When there are no unemployed then the various capitalists are in competition with each other to find the labour they wish to exploit. That competition raising the price paid for the labour, that is, wages go up. Full employment really does mean wages rise. It’s worth noting that minimum wages have somewhere between little and nothing to do with this. The current Federal such is $7.25 an hour. Walmart already pays $10 an hour, from next month $11. Competition in markets is thus very much more powerful than legislation, no?
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Samizdata quote of the daySamizdata Illuminatus (Arkham, Massachusetts) · Economics, Business & Globalization · Slogans & Quotations January 14th, 2018 |
 36 comments to Samizdata quote of the day |
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Ignore that man in the post above. (Damn clock)
“That competition raising the price paid for the labour, that is, wages go up.”
UNLESS “gub’mint” introduces artificial “economics”, and bans(Political Science)the raising of wages, leading to “perks” like employer health care insurance as barter, ultimately resulting in “Social Health” for ALL, because… fairness.
During wartime, the healthy men were “away”, leaving the poindexters, infirm, malingerers, women and children, to do the yeoman’s work, some better than others. But, you know,… same pay for the same job title.
IMHO,in fairness to “Gub’mint”, 1.Wartime. 2.It DID cut back on manufacturer/agriculture/financial interests from poaching ALL the effective workers, and “stranding” other venues with the remaining-for whatever reason- bottom of the barrel.
Competition in markets mean poor people have harder lives and die sooner than affluent ones.
I’m not entirely happy about that just because capitalism has proven to be the system which works best.
There is always room for improvement.
Or are we like animals who don’t know any better than to act selfishly and ruthlessly?
Competition in markets mean poor people have harder lives and die sooner than affluent ones.
No. The blame lies not with competition in markets but with the structure of reality. There are no utopias in which this inequality does not obtain – except those that solve the problem by actively seeking out the affluent and putting them to death. And even then, the structure of reality reasserts itself almost instantly. So for example the slaughter of the kulaks successfully shortened the lives of the (relatively) affluent, but the ensuing Holomodor then polished off a lot of poor people. The new rich – members of the apparat – survived pretty well by comparison, even taking into account a purge or two.
I’m not entirely happy about that just because capitalism has proven to be the system which works best.
You are not alone. Few of us are entirely happy with the structure of reality.
There is always room for improvement.
There surely is. But one ought not to overlook the extent to which the lot of the poor has been improving, and the speed with which this has been happening.
Or are we like animals who don’t know any better than to act selfishly and ruthlessly?
Well, that’s an interesting question. No, we do know that we ought not to act selfishly and ruthlessly all the time. And in fact we do act generously and mercifully quite often, particularly towards our family and friends, but often to strangers to.
But there are three (related) facts about life that may not be laws but which recur with such alarming frequency that they are certainly patterns – which we ignore at our peril.
1. Adam Smith’s line about the motives of those who provide us with our dinner is not a joke. Markets are just amazingly good at providing plenty, even for the poor, notwithstanding a degree of selfishness in the hearts of the suppliers. Note that while a free market does not punish selfish motives in a trader it is not so forgiving of all vices. Markets tend to punish bad faith – you can succeed as a selfish but trustworthy player, but if you aren’t trustworthy you’re pretty much limited to becoming a travelling snake oil salesman – something where you only meet a customer once. That or government work, obviously 🙂
2. People spend their own money on themselves far more efficiently than they spend their own money on other people, and waaaaaaay more efficiently than they spend other people’s money on other people. This has something to do with (a) a more intimate knowledge of the consumer’s wishes and (b) greater pain sensitivity for a cost you bear as against a cost that someone else bears.
3. It is very difficult to compute, and take into account, the unintended negative effects of altruistic acts. Which is not to say that we should avoid them – merely to say that the moral knowledge that we ought to help the unfortunate is not at all the same thing as the practical knowledge of how to do it.
Anything that drives down prices helps poor people, too. There’s a reason someone at the poverty line in a modern first world country would be considered quite wealthy in earlier centuries.
@pete
> Competition in markets mean poor people have harder lives and die sooner than affluent ones.
Do you have any proof to support this claim? After all, the evidence of our eyes seems to contradict it completely. The fact is that the poor in countries that have freer markets and stable legal systems are generally massively more wealthy that the poor in, to coin a popular phrase, various socialist shitholes around the world.
> I’m not entirely happy about that just because capitalism has proven to be the system which works best.
Capitalism is an absolute unadulterated good for the poor. It provides a rich society that can be charitable toward them. It provides a booming economy that they can jump on board with if they so choose. It often provides them with free education and excellent infrastructures to make that happen. It eliminates the withering barriers to entry that governments erect for their crony friends. It holds down the taxes that make it difficult to reinvest in yourself and your business, and it drives down the prices of all the things they need and want in their lives.
Remember, the poor in America have smartphones, cars, air-conditioners and penicillin. The biggest problem for the poor in the past was malnutrition. The biggest problem for the poor in America is obesity.
Being poor ain’t what it used to be.
> Or are we like animals who don’t know any better than to act selfishly and ruthlessly?
This is such a myth. Capitalism has nothing to do with selfishness. It is providing the best product for the best price. It is about fighting to satisfy your customers. And needless to say the richest capitalists have been, and always will be, the most altruistic, charitable people on the planet. To call people like Bill Gates, Warren Buffett, Andrew Carnegie or Henry Ford selfish is frankly somewhere between laughable and abominable.
“capitalism has proven to be the system which works best.”
That is all that needs to be said isn’t it? That capitalism works best is the reason why all attempts to ‘improve’ it always end in failure.
Excellent replies here, especially Lee’s. I’d add another aspect of it, maybe a more fundamental one: the quote reflects the all-too-common conception of society and reality in general as static, with social and economic attributes such as ‘rich’, ‘poor’, ‘powerful’, ‘oppressed’, etc. as being somehow fundamentally predetermined for certain groups of people and even their progeny. That conception misses the obvious fact that nature, especially human nature, is dynamic, and so nothing is really “set in stone” absent needless meddling. Consequently, ‘free markets’ means that those who are currently poor are free to enter the competition in an effort to become richer, just as the rich are doing all the time in an effort to maintain their wealth and to increase it.
Competition in markets mean poor people have harder lives and die sooner than affluent ones.
If by “poor” you mean mean absolute poverty, then competition in markets ultimately means less poor people, with easier and longer lives because of the cheaper products and services.
If by relative “poor”, then that’s a fact of life, and nothing to do with markets.
There is also room for making things worse in the name of making them better. Just how many more historical examples of what will afterwards be called “not real socialism” do we need. 🙂
“Competition in markets mean poor people have harder lives and die sooner than affluent ones.”
I second Alisa’s comments. However, I want to go back to something more fundamental: I think the statement is completely incorrect. “Die sooner”? Where is the evidence for this? As far as I can tell the life expectancy (at least in the West) is the same for all pretty much regardless of income level. We all have access to the same medical services and drugs. In the US, anyway, hospitals are required by law to treat all regardless of income or ability to pay; I think that’s basically the case everywhere in the West. There might be a handful of really expensive drugs that aren’t easily available to the poor, but those are outliers and don’t affect overall statistics. And as to “harder” lives? By what measure? They have to vacation at Dollywood instead of in Cancun? Poor babies. The working poor might have to work some overtime, but show me one wealthy person (self-made) who doesn’t work much longer than 40 hours a week. That’s how they got wealthy in the first place. So I reject the assertion ab initio.
And as to the comment that “there is always room for improvement“, I agree with the statement on its face but I very much doubt that I agree with what he means by it. The only “improvement” would be less governmental interference in markets; I expect that he wants more. Governmental attempts to “fix” markets are a receding tide which harms all, and the relatively poor most of all.
Thx to pete, much interesting discussion has been sparked.
Laird : I think the statement is completely incorrect. “Die sooner”? Where is the evidence for this? As far as I can tell the life expectancy (at least in the West) is the same for all pretty much regardless of income level.
It’s only a one second google* but MIT would disagree with you :
http://news.mit.edu/2016/study-rich-poor-huge-mortality-gap-us-0411
I’d offer the following possibilities for why richer people might live longer than poorer ones, even in a rich country like the US.
1. medical care – the rich can afford better doctors when they get ill
2. old age – the rich can afford better support either at home or in retirement facilities, making it less likely that a fall or the flu will kill them
3. rich people tend to be better educated about their health, thinner, fitter and they eat better
Twould be interesting to see how much of the mortality gap was explained by education rather than money per se.
* I say google but I mean bing, since google is in the penalty box at the moment for its wickedness. No doubt bing is equally wicked, but they are hiding it better.
Why not DuckDuckGo?
@Lee
But the data in this study is surely not a fair analysis of the question. There is a big difference between “the bottom 1%” and “the poor”. For sure, the former is a subset of the latter, but plainly the people are the very bottom of the economic ladder are there because they have other co-morbidity that have little to do with their wealth level. For example, many of them come from extremely broken homes, are abusers of drugs and have never had a job or learned to take care of themselves properly. Recently in the USA the average life expectancy decreased for perhaps the first time ever, but did so because of the massive abuse and overdose of opiods going on. (And the fact that it is treated as a component of the war on drugs rather than a medical problem to be dealt with, along with the fact that you have to buy your opiods on a black market devoid of safety checks, measures, or accountability.)
That isn’t what I think we are thinking of by the poor. For them we are thinking of capable people who are trying their best but for one reason or another aren’t successful financially. Can we perhaps compare those below the ever increasing poverty line rather than that absolute lowest of the low.
The other piece of data is an interesting, the increased rate of life expectancy for the rich. Of course this is the old gap argument. Is it better that the rich live shorter so that the gap is smaller, ir better that everyone lives longer, even if the rich get to live more longer? Especially so in medicine because trickle down economics absolutely does work in medical care. The specialized treatments for JP Morgan today, is the two-for-one deal in Walmart tomorrow. (Or would be were the medical care market not strangled by regulation.)
So my view is this comes under the category of lies, damn lies or statistics. You chose.
Alisa – I use DuckDuckGo for a bit, and then it fails to find the most obvious things, so I flip to Bing, and that usually works, and then occasionally I’m forced to use Google (particularly for maps.) Then I revert to Bing while the memory of DuckDuckGo’s general uselessness fades, then I go back to DuckDuckGo when the memory has faded sufficiently. Rinse and repeat.
Fraser – I should have added
4. There’s a correlation between ill-health and early death, and there’s a correlation between ill health and poverty. Consequently there’s a correlation between poverty and early death. Although we always have to be very careful about insinuations of causation (particularly with Laird in the room) your suggestions as to why the bottom 1% die quickly ring true to me.
I don’t know what the figures are for mortality for say the 10th to 20th percentiles of wealth as against the 90th to 100th. Presumably a more committed googler or binger or duckduckgoer can tell us. I can imagine that a certain amount of statistical gymnastics would be required to get sensible answers though. On average the rich are old, merely because of the wonders of compound interest.So unpicking that from the figures isn’t going to be that easy.
As to whether a mortality gap is a bad thing, I tend to agree with you. To the extent that the mortality gap is the result of rich people paying through the nose to get new treatments they’re paying for the medical research which keeps the rest of us alive and kicking fifteen years down the road. To which I say “Thanks very much.”
There are some who would prefer the nineteenth century when a good honest infection could kill off Duke just a quickly as a milkmaid, but I’m not one of them.
To be fair, I doubt pete is either. He’s probably just annoyed that reality sucks, which is a perfectly reasonable observation. I would merely encourage him to look on the bright side, whenever possible.
“There are some who would prefer the nineteenth century when a good honest infection could kill off Duke just a quickly as a milkmaid, but I’m not one of them.”
BWa ha ha ha ha ahhhh.
“ironically” Milkmaids had a MUCH better shot at surviving, even avoiding, Smallpox (red plague) than “The rich and famous”, including “Royalty”.
And thanks to our host for dumping my first fiasco in this thread. 😉
Full employment? Exploit?
Sorry, but employers always have to bid for labor. And why would someone gaining employment be an exploitation?
Yeah likewise, I feel your pain. If I can’t find something without Goggle, then I will just live without finding it. But I too am stuck with their maps, for now at least.
As to the DuckDuckGo, Bing, Google, etc., debate, I mostly use Startpage. My understanding is that it uses the Google search engine but anonymizes the search itself. Of course, I could be wrong.
Lee, Fraser beat me to it. But I will concede that I probably did overstate my case somewhat; there probably is a bit of a difference, if only for the reasons Fraser noted. But I would assert that whatever difference there is mostly has to do with the personal characteristics and lifestyle choices of the individuals involved, not their income levels; in other words, the same factors which result in their being lower-income also result in their higher mortality rate. It’s a correlation question (which I note that you anticipated!).
And I am far from convinced by that article you linked. It’s a summary (probably sensationalized, as these things usually are) of a “scholarly” paper which I haven’t read because it hasn’t yet been published. But I have serious doubts about the methodology employed, and thus about the conclusions (allegedly) reached. According to the article, the researchers “looked at 1.4 billion anonymized income tax filings from the federal government, and combined that with mortality data from the years 2001 through 2014 from the Social Security Administration.” (My emphasis.) I’m sorry, but that doesn’t pass the rationality test. If they are using anonymized tax returns (which is all that the government would ever permit) they could never find the mortality rate of specific individuals. I can conceive of no method by which any useful information could be extracted from anonymized tax returns and statistical mortality tables. Without much more information, I would characterize that “study” as junk. (The fact that it was conducted by economists, rather than epidemiologists, doesn’t give me a lot of confidence, either.) So while I will back off a little bit on my initial bold assertion, only a little bit.
Does anyone know how DuckDuckGo and Ixquick/StartPage are funded?
. . .
Capt, you say that milkmaids had a better chance than the rich of surviving, or even of avoiding, smallpox. Interesting — how come?
Milkmaids tended to catch cowpox as children (due to their close proximity to cows, obviously), which just so happened to give them them immunity to smallpox!
@Julie near Chicago
> Capt, you say that milkmaids had a better chance than the rich of surviving, or even of avoiding, smallpox. Interesting — how come?
I think he is referring to the fact that the eventual smallpox vaccine was originally developed from the cowpox vaccine based on evidence that milkmaids (who were obviously more prone to cowpox) had an apparent immunity. In fact the word “vaccine” comes from the Latin word for cow for that very reason.
However, the truth is that the story is quite disturbing. Jenner demonstrated the effectiveness of his vaccine by taking some random, witless eight year old boy, infecting him with cowpox, waiting a while then reinfecting him with smallpox. A methodology that today would get Jenner a ten year sentence in the Penitentiary, irrespective of its eventual, positive, outcome. Thankfully the boy did not get a smallpox infection, and Jenner’s contention that cowpox was an effective vaccination for the much more serious smallpox was proven right. And on this foundation of consent-less human experimentation is build all of modern virology and immunology.
Which isn’t to say that milkmaids lived long healthy lives. I doubt that is true at all in the brutal environment of rural serfdom in which they lived. They were just fortunate enough to have one of many deadly hazards removed due to a microbiological coincidence.
W.H. Hutt spent his life showing how “Collective Bargaining” does not increase wages overall – for a while it increases wages for union members (at the expense of higher UNEMPLOYMENT), but in the end the union destruction of industries (by guild like strangulation) means that even the union members lose, as they stand by closed factories and water filled mines.
Wages can only go up, in the long term, with rising PRODUCTIVITY. And this does indeed depend on the free market being allowed to work (at least internally). Of the great powers the United States had the highest wages as the start of the 20th century – and unions were of no importance in the United States, compared to Germany or Britain. What America did have was lower taxes, lower government spending and less regulation.
Actually, competition in capitalism means the quest for profits drives constant innovation, and yesterdays wonders become available to the poor. Computers, microwave ovens, cell phones, stoves, refrigerators, carpeting, even ballpoint pens used to be it luxury items available only to the rich. Most American poor families, ie those who earn in the lowest quintile of income, own two cars, whilst many European families don’t own a car at all.
pete : Competition in markets mean poor people have harder lives…
Thailover : Actually, competition in capitalism means the quest for profits drives constant innovation, and yesterdays wonders become available to the poor. etc
You missed off the end of pete’s quote. Never miss off the end of other people’s quotes (if they’re pertinent.)
pete : …and die sooner than affluent ones
It’s obviously true that markets, competition, capitalism, whatev have made the lives of the poor far less hard than the lives of the poor in t’past. Indeed far less hard than the lives of the rich in t’past. And this continues at an astonishing pace especially in the poorer parts of the world. But relatively (see “than”) the poor do worse than the rich. And what’s more they always will. For they will always be with us, even when we all have our own planets, with sexbots, gardening bots and vol-au-vent bots. That is what a “than” will do for you.
Not once we’ve achieved true socialism!
Come the revolution . . .
Lee, FWIW, I would totally buy a vol-au-vent bot.
Obviously, people in the past tended not to live lives as long and healthy as ourselves, but in the 1700s, when the practice of vaccination was being developed in England, milkmaids were not living in a ‘brutal environment of rural serfdom’. Their job required them to keep clean, which probably did their general health prospects good quite apart from being immune to Smallpox, and they were likely to eat well-enough and with a more balanced diet. They also lived in a country setting, much healthier than London at the time. Even in the mediaeval times when milkmaids were likely to be serfs, there were worse positions to occupy. And the ‘spilt milk’ fable suggests they were not the lowest of the low even in the far past.
(In Hardy’s ‘Tess of the D’Urbervilles’ – set a century later – the author’s brutal determination that things must end badly ensures that things end badly for Tess, but her time as a milkmaid is a rare happy episode in the book.)
If the average lifespan of the poor is less than that of the rich, this merely presents the question: what matters more to you; the relative difference or the absolute value?
– If your aim is to increase the lifespan of the poor, then a strategy that increases their absolute wealth seems indicated. Obviously, a reliable long-term strategy for doing so may well increase the wealth of the rich as well, preserving at least some of the relative disparity. And since these are statistically-defined categories, not studies of specific people through time, it doesn’t matter how well your strategy enables hard-working or lucky poor people to become richer, and idle or unlucky rich people to become poorer, since the relative lifespans of the hard-working or lucky (and now rich) versus the idle or unlucky (and now poor) may merely contribute to the statistical difference between the rich and the poor.
– If your aim is to eliminate statistical lifespan disparity between rich and poor then making the rich poor will at first glance seem much easier (it is usually quicker to destroy than to create). You may however encounter problems, and not just if making the rich poorer also makes the poor poorer. The lifespans of those rich in power (whom you will need, to force this change) may show a marked disparity with those poor in power (especially any of the former rich who refuse to go quietly into that good night).
So it’s always worth asking: what are you are trying to achieve; what is the actual problem you see here?
Thanks to all for the milkmaid-cowpox and related info.
.
Niall, just above: Very good. :>)
And “poor” is relative. America’s poor, i.e. those in the lowest quintile of income earners, live a better quality of life than 2/3 of everyone else on earth. ‘Better even than Italy’s middle class.
Todays poor in america live longer than the rich in America 50yrs ago. This root post is much adu about nothing.
“America’s poor, i.e. those in the lowest quintile of income earners, live a better quality of life than 2/3 of everyone else on earth.”
Interesting number for you. The average food stamps payment, alone, puts you in the top 50% of all income earners globally.
Note the details here. Among those who get food stamps the average recipient gets $29 a week. That is the income which is being compared with global incomes. This is at PPP, so this is at modern American supermarket prices. What you can buy for $29 a week in Walmart is more than the total living standard of 50% of extant human beings. Yes, this includes home production like maize grown by an African peasant etc.
Thus my insistence that there is no such thing as poverty in today’s US. Inequality, sure, there’s that, but no poverty.
The War on Poverty has, er. triumphed! But at what cost?
I’d put it more like, ‘Poverty is losing, despite the so-called “War on Poverty.”‘
Right when the army goes out to slay the dragon is the best time to set up in the public commons and start praying loudly to your gods for the death of the dragon.
You maximize the chances of your gods, and you, appearing powerful.
That’s why you push for a War On Poverty the loudest in an uplifting economy. (“It wasn’t that dumb army, it was my gods!”)
Mr Ed, the “war on poverty” has failed miserably, because the “war on poverty” strategy is to SUBSIDIZE IT. This is based on the false idea that poverty is lack of money (a bad idea) or worse, a lack of other people’s money (an even worse idea). Poverty is actually not knowing how to (or not caring to) create and keep one’s own wealth.
Global poverty is in decline because of free-ISH markets.