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Old 08-14-2019, 06:14 PM
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Quote:
Originally Posted by Corry El View Post
To state a little differently, free markets are the best way to most efficiently distribute limited resources, with rare exceptions. But society can always, and modern countries always do, decide to sacrifice efficiency to some degree at the margins in favor of subjectively perceived 'fairness'. It's a judgement call how to do that, but one basic point of disagreement would be whether to do it by interfering with the basic functioning of markets, or to just subsidized people who are deemed to suffer unacceptable outcomes in market competition.
If you're talking resources, this is true. If you're talking about money, the answer is a lot more difficult to state unequivocally.

From a fairness standpoint, most people will work 40 hour weeks through the majority of their prime and, probably, most of us would think that amount of labor for society is roughly worth a house, enough money to retire, to raise 2-4 kids, etc. And, I should note, that's not just "fair". If humans were all mostly rational, we would probably expect the free market to do that, because anything less should be inefficient for the market. Workers who spend their lives creating and distributing the things to support the whole population need to be able to continue on from generation to generation, or the engine will stop. But to create and distribute things, you need to be able to get trained up, feel like there's value in spending your life working, and be able to afford creating the next generation.

But, as it is right now, among that same group of people who work 40 hour weeks, in the American system (which is more free than most, but not quite free) only about 2/3rds of those people earn enough money to afford all of that, via their wages. This should be inefficient for the market since, as said, you can't lose 1/3rd of your workforce every generation, because they're not earning a true living wage.

The issue is that the average person is sufficiently bad with money and with planning for the future that they fail to bargain appropriately for a wage sufficient to see them able to retire, put their kids through college, cover their medical expenses, etc. In those cases where they get extra money (a bonus, win the lottery, become a famous actor/sports star, etc.) they tend to just throw it all away and (with sufficient money) drive themselves insane and gain some form of addiction.

If you manipulated wages enough to give people a wage equivalent to their contribution to society, we would expect that most of what you would see is a boost to things like cannabis use, use of casinos, etc. You would be giving people enough money to save to buy a house and retire, one day, but that's not what would actually happen in practice.

In the free market, about 1/3rd of people would go from working to "the pasture" once they're too old to work anymore (assuming that there was no family willing to take them in). They'd burn through the few hundred dollars in their account, take out a few payday loans, and then be out on the street within a few months.

In historic times, this was handled by it being that people expected to live with their children, when they got older. The next generation would route their "casino money" to, instead, supporting their elders. In cases where that wasn't an option, than the retiree was headed to the poor house - usually run partly through the charitable donations of others. Poor houses aren't really a free market solution, though.

The free market works well in the cases where people are objective and rational. Businesses are largely able to do this. The average individual, not so much.

From a policy standpoint, leaving businesses alone pretty well makes sense. They do what they do just fine (with exceptions). It's the worker side of thing where you need to do some fiddling.

Last edited by Sage Rat; 08-14-2019 at 06:16 PM.