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Post by blueneck on Jul 9, 2007 17:33:23 GMT -6
One of the biggest fallacies of the free marketeers IMHO, is that they assume that people and therefore markets behave rationally. The same could be said about corporations. Any one who has ever worked in the corporate world knows that rationality does not exist incorporate thinking.
Take the example of the assumption that the market drives wages to a fair market value. We know this to be false because in the corporate world the driving factor is to try to get away with paying as little as possible to fill vacant positions.
That is why we here the constant whine of the business community saying they cant find any qualified help. The problem is they never finish the sentence " We can't find any qualified help, because we aren't paying a wage that will attract skilled and talented workers.
We also see the push for more H1B visas despite the fact that US colleges and tech schools already crank out more tech graduates thant there are open positions for.
Adam Smith and other early economists never intended for markets to be wide open wild west "free", that there does need to be responsible government checks and balances. They knew that markets left to their own devices would always slant to the direction of capital - the wealthy and powerful.
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Morty
Contributor
No replastering, the structure is rotten.
Posts: 26
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Post by Morty on Jul 9, 2007 17:59:28 GMT -6
Whoa, whoa. "We know this is false"-? Howso? Considering the many non-free market controls on corporations, how can you possibly attribute everything to the free market? Furthermore, of course they are trying to pay the lowest wage possible. However, they still need to find workers. Meaning they have to pay more than their competition - else who would work for them?
And of course we see a push for a higher labor supply. Like any commodity higher supply = lower marginal price. If we have a surplus of labor, of course wages will not be equal to the value of labor when there isn't a surplus.
And, from my understanding of Adam Smith (I haven't read all of his work, nor did I know him personally, so I'm taking this from the perspective I have) he DID advocate unregulated markets, because he believed markets regulated themselves. He was the one who first "discovered" the invisible hand, you know.
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Post by unlawflcombatnt on Jul 9, 2007 20:09:05 GMT -6
Smith also believed the government should actively promote competition, including intervening to break up monopolies, oligopolies, and intervening where a big money interest could control a market and dictate prices, as a result of having bought out all of its competitors.
Smith would have likely advocated blocking most of the Corporate mergers that have taken place recently, as they reduce competition and allow a few large players to set prices without any concern about competition.
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huck
Contributor
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Post by huck on Jul 9, 2007 20:43:08 GMT -6
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Morty
Contributor
No replastering, the structure is rotten.
Posts: 26
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Post by Morty on Jul 9, 2007 21:28:06 GMT -6
That may be true. In Smith's time, the world was full of government monopoly and privilege - he had never seen a free market monopoly or oligopoly. The idea that inefficient monopolies, or especially oligopolies, can long exist has been disspelled in modern economic thought.
Austrians are the leading force behind rejecting the use of "Homo economicus" in economic models... so I'm not sure what you are getting at there.
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