Selling Labor For $0 Dollars An Hour

Reply to: Living wage — coming to a city near you

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The real problem is that people can give their labor away for free. For example… how much of your labor went into this story of yours? Maybe five hours? Yet, here you are giving five hours of your life away for free. You’re not selling your labor for $15 dollars/hour… or $10 dollars/hour… or even $5 dollars an hour. You’re selling your labor for $0 dollars an hour. 

It’s illogical to argue that you should have the freedom to sell your labor for $0 dollars/hour… but that you shouldn’t have the freedom to sell your labor for any amount between $0.01 cents/hour and whatever the minimum wage is.

If we made it illegal for you to sell your labor for $0 dollars an hour… then people would better understand the true value of labor. And nobody would be able to exploit you. Like, if your friend wanted you to help her move… then she would have to pay you at least the minimum wage. 

Of course this would do away with unpaid internships. And volunteering. If a non-profit wanted you to help the homeless… then they would have to pay you at least the minimum wage. 

Is Medium a for-profit or non-profit? In any case, once it’s illegal for you to sell your labor for $0 dollars an hour… then Medium would have to pay you the minimum wage for your labor. 

Well… what if you wanted to pull the weeds in your garden? If you shouldn’t have the freedom to sell your labor to others for $0 dollars/hour… then why should you have the freedom to sell your labor to yourself for $0 dollars/hour? You really shouldn’t be an exception to the rule. Exploiting yourself is just as bad as exploiting others. Therefore, if there was any work around the house that needed doing… then you’d have to pay somebody else at least the minimum wage to do it. 

How much time have I spent writing this reply? Eh… close enough to an hour. We should keep track of all the hours that Medium has exploited us. Then, when it becomes illegal to sell/buy labor for $0 dollars/hour, we can sue Medium for back pay. 

Minimum Wages vs Minimum Employees

Reply to: On Raising the Minimum Wage

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If it would be beneficial to increase the minimum wage… then why not also decrease the price of movie tickets, popcorn and sodas? 

If it would be beneficial to increase the minimum wage… then why not also force employers to hire more workers? 

If preventing the exportation of jobs is beneficial… then why not also prevent the exportation of food? 

If preventing the exportation of jobs is beneficial… then why not also prevent the importation of workers? 

If preventing the importation of workers is beneficial… then why not also prevent people from having more than one child? 

If preventing the importation of workers is beneficial… then why not also export the least productive American workers? 

If preventing workers from accepting less than minimum wage is beneficial… then why not also prevent workers from giving their labor away for free? Isn’t “free” less than the minimum wage? Right now we’re giving our labor to Medium for $0.00 dollars an hour. Why not force Medium to pay Americans the minimum wage for their labor? 

See also… Workers: Beggars or Choosers

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Anybody watched Madam Secretary on Netflix?  In the episode "Whisper Of The Ax"... Stevie, the 20 year old daughter of the Secretary of State, decides that she'd like to volunteer full time for a good cause... microloans.  The program is desperately understaffed and the only paid employee, Arthur, is very happy to have Stevie help out.  At the end of her first day volunteering, Stevie and Arthur exchange some information...

Arthur: You're still here.

Stevie: Yes.  Why wouldn't I be? 

Arthur: Oh, my God! You think this is a paid internship.

Stevie: No, I don't.

Arthur: Because it so isn't.

Stevie: Yeah, I figured 

Arthur: Okay, good.  On the upside, that means your mother's budget cuts won't affect the position.

Stevie: You know who my mother is? 

Arthur: I do.  And I don't care.  Unlike literally everybody else I've hired, you want to be here.  That works in your favor.

Stevie: Great.

Arthur: Here's some paperwork you'll need to take to your school's career services office.

Stevie: Oh, um, I'm actually not in school, so 

Arthur: Oh, the, uh, internship's only available for college credit.

Stevie: Like you said.  I'm really happy to be here.  I mean, I really like feeling useful 

Arthur: No, we have to do it in conjunction with a university course.  Otherwise asking people to work for no compensation is what the government likes to call slavery.

Stevie: Well can I, can I sign a waiver or something? 

Arthur: No, it's nonnegotiable.  It's part of the program's charter.  I'm sorry.

Benefit is in the eye of the beholder.  If it wasn't, then there wouldn't be any problem with the government determining whether personal relationships are adequately beneficial.  

Demand Disparities Reflect Information Disparities

Reply to: Toning it Down: Guitar Amps are not like Markets

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I got the same exact “fatal conceit” vibe from Brennan’s comparison of markets and guitar amps. 

However, you concluded by saying “don’t touch that dial” but a few sentences earlier you pointed out that, “Turning those knobs up to 11 won’t change the fact that a D chord is still a D chord.”

You kind of undermine your conclusion. If touching the dial doesn’t change the information that’s transmitted… then what’s the harm in touching the dial? 

The problem with the fatal conceit is that it does change the information that’s transmitted. This is a problem because the new information is less accurate. Less accurate information results in less valuable behavior.

For example… a minimum wage changes the information that’s transmitted. It communicates that the given geographical region needs more unskilled labor than it truly does. People adjust their behavior according to this false information and society is worse off as a result. We end up with too many unskilled workers in that area. Society is harmed by the inefficient allocation of labor. 

It’s a fatal conceit for planners to override the information that’s supplied by millions and millions of people.

You get a lot closer to this concept than Brennan does. He argues that markets should be expanded… which I agree with… but it’s extremely unfortunate that he doesn’t come close to illuminating the value of accurate information. 

Here’s a comment on Brennan’s most recent entry… Markets in Adoption Rights

In other words, it seems to me that everything that those that object to markets in adoption are screaming about is this: that market transactions means no interference from the government and that price, supply and demand is allowed to play out. This should mean that the pedophile with lots of money and the parent really in need of money have to be allowed to come to a deal for the latter to sell the kid to the former. — King Goat

If supply and demand are allowed to play out… and the pedophile purchased the child… then the assumption is that there was inadequate demand for preventing the purchase. Let’s take a look at this assumption from a different angle…

Imagine that there’s an auction for an extremely endangered animal. There are only two bidders. One is an extremely rich guy who wants to buy the animal so that he can eat it. The other is the moderately wealthy owner of a zoo who wants to buy the animal so that he can try and save the species. Given the disparity in wealth between the two bidders, chances are good that the animal is going to be eaten. The conclusion is that there shouldn’t be a market for endangered animals.

However, the only reason that we don’t have legal markets for extremely endangered animals is because enough people don’t want extremely endangered animals to go extinct. 

With this in mind, let’s revise the auction scenario. There are still only the two same bidders… but everybody in the world could use their own money to bolster whichever bid they preferred. If you don’t want the animal to be eaten… then you could reach into your own wallet… pull out $5 dollars… and increase the zoo owner’s bid by $5 dollars. 

How much money would the crowd allocate to each bid? What is the demand for the animal being saved? What is the demand for the animal being eaten? 

Personally, I benefit a lot more from the continued existence of California condors than I would from some extremely rich guy eating a California condor for Thanksgiving. So I would be a lot more inclined to bolster the zoo owner’s bid. How many other people are in the same boat? 

The extremely important, but conceptually difficult, part here is that the rich guy eating the condor is a private good while the zoo owner saving the condor is a public good. With the private good… even if I did enjoy eating condors, I couldn’t benefit from the rich guy’s Thanksgiving meal… so there wouldn’t be any incentive to bolster his bid. But with the public good… even though I do enjoy the continued existence of the condor… I can enjoy this benefit even if I don’t chip in to increase the zoo owner’s bid. And if I can benefit from condor conservation without paying for condor conservation… then it wouldn’t make sense to pay for condor conservation. The problem is… if too many people come to the same conclusion… then the zoo owner’s bid wouldn’t be adequately bolstered by the crowd… and the condor would be consumed rather than conserved. This is the free-rider problem.

Getting back to the pedophile scenario… here are two possibilities…

1. The crowd doesn’t care whether the child is purchased by a very wealthy pedophile or purchased by a moderately wealthy non-pedophile. 
2. The crowd does care whether the child is purchased by a very wealthy pedophile or purchased by a moderately wealthy non-pedophile… but, because of the free-rider problem, the very wealthy pedophile would still outbid the moderately wealthy non-pedophile.

Clearly the crowd does care… so it’s most definitely not the first possibility. 

King Goat thinks that the problem is with supply and demand playing out… but the real problem is that the free-rider problem prevents supply and demand from playing out.

With the current system… the government forces us to contribute to public goods (taxation) and then gives us the opportunity to vote for representatives who decide how to divide the very large pool of money between children, conservation and numerous other public goods.

Our current system also prevents supply and demand from playing out. 

If we truly want supply and demand to play out… then taxpayers should be free to choose where their taxes go (pragmatarianism). Taxpayers would have the freedom to decide whether placing children in the best homes is more important than placing endangered animals in the best homes. 

If you decide that conservation is more important… then you’ll also have the freedom to decide which zoo is doing the best job of conserving endangered animals. You’ll allocate your taxes accordingly. Taxpayer choice will provide zoos with the maximum possible incentive to do the best job possible conserving endangering animals. 

If you decide that children are more important… then you’ll also be able to reward the best public services for children and boycott the worst public services for children. Taxpayer choice will provide children’s services with the maximum possible incentive to do the best job possible of protecting children. 

Creating a market in the public sector wouldn’t just provide proper incentives… it would also provide accurate information. We would know the true demand for public goods. Will we always agree with the true demand for public goods? Of course not. But this disagreement will reflect information disparities. 

If the crowd demands a lot more defense than you do…. then what, exactly, does the crowd know that you do not? And what, exactly, do you know that the crowd does not? Maybe you don’t know that the crowd knows that Godzilla is heading for America. Maybe the crowd doesn’t know that you know that it’s only a prank that would make Orson Welles proud. 

Correctly prioritizing the elimination of information disparities depends on knowing the real demand disparities.  

Consumers Are The Conductors Of Commerce

Reply to: Welfare recipients aren’t taking all your money. Business owners and investors are.

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If Bob, the greedy owner of a bakery, pays the least amount possible to his employees… then it stands to reason that he strives to pay the least amount possible for flour, bowls, ovens and all the other “inputs” he needs to operate his business. Do you know how many different inputs Bob needs to run a bakery? I sure don’t. 

The thing is… flour, bowls, ovens and nearly all the other inputs that Bob needs are produced by other business owners. Yet, despite the fact that Bob endeavors to pay these other business owners the least amount possible, they also manage to rake in the profits. 

So what is it, exactly, that makes Bob’s employees so exceptional? Why do they, unlike everybody else that Bob pays, fail to rake in the profits?

If we dug a little deeper then we’d discover that the businesses who supply Bob’s inputs aren’t equally profitable. So the real question is… why is there a disparity in profitability? 

Let’s take flour for example. The more businesses that supply flour… the higher the competition… and the lower the profits. 

The point of profits is to tell people what to do…

Low flour profits = “Hey people, don’t start a business that supplies flour”
High flour profits = “Hey people, please start a business that supplies flour”

If Bob is paying really high prices for flour… then he’s basically trying to incentivize more people to supply flour. 

But if Bob is able to pay a lot of money for flour… then perhaps it’s because people are paying him a lot of money for his baked goods. 

Consumers are the conductors of commerce. Like the conductor of an orchestra… consumers wave their money around and producers supply the most beautiful music. 

Not everybody is equally good at following the conductor. Yet, here you are arguing that the music will sound even more beautiful if the people who fail to follow the conductor are paid more. 

People who ignore the directions of consumers should be paid more? People who ignore profits should be paid more? 

We need minimum wages because… increasing the supply of unskilled workers is always good for the economy? Just like increasing the supply of flour is always good for the economy? Just like increasing the supply of flutes is always good for the symphony? 

Poverty exists because people, such as yourself, don’t understand the point of market signals. Whose fault is it that you don’t understand the point of market signals? 

Surely it can’t be your fault. It’s got to be my fault. 

Maybe a military metaphor would help? Profits say, “follow me!” and producers reply, “lead the way!”

When I was stationed in Panama I spent a lot of time in the jungle with a compass and a map. Land navigation works better when the compass and map are accurate. 

I kinda stole the compass comparison…

The management of a socialist community would be in a position like that of a ship captain who had to cross the ocean with the stars shrouded by a fog and without the aid of a compass or other equipment of nautical orientation. — Ludwig von Mises, Omnipotent Government

When I wasn’t in the jungle, I ran a race across the Bridge of Americas, participated in a few sprint distance triathlons and rode a bike from the Pacific coast to the Atlantic coast. I also had sex. A lot of sex. Even with some white chicks in the Air Force. 

Here’s an excerpt from your most popular blog entry…

Sex isn’t something you do to someone else. It’s something you do together; it’s a dance. Good tango dancing requires the dancing partners to read each other, communicate with each other and play off each other.

Nowadays, “intercourse” is synonymous with “sexual intercourse”. Back-in-the-day, if I had said, “the economy is intercourse with everybody”, then nobody would have jumped to the conclusion that the economy is a massive orgy. 

One of the main characters in the show Heroes is a mind reader. Spoiler alert: he’s really good at sex. 

In real life nobody is a mind reader. Nobody is omniscient. Hence the value of communication. Hence the value of accurate communication. Hence the value of accurate market signals. Hence the problem with inaccurate market signals…

The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price. — Mark J. Perry, Why Socialism Failed

Ever had a threesome? Do you think adding another person to the mix makes accurate communication less or equally or more important? 

Even though I really like that song by Stereo Total… I’ve never even spent a single penny on it. 

The free-rider problem is a problem because again, nobody’s a mind reader. How can Stereo Total know whether they should continue, or discontinue, their behavior if I don’t accurately communicate to them how much benefit I derive from their behavior? 

It behooves us to positively reinforce beneficial behavior. And benefit is entirely in the eye of the beholder. 

Right now you’re giving your labor away. Clearly you’re under the impression that people should have the freedom to sell their labor for $0.00 dollars an hour. But you’re also under the impression that people shouldn’t have the freedom to sell their labor for any amount between $0.01/hour and $7.25/hour.

J. S. Mill was one of the best libertarians ever. But he was under the impression that people shouldn’t have the freedom to sell themselves into slavery. I wonder if he was also under the impression that people shouldn’t have the freedom to commit suicide. 

I think it’s very possible to regret selling yourself into slavery. But in theory it shouldn’t be possible to regret committing suicide. Well… unless you go to Hell. 

You and I were both free to enter into the military and, after we completed our contract, we were free to exit from the military. More specifically… you were free to enter into and exit from the Chair Force and I was free to enter into and exit from the Army Infantry. 

The military isn’t for everybody just like the infantry isn’t for everybody. And society works a lot better when people are free to decide for themselves what is, and isn’t, for them. 

Personally, I have a pretty high tolerance for relatively miserable conditions. From the soaking wet jungles of Panama to the frozen slopes of the Andes to the scorched deserts of Afghanistan… I didn’t just survive… I thrived.

Who are you, or anybody else, to prevent me from deciding for myself which conditions/compensations are, or are not, optimal for me at any given point in time? 

You don’t know me like I don’t know you. Nobody can ever know me as well as I know myself. So why are you so willing to impose your own personal standards on me and everybody else? Is it simply because you don’t appreciate the point of accurate market signals? Or does it stem in some part from a failure to adequately appreciate the immense diversity of preferences and circumstances? 

Right now I’m not earning more. I could be earning more… but I’m not. I’m choosing to partially ignore the conductor in order to dance more to the beat of my own drum. Clearly I think sacrificing some comfort is worth taking more of this tricky, terrific and terrifying trip to discover and eliminate the bottleneck in progress. 

See also: Worker/Employer Ratio

A Surplus Of One-Armed Workers

Comment on: A minimum wage fable

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Homestar Runner kinda ruined this fable for me because the first thing that came to my mind was that a one-armed worker would have the heart of a champion.

Unlike scottd... I have absolutely no problem with fables.  I'm all about making economic concepts infinitely more accessible.  But I'm not quite sure if your fable really illuminates the problem.

When kids are in school they have to decide whether they want one or two arms.  It requires a lot more effort to acquire two arms.   The question is... is it worth the effort?  A minimum wage makes it less worth the effort to acquire two arms.

The same is true of adults with only one arm.  Why bother making the effort to acquire a second arm if having only one arm can provide an adequately comfortable existence?

And then there are the one-armed workers in Mexico.  Is it worth it for them to risk their lives crossing the border?  The higher wages that one-armed workers are paid in America gives the impression that the US is suffering from a shortage of one-armed workers.  But if the US was truly suffering from a shortage of one-armed workers... then why would it be necessary to mandate higher wages?

As anybody who has complained about price-gouging should know... shortages mean higher prices... not lower prices.   If we were truly suffering from a shortage of one-armed workers... then people would be clamoring for there to be a ceiling on wages paid to one-armed workers.

When labor advocates argue for higher minimum wages for one-armed workers they are arguing that the natural wages would be way too low.  But by arguing that natural wages would be way too low... the labor advocates are inadvertently acknowledging that the US actually has too many one-armed workers.  But the only reason that the US is suffering from a surplus of one-armed workers is because government intervention has prevented the natural wage from doing its fundamentally important job of accurately and clearly communicating that the US already has more than enough one-armed workers.

If we eliminated minimum wages... then the low natural wages would have two logical consequences...

1. Kids would have more incentive to acquire two arms.  Adults with one arm would also have more incentive to acquire a second arm.  One-armed workers would also have more incentive to go to other countries.  One-armed workers in other countries would have less incentive to come to the US.

2. Existing business owners would have more incentive to hire one-armed workers.  The higher profits that the business owners earned would provide entrepreneurs with more incentive to start businesses that employed one-armed workers.

The supply and demand responses to the decrease in the wages paid to one-armed workers would quickly solve the problem of America's surplus of one-armed workers.

What really needs to be illuminated is how market prices help ensure, via incentives, that surpluses and shortages are only temporary in nature.  If liberals understood the point of prices and incentives then they would understand the problem with arbitrarily changing them.  They would understand that their good-intentioned interventions invariably have very negative consequences.

Personally, in order to help make the point of market signals more accessible... I've tried using the bat signal (value signals), Garbage In, Garbage Out (GIGO) and accurate vs inaccurate treasure maps.

Ideally there should be a short and entertaining animated video on market signals that even kids could easily understand.  As far as I know such a video doesn't already exist!  Talk about market failure!  

Ideally there would be some organization dedicated to things like say, for example... expanding liberty, increasing individual opportunity and strengthening free enterprise.  Creating a short animated video dedicated to illustrating the point of market signals would be right up the alley of this purely hypothetical institution!

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I couldn't help but wonder what the story line might be for a short animated video about market signals.  The bat signal would probably be entertaining... but I'm guessing that it's proprietary.

What about the treasure map idea?  A kid finds a treasure map... and then... what?  And then some sneaky creature somehow alters the treasure map?

For some reason the Noid came to mind.  Do you remember the Noid?





When I googled for the Noid I discovered what happened to him... How Domino's Pizza Lost Its Mascot.  It's a darkly humorous story.

The Noid as an example doesn't exactly work for the animated video because he's intentionally malicious.  Liberals aren't intentionally malicious.  They simply fail to understand the problem with arbitrarily changing market signals.

But I do enjoy the thought of the video having some good-intentioned creature called the "Krug".  Any resemblance to any real person... or Nobel economist... would be entirely coincidental!  heh

Why would the Krug change the location of the treasure on the map?  Maybe because the "X" on the map is too far away?   Krug is a little vague on how treasure maps work.  So he somehow moves the "X" on the map somewhere closer to where the kid lives.  The kid somehow doesn't realize that the "X" on the map has been moved and wastes an entire day digging holes in the wrong location.

Anyways... there's room for improvement... to say the least.

See also:  Workers: Beggars or Choosers?