Why do MBAs get so well paid even though all evidence points that they do not deserve it? My half-cooked theory is that they are the natural result of the crypto-feudalism of our system.
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I just read this interesting piece on how the MBA degree is not only useless but practically fostered the mindframe that drove the Wall Street meltdown. There are some interesting points within and some of the quotes are just hilarious but I feel that the author does not go far enough.
While the problems of the mindframe that your can “train a leader” are obvious not only after a short explanation but also through viewing the dismal failure most managers are, a failure which in turn has not relation to their subsequent payment and bonuses, the reasons of why this paradigm came to be is not explored.
And what would you know, I have a theory on that.
You see, we have a society which rewards those who can accumulate wealth better with more wealth. We also have the concept that this wealth can and should be passed to one’s progeny so as not to be squandered. We also know that wealth = power and power can be used to prevent others from challenging one’s own wealth/power.
As wealth accumulated to fewer and fewer hands, those at the top, through inheritage ended up creating dynasties, and the mentality of those who are born within a dynasty is that they deserve to be there. That they deserve these privileges that their ancestors have granted them (AKA Spoiled rich brats). When you add to that the common feeling of people who have “made it”, who do not want to see their progeny having to walk the same path but rather continue where they left them, you get the mentality of nobility: By right of heritage, one deserves their social position.
Sure one could train his children as experts on something but that would mean that they may start low and actually have to take orders from someone else. There also the alternative that the progeny simply lives of the considerable wealth the parents have created but this would lead to a progressive reduction of wealth, especially since a jbless hedonistic child is bound to spend increasingly more and more. No, the wealth a position had to be transferred somehow.
In the past, the founder of a very succesful company could easily tranfer his wealth to his children (or at least some of them) which wasn’t much different from a lord tranferring his feud to his sons. However as privately owned companies were outcompeted from public ones, this path became progressively harder to take as the shareholders don’t necessarily have to be the same as the managers.
So another way had to be found to ensure that the progeny of the movers and shakers of any society would in turn become the movers and shakers of the future. And just in time, the managerial courses came about. I have noted that the rise to prominense of such courses correlates very nicely with the increased incorporation of American business. The less the posibility one has to transfer the accumulated wealth, the more necessary to have a way to jump start one’s career.
And slowly but surely, the managerial class was created. A class which incidentally has a very high entrance cost (as you need to have both the money and the status to be accepted in institutions such as Harvard) which practically means that only those already in the upper levels of society can enter. And as progressively the higher paying positions of companies necessitated one being part of the managerial class, the cumulative dificulty in getting in, became even larger.
So now you’ve basically got a system where if you’re rich and powerful you get to become even more rich and powerful by right of heritage, while the chances of one of the unwashed masses “making it” are as high as the chance a mercenary or a merchant had to become a “sir” or a lord in an Aristocracy.
Like the nobility, the managerial class is not taught how to be productive or ethical like the rest of us, they are tought how to be decisive and arrogant. Like the nobility, the managerial class does not need to suffer the bad results of their actions (golden parachutes and the like) unless they happen to step on the toes of another of the ruling class while they’re at it.
It is funny because this is the culmination of all the bourgeoisie has been striving to achieve ever since the liberal revolutions of the past few centuries. To take the place the aristocracy had in their zenith. They have obviously achieved it, but like the aristocracy before them, they have nowhere to progress, but down.
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Your view that management is not work is very wrong – the history of our very country and the innovations of which we take use of each and every day would not be possible under your system. Effective management techniques are required to say run a hospital or a state, regardless of how worthless today's MBA education truly is. You act as if this is something that even managers don't understand.
I firmly believe the "failure" you see in the market is routed in corruption, self obsession, and a lack of morals (not religion). This problem occurred not only with the public at large who believe they don't have to be held accountable for their mistakes, but also the CEO who gave short shrift to their company's long term viability while enriching themselves. http://totalconfusion.com/blog/2009/05/supporting…
Simply untrue. There's no part of the management that the bosses do that workers can't do themselves and better. This is empirically proven mind you.
lol – I know this was a long time ago, but innovations in management helped more people be more productive that workers by themselves ever could. Just like a football team needs a good coach, a good leader will make their team more productive than a bad leader.
& You have absolutely no empirical evidence of your assertion of you would've given it.
Co-Operatives for one
Also check the pilot experiments of GE in worker's self-management. Such other examples are many and all empirical research confirms it.
I don't see the empirical evidence you claim, but the beauty of a free-market is you can self manage right now. Just start a business that sells your services and abilities to clients that want them – and viola – instant self-management.
As for their idea specifically, even though I didn't see evidence, they have been talking about this for years. That is the principle of decentralization of decision making to the lowest point possible. Theoretically, if this trend can continue forward, then companies will become much smaller, where by GE might still pay 100K workers, but through sub-contractors.
So instead of say owning a call-center, they farm it out to someone who owns it. So their 50 employees or whatever, becomes one sub-contractor with employees. The intuition used seems correct, which is owners have more motivation to succeed and therefore customer service, expertise, and the rest should increase more rapidly.
I agree with this in its basic form – that is decentralization of decision making to the lowest possible level. Companies which see their employees as true assets, will allow them to "own" most of their job and reward based on performance and not unrelated items such as friendship or political connections.
It seems however, we're not moving in that direction. While there are very good, smaller companies, who operate like this and are very successful for doing so, larger, older companies can't seem to shake the express top-down management style which stifles innovations and growth. I think there is a fear to change from top-down to decentralization simply because it's a change in what they are used to and the chaotic nature or allowing employees true decision making power scares them. It's looks odd and feels odd.
The funny part is that the free market is the macro version of this. Individual consumers working with individual sellers using millions and millions of daily transactions. This chaotic process with millions of independent interactions daily, allows a basic consensus to arise as to what items should cost or not cost. It creates enormous efficiency because everyone votes with their money.
So if companies would reduce their bureaucracy and allow more employee decision making, this same chaotic process will let the best ideas float up. One business unit can see another business unit doing something that is working well and follow. It allows for individual pockets of expertise to grow through experimentation.
Of course even companies that push this thinking, GE and others, it's still not easy to maintain because the managers who need to help usher in this process are humans and some of them are scared as well.
& yes, to get employees to go from "do what you're told" to "speak up always, push ideas, own your job" is a change management process. Because not only are managers worried about the consequences, some employees worry about it as well. Not because they're against having more control, but because for some it's very different that what they're used to. Due to this, appropriate development of a team is necessary to ensure open communication channels.
I wrote about this a while back: http://totalconfusion.com/blog/business/trends/
One last point – for anarchy. I get the ideas behind it and I'm not completely against it as a philosophy, however I don't think it's sustainable. It seems like government is the natural consequence of human interaction.
Once a society gets to a size where it can't easily self govern through normal societal pressures that would be used even in anarchistic communities, allowing an institution to help with crime, contract law, and the things needed for a free market and free exchange of ideas to work will naturally grow.
It seems it will naturally grow from freedom to tyranny and start this process over, but humans are habitual and sometimes it takes massive failures to understand the steps that pushed them to tyranny and away from freedom.
Either way – it seems to me, a large enough society will naturally gravitate towards some type of common institutions to help promote society for innovations, food production, service delivery, etc, etc – the things people will do… IE – a government.
You're claiming we have a free market right now then? That would be quite different than what is actually the case.
And again, no, you can't start your own business right now. The state puts too many costs upfront to do this without being rich already and the oligopoly of capital puts enough barriers to entry to make such endeavor even more difficult. As such it maintains that only the rich or the lucky will be able to be self-managed. Certainly this is not a possibility for eveyrone.
Sorry, that's simply untrue.
First – I agree, we don't have a "free" market, if we're assuming free means completely open. & I do agree there are too many regulations pushed by the government that increases barriers to entry and therefore decreases individuals ability to enter any one given market.
Having said that – if you have a skil? Say carpentry? Or project management? Right this very second – with very, very little upfront costs – you can start marketing door to door (or business to business) to sell your services to those who need them.
You do NOT have to work for anyone buy yourself if you don't wish to.
This is what is simply untrue. The upfront costs are very high. Both because of the regulations that the govt will make you pay for, and because of the barriers to entry that one will have from the oligopoly of capital (ie increased costs on raw materials etc). Not to mention that to start with a "door-2-door" sale, one needs savings, similar to how one would open his own company, savings that most wage-slaves can't afford, especially if the minimum wage is repealed.
No there are no upfront costs in terms of regulation to sell your services for literally thousands upon thousands of jobs. Project management, professional assistant, deliveries, moving services, shipping, building things and selling them, shelves, installing carpet, a friend of mine cleans bars afterhours, makes a lot of money, very little investment ….
As for needing money, door-to-door on the weekends, your time off, afternoons… anyone can make it work that wishes to (& for the record, I have, but do not now own a small business – I presently work for the man)
yes there are. I don't know where you live and how it is over there, but where I'm from and where I live now, you can't start a business, any business wihout paying for licenses to the government, unless you want to be illegal. And again, once more, there are the barriers to entry from the oligopoly of capital.
I want to start this one – that it might be better to keep this in email. You seem a decent guy, hopefully I seem the same :), but our 8 threads are getting confusing…
However I will grant you that depending upon where you live, there can be extensive barriers to entry. This is because the government was allowed to influence business in the first place. As soon as they moved in, business interests spent more money than individuals grouped, so legislation was passed to protect them.
This isn't an indictment of a free-market, because it's not a free market when artificial barriers to entry are introduced.
I still submit that there are likely businesses you could start pretty easily. True, a lot of work up front, most of it selling (which I'm not that good at) & marketing… but you can, I can – I chose not to.
Actually you're wrong. The state was required before businesses could become powerful. It wasn't as if we first had a free market and then the govt was created. The govt was instrumental in moving towards capitalism with their tariffs, enclosures, land grabbing etc. As such it is in fact an indictment of the free market because it can't exist without a govt. The "free market" concept is in fact a theoretical and unrealistic concept.
As such, the govt barriers to entry is a natural extension of the feudalist nature of capitalism which simply aims to keep control within the same powers, much like the nobility of old. Thus the nature of MBAs as I say above.
Humans organize naturally, but a top-down hierarchical organization is not the natural consequence.
Nope, it does not have to be a hierarchical government. It can just as well be a horizontal spread of power through worker-managed co-operatives, collectives, syndicates, communes and the like, all federated together democratically to achieve nevessary organization. None of this requires a government.
Please name the historical example you have of a society starting with this idea and keeping it.
Spanish Revolution
Really? So all these things can bring down the markets? Aren't they supposed to be self-correcting and be able to turn the rational self-interest of people to a benefit for all? At least that's the idea I've heard…
If this is indeed the case, if the markets are subject to corruption, self-obsession and all that jazz, I don't see why we're not better off getting rid of them and applying a system that activery discourages all these traits in the first place.
Trying to discourage humans basic instincts to do better, learn more, innovate for the future, etc, etc, etc will fail as it has every time it's been tried before.
& in case you didn't see it – it did self-correct. Enron went out of business, their leaders to jail. The same thing would've happened to a lot of other companies if the all knowing government hadn't stepped in and gave failed businesses my (and yours) tax dollars.
Such human basic instincts are not tied to the Markets. As such taking them away won't stop human need to do better, learn more and innovate for the future.
yeah, only this wasn't the act of the markets you know. It was the act of the government. In fact the markets benefited the acts of Enron. And no, the same thing obviously does not happen to other companies, very much because they control the government.
I completely agree with you here. I don't know about specific Enron & governmental connections though it wouldn't surprise me.
Anyway – right now, the health care bill flowing through congress is being written by lobbyists paid by large employers, insurance companies, drug companies, and hospitals.
People seem to think this bill will help them. I have news for them, the lobbyists writing the bill aren't interested in protecting consumers, they are interested in protecting their assets.
Even when Obama & admin pushed to regulate nicotine through the FDA. The tobacco industry pushed that as well. Once the FDA starts making changes, regulating the production, regulating advertising, etc, etc, etc – it increase the barriers of entry to the point that the current large tobacco producers will in effect become a combined monopoly. Additionally, with the idea that nicotine can be regulated, they pretty much dropped the make illegal option. Thought I never thought that would happen, even though it's obviously what some people want.
You haven't answered my criticism though in the fact that the markets are not self-regulating.
They are self-regulating – Enron going bankrupt, MCI going bankrupt – that's self correcting.
GM going bankrupt would've been self-correcting without government involvement.
To the extent the market isn't self correcting, the government is the reason.
Nice double standard. If a company goes under, it's because of the market (even if govt intervention was needed). If it doesn't, it's because of the govt (even if the govt doesn't intervene, it's existence is enough one assumes). You have in fact assumed what you're trying to prove (that the market is self-correcting) and thus simply look for confirmation.Needless to say that you are begging the question.
Double standard? How. The market causes failures for bad companies and rightfully so. Crappy companies should not stay in business.
The only way this natural freedom is screwed up is through government intervention.
Two separate thoughts – no double standard.
You assume what you're trying to prove! That the markers are self-regulating. This is begging the question as I said.
Sorry to split this into two posts, but I have to add that what you are seeing is actually not a failure of the market, but a feature. People should lose their businesses when they fail to live up to their obligations. IE – you need both the carrot and the stick for human improvement as this is more in line with reality. It's just that when you are truly free, sometimes you have to give yourself the stick – it's not other people's responsibility.
Yes, unfortunately it's not those at blame that suffer the pain. There's a whole lot of people who were being rational, saving, altruistic, careful, and they got burned like everyone else. In a systematic crisis of the system, as is regular with capitalism, everyone gets to suffer, but unsurprisingly, it's those most wealthy, most greedy and most corrupt that will suffer the least.
But I agree that this is not a failure of the market system and rather a feature. It's exactly because of this that we need to discard a system with such harmful features with something which does not have them.
lol – people who saved are not hurting. The whole point of saving is to have money during a crisis. Not only were our business leaders over leveraged, but most citizens are as well. So when the system had to reset, normal citizens got hurt because they were not prepared to weather the storm. Just as businesses got hurt by being unprepared.
& if you want to ditch the system that uses both the carrot and the stick, you will end up with nothing. Without appropriate motivations and incentives, humans won't do what you think they will. There will never be a magical world where everyone lives in peace and harmony and no one cares if he has less than his neighbor, because he's just happy to be working towards the common goals of the collective.
It would be nice, but humans don't operate that way and believing you can devise a system that would get humans to forgo their very nature is very arrogant. It's also presumptive of you to think you can force your system on others.
Remember, in a free system, you are free to checkout anytime you'd like. Start growing your own food, keeping some chickens… in just a few short years you can probably barter for clothing and the rest of your necessities and be mainly self-sufficient.
If you chose not to do that and take the risk associated with being a larger part of society, then you have done so willingly as with a free market system you truly are free.
Anything you want to do to get rid of that freedom is just one step closer to slavery.
Man, what drivel. Have you even seen what is happening in the US? Yes people who saved are hurting by having their retirement funds destroyed and/or losing their jobs just like everyone else.
Saving & investment is not the same thing – before you invest a dime, you should have two funds – one with $1000 dollars or so for those incidentals – care repairs, dental bills, what have you.
A second fund, money that would allow you to pay for 3-6 months of your current expenses or current required expenses in case you lose your job.
Putting everything in the stock market and losing it is NOT people saving.
Do you miss the point where people are still losing their jobs without being in any fault of their own? Or does that not count as hurt? Or did these people "fail to live to their obligations" because they didn't live a life of asceticism to survive a capitalist crisis? Fact of the matter is that the capitalist crisis, as always, hurts the poor far more than it hurts the rich.
Just because you can't imagine an alternative doesn't mean it doesn't exist. The Anarchist movement shows and explains exactly that.
Agreed that it might be there and I can't see it, but I think anarchy isn't sustainable.
Just saying what you think is worthless. Other substantiate it or say nothing.
What's presumptive is thinking you know what human nature is. In fact what I propose does not go at all against it and rather is built with "human nature" in mind.
What's presumptive is assuming that my idea is to force anything on others.
True – you didn't say you intended to force things. I missed the part of the blog where you're pushing anarchy. Had I seen that, I would've known better.
As you probably know – generally when you hear your fellow man emphatically state, X shouldn't happen, invariably most people are willing to use legislation to ensure what they think is an unqualified good.
Again though, having said that – you are correct that I assumed.
I'm glad that you're being reasonable on this. I'm way too tired of people assuming I'm an authoritarian.
Remember, in a Capitalist system you have to buy or rent such land, and most people can't afford that. When most people did live like that, Capitalists had to use the state to strangle such alternatives and get ample wage-slaves.
Without property rights – how to propose you would divide resources?
We do know – land is finite, but the wants are infinite. So at some point land will have to rationed. In a true anarchist society, it seems this would end with the guy with the biggest guns and most force owning most of the land. At least this is demonstrated over thousands or years throughout history.
I do agree with you that capitalists use the government to protect their interests, but that's an argument against government intervention in the market – it is not an argument against property rights.
Oh – & most people do afford it in the western world. Most people not in third world countries have access to housing. And by most, I mean a very high super majority. I'd have to look, but I think American has something like 3 million homeless. Some of those people are kids who could go home if they felt like it, but even if there were 30 million homeless, that's still 90% who are not. That belies your idea that "most people can't afford it".
Common ownership. Possessive rights.
Then you are misunderstanding what Anarchy is. It's not the law of the jungle. It's not simply the disbanding of the state. It's the arranging of society to prevent hierarchy and domination from being possible. In fact, in the thousands of years throughout history we were quite far from anarchy (unless you call anything other than Capitalism anarchy which is absurd) and the actual experiments in anarchy (say the Spanish Revolution) prove you wrong.
So sure, some resources are scarce, but not everyone wants to be a farmer, nor would everyone want to cultivate their own land. The idea is to have people do what they wish to do. So if everyone wanted to be a farmer (an unrealistic proposition but lets roll with it) common discussion and agreement could achieve this by allowing everyone time to tend the common land, or by putting effort in inventions that might make this possible.
On the other hand, property rights and markets might ration the land, but my no means is this rationing fair or optimal. It simply means that those with the most wealth get to control it.
If those with power have use of a state to protect their rights, then those with power will make sure that such a state exists. This goes without saying.
Then you are making the error of looking at the developed world in isolation from the third, which is the actual one providing the wealth (cheap labour, raw resources) which allow the developed world to maintain their high standard of living. Ergo, the first world as a group has become the bourgeoisie.
And even there, I can easily challenge your idea that most can afford it. This is very far from the truth when you see that in the US alone, a huge percentage can't even afford their healthcare. And again, back when people could afford it, the state – as a true instrument of the capitalist – stepped in to change this state of affairs (ie poll taxes, tariffs, regulations etc)
One last thing – I know why articles are written about worthless MBAs and that's because of degree mills where by paying enough money to a private school, they will give you very easy classes in order for you to easily pass and get your degree.
MBAs from MIT, Harvard, and other tops schools still receive extremely lucrative positions in the business world or they end up innovating through starting their own businesses.
I mean you can certainly chose believe the students, the people hiring those that graduate, the large salaries, and the proof that lots of MIT & Harvard grads are wealthy through starting their own businesses are all just wrong and you're right. But choosing to believe it will never make it so.
I wonder what corporate entity or boss harmed you? Or harmed someone you know?
Actually, this is false. MBAs from big schools are as worthless as anything else. There is no empirical study showing any net positive from them and quite a few showing the opposite.
There are no empirical studies showing an MBA from a top school is worthless. I'm not even sure what data points you'd have to be able to pull from in order to prove such a statement anyway.
What we can pull from is the market – the market is paying a lot of money to hire these people, therefore they obviously see value in their education. If they didn't, less people would be looking for those graduates and naturally their wages would decline.
So the market has spoken loudly and clearly. They think MBAs from top schools are worth a lot of investment money. & trust me, the one thing the business wants out of any employee is for that employee to produce more value than their pay. Obviously, because without profit for the owners, there's no reason to exist.
I can't be bothered to look it up now but if stumble onto them I'll post a comment for you. But there's also no empirical study proviing that MBAs are useful at all.
You're assuming that we have a free market that would do this.
You're also assuming that a free market would serve this function, where this is unproven. You assume in short, that the world works as you imagine (ie free market principles).
It's free enough – again, I agree it's a hybrid as all systems these days are – but businesses don't have to hire MBAs from Harvard for lots of money. They could try to hire them for much less.
Their competitors of course will pay what's needed to get the skills they want.
It is evidence when the majority of degree holders from prestigious universities receive very high salaries after getting an MBA. There is absolutely no evidence to the contrary.
One thought – there is no evidence to the contrary, because it simply can't exist.
If someone is being paid a lot of money, we both might think that individual is an idiot and wonder what happened to allow them to make such money. But that's based on a much smaller amount of knowledge than their employers would have. & while some idiots will continue making money even if they aren't doing all that well, none will continue to make money if they are losing money for their employers.
Unless of course the government decides that "you're too big to fail"…
And you're wrong. Empirical research can be done on companies who get MBAs to work for them and see how their profits fluxuate compared to previous periods or to other companies without them. You simply assume that this is impossible and then use the unproven assumption of a self-regulating market to claim that MBAs are worth their wage.
Where's the data? You can't possibly tell me that companies have willingly offered data to someone for their MBA hires, where their MBA hires were educated and then what the results can be attributed to those hires.
For instance, right now our sales force isn't doing so well…. imagine that, a recession has lowered people's wish to buy products, including ours. Should I assume if one of them graduated from Harvard it's because he's an idiot and overpaid?
This is what I mean by "no evidence" – the level of granularity needed is much higher than exists anywhere, especially people writing books about anarchy.
The evidence that does exist is the amount of money people are willing to invest to hire them. That is real and substantial.
If you can't understand how difficult it would be to prove the opposite, then we're going to have a basic problem which can't be solved. I can't debate someone who can't admit obvious facts.
Then you have already decided that you can't be proven wrong based on an argument from personal incredulity (a logical fallacy) and you simply use circular reasoning (ie the "free market") as "proof".
The article above is just one of the wealth of data that exists. If you cared to look outside your preconceptions you'd find more of it.
In fact, the high wages of MBAs which do not correspond to their effectiveness should have made you double think the free market paradigm you subscribe to, instead of sticking to your guns and claiming that MBAs or the rest of the market failures don't exist.
I've actually spent quite a bit of time trying to dig up information on the value of education. Not surprisingly, the researchers (overly-educated) aren't generally inclined to question the value of their education.
You're assuming that companies can see if MBAs bring a lot of money. You assume that there are not power games behind (eg a company getting the MBA who is incidentally the son of the CEO's friend from the golf club). You are simply assuming that the market is free enough to prove that MBAs work (but obviously not free enough to make bad corps bankrupt without govt intervention).
This is simply evidence that the those running corporations (ie MBAs) and shareholders (who have very little knowledge or control over a company) wish to get other MBAs along for the ride, as I said above, forming a de-facto nobility. The article I've linked to in the start provides ample evidence to the contrary.
You have obviously not understood what my point is which made you incidentally to support it.
I wonder how privileged life or how much neo-classical/austrian economic brainwashing you had to go through to believe the free market nonsense.
lol – that's me – privileged – I went from high school to the military, didn't graduate college until I was 30, from a small school because my grades and my money wouldn't allow me a great school…
I have studied some Austrian economics though, but as a hobby. You're probably well aware the most colleges don't even discuss that in economics classes and they certainly didn't in the few I took.
My opinion on free markets and appropriate use of government is formed from basic logic, using human nature, game theory, and other techniques to analyze policy recommendations.
Additionally, my moral philosophy at its core, highly value individual freedom. I think one can logically argue that allowing humans an ability to flourish as they will helps all, but morally I think restrictions the government places on starting businesses to protect current interests is a restriction on individual freedom.
Obviously some restrictions are required – murder laws for instance. But with each restriction, we should ask – what is this fixing and is it worth reducing your neighbor's opportunities?
Things like minimum wage laws which prevent you from working for any amount you so chose, licensing laws that restrict entry to better jobs, laws where government contracts always use union workers is a barrier to entry for those with skills who don't know anyone in the union, and so on – these things are wrong. They restrict freedom without much upside.
Well, the upside is there, but it's emotion. "What you want someone to work for $2/hr? You heartless bastard!" "You really want a world where doctors aren't licensed?" etc, etc, etc
You are using unproven theorems to base your positions. Theorems such as that minimum wage reduces employment or that anything that restricts the capitalist is bad.
Your flaw in your theory is this :
You cannot and shout not make an opinion based on human logic and what you assume human nature is. You need empirical studies. Unfortunately empirical studies on actual existing capitalism show time and again that it is harmful, that the markets don't self-regulate, that egalitarianism is a superior result, that competition is harmful etc. Which is in fact why economists and Austrians especially tend to dismiss empirical studies and stick to "laws of logic and human nature" as they've assumed them to fit with their ideologies.
I'm glad that you are big on human freedom, but you should reconsider which system provdes this. It is certainly not the system which gives people only the freedom to chose under whom they will lose their freedom for 8 (or more) hours a day.
You are using unproven theorems to base your positions. Theorems such as that minimum wage reduces employment or that anything that restricts the capitalist is bad.
Your flaw in your theory is this :
You cannot and should not make an opinion based on human logic and what you assume human nature is. You need empirical studies. Unfortunately empirical studies on actual existing capitalism show time and again that it is harmful, that the markets don't self-regulate, that egalitarianism is a superior result, that competition is harmful etc. Which is in fact why economists and Austrians especially tend to dismiss empirical studies and stick to "laws of logic and human nature" as they've assumed them to fit with their ideologies.
I'm glad that you are big on human freedom, but you should reconsider which system provdes this. It is certainly not the system which gives people only the freedom to chose under whom they will lose their freedom for 8 (or more) hours a day.
I'm not assuming "human nature" – it's there for you to see and there are studies done. Group think, the value of incentives (whether given or inherent), etc, etc, etc…
The reason why Austrians stick closely to this idea of human nature is because one can't make economic predictions if their understanding of how human's will react to changes in the economic system are inherently flawed.
Just on human nature (proven recently) thought – tell someone you'll give them 4,000 dollars for a car that worth 1/2 or less than that and more people will bring their cars to you. This will have a few side effects, charities that used to get old cars won't, the poor who used to buy these cars now can't, a car purchase is too big to be "spontaneous" so it likely caused people to buy earlier than assumed, not to cause people to buy who wouldn't have.
All that was predictable if you work from the assumption – based on Game Theory, not Austrian Economics, that humans will move based upon their incentives.
On minimum wage – yes ANYTHING that restricts your freedom to sell your services for the amount of money you wish to sell them is wrong. Whether that be a floor on the price or a ceiling.
Actually studies done prove the contrary of what Mises and neoclassicals assume human nature is. That is, there is no homoe-economicus, people don't act rationally, they prefer co-operation to competition etc.
People will also prefer acting to save the same amount of money when the percentage to the actual cost is higher. People will also prefer not to get a small amount if by doing that, someone else would get a large amount etc. Again, it's the opposite that has been proven.
That "humans will move based on the incentives" tells nothing. That much is obvious but also worthless. The question is how and this how is what the Austrians assumed to build their edifices of pure logic.
A minimum wage does not restrict your freedom to sell your services as you haven't yet reached the level where you offer it yet. It prevents capitalists from offering too little. As you see, the "freedom" of it depends on one's perpective.
Not to mention "is wrong" tells us nothing unless you can explain why it's wrong.
What? If I haven't reached the "level"
I assume you and others get to define that level for me, huh? But it's for my own good right?
That's restricting freedom. You can argue it's necessary for whatever reasons you chose to believe, but to not understand that it is a restriction is disingenuous.
Think slowly and carefully – murder laws restrict people. That's ok, because people shouldn't be able to murder others.
Minimum wages laws restrict people's abilities to sell their services.
Almost all laws restrict certain things – some of those restrictions are good, others not so much. But they are ALL restrictions no matter how much you'd like to think otherwise.
*sigh* there you go again, trying to label me as an authoritarian. And I assumed we'd moved past this nonsense…
It isn't. The position with the lower wage is not there for someone to take it. As such, no freedom is violated except the freedom of the Capitalist to exploit as much as they want.
But you made a good example with Murder. Lets for the sake of argument assume that a minimum wage does restrict this "freedom". With murder you did substantiate why this restriction is good, but with minimum wage you haven't substantiated why it's bad. As I said above and you ignored me: "Not to mention "is wrong" tells us nothing unless you can explain why it's wrong. "
The submit button seems gone… maybe I've replied too much 🙂 and it wants a twitter of FB or some other login… so I'll have to stop here. I have replies for the Spanish revolution and the rest of it, but we'll have to go about this via email – I appreciate your thoughts though, just need a different avenue to keep one thread one thread 🙂
Hm? No there's no such limitation really. Try to reload the page. I'd rather not go through this through email to tell you the truth as I find the threading here easier for discussion. With email we'll choke in quotes and make the whole thing impossible imho.
EDiT: I think I figured it out. There's something wrong with the submit button format. You should still see two white circles below your post. The right one should be "Submit" one. I'll contact the devs