Saturday, 23 November 2013

Free Market System – Some Uneducated Speculations.

I say these are uneducated because I really don’t know much about the free market, but I learned some things today, and this is my push back:
Unprofiting endeavours
Profit motivation
And workers.

There are some things which do not create a profit even though they are worthwhile endeavours.  I found out today that my uncle had a cancerous polyp removed so a thought that came to me is cancer research.  One could spend their entire life searching for a cure, find things that point other researchers in the right direction, but ultimate find nothing they can sell. 
A similar concern I have is with Children.  I think they should all get equal opportunities.  I hope they can all have quality education. 
I think in the ideal free market, teachers and researchers would be funded by donations of the people.  It would be neither force nor coercion that made people pay taxes to the system, but out of freewill and goodness people would donate to such noble causes.  Sounds great, but what if people don’t donate very much?  Is it right for a researcher to struggle to get by because people give him little support?  Or what if he takes a pay cut to get cutting edge technologies.  Worse even would be if the leading researchers and top teachers gave up their jobs to become dog trainers because it made them more money.
I think profit motivation is ugly.  It seems to suggest that more money brings more happiness.  I doubt this is the case.  I am not alone in this doubt:

(but how can one measure happiness?)
It seems criminal to me for a society to function by profit motivation.  Perhaps I am unrealistically optimistic in believing motivation could happen any other way.  However, Seeking more money is akin to seeking more stuff in a world of limited resources.  Th more I take for myself, the less there is for others.  As Walter Rauschenbusch wrote in Christianity and the Social Gospel, “The rule of trade, to buy in the cheapest market and sell in the dearest, simply means that a man must give as little to the other man and get as much for himself as possible.  This rule makes even honest competitive trade – to say nothing of the immense volume of more or less dishonest and rapacious trade – antagonistic to Christian principles.  The law of Christ, wherever it finds expression, reverses the law of trade.  It bids us demand little for ourselves and give much service.  A mother does not try to make as rich a living as possible, and give minimum of service to her children.  It would be a sorry teacher who would lie awake thinking how he could corner the market on education and give his students as small a chunk of information as possible from the pedagogic ice-wagon.”  I have a hard time meshing the profit motif with love, generosity or compassion.  Profit maximizing often leads to exploitation.
Two things were mentioned today that I have a hard time reconciling.  “No minimum wage” and “do no harm.”  Let’s face it, people in difficult situations will be willing to work for exceedingly little.  Humans enter into exploitative environments because they feel they have no choice.  Desperation will lead one to work 14 hours a day in unsafe conditions with the hope of feeding the children, even if nothing is left for oneself.  Just because someone, by choice, enters into an exploitative situation does not mean they deserve to be exploited.   Such situations are harmful.  If someone if doing valuable work, they deserved to be paid a minimum wage.  They deserve to eat and feed their family and have a place to live.  To pay them any less is harmful, it’s ugly.  While our system is not free today, such situations still happen.  A successful way of lowering costs (ergo increase profit) is to pay your workers less.  If people can get away with paying their workers less, they will, even if their workers are worth more.  In my estimation, a free market without regulations ensuring the rights of workers to earn a fair wage will exploit the poor for profit.

As mentioned above, I don’t know tons about the free market ideal.  These are just some of my hesitations based on my (mis)understandings.  Please, push back.


  1. Thanks for this post! Though we should really have a discussion over coffee, here are a few thoughts of mine on the 4 concerns you’ve raised with the free market.

    Unprofitable endeavors:
    I agree with you that worthwhile endeavors aren’t always financially profitable in the traditional sense, and that might include cancer research. But this doesn’t mean others aren’t willing to pay you to do the work because they see the value in the work too. There are A LOT of people who are interested in seeing a cure for cancer, and there are tons of fundraisers for cancer research. Unfortunately I think there is corruption going on there and that’s why we don’t have a cure yet… we should talk about it sometime… so perhaps a better example: missionaries are paid wages by relatives and their churches because they see value in what the missionaries are doing.
    There is a compelling argument that if families weren’t paying half of their income in taxes, sometimes with the belief that the government would then take care of everyone, they would give more away and take on more responsibility for society themselves.

    Good one! I’d say public policies related to children are the most perplexing issue for libertarians to come to terms with… I don’t have the answers myself. However, I can tell you this: the thought of the state taking the responsibility for raising all children to think the same way and not to excel is a terrifying thought. You make a point about quality education… there are people arguing that home-schooling (or anything but public schools) should be illegal because parents will instill religion in their children and it’s not fair to the kids to be indoctrinated. What if the official government or school board stance on morality is wrong? Like Hitler’s Youth… the parents didn’t like what the government did with all the children but there was nothing they could do about it because the state was intervening.

    More coming in 2nd comment...

  2. Profit motivation:
    I don’t think wanting to make a profit means you think more money will make you happier. What’s wrong with opening a coffee shop and making a profit/aka wages? If you don’t make any money you can’t support your family or the people around you, and if your business isn’t allowed to grow how will you afford to hire more workers which in turn helps them out? :) Products and services won’t improve if we don’t have profits to indicate what people like and people need.
    I agree there are evil people out there who seek to be rich at the expense of others, and that is wrong, but profit itself isn’t the problem. There is evil in the world… but this doesn’t mean government intervention will fix the problems evil creates. (Rather I believe it exacerbates it.) Participating in the political market instead of private market doesn’t change our human nature.
    The thing with the truly free market is if you are making a profit, you are delivering something people want or need. You are producing something and making the “pie” larger. An economic concept “rent seeking” is where when you take something there is less for others and you are taking as big a piece of the pie as you can instead of making it bigger. Free market advocates think rent seeking is bad. A voluntary exchange is where both parties are better off, or the exchange wouldn’t happen.

    Workers and minimum wage:
    There is a difference between paying someone a fair amount for their work and forbidding people from working at a certain wage. Exploitive arrangements are bad of course, but if an employer doesn’t already care for your well-being, there are ways they can get around legislation. Many employers now seek the contract route to avoid dealing with employee liabilities and an hourly wage isn’t paid at all – money is paid on a task-completion basis. It’s often illegal immigrants that are the ones in exploitative arrangements; they are underground so the law is irrelevant. Or foreign workers brought here by a company and required to stay with that company. I think a big step in the right direction is making illegal immigrants legal and not kicking foreign workers out of the country if they quit their job.
    But anyway, minimum wage legislation causes lay-offs and unemployment… for example, say I’m starting a business and hire two teenagers part time to help me out. I paid them $7 an hour… totally fine for them because they are being supported by their parents and it’s just part time work to gain experience and help me out. Government decides to make the wage $9.50 (what it is now in AB), but I’m barely breaking even as it is, so I had to get rid of one of my teenagers because I couldn’t afford to pay him, and tell him even though we were both happy with the arrangement the government will not allow it.
    Blanket legislation like the minimum wage ignores the fact that every situation is different. Regulation is very impersonal. I think you raise some great points though, and some evil people do exploit their workers. I just don’t think minimum wage is the best or most effective way to address this. In my imagination, a free market would mean a much better economy where people aren’t desperate and need to enter into exploitative arrangements to make a living.

    Anyways, that’s my initial feedback. :) Thanks so much for your thoughts, compassion, and strong sense of justice!


    1. Thanks Brianna, here are some thoughts in reply.
      Regarding people supporting missionaries, cancer researchers and the like, there is always some tension, the lingering question of is it right for the missionary/pastor/researcher to get filthy rich in their career. I’m not saying have a comfortable life, I’m talking about lots of money. A lot of people have a bad feeling about that. Even if the missionary is a really good missionary (however one chooses to judge that) there is always some hesitation in having that really good missionary really rich. Many missionaries themselves feel this and can even get tax breaks if they take a vow of “poverty.” I feel that tension. I can’t say I’m fond of the idea of filthy rich missionaries. I wonder if they are missing the point. I wonder if it is wrong to get rich off of saving souls or helping the poor. On the other hand, if is it wrong to get rich doing good, then is it wrong to get rich selling unnecessary goods at the expense of underpaid workers? Is it wrong to get rich selling chocolate when the cocoa farmers have never tasted chocolate? Is it wrong to get rich off of others?
      This ties in with profit motivation. My concern is not with businesses being able to sustain themselves or expand. Rather, I don’t like it when the CEO thinks he can take home bigger and bigger cheques every month. If his goal is a big pay cheque, he will keep salaries as low as possible, pay as little as he can for raw materials and charges as much as he can for the service. Perhaps this isn’t criminal, but it seems like a horrible, horrible value system to base a society upon. Something I’ve been thinking of late is that people will never be satisfied with material wealth. I want all the hungry to be fed, but say they are, I don’t think they will be satisfied. The CEO bringing home larger and larger cheques, I don’t think she’ll ever be satisfied. Material possessions cannot bring satisfaction. A society which rewards financially will be filled with people always wanting.
      I certainly agree – there are many a problematic immigration laws in this country. That said, I think a minimum wage should be a living wage. I think it is wrong to pay anything less than that, and I’m afraid it needs to be legislated. I hear you when you say that every situation is different. A living wage for a single parent with 10 kids would be different than a living wage for a double income no children family. Even if the single parent is untrained, the kids still need to eat! So, what to do, what to do?
      I think many companies employ workers overseas where there are fewer legislations that are less strictly enforced. It seems to me that these companies operate in these freer societies eager to exploit employees. Certainly exploitation is not their goal, their goal is profit, and they’ll use any means to get to that end.
      My head hurts. I hope what I’ve said made some sense.

    2. Hi Patricia,
      I love your comments about missionaries and how much they should make and what not. Looking forward to our coffee today to discuss further! I don't know what I think!
      I do think you might have missed my point about the minimum wage though. If the worker is an illegal immigrant, it's already under the table, so minimum wage legislation does nothing. What it does do is cause fewer legal citizens to get hired. You'll have teenagers who live with their parents making a living wage they don't need, but others won't get hired at all because employers hire fewer people when the costs go up. Minimum wage hurts employers and the low-skilled, inexperienced workers... the latter being the very people it is supposed to help. It doesn't affect the middle class who are getting higher wages anyway. What I suggest to you as a replacement is a minimum basic income. Rather than preventing people from working by mandating what a person must pay them, taxpayers could subsidize incomes every month.