on the premise that CEOs don’t do anything, it’s not difficult, and/or the skillset is not rare, and anyone can be dropped in and do a good job. That isn’t obviously the case, CEOs have a lot of power and a lot of trust, the talent pool is small and competition is fierce.

Publicity puts the employer at an informational disadvantage. If CEO salaries weren’t public, hiring a new CEO at a drastic pay cut would be easier. Consider how business often (illegally) forbid employees from discussing their salary with each other. That helps keep wages down, because it lets business price discriminate in buying labor (paying worse employees less), and employees are less motivated to ask for more money because they don’t know they’re being hosed and no one else sees how little they make so they don’t lose face. CEOs know what their peers are making, so they know what a fair package looks like, and they’re motivated to bargain for more because they and everyone can see how they’re valued relative to their peers.

I agree. But to the extent that the argument against capitalism depends on the premise that managers don’t do anything, acknowledging that managers add something of value does weaken that argument and so supports capitalism.

I’m saying that the bottle of water only has the value it was sold to me at because the person who sold it to me is a vicious person combined with the scenario.

No, I’m about to lose consciousness having gone without water long enough to be in danger. The only person who knows I am on this side of the sand dune is a horrible person who sees me as an opportunity to make money. He may not tell anyone I am there so I die. It is rational to buy his water, my money being valueless if I am dead.

As a social mammal I find this idea that the steak has that value bizarre.

It seems to me the context of the discussion with Serendipper is if there is exploitation. If the people setting the market value have contributed to a value they would never have put on the product or labor themselves - if they wanted to buy the product or if they were doing the labor - they are being immoral.

I really do understnad that if money changes hands then people made a choice. It seems to me this is oddly leaving out the core of Serendipper’s context which is a moral one.

But how much of this is just framing? Take the question in a more abstract form: I have an item that you want to buy, and we know that you will get >$1000 worth of value from that item. What’s a fair price to ask of you for that item? Framed this way, it’s much less morally repulsive, and it’s very similar to Serendipper’s question.

But it’s the same question, we’re really supposing as part of the hypothetical that the bottle of water is worth >$1000 to you. So, two people value a good differently, and we’re trying to find a fair price so that the two people split the surplus. If you’re really going to die, you likely value the water bottle at much greater that $1000.

This reframing is not dishonest, it’s only a difference of emphasis. I agree that intuitive morality says we should just give the dying person water, but we might reframe intuitive morality as naive morality.

For example, take price gauging in the run-up to a hurricanes. People have strong intuitions against it, but price gauging in those situations serves a very important function that has positive social spill over. First, it maximizes the supply that will be available in the affected area, by compensating people for the risk and expense of making more supply available. Second, it limits hoarding: without price gauging, cases of water sell out in a few hours, but if they have to pay a price that accurately reflects the value they expect from the water, they will be more careful to buy only what they need and leave more for other people to buy. Price gauging looks opportunistic, but letting prices track value aggregates information and allocates scarce resources efficiently. That’s what the market’s for.

That’s a bit different from a one-off, dying in the desert situation, but it does demonstrate that economic exchanges that are intuitively icky can be socially beneficial. Sometimes our gut reaction is wrong.

What about the people who can’t afford to buy the water at inflated prices?

They die. Their families die.

They depend on the kindness of the “naive”.

Why are there slums in the richest country in the world? Important functions being served. Positive social spill over. Efficiency.