There’s a few countries without minimum wage laws that have way better average wages than the US and many others, I believe this fact already invalidates some of your observations.
For libertarians workers unions would be ok, as long as they’re not government sponsored (they’re a type of private government), while government intervention is pretty much always seen as bad since they are not considered a legitimate way to solve market issues (wages are a market issue)
I don’t think it invalidates the claim that “Without the minimum wage law, lots of people would probably be paid significantly less.” (I believe that’s one of the claims you were referring to. Let me know if I misinterpreted your post.)
I don’t have a whole lot of time to research economies around the world, but I checked out a couple sources with varying perspectives (two struck me as neutral, two as libertarian). One of the libertarian ones made no effort to understand or explain the phenomenon, but all three others agreed that these countries rely on strong unions to keep wages up.
IMO, that means you’re both partially right. As you said, some countries can and do function without minimum wages—it’s clearly possible. But as the original poster said, if a country has minimum wage laws, removing those laws will in fact tend to reduce wages.
Some countries without minimum wages still have well-paid workers. Other countries without minimum wages have sweatshops. I think that market forces push towards the “sweatshop” end of the scale (for the reasons described by the original poster), and unions are one of the biggest things pushing back.
“if a country has minimum wage laws, removing those laws will in fact tend to reduce wages.”
You say so, but you don’t justify that statement in any way. When the poster wrote: “Without the minimum wage law, lots of people would probably be paid significantly less.”
I assumed they meant that the lack of MWL would push to sweatshop like conditions, my observation proves that it is not ture. The reverse (MWL pushes away from sweatshop like conditions) can also be proven false, as there are plenty of countries with bad economies and MWL where people live in miserable conditions.
Why is government intervention not legitimate? Is that judgement grounded in a model of how labor relations would work with or without various kinds of intervention? (It doesn’t have to be. E.g. “intervention should be presumed bad because third parties have bad incentives from the 1st and 2nd parties’s perspectives” is a solid argument; and it’s not based on “here’s how wage negotiations will go in a world without gvt monopoly on threats of force”.)
Government intervention is generally considered a bad idea (I won’t say “not legitimate”) because the intervention is usually laws that stop people from making the deals they want to make, which usually is bad for all parties involved—if they didn’t think the deal was better than no deal, they wouldn’t want to make it.
But I suppose there might be other government interventions that would be OK (for example providing information about competing offers, or offering education, etc.).
The idea is that government is a tool for enforcing a group decision. If at any given time half of workers are holding out for higher wages and half are scabs, then the managers are always fed and can always starve out the striking workers. So the striking workers want to use violent threats to prevent other workers from breaking the strike, i.e. making a deal they want to make with the managers. And this enforcement can be formalized / sublated into government, both as specific negotiating outcomes (wage, working conditions) and as process (unions given some power by government-enforced law, I assume?). (In practice this might be very far from what actually ends up happening. And I’m not particularly in favor of gvt. But I can see the game-theoretic use, and I think this is the historical origin of unions and wage laws and worker’s rights… or maybe it’s not?)
If our libertarianism implies no monopoly on force, then unions can still prevent trades between willing parties. If it implies enforcing no use of force at all, then it seems like we’ve severely limited the ability of workers to bargain, relative to the “state of nature”. Maybe unions would regrow without being founded on threats of violence? But this seems surprising; it seems like it would require a high degree of game-theoretic fluency.
But it seems very little government intervention into any economic activity or relationship is really dominated by the wishes or needs of those directly involved. Most seems related to external impact—parties outside the direct exchange.
Probably: private unions for a category of jobs would do collective bargaining agreements with employers (if necessary). In all other cases, people would just negotiate their work value.
Is there a clear argument that this would not result in most workers being paid just enough to not starve? (Or would you endorse that happening, if that’s the result of the negotiations? Or something else?) The “sweatshop” attractor seems to exist, naively. The argument being: local incentives for managers push towards slave wages; transition costs of switching jobs are high enough that more generous managers can’t just poach all the workers, and in the long run less generous managers make more money.
This argument only straightforwardly works for some extreme simplifications. E.g. I’m imagining that all the workers are playing their CDT best response, and all the managers are doing something more complicated that involves starving out workers. I don’t get whether other people are making different simplifying assumptions that apply things will be fine, or what.
Mind if I ask you why are you so interested in arguments? I already provided empirical evidence of the opposite of what you suggest, doesn’t that beat any opposing argument?
I can easily flip your argument around: In a free market workers can ask for whatever pay they want, since they want to be paid as much as possible for as little work as possible, eventually the owners will be left with very little profit, just enough to survive.
What makes this argument wrong and yours correct is not evident to me; both are disproved by empirical evidence.
Because the world is complicated and there could be a lot of factors determining the equilibria, and I’m looking for insights that cover many actual and possible cases. (Also, I don’t think you named any countries? Someone else named some countries, but it seems like at least some of them have heavy gvt-enforced worker’s rights and gvt unemployment benefits, which does not seem like what you’re imagining.)
Libertarians see government intervention as bad because, to them, it is a self-interested third party, and as such, will make decisions that benefit itself mostly.
Many Libertarians believe in self ownership and therefore think government power is illegitimate and that they can’t make decisions for others.
There’s a few countries without minimum wage laws that have way better average wages than the US and many others, I believe this fact already invalidates some of your observations.
For libertarians workers unions would be ok, as long as they’re not government sponsored (they’re a type of private government), while government intervention is pretty much always seen as bad since they are not considered a legitimate way to solve market issues (wages are a market issue)
I don’t think it invalidates the claim that “Without the minimum wage law, lots of people would probably be paid significantly less.” (I believe that’s one of the claims you were referring to. Let me know if I misinterpreted your post.)
I don’t have a whole lot of time to research economies around the world, but I checked out a couple sources with varying perspectives (two struck me as neutral, two as libertarian). One of the libertarian ones made no effort to understand or explain the phenomenon, but all three others agreed that these countries rely on strong unions to keep wages up.
IMO, that means you’re both partially right. As you said, some countries can and do function without minimum wages—it’s clearly possible. But as the original poster said, if a country has minimum wage laws, removing those laws will in fact tend to reduce wages.
Some countries without minimum wages still have well-paid workers. Other countries without minimum wages have sweatshops. I think that market forces push towards the “sweatshop” end of the scale (for the reasons described by the original poster), and unions are one of the biggest things pushing back.
I’m curious if you have independent reasons for thinking that market forces push towards sweatshop-like relations. It’s not obvious to me either way.
“if a country has minimum wage laws, removing those laws will in fact tend to reduce wages.”
You say so, but you don’t justify that statement in any way. When the poster wrote: “Without the minimum wage law, lots of people would probably be paid significantly less.”
I assumed they meant that the lack of MWL would push to sweatshop like conditions, my observation proves that it is not ture. The reverse (MWL pushes away from sweatshop like conditions) can also be proven false, as there are plenty of countries with bad economies and MWL where people live in miserable conditions.
Why is government intervention not legitimate? Is that judgement grounded in a model of how labor relations would work with or without various kinds of intervention? (It doesn’t have to be. E.g. “intervention should be presumed bad because third parties have bad incentives from the 1st and 2nd parties’s perspectives” is a solid argument; and it’s not based on “here’s how wage negotiations will go in a world without gvt monopoly on threats of force”.)
Government intervention is generally considered a bad idea (I won’t say “not legitimate”) because the intervention is usually laws that stop people from making the deals they want to make, which usually is bad for all parties involved—if they didn’t think the deal was better than no deal, they wouldn’t want to make it.
But I suppose there might be other government interventions that would be OK (for example providing information about competing offers, or offering education, etc.).
The idea is that government is a tool for enforcing a group decision. If at any given time half of workers are holding out for higher wages and half are scabs, then the managers are always fed and can always starve out the striking workers. So the striking workers want to use violent threats to prevent other workers from breaking the strike, i.e. making a deal they want to make with the managers. And this enforcement can be formalized / sublated into government, both as specific negotiating outcomes (wage, working conditions) and as process (unions given some power by government-enforced law, I assume?). (In practice this might be very far from what actually ends up happening. And I’m not particularly in favor of gvt. But I can see the game-theoretic use, and I think this is the historical origin of unions and wage laws and worker’s rights… or maybe it’s not?)
If our libertarianism implies no monopoly on force, then unions can still prevent trades between willing parties. If it implies enforcing no use of force at all, then it seems like we’ve severely limited the ability of workers to bargain, relative to the “state of nature”. Maybe unions would regrow without being founded on threats of violence? But this seems surprising; it seems like it would require a high degree of game-theoretic fluency.
But it seems very little government intervention into any economic activity or relationship is really dominated by the wishes or needs of those directly involved. Most seems related to external impact—parties outside the direct exchange.
I’m asking because I’m curious how labor relations work.
Probably: private unions for a category of jobs would do collective bargaining agreements with employers (if necessary). In all other cases, people would just negotiate their work value.
Is there a clear argument that this would not result in most workers being paid just enough to not starve? (Or would you endorse that happening, if that’s the result of the negotiations? Or something else?) The “sweatshop” attractor seems to exist, naively. The argument being: local incentives for managers push towards slave wages; transition costs of switching jobs are high enough that more generous managers can’t just poach all the workers, and in the long run less generous managers make more money.
This argument only straightforwardly works for some extreme simplifications. E.g. I’m imagining that all the workers are playing their CDT best response, and all the managers are doing something more complicated that involves starving out workers. I don’t get whether other people are making different simplifying assumptions that apply things will be fine, or what.
Mind if I ask you why are you so interested in arguments? I already provided empirical evidence of the opposite of what you suggest, doesn’t that beat any opposing argument?
I can easily flip your argument around: In a free market workers can ask for whatever pay they want, since they want to be paid as much as possible for as little work as possible, eventually the owners will be left with very little profit, just enough to survive.
What makes this argument wrong and yours correct is not evident to me; both are disproved by empirical evidence.
Because the world is complicated and there could be a lot of factors determining the equilibria, and I’m looking for insights that cover many actual and possible cases. (Also, I don’t think you named any countries? Someone else named some countries, but it seems like at least some of them have heavy gvt-enforced worker’s rights and gvt unemployment benefits, which does not seem like what you’re imagining.)
I didn’t mention any country because you didn’t ask for any. Anyway, it seems we aren’t having a very productive conversation so I’m gonna stop here.
have a good day
Libertarians see government intervention as bad because, to them, it is a self-interested third party, and as such, will make decisions that benefit itself mostly.
Many Libertarians believe in self ownership and therefore think government power is illegitimate and that they can’t make decisions for others.