Robert Taylor, resident anarchocapitalist in the comments section, asks a fascinating question: Why don’t capitalists compete with each to attract workers by raising wages? Good question! I don’t know why they don’t. But they don’t. Generally.
Robert, you’re talking about evil people here. You say that if they have their way, they would lower wages to the subsistence level. Meaning that they could afford to pay higher wages, but choose not to.My question is: what’s stops an EVEN MORE evil capitalist from paying just a little more to take the business away from the current controlling Capitalist? If he pays just a little more, clearly the labor force will go to him, and without labor, the subsistence-level capitalist has nothing, no matter how low he can drive prices.
We shall take this apart bit by bit here.
Robert, you’re talking about evil people here.
Yes, I am talking about capitalists, correct.
You say that if they have their way, they would lower wages to the subsistence level.
There really is no wage level that is too low for the capitalist to pay. If you don’t believe that, check out how many US corporations shut down their US operations and head to whatever place is currently paying the lowest possible wage. If that place lowers its wage, they move to someplace even lower. How many US corporations have moved to places where they pay ~14 cents an hour? Lots.
In fact, many US corporations and of course businesses overseas deliberately pay people at wages that are not only at subsistence but are often below subsistence. I’m pretty sure they could afford to pay those folks more than subsistence or below subsistence wages, correct? Then why don’t they do so?
If slavery was legal, capitalists would take it up in a New York minute. Child labor is great for business too.
Slavery and child labor are epidemic forms of exploitation by capitalists in the 3rd World, in particular in South Asia – in Pakistan, India, Nepal, etc.
After all, Austrian economics is all about efficiencies. Wages being one of the biggest inefficiencies of all, of course. Surely slavery and child labor must be much more efficient than wage labor? What is scary is that this “efficiency talk” has now taken over world economics. Just about every country on Earth now is talking in terms of economic “efficiency.” Yet I just showed how slavery and child labor are incredibly efficient. I think it’s time we trashed this efficiency fetish once and for all.
My question is: what’s stops an EVEN MORE evil capitalist from paying just a little more to take the business away from the current controlling Capitalist?
Interesting argument. How come it never works that way then? I guess I will just throw that question right back at the anarchocapitalists then, since they are the ones who says that anarchocapitalism is the best way thing since sliced bread for workers, consumers, society, and, oh yeah, as an afterthought, business.
So…How come it never happens?
The labor market is deliberately tight. There are way too many workers than there are jobs. So workers don’t have a lot of mobility. Sure workers might leave Capitalist A paying $8/hour to go work for Capitalist B paying $10/hour. A few might. Maybe. But probably Capitalist B would just fill up all his positions with new folks. His costs would be so high that he would soon be driven out of business by Capitalist A.
Believe me, I would be overjoyed if capitalists competed like this. But they just don’t. I’ll leave it to the anarchocapitalists to explicate this thorny matter for us.
In some industries, labor is very highly valued, and companies actually do compete for labor. Putting aside for a moment Hindu 1-B job thieves, IT is a good example of this. IT companies sometimes actually compete with each other by trying to offer higher wages and better benefits in order to get scarce talented labor to work for them instead of the competition. But this is rare.
There is a hint of truth to Taylor’s comment, but it has to do with people Libertarians hate worse than any other humans – labor union members. If one company in an industry is unionized, then the higher wages and bennies in that company will often fan out from that company to its competitors somehow. But this is increasingly rare now that unions are as rare as four leaf clovers, thanks to guys like Mr. Taylor.