# Think Tank > Austrian Economics / Economic Theory >  Length of the working day

## idiom

Hey,

Where do I go for Austrian discussion of the length of the working day? Outside of Marx discussions about it and the forces controlling it are pretty thin on the ground.

Any guidance appreciated.

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## CaptUSA

> Hey,
> 
> Where do I go for Austrian discussion of the length of the working day? Outside of Marx discussions about it and the forces controlling it are pretty thin on the ground.
> 
> Any guidance appreciated.


I think you're in the right subforum.  In Austrian economics, the work day never ends.  If you are exchanging value for value, it doesn't matter whether or not you've punched a clock.

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## idiom

I meant any papers on it or books. So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?

Is it just a continuous race to the bottom?

Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.

Do you try and get 20 hours of work at $5 per hour?

Or consider it in another form:

What is the difference between hiring one person to work for 12 hours, or two people to work for 6 each?

In the first instance the persons minimum bid is spread over 12 hours, in the second each person needs to cover their costs in only six hours.

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## specsaregood

> I think you're in the right subforum.  In Austrian economics, the work day never ends.  If you are exchanging value for value, it doesn't matter whether or not you've punched a clock.


If you are self-employed or the boss, it never ends as well.

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## specsaregood

> I meant any papers on it or books. So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?
> Is it just a continuous race to the bottom?


Race to the bottom?  For Whom?




> Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.
> 
> Do you try and get 20 hours of work at $5 per hour?


If both are guaranteeing to get the exact same job/amount of work done, then it really doesn't matter does it?  I'm just paying a set amount, right?  Although, why should I wait an extra 5 or 15 hours for the same job to complete? That could end up costing me money.




> Or consider it in another form:
> What is the difference between hiring one person to work for 12 hours, or two people to work for 6 each?
> In the first instance the persons minimum bid is spread over 12 hours, in the second each person needs to cover their costs in only six hours.


That is quite the assumption that 2 people can get the same amount of work done by splitting the job in 2.   Not practical in reality from my experience.

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## CaptUSA

> I meant any papers on it or books. So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?
> 
> Is it just a continuous race to the bottom?
> 
> Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.
> 
> Do you try and get 20 hours of work at $5 per hour?
> 
> Or consider it in another form:
> ...


As far as references, I'd probably begin with Henry Hazlitt's _Economics in One Lesson_.  It sounds like you still need to update your basic understanding a little, though.

It's not really a "race to the bottom"...  maybe a race to the top??  You shouldn't be getting paid for how many hours you spend doing something, but how much value you are providing.  

Think of it this way, if I needed my car washed, should I pay the guy who spent 3 hours doing it more than the guy who did it in 10 minutes if the quality was the same?

Meanwhile, the guy who does it in 10 minutes can earn more by washing more cars in the same amount of time.  The first thing you need to realize is that we are not interchangeable cogs.  The quality and time of each person's work is going to differ greatly - and that's a good thing!

In Austrian economics (and the real world, for that matter), the amount of money you make is dependent on the amount of value you provide.  For example, if your employer values your piece of work (in hours, quantity, quality, whatever) at $20 and you value your labor at $10, the difference is $10.  And then it's between you and your employer to decide how you want to split that $10.  To make it easy, let's say you agree upon an 80/20 split in his favor.  You'd get paid $12 (which is an increase of over the $10 you valued your labor at) and your employer would get $8 in value out of it (because he got $20 of value for $12).  In other words, you both become wealthier.

Now you, as the employee, have many ways of increasing your wealth:  
You can change nothing and renegotiate the split.  
You can increase the value to your employer and _then_ renegotiate the split (this is really what you should always be doing).  
You can maintain the value to your employer and lower the value of your own labor (this happens with experience - the more you do a job, the less effort you need to put into it.  If it's easier, then the value you are expending is lower.)
You can find other things about the job that increase its value (flexible schedule, enjoyable coworkers, experience for your resume, etc.  All of these things are values that need to be considered when you determine how much you're making.)

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## CaptUSA

> If you are self-employed or the boss, it never ends as well.


In Austrian economics, we are ALL self-employed.   

We may just exchange our labor with one buyer instead of several.

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## Brian4Liberty

> I meant any papers on it or books. So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?
> 
> Is it just a continuous race to the bottom?
> 
> Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.
> 
> Do you try and get 20 hours of work at $5 per hour?
> 
> Or consider it in another form:
> ...


So many variables and factors at play. It is an interesting question, especially when exploring the completely arbitrary standard of the 8x5 40 hour workweek.

I have my own analysis of the situation, which does not come from dogma or a school of study. The most important single factor, IMHO, is the supply of labor. This informs my opinion on other issues like immigration, much to the chagrin of globalists.

When there is demand for labor, as a whole and on the average, labor can dictate more terms of employment, which includes how many hours a person will work.

I judge that to be the single most important variable, but by no means the only variable.

You seem to want to know the minimum number of hours that can be worked that will cover your living costs. Even that simple question is full of more variables, some of which have been brought up. 

What style of living are you interested in? A minimalist tiny home? A four story luxury home on the beach? Do you want to live a lavish lifestyle that requires constant spending?

What do you provide that is of value? How much can you get for each hour that you work? How productive is an hour of work?

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## idiom

> So many variables and factors at play. It is an interesting question, especially when exploring the completely arbitrary standard of the 8x5 40 hour workweek.


Its not arbitrary. We got there after centuries of labour organisation. It is enforced by the state. Before that 10 and 12 hour days were they maximums.

Without maximums the working day extends to be extremely long. Do Hazlitt, Mises, or Hayek have any discussion of this?

Now Marx thinks that the length of the working day is where profit comes from, right. He is wrong here, but its why socialists fixate on it, and why labour has fought for shorter work days. However his discussion of commodification is interesting in this regard. His costing of a commodity is basically marginal. The cost of something isn't what it cost to make, but the replacement value using the latest technology, so on a cost basis everything you have in stock is constantly depreciating as capitalism moves technology forward. Of note by Marx's commodity rather than surplus value framework employees are forever being _overpaid_.

Now we look at a machine operator, a worker babysitting a machine, so easy a child can do it. Almost no opportunity for a person to differentiate their value. Also assume a market where supply outstrips demand. The value of this job is going to be set by the lowest bid. Lowest bid is going to be the cost of staying alive divided by the number of hours per day worked.

Under these conditions there is strong incentive to work as many hours as physically possible. The work will also go to women or children who are cheaper to keep alive.

Under these conditions I see moral value in a state imposed maximum workday. Note this is my own work, its very different from Marx, just an Austrian look at the conditions he was studying. Surely someone else has tackled this first?

The following are all from historic English government reports:

This is an English free market working children 18 hours per day, being compared unfavourably with American cotton slaves.




> Mr. Broughton Charlton, county magistrate, declared, as chairman of a meeting held at the Assembly Rooms, Nottingham, on the 14th January, 1860, “that there was an amount of privation and suffering among that portion of the population connected with the lace trade, unknown in other parts of the kingdom, indeed, in the civilised world .... Children of nine or ten years are dragged from their squalid beds at two, three, or four o’clock in the morning and compelled to work for a bare subsistence until ten, eleven, or twelve at night, their limbs wearing away, their frames dwindling, their faces whitening, and their humanity absolutely sinking into a stone-like torpor, utterly horrible to contemplate.... We are not surprised that Mr. Mallett, or any other manufacturer, should stand forward and protest against discussion.... The system, as the Rev. Montagu Valpy describes it, is one of unmitigated slavery, socially, physically, morally, and spiritually.... What can be thought of a town which holds a public meeting to petition that the period of labour for men shall be diminished to eighteen hours a day? .... We declaim against the Virginian and Carolinian cotton-planters. Is their black-market, their lash, and their barter of human flesh more detestable than this slow sacrifice of humanity which takes place in order that veils and collars may be fabricated for the benefit of capitalists?





> Fifteen hours of labour for a child 7 years old! J. Murray, 12 years of age, says: “I turn jigger, and run moulds. I come at 6. Sometimes I come at 4. I worked all night last night, till 6 o’clock this morning. I have not been in bed since the night before last. There were eight or nine other boys working last night. All but one have come this morning. I get 3 shillings and sixpence. I do not get any more for working at night. I worked two nights last week.”





> “Last winter six out of nineteen girls were away from ill-health at one time from over-work. I have to bawl at them to keep them awake.” W. Duffy: “I have seen when the children could none of them keep their eyes open for the work; indeed, none of us could.” J. Lightbourne: “Am 13 ... We worked last winter till 9 (evening), and the winter before till 10. I used to cry with sore feet every night last winter.” G. Apsden: “That boy of mine when he was 7 years old I used to carry him on my back to and fro through the snow, and he used to have 16 hours a day ... I have often knelt down to feed him as he stood by the machine, for he could not leave it or stop.” Smith, the managing partner of a Manchester factory: “We (he means his “hands” who work for “us”) work on with no stoppage for meals, so that day’s work of 10½ hours is finished by 4.30 p.m., and all after that is over-time.” [40] (Does this Mr. Smith take no meals himself during 10½ hours?) “We (this same Smith) seldom leave off working before 6 p.m. (he means leave off the consumption of “our” labour-power machines), so that we (iterum Crispinus) are really working over-time the whole year round. For all these, children and adults alike (152 children and young persons and 140 adults), the average work for the last 18 months has been at the very least 7 days, 5 hours, or 78 1/2 hours a week. For the six weeks ending May 2nd this year (1862), the average was higher — 8 days or 84 hours a week.”


Now these days this all still happens, but not in western countries with state imposed maximum workings days and working age laws.

The question is why?

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## CaptUSA

> Without maximums the working day extends to be extremely long. Do Hazlitt, Mises, or Hayek have any discussion of this?


http://www.notbeinggoverned.com/hazl...-work-schemes/

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## dannno

Let's see, half my $#@! isn't being stolen, so I guess I could work half the hours. 

But then, half of the $#@! my customers make isn't being stolen either, so they can afford to buy more from me so maybe 1/4 the hours to have the same standard of living..

Or I could work half the hours and double my standard of living.

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## dannno

> Without maximums the working day extends to be extremely long. Do Hazlitt, Mises, or Hayek have any discussion of this?


Ya, it's called the half my $#@! isn't being stolen axiom.

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## idiom

> http://www.notbeinggoverned.com/hazl...-work-schemes/


Thanks, this is roughly what I was after and has the same conclusions I reached regarding 30 hour weeks, but doesn't address the historical cases of 7 year olds working 16 hour days. Is that simply a desirable market outcome to avoid paying tax?

Also his claims that labour campaigned against 18 hour days in order to decrease unemployment is also untrue, and is straw-manning it.

Unions can create serious economic difficulties, but luddite type action is not what we are addressing here.

What free market mechanisms lead to a world where children aren't working themselves to the bone with menial labour?

Bear in mind that the English state was also hanging 7000 people a year for the crime of begging.

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## dannno

> Thanks, this is roughly what I was after and has the same conclusions I reached regarding 30 hour weeks, but doesn't address the historical cases of 7 year olds working 16 hour days. Is that simply a desirable market outcome to avoid paying tax?
> 
> Also his claims that labour campaigned against 18 hour days in order to decrease unemployment is also untrue, and is straw-manning it.
> 
> Unions can create serious economic difficulties, but luddite type action is not what we are addressing here.
> 
> What free market mechanisms lead to a world where children aren't working themselves to the bone with menial labour?
> 
> Bear in mind that the English state was also hanging 7000 people a year for the crime of begging.


Compared to what? 

Before kids were working in factories, they were working on farms, and often starved. 

They chose working in factories to help their family survive and it was a higher standard of living than working on a farm. Otherwise they would have opted for farming.

The reason kids don't work in factories today is not because there are laws against it, it is because we came up with more efficient machines and tools and so they don't have to work in factories anymore. We can afford to send kids to school longer. 

That isn't the case in some developing countries, where kids still work in factories or on farms.

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## idiom

Found it, in Chapter 19 Hazlitt advocates for unionization to solve the problem

"The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization."

Thanks for the help guys.

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## Brian4Liberty

> ...Also assume a market where supply outstrips demand...


Yes, the root of all evil...

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## idiom

> Yes, the root of all evil...


The really evil $#@!ers are guys like Wakefield apparently, just digging into him. Though that colonies had a hard time because people were not compelled to become pitiful wage slaves, so colonial governments should put in price floors on land so that people have to work for the rich. Marx cites this as proof of his theories.

When people bitch about colonialism, this is the dude they mean, a bloody awful strawman of colonial theory.

Poor old industrialists travelling to the new world with tonnes of machinery but can't find cheap labour. My heart breaks for them.

Marxists genuinely believe capitalists feel entitled to magic profit. The problem is a lot of people do, hence 2008 etc. Ayn Rand excoriated this sort pretty fiercely.

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## Ender

IMHPOV working for "The Man" is modern slavery- or living in The Matrix.

Our whole society is based on the myth that this is the "real world". Public schools were set up to edumacate everyone into the Matrix prison & keep you compliant.

Anything that threatens that becomes "illegal". 

i.e. Tesla invented free power for all, Ford made steel that lasts for ever, & oil, from hemp. Can't any of that, now can we?

The longest living, and happiest people in the world, the Hunzas. live simple lives, helping each other & their lands, enjoying the arts & their own personal culture. Many don't reach middle age until their 80s & are still having children.

http://thespiritscience.net/2015/11/...-their-secret/

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## r3volution 3.0

> Is it just a continuous race to the bottom?


Suppose an employer is confronted with two workers, A & B:

They can each produce 1 widget per day. 

A charges $10 hour and will take 10 hours to produce the widget.

B charges $5 per hour and will take 20 hours to produce the widget.

The employer will choose A, because a widget at T+10 hours is more valuable than a widget at T+20 hours. 

So, no, B doesn't drag down A's wages.

...

So what determines a person's workday?

A person's hourly wage is determined by his productivity. 

In a competitive market, he can't earn significantly more or less than his labor earns his employer. 

The length of the workday, on the other hand, is simply a matter of the personal preference of the worker.

The reason that the workday has shortened historically is that people have gotten richer. 

Money is subject to diminishing marginal utility.

The 18th century pauper could buy bread to feed himself with the wage from his 16th hour of work. 

The 21st century office-dweller could buy a Kanye album on iTunes with the wage from his 16th hour of work. 

The bread is more valuable to the pauper than not having to work another hour.

Not having to work another hour is more valuable to the office-dweller than the album. 

Free time is in essence a consumer good, which people can be expected to "buy" in greater quantities as they get richer.

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## idiom

> Suppose an employer is confronted with two workers, A & B:
> 
> They can each produce 1 widget per day. 
> 
> A charges $10 hour and will take 10 hours to produce the widget.
> 
> B charges $5 per hour and will take 20 hours to produce the widget.
> 
> The employer will choose A, because a widget at T+10 hours is more valuable than a widget at T+20 hours. 
> ...


Two paupers from the 16th century with the same productivity, both will work until they can buy bread, but the employer only needs one person to tend a machine.

The wage for the day is going to end up at the price of the bread.

Who decides how long they will work for?

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## r3volution 3.0

> Two paupers from the 16th century with the same productivity, both will work until they can buy bread, but the employer only needs one person to tend a machine.
> 
> The wage for the day is going to end up at the price of the bread.
> 
> Who decides how long they will work for?


The hourly wage will reflect their productivity.

The workday will equal the price of the bread divided by the hourly wage. 

So, if their productivity is such that they can earn 10/hour, and they need 50 to buy the bread, the workday will be 5 hours.

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## idiom

> The hourly wage will reflect their productivity.
> 
> The workday will equal the price of the bread divided by the hourly wage. 
> 
> So, if their productivity is such that they can earn 10/hour, and they need 50 to buy the bread, the workday will be 5 hours.


One of them can earn the loaf of bread in 5 hours then, the other gets no loaf of bread. Why would the second individual not under bid the first and offer to work six hours for the same total pay?

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## VIDEODROME

I suppose the market will push people to the limits until fatigue makes them ineffective or prone to work injury or causing errors in machine usage or with paperwork.  It will also depend on whether an industry cares about the loss of workers who get frustrated and quit.  Some industries such as Truck Driving have crazy hours, but are a functioning revolving door of people quitting and constantly training new hires.  New hires can expect low pay for the first 1 or 2 years and often get discouraged by the long work hours which leads to them quitting as well as contributing to a shortage of skilled drivers that can do HAZMAT or Heavy Haul. 

Truck Driving is currently regulated with the DOT and Hours of Service rules.  Truckers are allowed to log 14 working hours or 11 drive hours within that 14.  They are basically limited overall to 70 work hours per week.  If they run really hard and use up their hours, it requires a 34hr Reset rest break.  

It's an interesting job to consider for this topic as it can push some people to their limits for work fatigue with serious consequences.  It can also take a major toll on a person's health.  

I'm not sure how the free market would handle this as it's now regulated by government.  In the past, some truckers ran multiple log books trying to cheat the system to get more loads and miles.  I can imagine some drove up to 5000 miles a week.  Today with stricter Electronic Log compliance and following the law, it would more realistically be 3000 miles a week.  

Possibly, the most 'Free' drivers are Owner Operators that have self ownership of their truck.  That is very expensive, but they should be able to set their own schedule.

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## r3volution 3.0

> One of them can earn the loaf of bread in 5 hours  then, the other gets no loaf of bread. Why would the second individual  not under bid the first


If there's a single employer, yes, wages will be bid down to subsistence.

...Workers A and B will underbid one another until they hit subsistence.

But  if there are multiple employers competing for the same labor (i.e. the  situation in any market economy), wages will reflect productivity.

...Employers  X and Y will bid up the price of labor until it reaches a level at  which it is no longer profitable to employ that labor.

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## idiom

8 Employers, 9 labourers.... Its just supply and demand. If supply of labour outstrips employment then you get subsistence wages and a 16 hour working day, and still one unemployed dude.

If the employers voluntarily restrict the working day, you end up with a shorter working day, workers all still getting their bread, one unemployed dude, but lower productivity at the specific thing the employers are doing. Maybe you end up losing an employer or two and you end up with 5 guys with no bread.

Point being with a labour surplus, the employers are punished severely for not working labourers as hard as they can as long as they can for as little as they can.

So its not the employers exploiting the labourers, but competitive forces threatening employers.

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## Swordsmyth

> 8 Employers, 9 labourers.... Its just supply and demand. If supply of labour outstrips employment then you get subsistence wages and a 16 hour working day, and still one unemployed dude.
> 
> If the employers voluntarily restrict the working day, you end up with a shorter working day, workers all still getting their bread, one unemployed dude, but lower productivity at the specific thing the employers are doing. Maybe you end up losing an employer or two and you end up with 5 guys with no bread.
> 
> Point being with a labour surplus, the employers are punished severely for not working labourers as hard as they can as long as they can for as little as they can.
> 
> So its not the employers exploiting the labourers, but competitive forces threatening employers.


You assume that no labourers  start their own businesses in response to bad working conditions and that they don't unionize.

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## r3volution 3.0

> If supply of labour outstrips employment...


As long as there are at least two employers, the price of labor will reflect its productivity. More precisely, the price of labor equals its discounted marginal revenue product (DMRP): i.e. the revenue that the unit of labor generates for the employer, discounted by the prevailing interest rate.
 [N.B. It's obvious that wages have to be less than the revenue they generate (otherwise there would be no incentive to hire anyone at all), but why discount that revenue by the prevailing interest rate to arrive at the wage? This reflects the essential economic function of the employer; he fronts the worker wages in anticipation of selling goods which don't yet exist, because the worker hasn't yet produced them. The worker's wage is the present value of the goods he is _going_ to produce and which the employer is _going_ to sell in the future.] 
 To see why wages get bid up to DMRP, suppose that consumers had unlimited demand for apples at a price of $10 or less. The price of apples would always be $10, wouldn't it? Of course, consumers never have unlimited demand for consumer goods at any price. But producers _do_ have unlimited demand for production factors (such as labor) at the DMRP of those factors (there is no reason not to buy factors if they can be profitably employed). Hence, the price of a factor is always bid up to its DRMP, just as apples would always be bid up to $10 if consumer were willing to buy an unlimited quantity of them at that price.  

 ...

 A “surplus of labor” wouldn't change this; labor would still be priced at its DMRP.

 But the DMRP would be lower, due to labor being less well equipped with capital.  

 ...

 Suppose there are two employers, X and Y, and 20 workers.  

 X and Y are in the ditch digging business.  

 They each have 10 shovels with which to supply their workers.  

 Each worker has a DMRP of $10/hour working with a shovel, $5/hour without a shovel.  

 All 20 workers will be paid $10/hour, as X and Y bid up the wage to that level.  

 ...

 Now suppose a 21st worker appears on the scene.

 He will also be paid at his DMRP, but that's only $5, since there isn't a shovel available for him to use.

 Alternately, in the 20 worker scenario, the loss of a shovel would have the same effect.  

 …

 In other words, when the supply of labor exceeds the supply of capital (loosely speaking, since neither is homogeneous), the DMRP of labor drops, and wages with it. This can happen either through a loss of capital (as through war, natural disaster, or socialistic economic policies), or through population growth exceeding capital accumulation. On the other hand, it is the inverse (capital accumulation exceeding population growth) which accounts for the long term wage growth we've seen over the last several centuries.  

 There's no reason to think that chronic overpopulation could occur in a market economy, given the historical record, but I don't see why it would be impossible in principle. I'm sure its physically possible for people to breed like rabbits to the point of overtaking even the most rapid economic growth, but this couldn't be blamed on the market economy any more than a capital-vaporizing asteroid could be.

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## idiom

The goal isn't to ascribe blame but to describe the forces at work. The other difficulty is we are describing equilibrium conditions, when capitalism is inherently seeking of a disequilibrium as at the equilibrium nobody makes a profit.

In a model market economy things should always get better, and historically in aggregate they do. The accounts quoted above were the result of massive rapid local dislocations. Peasants in England urbanized incredibly quickly with the mechanization of agriculture. Cities would double or halve from one year to the next with the incredible pace of innovation wiping out industrial centers and rebuilding them just as quickly.

Thus we examine where the sweat shops come from, how we have alleviated conditions historically, if the cure is worse than the disease, etc.

We also have the difference between an economic model and actual human action in the face of upheaval at beyond human scales, like when its not your neighbour that leap frogs your factory and shuts you down, but another country leap frogs your entire region and obliterates the regional economy fair and square.

Are the realistic non-state responses better or worse than the reality of state interventions.

Can these dislocations reduce highly productive workers to under bidding each other back to subsistence wages? 

On ones own block of land productivity is real and objective, but in a market economy it becomes relative. However there seems to be empirically a threshold for a race condition. Instead of seeing sweatshops proliferate in a dislocation, we now see mass unemployment, and structural unemployment, because of limits on age, working day, and minimum wage.

Is having the winning part of the economy carry the unemployed while they relocate and rengage, better or worse that having people oscillate between good salaries and starvation wage labour?

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## r3volution 3.0

> The goal isn't to ascribe blame but to describe the forces at work.


I just meant to suggest that, to the extent there's a problem, the solution won't be found in deviating from laissez faire.

I thought you may have been heading in that direction. 




> The other difficulty is we are describing equilibrium conditions, when capitalism is inherently seeking of a disequilibrium as at the equilibrium nobody makes a profit.


We are indeed talking about equilibrium, but the underlined isn't correct. Markets tend _toward_ equilibrium; the reason they never (or at least rarely) reach it is that the exogenous factors behind economic forces (e.g. consumer preferences or the physical environment) are constantly changing, while adjustment (i.e. various human acts) cannot occur instantly. Anyway, the more important point is that, while we're hardly ever at equilibrium, we're hovering around it. The price of a unit of labor may not exactly equal its DMRP, it may be a bit higher or lower, but this doesn't change the big picture, certainly not in the long run. 




> In a model market economy things should always get better, and historically in aggregate they do. The accounts quoted above were the result of massive rapid local dislocations. Peasants in England urbanized incredibly quickly with the mechanization of agriculture. Cities would double or halve from one year to the next with the incredible pace of innovation wiping out industrial centers and rebuilding them just as quickly.


There can be temporary, local distortions, sure.




> Thus we examine where the sweat shops come from, how we have alleviated conditions historically, if the cure is worse than the disease, etc.
> 
> We also have the difference between an economic model and actual human action in the face of upheaval at beyond human scales, like when its not your neighbour that leap frogs your factory and shuts you down, but another country leap frogs your entire region and obliterates the regional economy fair and square.
> 
> Are the realistic non-state responses better or worse than the reality of state interventions.
> 
> Can these dislocations reduce highly productive workers to under bidding each other back to subsistence wages?


In a global free market, with complete freedom of movement for goods, labor, and capital, long run regional price variations can only be the result of transportation costs or differences in land (immoveable). Temporary variations could and would arise (some new thing happens to be invented in this place rather than that place, etc), but these would be eliminated quickly through arbitrage.

I fail to see how any state intervention could speed this process.

It's essentially the same situation with liquidation and reallocation during a depression. 

Just let the market clear. 




> On ones own block of land productivity is real and objective, but in a market economy it becomes relative. However there seems to be empirically a threshold for a race condition. Instead of seeing sweatshops proliferate in a dislocation, we now see mass unemployment, and structural unemployment, because of limits on age, working day, and minimum wage.
> 
> Is having the winning part of the economy carry the unemployed while they relocate and rengage, better or worse that having people oscillate between good salaries and starvation wage labour?


I'm not sure what you mean, especially re the underlined part.

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## idiom

In reverse order:

Lets say you are good at raising sheep, and can manage 1000 sheep on your own. That great in a closed system on your own farm, you get to have more sheep and wool that you can possibly use. You are rich in sheep and wool, regardless of what other do.

As soon as you are in an exchange economy producing those sheep for exchange your productivity becomes relative. If someone can produce sheep a wee bit more efficiently than you, or better sheep, you are completely $#@!ed. Your production capabilities become unprofitable, and thereby worse than useless, they become capital sinks.


At equilibrium in a free market with no barriers to entry and so on, one only makes an profit equivalent to the risk rate plus a small premium related to cost of entry. So if an individual wants to create a profit they must create a dislocation. There are bad ways to do this, but the good ways are technology innovation, organisational innovation, market innovation, branding, or anything else that creates a temporary concrete difference between your product and that of everyone else. Either you can make something cheaper, more appropriately, or something new. One can't make a noteworthy profit by doing the same thing as everyone else in a competitive market.

This is the blessing and curse of capitalism, a permanent revolution. We tolerate millions being made obsolete en masse, because what they were doing was sub-optimal, and now they can do something better. But maybe they can't, not all of them as individuals, or maybe they all can, maybe they need a boost, maybe they need to be left to become desperate enough to create the next dislocation.

Capitalism is a welfare system because to make a profit you have to improve the world measurably. In aggregate everyone is better off over time, by a lot, and it doesn't matter why you want that profit. But if you just invested a lot in being able to build canals, you better pray to god you can retool to build railway lines in a hurry.

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## r3volution 3.0

> In reverse order:
> 
> Lets say you are good at raising sheep, and can manage 1000 sheep on your own. That great in a closed system on your own farm, you get to have more sheep and wool that you can possibly use. You are rich in sheep and wool, regardless of what other do.
> 
> As soon as you are in an exchange economy producing those sheep for exchange your productivity becomes relative. If someone can produce sheep a wee bit more efficiently than you, or better sheep, you are completely $#@!ed. Your production capabilities become unprofitable, and thereby worse than useless, they become capital sinks.


Less-efficient producers get outcompeted and driven out of business by more-efficient producers, yes; but what's the problem?

It doesn't follow that the less-efficient producer starves to death. He almost certainly finds another, more profitable occupation (either as an employee-shepherd, or in some other sector altogether). And if not, there's nothing to prevent him from continuing as before, producing only for his own consumption. The "market economy" is so named not because people are_ required_ to produce for the market, but because virtually everyone chooses to do so when given the opportunity (since it means much higher incomes). 




> At equilibrium in a free market with no barriers to entry and so on, one only makes an profit equivalent to the risk rate plus a small premium related to cost of entry. So if an individual wants to create a profit they must create a dislocation. There are bad ways to do this, but the good ways are technology innovation, organisational innovation, market innovation, branding, or anything else that creates a temporary concrete difference between your product and that of everyone else. Either you can make something cheaper, more appropriately, or something new. One can't make a noteworthy profit by doing the same thing as everyone else in a competitive market.


The entrepreneur can "create dislocations," as you put it, or respond to natural dislocations (e.g. changing consumer preferences). 




> This is the blessing and curse of capitalism, a permanent revolution. We tolerate millions being made obsolete en masse, because what they were doing was sub-optimal, and now they can do something better. But maybe they can't, not all of them as individuals, or maybe they all can, maybe they need a boost, maybe they need to be left to become desperate enough to create the next dislocation.


Sure, some won't be retrainable, but this isn't the "curse of capitalism."

People who can't feed themselves in the market economy will have ever greater trouble feeding themselves in any other system. 




> Capitalism is a welfare system because to make a profit you have to improve the world measurably. In aggregate everyone is better off over time, by a lot, and it doesn't  matter why you want that profit. But if you just invested a lot in being  able to build canals, you better pray to god you can retool to build  railway lines in a hurry.




It's a welfare system ...because it's a meritocracy?

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## idiom

> It's a welfare system ...because it's a meritocracy?


That's the beauty of it, and why its moral. Its not even the merit of people, but of their actions, measured objectively, and agnostic about its goal seeking. The point of it is that is better than any other welfare system and even people who are looking out purely for themselves end up benefiting others.

The upside is it massively increases productivity. The downside is this process isn't necessarily humane. It works out in the global aggregate, but for example whole chunks of the US are only competitively employable at 16 hours @ $2 day if we went entirely deregulated. Now that is working its way up gradually over time.

Now to go from a safe job to that, does that increase risk tolerance or lower it? Does it increase capital accumulation? Would talent flee to regulated countries?




> The entrepreneur can "create dislocations," as you put it, or respond to natural dislocations (e.g. changing consumer preferences).


The consumer preferences change for her competitors equally, so that is not a defensible advantage. One may arrange the company so it is faster to notice and respond, but that is organisational innovation for the purpose of going something better or something new. Again if the competition adapts you have to change again.

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## r3volution 3.0

> That's the beauty of it, and why its moral. Its not even the merit of people, but of their actions, measured objectively, and agnostic about its goal seeking. The point of it is that is better than any other welfare system and even people who are looking out purely for themselves end up benefiting others.


That's all substantively true, though I don't know why you call it a welfare system. 

...no need to argue over semantics, I suppose. 




> The upside is it massively increases productivity. The downside is this process isn't necessarily humane.


In comparison to what? 




> The upside is it massively increases productivity. The downside is this  process isn't necessarily humane. It works out in the global aggregate,  but for example whole chunks of the US are only competitively employable  at 16 hours @ $2 day if we went entirely deregulated. Now that is  working its way up gradually over time.
> 
> Now to go from a safe job to that, does that increase risk tolerance or  lower it? Does it increase capital accumulation? Would talent flee to  regulated countries?


A sudden movement to laissez faire would cause a bust just as at the end of the business cycle. It's exactly the same phenomenon: subsidized enterprises (not justified by consumer demand) will have to liquidate, with the resources they're (mis)using being reallocated to other enterprises (justified by consumer demand). There would be frictional unemployment of production factors, including labor, but this is temporary: just a lot all at once of the creative destruction that's always occurring. Markets would clear soon enough and Bob's your uncle. 




> The consumer preferences change for her competitors equally, so that is not a defensible advantage. One may arrange the company so it is faster to notice and respond, but that is organisational innovation for the purpose of going something better or something new. Again if the competition adapts you have to change again.


The point is that one of the functions of the entrepreneur is to actually bring about those reallocations in response to changing conditions. 

These don't occur by magic. Humans beings must act. Profit is their reward/incentive.

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## idiom

> A sudden movement to laissez faire would cause a bust just as at the end of the business cycle. It's exactly the same phenomenon: subsidized enterprises (not justified by consumer demand) will have to liquidate, with the resources they're (mis)using being reallocated to other enterprises (justified by consumer demand). There would be frictional unemployment of production factors, including labor, but this is temporary: just a lot all at once of the creative destruction that's always occurring. Markets would clear soon enough and Bob's your uncle.


Point was that every wave of destruction would trigger massive moves to starvation wages instead of structural unemployment due to the huge disparities between economies suddenly joined with 300 years of economic development separating them.

If half of Michigan was on $2 a day, 16 hours a day with no hope it would change, the Trumpian anger would be way hotter than it already is.

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## heavenlyboy34

> That's all substantively true, though I don't know why you call it a welfare system. 
> 
> ...no need to argue over semantics, I suppose. 
> 
> 
> 
> In comparison to what? 
> 
> 
> ...


+rep for correct understanding of economic theory and praxaeology.

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## idiom

> +rep for correct understanding of economic theory and praxaeology.


So what happens if we shorten the working day to six hours, apart from the 30% loss in wages? How will humans act with a workday synced to the school day?

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## CaptUSA

> So what happens if we shorten the working day to six hours, apart from the 30% loss in wages? How will humans act with a workday synced to the school day?


Who is "we"???

Listen, the workday hours are determined by the employee and the employer.  Perhaps a group of employees unionize to collectively bargain the hours with the employer.  Whatever the case, it makes no sense to have some uninformed third party getting involved.  Markets will always work it out to the maximum possible benefit.  Unless some central planner decides he can make decisions better than people he doesn't even know.  That's when artificial distortions happen.  And while those distortions may help _existing_ employees in some cases, they will always hurt the _potential_ employees that never get considered.

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## heavenlyboy34

> Who is "we"???
> 
> Listen, the workday hours are determined by the employee and the employer.  Perhaps a group of employees unionize to collectively bargain the hours with the employer.  Whatever the case, it makes no sense to have some uninformed third party getting involved.  Markets will always work it out to the maximum possible benefit.  Unless some central planner decides he can make decisions better than people he doesn't even know.  That's when artificial distortions happen.  And while those distortions may help _existing_ employees in some cases, they will always hurt the _potential_ employees that never get considered.


Pretty much that^^ Also, entrepreneurs' and freelancers' work days are often much longer than 8 hours.

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## The Gold Standard

> I meant any papers on it or books. So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?
> 
> Is it just a continuous race to the bottom?
> 
> Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.
> 
> Do you try and get 20 hours of work at $5 per hour?
> 
> Or consider it in another form:
> ...


An Austrian economist would never say there is an ideal work day. Real economics doesn't prescribe solutions. It merely describes what the processes that occur in the real world are and how they happen. People will work as long as they need to in order to achieve their desired ends. Employers pay workers according to their productivity. Investment in capital goods creates tools and machines that make workers more productive, thereby increasing their real wages. 

Any government activity that diverts investment or regulates this process only impoverishes workers. Any monetary inflation that drives up the cost of inputs does so at the expense of workers. Any monetary inflation that drives up the cost of consumer goods does at the expense of consumers, which are mostly workers.

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## The Gold Standard

> Now these days this all still happens, but not in western countries with state imposed maximum workings days and working age laws.
> 
> The question is why?


Because your premise is wrong. The length of working days in the U.S. fell long before any laws were passed about it. The length of the work day decreases when society becomes wealthier. How does it become wealthier? By companies producing products demanded by the market. The greater the number of products, the cheaper they are to buy, and the wealthier everyone is.

So the poor countries that have long work days do so because they are not wealthy enough to be able to afford to stay home 16 hours a day. It's the same argument as child labor. Child labor in the U.S. was almost completely gone decades before the government did anything about it. Before then, society wasn't wealthy enough that they could afford the kids not to work. Once it became wealthy enough, the kids didn't work anymore.

With no regulation on working hours, they would still fall as steadily as the wealth of society would allow.

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## The Gold Standard

> 8 Employers, 9 labourers.... Its just supply and demand. If supply of labour outstrips employment then you get subsistence wages and a 16 hour working day, and still one unemployed dude.
> 
> If the employers voluntarily restrict the working day, you end up with a shorter working day, workers all still getting their bread, one unemployed dude, but lower productivity at the specific thing the employers are doing. Maybe you end up losing an employer or two and you end up with 5 guys with no bread.
> 
> Point being with a labour surplus, the employers are punished severely for not working labourers as hard as they can as long as they can for as little as they can.
> 
> So its not the employers exploiting the labourers, but competitive forces threatening employers.


Those competing forces drive up wages too. If a laborer is more productive than subsistence wages, then he will be bid away from the employer paying only that much, because they can give the worker a raise and still make a profit off of them. The process repeats itself until the worker's wage is at or near his productivity. 

Even in your unrealistic scenario, with such a surplus of labor, wages are going to be so cheap that it will create opportunities for companies to arise and hire these people, which starts the competitive process of increasing wages again.

All of this assumes private property rights and the lack of state interference, of course.

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## VIDEODROME

How about Employees having some ownership or being stakeholders in the Company?  At least to have some sway over things like work shifts?  

I think we have a weird system that tosses dividends to mere Stock Holders that have little personal stake in the actual business long term success.  I mean yeah they want success in terms of financial return, but that doesn't necessarily equate to success in terms of a positive work culture. 

Employees can either Unionize or we can encourage a system where they are stakeholders that have opinions heard in boardrooms.

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## CaptUSA

> How about Employees having some ownership or being stakeholders in the Company?  At least to have some sway over things like work shifts?  
> 
> I think *we* have a weird system that tosses dividends to mere Stock Holders that have little personal stake in the actual business long term success.  I mean yeah they want success in terms of financial return, but that doesn't necessarily equate to success in terms of a positive work culture. 
> 
> Employees can either Unionize or *we* can encourage a system where they are stakeholders that have opinions heard in boardrooms.


Again.  Who is "We"?!

Those decisions are between the employees and their employers.  The only way "we" should influence those decisions is as consumers choosing which businesses we want to support.  Other than that, let it alone!

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## CaptUSA

So, here's the thing, folks...  Employees have just as much power to dictate their conditions and hours as the employer does.  If you disagree with that, it's probably because you are a substandard employee.  Sorry to break it to you.  I've worked in several industries and have had several employers and it's always the same.  If you give extra value to your employer, you will get extra value back.  Or you will choose a different buyer for your labor.  But if you're good and smart, you hold all the cards.

The problem isn't with any "system"; it's that the people who get caught up in this line of thinking don't understand their value.  (Or they haven't improved their value to the point where this isn't a problem.)

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## specsaregood

> Sorry to break it to you.  I've worked in several industries and have had several employers and it's always the same.  *If you give extra value to your employer, you will get extra value back.*


Not if you are at a union workplace, where giving extra value gets you exactly nothing; and actually can get you less if your coworkers start to resent it.  Such places actively reinforce the work the bare minimum work ethic.

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## CaptUSA

> Not if you are at a union workplace, where giving extra value gets you exactly nothing; and actually can get you less if your coworkers start to resent it.  Such places actively reinforce the work the bare minimum work ethic.


Not my experience.  I've worked for 3 unionized companies.  The employers either find ways to work around the union or promote their good people into management.

I worked in one union that had a provision for "merit" increases which they used.  Another company used some clever negotiation to promote me into another union position even though there were people with more seniority.  In nearly every case, when I asked for some kind of schedule change or other perk, I got it - even if it caused a grievance by some other employee.  Generally, though, the easiest way for an employer to keep a good union employee is to give them a non-union position in management somewhere.

I concede your point that the nature of unionization can limit the individual's success, but that's not who the unions are designed for.

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## VIDEODROME

> Again.  Who is "We"?!
> 
> Those decisions are between the employees and their employers.  The only way "we" should influence those decisions is as consumers choosing which businesses we want to support.  Other than that, let it alone!



We as in society or employers and employees creating different working relationships.

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## osan

> I meant any papers on it or books.


I take it you've heard of mises.org, yes?






> So without state intervention the ideal workday is like 12 or 14 hours? 30 hours?


At the bottom of it all, the workday is as long as you decide.  If you don't like how long an employer expects you to work, you are free to leave and seek other venues or you can hang your own shingle, which usually means even longer days. 

Also, it all depends on what you want, how much you want it, and what you are willing to do to get it.  I do not subscribe to the boilerplate philosophy that is peddled as "entrepreneur's attitude" where one seeks billions in revenues per hour and to destroy all competitors.  There are plenty of entrepreneurs out there who run mom and pop shops such as bodegas in NYC, for example.  Many of them live quite comfortably, usually with longer-than-employed-people hours, but not automurdering.  They seek not to build empires but to have a more relaxed lifestyle where they can afford many good things, though perhaps not a Gulfstream.




> Is it just a continuous race to the bottom?


This is very reflective of your inner mindset.  You might wish to reconsider the base presumption that leads you to even ask such a question.  We are not living in red China or soviet Russia... at least, not yet.  Therefore, you are free and would presumably remain free to shape your professional life as you pleased, all else equal.

My annual income used to range between $250K and $500K+.  I worked very long hours to bring in that upper limit and can tell you that averaging 102 hours/week for 3 and 4 months at a time isn't that much fun.  Therefore, I didn't do it that often.  But when I did, the paychecks were enormous.  But I also was able to take anywhere from a few weeks off at a time, to months, with corresponding dips in the accounts.  The point is that it was largely up to me.  I schooled the $#@! out myself with science degrees and then took good advantage of those credentials, as well as my God-given talents and my developed skills precisely because the two years of being a NYC school teacher taught me just how much I didn't want to be one of those and just how little I wanted to work a 2000-hour year for $14K.  I liked money.  A lot.  I still do.  So I divined that middle-road where I worked "hard", but not so much so that I had no life of which to speak.  I had plenty of time to hang with the friends, hit the dojo faithfully, chase women, do deeply stupid things in aircraft, and get into all manner of other nonsense that I considered worthy of my pursuit.

I worked for Bell Telephone Laboratories for six years, was miserable, pissed people around me off because I was young, a bit brash, was usually the smartest person in the room, and when my colleagues showed they were men of no vision, I'd rub their noses in it... and all for about $40K.  I discovered that THAT was also not what I wanted.  That is why I started my own consultancy and did my own thing where my counsel was sought and at least sometimes appreciated, all for $300/hour+ back in a time when we, the brothers of the brass-nutsack, could get away with such extortionate rates.

It was MY choice.  Nobody forced me to do this or not do that.  I could have remained in teaching.  I'd have eaten a bullet eventually.  No thanks - I like women way too much to go out like that and so very much too soon.  The same for my tenure at Bell.  I make my own deal, wanted bigger bucks than the average Joe, and did what I had to do to see it become real.

It's all about choice and thank God we live in a land that, while $#@!ed up as all get-out in a thousand ways, is still worlds better than any other place on the planet precisely because we have the prettiest slavery on the planet.  I'd rather be less restricted than more, my dreams of true freedom notwithstanding.




> Say you have to make $100 per day to cover your living costs. You can work 5 hours for $20 per hour. Similar person to you offers to do the same job for $10 per hour as long as they get 10 hours of work.
> 
> Do you try and get 20 hours of work at $5 per hour?


Depends on the job in question, the market conditions, as well as those of the economy in the broader sense.

Of perhaps you take a stab at doing your own thing.  It doesn't have to be anything fancy.  You don't have to have an engineering degree.  Open a deli.  If you work smart and diligently, chances are fair to middling you will meet with success, again all else equal.

Look at Col. Sanders.  He'd failed at business repeatedly until he was 62 when finally Kentucky Fried Chicken took off.  He's long gone but his creation survives to this day.

The good Colonel's secret of success?  NEVER GIVE UP.

Or consider it in another form:




> What is the difference between hiring one person to work for 12 hours, or two people to work for 6 each?


Because of governmob interference, the difference is likely significant.

Consider that the salary you are paid is only about 1/3 to 1/2 of the cost your employer must bear in order to employ you.  Because of dog-poo regulation, employers are required to pay all manner of additional costs.  After the Fed and perhaps mainline religious institutions, it is the biggest scam of all time, places huge drags on the economy (it is a tax, after all, when all is said, done, and the bull$#@! is flushed away), and results in less prosperity for everyone.  And we call that FAIL.




> In the first instance the persons minimum bid is spread over 12 hours, in the second each person needs to cover their costs in only six hours.


Start a business.  It's the right answer for people who churn over these questions you have raised.  For the rest, punching a time clock is good enough in terms of effort to be put out.  Therefore, those people have no basis for issuing the least complaint.  The world owes you nothing and your right to life is valid only to the extent that you are able to provide for yourself using morally valid means.  That, of course, precludes criminal actions against your fellows such as robbery, theft, and fraud.

Open that deli.  Hell, open a whorehouse.  WHAT you do really doesn't matter, that is unless one is of a weakened ego and must be a scientist, doctor, lawyer, etc. in order to feel he is respectable.  I respect nobody more than the man who buys a concrete pump and pours and finishes structures needed by his customers.  That man is worthy of my respect and praise, dirty, rough hands and all.

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## r3volution 3.0

> How about Employees having some ownership or being stakeholders in the Company?  At least to have some sway over things like work shifts?


Equity markets (i.e. markets in ownership interests in businesses), like all markets, tend to put resources into the hands of those who can most productively use them. If, by magic, employees of XCorp woke up tomorrow with 100% ownership of the company, that situation wouldn't last. The average employee would end up selling his shares to someone more capable (whether an especially business-minded fellow employee or a third party), who could run the company more productively. This is why "cooperatives" and so forth are so rare. The only way around this would be a law prohibiting the employees from selling their shares, or some equivalent restrictions, which would be as counterproductive (in tending to retard production) as any other law trying to enforce an unnatural equality.

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## VIDEODROME

> Equity markets (i.e. markets in ownership interests in businesses), like all markets, tend to put resources into the hands of those who can most productively use them. If, by magic, employees of XCorp woke up tomorrow with 100% ownership of the company, that situation wouldn't last. The average employee would end up selling his shares to someone more capable (whether an especially business-minded fellow employee or a third party), who could run the company more productively. This is why "cooperatives" and so forth are so rare. The only way around this would be a law prohibiting the employees from selling their shares, or some equivalent restrictions, which would be as counterproductive (in tending to retard production) as any other law trying to enforce an unnatural equality.


Makes me think of Democracy in a way as people's say in the direction of the country are eroded or in other cases people in Congress trade away their authority for financial or political favors. 

Hmm which interests me more?  Having a hand on the levers of power steering the direction of the country or some money/power in the short term.

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## r3volution 3.0

> Makes me think of Democracy in a way as people's say in the direction of the country are eroded or in other cases people in Congress trade away their authority for financial or political favors. 
> 
> Hmm which interests me more?  Having a hand on the levers of power steering the direction of the country or some money/power in the short term.




How can we object to democracy (?!?!?); after all, it's produced the status quo..

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