Libertarianism and the Workplace II

by on July 3, 2012 at 1:15 pm in Current Affairs, Economics, Law | Permalink

Over at Crooked Timber Chris Bertram, Corey Robin and Alex Gourevitch are upset about what they call lack of freedom in the workplace. (Tyler offers his excellent comments immediately below.) They give a grab bag of peculiar examples such as workers can be fired for donating a kidney to their bosscarrying on extramarital affairs, participating in group sex at home, cross-dressing, and more. They seem especially incensed that workers can be commanded to pee or be forbidden to pee. (I will put aside that mandatory drug tests are greatly encouraged by the war on drugs.)

In other words, the CTrs have discovered that the most basic US employment law is at-will employment which means that workers can be fired for just about any reason, outside of a few protected categories such as race, sex, and age. Simply put, an employer can fire you if she doesn’t like you. This is a surprise? No one has a right to a job, a job is an agreement to exchange services for cash and compensation and both parties must agree to the exchange to make it legitimate.

The CTrs do not adequately acknowledge that workers have the same rights as employers. Workers can quit for any reason and they can refuse to work for any employer. If you don’t like the politics of Monsanto, or the NRA or Georgia-Pacific you don’t have to work or even apply for those jobs. Indeed, workers have more rights than employers since workers are not subject to anti-discrimination law; that is, employers are prohibited from discriminating against African American workers but workers are not prohibited from discriminating against African American employers.

If you think that the freedom to quit is without value bear in mind that under feudalism and into the early 19th century in the U.S. and a bit later in Britain employers and even potential employers could prevent workers from quitting and from moving. The freedom to quit was hard won. We should not disparage the liberation brought by a free market in labor.

Turning to the economics, the CTrs are so outraged by an employer’s legal possibilities that they fail to notice that most employers do not in fact fire their workers for having extra-marital affairs. Why not? The reason is that these rights are often more valuable to the employee than to the employer and thus both employee and employer can be made better off if the employee keeps the rights. If the employer values the right more than employee then the employer buys the right with a higher wage. If the employee values the right more than the employer then the employee retains the right at an otherwise lower wage. The employer gets the right only when the employer pays. The same thing is true of control rights, residual rights not explicitly noted in the contract (because of complexity and unforeseen events). The employer buys these rights from the worker when doing so maximizes the total value of the exchange. This is not to say that abuses do not occur, they do, as in all relationships and on both sides, but the CTrs lump abuses and mutually profitable exchanges together–that’s dangerous because in regulating abuses it is very easy to do away with mutually profitable exchanges.

The greater the productivity of workers and the higher their incomes the less workers will be willing to sell rights for higher wages (i.e. the more willing they will be to pay for better working conditions with lower wages). Workers gain more autonomy as they and their society become more productive. Thus, the best protector of worker autonomy is high productivity and economic growth. (The best protector not the only protector, unions can also serve a useful purpose in this regard as can shareholders and human resource departments.)

If the CTrs were merely arguing for greater economic growth there would be little with which to argue –who doesn’t want  bigger televisions and better working conditions? The CTrs, however, confuse wealth and political freedom. Bigger televisions don’t make you more free and neither do better working conditions, even though both goods are desirable.

A job is an exchange with mutual consent and benefits on both sides of the bargain. The freedom is in the right to exchange not in the price at which the exchange occurs. A worker who is paid for 8 hours of work is not a serf 1/3rd of the day. We all sell our labor and we would all like to sell at a higher price but that does not make any of us serfs. From the minimum wage waiter to the highly-paid sports superstar there is dignity in work freely chosen.

To understand freedom and true coercion let us remember that American workers have the freedom to bargain and exchange with American employers, a freedom that gun, barbed wire and electrified fence deny to many millions of less fortunate workers from around the world.

david July 3, 2012 at 1:31 pm

The left celebrates the right to quit as its own accomplishment here. And not without reason – the defense Tabarrok gives here – that the employer is buying away some given employee’s right – was precisely what was invoked to defend very long no-quit contracts during the Lochner era. The employee always had the option to starve instead, so clearly signing away the right to quit was Freedom.

Don’t let “this deal is mutually beneficial” distract you from “this deal is nevertheless extremely unjust”. There can be mutually beneficial contracts that are less inequitable.

Doc Merlin July 3, 2012 at 1:38 pm

‘Don’t let “this deal is mutually beneficial” distract you from “this deal is nevertheless extremely unjust”. There can be mutually beneficial contracts that are less inequitable.’

What’s the alternative? Banning deals that aren’t mutually beneficial and people would be willing to take?

david July 3, 2012 at 1:49 pm

Stacking the deck in various ways so that the deals which are eventually formed are tolerably equitable ones? There are lots of solutions here. Libertarian-leaning ones like basic incomes function in this sense, although the Crooked Timber post correctly points out that it implies tax levels that libertarians seem to find abhorrent. Neoliberal notions of deregulation plus redistribution function in the same sense.

TallDave July 3, 2012 at 2:45 pm

Incentives matter. Unless you start forcing employers to hire a certain number of people at certain wages (in which case the information problem already dooms you), they will respond to your stacked deck by reducing compensation/hiring.

david July 3, 2012 at 2:55 pm

If you assume there is only one uniquely bilaterally beneficial contract, then by definition moving away from it reduces real transactions. I think we live in a universe where price discrimination is a phenomenon that exists, though.

TallDave July 3, 2012 at 3:06 pm

You do understand you are changing the price of labor to the employer?

david July 3, 2012 at 3:34 pm

Employment level depends on the price of the marginal laborer, not the share of national income that labor captures.

TallDave July 3, 2012 at 3:50 pm

Which part of “you are changing the price of labor to the employer” is confusing you? I said nothing about national income.

david July 3, 2012 at 5:51 pm

What part of “employment level depends on the price of the marginal laborer” do you find difficult? Price discrimination maintains efficiency of allocation and only alters endowments, so that employers find that their profit-maximizing level of employment is nonetheless more costly. Of course the price of labor changes for the employer. It can change in ways that do not reduce compensation or hiring.

Unionization under the law of one price must restrict entry to raise wages of members; only labour groups that can suppress the law of one price can work under full employment. But the American lockout/walkout format of labor bargaining moves in favor of the former.

TallDave July 3, 2012 at 6:04 pm

It can change in ways that do not reduce compensation or hiring.

/facepalm

david July 3, 2012 at 6:12 pm

General equilibrium is a difficult notion, yes.

TallDave July 3, 2012 at 6:17 pm

Apparently for some, yes.

david July 3, 2012 at 6:25 pm

Wait. I realize why you don’t get it, you have no idea what price discrimination is.

Here, let me help: it means charging differing prices according to willingness to pay rather than letting the market equalize the price of otherwise identical products (here, labourers of indistinguishable ability). i.e., price increases for buyers who would buy at higher prices anyway, letting the marginal buyer pay the same price as they would have otherwise (i.e., marginal cost). For this reason, the seller’s surplus (i.e., labour’s share) increases, the monopolist (i.e., the union) receives even more profit and is very happy, the average cost for the buyers increase, yet the quantity sold (i.e., hiring) remains the same. This is for the same reason the familiar phenomenon of price discrimination in goods is efficient.

Naturally, labour groups can only negotiate their way into acting as perfect price discriminators under particular labour law frameworks.

david July 3, 2012 at 6:33 pm

(I do emphasize that this is only one way to achieve the intuitive notion of moving endowments around whilst leaving allocations efficient – there are other suggestions of varying political sense. Regardless the raw assertions that you can’t enforce transfers without karmically ironic penalties is a classic case of insufficient knowledge of economics.)

TallDave July 3, 2012 at 6:34 pm

Oh good, then you realize price discrimination is basically irrelevant. Now, the only mystery is why you brought it up.

david July 3, 2012 at 6:40 pm

… because it is a trivial example of increasing labour’s share of income without reducing compensation or hiring? And furthermore does so in a decentralized incentive-consistent way, i.e., the monopolist supplier of labour benefits from becoming as price-discriminatory as possible, which unambiguously moves toward efficiency, so any Hayekian planner-knowledge problems are dispelled?

TallDave July 3, 2012 at 6:46 pm

Great, that will be totally relevant when we have a monopolist supplier of labor. I’ll keep your number on speed dial just in case.

And no, that isn’t efficient. Just ask the employers who go out of business when labor becomes more expensive.

david July 3, 2012 at 6:48 pm

Was “price increases for buyers who would buy at higher prices anyway” too hard to understand?

david July 3, 2012 at 6:50 pm

Anyway, if you’ve ever wondered how on earth continental industry-wide bargaining agreements negotiated by unions that don’t even encompass all employees of the industry manage to persist without destroying Germany and such, the point about the union interest is worth keeping in mind.

TallDave July 3, 2012 at 6:54 pm

Apparently “price discrimination is rare in labor markets” was.

No, there is no magic by which employers will not generally respond to your stacked deck by reducing compensation/hiring.

david July 3, 2012 at 6:56 pm

It is also the case that unionization is increasingly rare in private-sector US labour markets. But I hope you understand that this and ancillary labour-related legislation is precisely what is being argued about here, so “but this is not the status quo!” is exactly as irrelevant as you might guess.

TallDave July 3, 2012 at 6:59 pm

Oh good, I had been wondering why Germany still existed. Thanks for clearing that up!

Have you ever wondered why countries with mandated longer vacations have lower pay?

david July 3, 2012 at 7:02 pm

What is this, mood affiliation tango? I have said nothing about mandatory vacation. You insist that it is impossible to increase net compensation without decreasing compensation or hiring; I have provided a trivial counterexample embedded quite solidly in the realm of neoclassically marginalist economics, and you have responded by repeating yourself.

TallDave July 3, 2012 at 7:08 pm

No, this is you making irrelevant points and me pointing out, over and over again, that they are irrelevant.

Do you really think that, in the aggregate, supply and demand does not operate in labor markets? Really?

At least make some minimal effort at not being a complete waste of my time. This is worse than when you confused trespassing with a contract violation.

david July 3, 2012 at 7:21 pm

The result I outlined is exactly an equilibrium outcome, that is, supply and demand in both the labour market and in aggregate general equilibrium are equalized and all markets clear. You know nothing of economics and a babbling ideological fool. I have wasted my time trying to educate you.

Careless July 3, 2012 at 8:18 pm

This is worse than when you confused trespassing with a contract violation.

No it isn’t.

TallDave July 3, 2012 at 9:12 pm

Great, the guy who accepts neither that labor markets will follow basic laws of supply and demand in response to prices nor that there will be effects on business profitability thinks I’m a babbling ideological fool who doesn’t understand economics. I have just been paid the highest possible compliment.

TallDave July 3, 2012 at 10:03 pm

No it isn’t.

I checked and you are right, I stand corrected. This was an arguably interesting detour, albeit with little real-world relevance and incorrect conclusions about the ultimate effect on employers’ propensity to hire and marginal ability to operate profitably, whereas the other just didn’t make any sense.

The comments here are a great example of the problem with Marxist thought generally — it has to rely on crazy assumptions like “well, if you were starving…” (that one alone appears several times) in order for its conclusions to make any sense.

TallDave July 4, 2012 at 9:31 am

Just to be clear on why price discrimination doesn’t make sense here:

1) In the general cases of pd, consumers’ continued existence isn’t partly a function of pricing — getting more surplus is assumed to be cost-free to the supplier, which is not true for employees who become more likely to lose their employer due to exogenous factors.
2) Labor laws increase labor costs to everyone, not just employers who would have paid more.
3) The notion of a true labor monopoly (even by law) is about as unrealistic as Americans starving — there will always be people somewhere willing to work for less (this is why private sector unions have declined in America — employers moved the jobs somewhere else).
4) Employers/investors respond to incentives; even for those that stay in business, one can’t take a free lunch out of their profits with no consequences to employment. Diminished expectations for profit due to increased labor pd will lead to several behaviors: increased substitution of capital for labor (lights-out factories), reduced propensity to invest generally, etc.
5) There’s still an information problem, esp if labor is monopolist.

Careless July 3, 2012 at 4:26 pm

” the Lochner era”

summon David Bernstein!

david July 3, 2012 at 6:47 pm

Do you know whether his view has become accepted, or is the Sunstein narrative still the orthodox account?

Careless July 3, 2012 at 8:19 pm

Not even the faintest hint of an idea.

Noah Yetter July 6, 2012 at 12:32 am

There cannot be injustice in a mutually beneficial, mutually agreed-upon exchange.

CANNOT.

JVA July 6, 2012 at 7:13 am

“You give me your wallet and I will not kill you.”
Mutually agreed (obviously) and mutually beneficial (one lives, one gets a wallet).

Seth July 3, 2012 at 1:41 pm

It is clear the issue being disregarded is that the Crooked Timber writers generally presume that there is a difference in the economic power of worker and employer. If Dr. Cohen and/orTabarrok could assume the existence of the differential then the argument would get interesting.

FXKLM July 3, 2012 at 1:49 pm

If there is a difference in power, it is because the job being offered by the employer is much more valuable than the services being offered by the employee. I don’t see why that is any reason to give extra rights to the worker.

Seth July 3, 2012 at 1:59 pm

So if we agree that the value of the job to the employee is higher than the cost of creating the job for the employer, what does the employer do with the excess value. He stores it away and buys more political and economic power…These he can use in the future to stop the employee from peeing, or having sex…

Cliff July 3, 2012 at 2:04 pm

So what?

MD July 3, 2012 at 2:16 pm

It’s okay for someone to use economic power to obtain political power, and then use that political power to gain more economic power? That doesn’t sound very libertarian.

FXKLM July 3, 2012 at 2:26 pm

That’s not the comparison I was making. I was noting that, in the employment relationship, the employer is providing more value than the employee. If it’s such a horrifying prospect for an employee to lose a job, that means the terms of employment are extremely favorable to the employee. To me, the power disparity suggests that the agreement is already tilted in favor of the employee and it’s certainly no reason to give the employee even more rights.

david July 3, 2012 at 2:30 pm

“Tilted in favor”? Compared to what? Why on earth might the terms that result from some prevailing set of labour market institutions necessarily be just ones?

seth July 3, 2012 at 2:42 pm

I am sure that there are some cases where employees have more economic or political power than employers, and bargains are made to benefit the employees. These must be rare cases, here is why: Why does an employer hire workers? It is because their product exceeds their costs. If that is not the case the employer will stay home and employ nobody. That money came from somewhere and it goes somewhere. I am pretty confident in saying that there is only a small chance that this money increases the political or economic power of employees.

FXKLM July 3, 2012 at 2:57 pm

My argument is that the power of the employer is entirely a result of the employee receiving more benefits from the arrangement than the employee. You’re assuming that the party with greater power and the party receiving the greater benefit are the same because you’re assuming that the disparity in power causes a disparity in benefits. I’m saying that it’s a disparity in benefits that causes the disparity in power. The causal relationship runs the other direction in my view.

Brian Donohue July 3, 2012 at 5:17 pm

@ seth. “Why does an employer hire workers? It is because their product exceeds their cost.”

First off, this only holds for the private sector. Second, it’s only an expectation, when each employee is hired. Third, to the extent it’s true, the “extra value” an employer receives, above and beyond what he pays the employee, is leverage to the employee. It is what the employer risks losing if the employee walks.

You want employment leverage as an employee? Don’t be overpaid.

GiT July 3, 2012 at 5:40 pm

“entirely a result of the employee receiving more benefits from the arrangement than the employee”

A typo makes this confusing.

Byomtov July 3, 2012 at 6:05 pm

Please do not confuse utility with money.

The employee faces an entirely different set of choices than the employer. That the employee has a stronger preference for keeping her job over the alternatives than the employer has for firing her does not mean the employer has somehow been taken advantage of.

Indeed, it likely means the opposite.

Sam July 3, 2012 at 6:17 pm

There is a fundamental asymmetry – employers can usually choose not to hire an employee, as so take on less business than if they had a larger workforce. Employees can’t usually choose to not work, and just go hungry. Whether employees are in this position or not is a function of the overall economy. In the case where unemployment is low, prospective employers must compete for good employees, and one would suspect that having to have the frequency and duration of one’s urinations monitored would ensure that desirable employees got jobs elsewhere. This year, jobs aren’t so easy to come by, and employees, particularly those with family responsibilities, may not be in a position to risk rocking the boat.

Willitts July 3, 2012 at 8:49 pm

Generally I agree with this sentiment, but recently I saw a local restaurant close because of the inability to find reliable workers. Minimum wage and other laws played a role, but employers sometimes “go hungry.”

I do believe there is an asymmetry, and that an implied contract is beneficial. If a manager cannot fire an employee without good cause, the firm’s owner (shareholders, if a corporation) have the state as a partner in preventing arbitrary or capricious personnel actions. Even in cases of discrimination which are codified into federal law, the employer has powerful affirmative defenses to avoid liability. All the firm has to do is exercise due diligence.

No one should lose their job for reasons that are unrelated to business conditions or a good business reason. Employees or managers can contrive circumstances to get rid of a good employee. Only the threat of lawsuit will keep HR on its toes. It’s also reprehensible to fire someone over 50 who is still productive. Workers should not be employed only on a whim.

TallDave July 3, 2012 at 10:05 pm

just go hungry.

Again! For God’s sake, the poor are obese in this country.

johndraper July 4, 2012 at 3:34 am

One third of homeless are obese and only 2% are underweight: http://www.medicinenet.com/script/main/art.asp?articlekey=158381

The fact is that the working class are increasingly being priced out of the market by AI. It’s only a matter of time before stupid people are entirely unemployable. When that happens we’re gonna have to answer some tough questions about how to deal with millions of people who are not, nor ever will be, economically productive citizens.

GiT July 4, 2012 at 5:40 am

Also, obesity can be a consequence of being malnourished, and malnutrition can be a form of hunger. Sometimes hunger is just a lack of calories, sometimes hunger is a lack of nourishing calories. Some obese people always feel hungry. But I guess that’s not hunger because they’re fat. Certainly, it’s a hunger problem that can’t necessarily be solved by a policy of giving people more food; but it might be solvable by spending more resources on their problem.

TallDave July 4, 2012 at 9:43 am

One third of homeless are obese and only 2% are underweight:

Yep, clearly the notion labor relations have anything to do with access to food is ridiculous. And you can eat very healthy very cheaply — I make a protein shake for breakfast and lunch that costs less than a dollar and is nutritionally optimal.

When that happens we’re gonna have to answer some tough questions about how to deal with millions of people who are not, nor ever will be, economically productive citizens.

It’s probably not as big an issue as people think. The thing to remember is that productivity rules all — if you’d told people in the 1950s that around 5% of working-age people were on disability, more than 10% were getting food stamps, and there were only 2-3 workers for every retiree, that would have sounded like a major problem. But we’re so productive now we can afford a level of anti-productive socialism that would have have been much more problematic in the past.

I like to think we’re headed for a John Barnes future where people are only required to work for 2 hours a day for 5 years — and bitterly resent even that. A few people are still productive, but most just enjoy themselves.

Sam July 5, 2012 at 6:36 pm

Alongside fat poor people and homeless people winning places at Harvard, my universe also contains poor children who are sent to school with no breakfast because there’s no food in the house, or whose biggest meal of the day is their free school lunch. Yes, you can argue that these kids have incompetent parents, and that a competent poor parent could manage their limited budget to provide adequate food, but that’s hardly a fair argument. Expecting poor people to show reasoning skills that are above average for the general population seems a little unreasonable to me.

Tracy W July 4, 2012 at 10:21 am

Yes, which is a prima facie case against raising the costs or risks of employing someone. So many of these legislative proposals tend to protect people currently with jobs at the expense of those who want a job but currently don’t have one. It’s hard to make a moral case for that.

GIVCO July 3, 2012 at 6:01 pm

Read Renegade History of the United States and you will better understand the power employees have over their employers, particularly passive aggressiveness and hangovers.

Dan Hanson July 3, 2012 at 6:07 pm

The left always frames issues in terms of the strong vs the weak. They see the labor market is a zero-sum game: If an employer profits, it must be because he’s extracting value from the employee at the employee’s expense. That was basically Marx’s labor theory of value and the source of his belief that the working classes would be in conflict with industry. The left has never really let go of this.

As a matter of fact, it does not matter whether the firm has more power than I do, because the nature of our contract has nothing to do with our relative disparity in power, and everything to do with the value the firm can offer me vs the value I offer to the firm. I’m not a serf, and I’m not exploited. I work for a company for the simple reason that the company gives me access to the tools I need to magnify the value of my own labor. I work on a product with millions of dollars of tools. The result of my work is marketed and distributed by other workers. The employer provides me with a place to work, and magnifies my labor through the structure of the firm. This is not zero-sum: I benefit, AND the employer benefits.

Why do you think an auto worker makes as much as they do? It’s not because of the union, or because of government laws. They make what they do because working for an auto company allows them to magnify their labor by working on an assembly line, or by managing automation, or even just through the division of labor so that I can focus on what I do best and leave the paperwork and other stuff I’m no good at to other people. Everyone benefits.

An auto company may be worth billions, but if I’m a productive employee I still have a bargaining chip: If I make demands that cost less than my marginal value (or that of someone willing to replace me), I have a good chance of having that demand met. If I’m a lousy employee who is not productive, I have no power at all. That has nothing to with the relative disparity in power between myself and my employer, and has everything to do with the value of my employment contract vs the cost of my demands.

The disparity in power can often work both ways. My company has several job openings for hard-to-fill specialties. The people in these jobs can demand more in wages than others and get it, because the company has no choice. Likewise, it’s not unheard of for someone who is temporarily in a position of power in a company to leverage that power into greater wages or benefits. For example, if a company has two certified machine operators, and one quits. The other one now has the power to shut down the entire assembly line, and may try to leverage that power by lobbying for a raise. You see this quite often in contract work: A company with a contract job that would normally pay $50/hr might have to pay $100/hr if there is a shortage of available contractors, and the available contractor knows it. The fact that the company is worth billions and the contractor has a net worth of $0 has nothing to do with it.

Now, some of this presupposes that there is a reasonable amount of choice available in the labor market. The issue of company towns and regional monopolies is another matter. But in general, labor markets are fluid and therefore the price of labor tends to already include the relative values of any restrictions on freedom the employer demands. Therefore, the employer is generally only going to demand restrictions that make economic sense, and an attempt by government to remove those restrictions will increase labor costs to employers and either restrict wages or employment.

Brian Donohue July 4, 2012 at 9:32 am

slow clap.

awfulconcoction July 3, 2012 at 1:42 pm

surely you can do better than this. Reading the two articles side by side, there simply is no comparison. The main point is that libertarians have no real theory for explaining non-governmental governance other than outright tyranny (the powerful are free to take advantage of the weak; and the weak are free to starve if they don’t want to take it). This is an internal contradiction that prevents mainstream America from accepting libertarian moral philosophy (which rejects it as dog-eat-dog sociopathy).

Cliff July 3, 2012 at 2:06 pm

What the hell is non-governmental governance? How can voluntary association be tyranny? My choosing not to hire you is tyrannizing you somehow?

UnlearningEcon July 3, 2012 at 2:21 pm

My god cliff did you actually read the CT piece? All of these silly ‘everything is voluntary’ arguments have been addressed.

TallDave July 3, 2012 at 3:00 pm

You mean their argument that voluntary employment somehow isn’t voluntary, because sometimes workers are “desperate?” I guess sex isn’t voluntary either, if you really really want it. Who knew so many men had been raped by attractive women over the years? The injustice, my God. We demand reparations!

Sugar Stumpy July 3, 2012 at 3:18 pm

Ok. You don’t believe any type of coercion exists outside of the government. You believe no one has ever been compelled to do something they wouldn’t otherwise do because of external costs being imposed on them by (non-govt) others.

TallDave July 3, 2012 at 3:21 pm

Of course not, armed robbery happens every day. It just doesn’t involve W-2 forms.

UnlearningEcon July 3, 2012 at 3:33 pm

No that’s not what I meant and was accompanied by a ridiculous false equivalence.

The CT guys made the argument that even if somebody voluntarily consented at the point of employment, it doesn’t automatically follow that everything that happens after that is ‘free’, an argument with echoes of Hayek in CoL.

You must try harder to convince me you have read the piece and properly engaged it. t asks a lot of difficult question and your tinned libertarian responses will not work here, you’ll have to think instead of paraphrasing Milton Friedman.

FYI July 3, 2012 at 4:05 pm

Oh yes, because ‘guys at CT’ are so much more versed on this that stupid old Friedman.

The CT article is typical of the left: they start with a fallacy (employees are not free because employers can dictate rules which we think are not fair) and go from there. To try and analyze all the subsequent arguments is an exercise in futility. If you don’t understand the difference between forcing someone to pee in a cup and giving someone enough money until he is convinced to do so voluntarily there is no argument here. Liberty is the power to choose what you want to do. Nobody said that the available options are what you think they should be.

TallDave July 3, 2012 at 4:07 pm

Well, they did in fact make that argument re voluntary labor. Did you read the piece? Anyways, it’s a perfectly valid equivalence, their argument is really really wanting something means you’ve been coerced. It’s nonsense, which becomes very clear in other contexts.

Of course it’s free — for you and your employer. If you show up with underwear on your head, your employer may feel that violates his understanding of your employment agreement and he is free to fire you. If your employer says “Hey, btw, I expect you to work with underwear on your head” you are free to quit. There is no such thing as indentured servitude in this country. The only justification the CTers give for claiming the relationship is unfair is that you might really really want your employer’s money.

The piece is just a collection of poor logic built on dubious claims (U.S. citizens are going to starve without jobs? really?), and even libertarians who just found Ayn Rand yesterday would have zero difficulty in poking numerous gaping holes in it.

UnlearningEcon July 3, 2012 at 5:45 pm

FYI,

I’m not sure what’s worse about your comment – the sweeping generalisations of ‘the typical left’, throwing around the word ‘fallacy’ when it is not justified, or your appeal to authority (no I wasn’t appealing to authority, I was simply noting libertarians tend to rely on cookie cutter arguments, many of which originate from Friedman).

‘employees are not free because employers can dictate rules which we think are not fair’

Not really. Employees are not free because employers can exercise power over them by making them do certain things. You will have any manner of ‘b-b-b but voluntary’ objections to this and they are all addressed in the post- perhaps you should read it instead of finding any excuse to dismiss outhand.

TallDave,

“their argument is really really wanting something means you’ve been coerced. It’s nonsense, which becomes very clear in other contexts.”

No, it isn’t. Wow.

“The only justification the CTers give for claiming the relationship is unfair is that you might really really want your employer’s money.”

No, they go into far more depth than this. And ‘starving without’ isn’t the same as ‘really really wanting’

And it is an abstract argument, not based on the US specifically. In abstract, under a wage labour system the alternative is starvation. They also address the issue under the assumption their is an IT, though, and no it doesn’t amount to somebody ‘really wanting something’, it’s about the large costs associated with quitting versus the small costs of each coercive act an employer may demand.

I just can’t take you guys seriously when you clearly haven’t read the piece properly.

UnlearningEcon July 3, 2012 at 5:47 pm

Correction: under the assumption there is an NIT*

TallDave July 3, 2012 at 6:07 pm

UE,

All their arguments amount to “the employee might really really want the employer’s money.” If they made an argument that didn’t amount to that, you’d have some response beyond “Did not!”

The piece doesn’t deserve to be taken the least bit seriously.

TallDave July 3, 2012 at 6:10 pm

In abstract, under a wage labour system the alternative is starvation.

And I’m sure that’s a terrible tragedy for the residents of Abstractia. My heart weeps for them. Please, for God’s sake, erect an abstract Marxist utopia so their poor suffering abstract children don’t develop abstract malnutrition.

GiT July 3, 2012 at 7:03 pm

““their argument is really really wanting something means you’ve been coerced. It’s nonsense, which becomes very clear in other contexts.””

No, the argument is that “really really really wanting something” means you may have been coerced. The claim that ‘all cases of really wanting something are cases of coercion’ may be nonsense (though there are those who would bite the determinist bullet here and could make this position perfectly sensible), but it is definitely a strawman.

Insofar as most people don’t like to follow Hobbes all the way through on his definition of voluntary (whereby, ‘really really wanting to say alive’ doesn’t mean your choice to submit to the sword is not a choice), the argument is perfectly reasonable, and not at all nonsense.

In some situations ‘really really really wanting’ something means you are being coerced. In some situations it doesn’t. In order to determine which is which (e.g., whether Hobbes’s ship captain throwing stuff overboard in the storm is non-coercive while Hobbes’s vanquished soldier held at sword point is coercive) requires more work.

It’s perfectly possible to both choose and to be coerced. If that means that it’s perfectly possible for something to be both voluntary and coercive, because you defined volition as choice, well, them’s the breaks.

TallDave July 3, 2012 at 7:16 pm

(whereby, ‘really really wanting to say alive’ doesn’t mean your choice to submit to the sword is not a choice),

Which apparently happens all the time where you work?

Again, we are talking about getting money. Not whether you’re allowed to breath, not choosing which of your children is thrown off a building, but whether or not you get your employer’s money.

GiT July 3, 2012 at 7:51 pm

Right, so you’re offering a brightline threshold for what sorts of threats and/or deprivations count as coercive and which don’t, and under what contexts they do or don’t.

There is disagreement about those thresholds and conditions. That disagreement is not reducible to the bright line you offer as a caricature: ‘really really wanting something: money.’

A real discussion would involve much more detailed talk about what makes things coercive or not.

‘Really really really wanting money’ is not really enough to dismiss the claim, quite obviously. (Maybe I really really want money because you owe it to me from a contract. Or because you physically injured me. Or because you informally promised me money. Or because I’m starving. Or because I think I ‘need’ a job. Or because you racially/sexually/etc discriminated against me. Or because you lied to me. Or because you omitted information you could have made available to me in making a decision. Or because you polluted the air.)

The CT post contained examples, and anecdotes, and studies, about actual orders, commands, demands, requests, &etc people make of each other, and the contexts in which they occur. And these matter. But your simplification of ‘employee demands money for job’ just renders everything completely inane.

TallDave July 3, 2012 at 9:19 pm

I’m saying when you contract to get your employer’s money, you are not being coerced.

A real discussion would end there, much as few people debate whether 2 + 2 is really 4 as opposed to sometimes being 5 or 7 or the square root of negative pi.

Again with the starving. I had no idea there were so many North Koreans posting here.

GiT July 3, 2012 at 10:18 pm

Your decision to take my use of the starving example as a claim that the US is like North Korea is further evidence of your typical bad faith in argument. I was listing possible reasons people might want your money. I was making no judgment as to whether they were believable claims or not or where they applied or whether they were good or bad claims.

“I’m saying when you contract to get your employer’s money, you are not being coerced.”

And the CT post is saying, ‘when someone orders you to do something, sometimes you are wrongfully being coerced, and sometimes you aren’t, and we cant simply look at the employment contract to determine whether or not you’re being wronged.’

Employers can fire employees in ways there are justiciable, just as employees can quit doing work in ways that are justiciable (“I quit.” *let go of rope* *piano crushes my manager*), regardless of whether the justiciability of those claims is spelled out in a contract.

Maybe all of the situations in which there are justiciable tort claims are covered by tort law (or by criminal law, if not a tort). But maybe some tort claims (or claims about violations of equity) are specific to employer-employee relationships, and thus need their own particular code – employment law.

In order to figure that out, we need to see whether all varieties of contractual relationships are alike, and thus contract law can cover all contractual relationships equally, or whether different varieties of contract presuppose different principles of equity (and accordingly different varieties of contract law), which are best encoded not in the contract (since writing the law of equity into every contractual relationship is ridiculous) but in some variety of publicly known law (common, natural, statute, sharia, whatever).

I would suggest that contractual relationships which authorize others to give you unspecified commands bring up special problems not present in other types of contract, and that these problems are often best dealt with outside of the employment contract itself, through what we could call ‘employment law.’ Fair notice, minimum wages, anti-discrimination, wrongful termination, &etc are all examples of things that have been treated as appropriate for that domain. Not all of them are necessary or appropriate, but the inappropriateness of any one particular statute does not tell us whether or not having a general code with specific statutes is necessary or appropriate.

TallDave July 3, 2012 at 11:33 pm

Are you drunk or something? My point was not to compare the U.S. to NK, it was just that no one starves in the U.S. hence your example is pointless. Yes, there are all kinds of ridiculous possibilities one could examine — you could be falling into a black hole! you could be riding a dragon! — but if they bear no relation to reality, they’re not very interesting. (And when you have to rely on that kind of example, maybe you should consider re-examining your argument…)

The rest of that is just incompleteness again. CT goes on and on about the things that might not be spelled out, but as long as they’re non-tortious and lawful the argument doesn’t hold water — you can choose to do those things in exchange for your employer’s money, or not. No coercion.

I think libertarians generally agree employment law should exist.

GiT July 4, 2012 at 2:18 am

In order for your point that the US is not like NK to make any sense, it must assume that the person you were responding to said something that implied the US was like NK. Since I nowhere said that starving is a problem in the US, but only that it is a problem which might lead me to ask you for money, your comment is inane. The point of my example was not to exemplify “things that happen in the US”, it was to exemplify “things that could lead people to ask for money,” and nothing in my comment suggests otherwise.

And the “left” argument, or whatever, is that in order for employment law to exist, and for torts to exist, you need to go about defining what torts are and what the law is.

So your comment that, “as long as they’re non-tortious and lawful the argument doesn’t hold water” just begs the question, as the whole debate is about *what is tortious and lawful*

I’d accuse you of being drunk, but I know better. The problem is that you’re obtuse.

GiT July 3, 2012 at 5:49 pm

“What the hell is non-governmental governance”

http://en.wikipedia.org/wiki/Corporate_governance
http://en.wikipedia.org/wiki/Bylaw#Corporate_bylaws

See also: “Management” “Organizational Theory,” “Institutional Design,” “Administrative Science,” &etc.

But please, continue to feign being flummoxed by the obvious phantasm of a contradiction.

Slocum July 3, 2012 at 2:18 pm

“The main point is that libertarians have no real theory for explaining non-governmental governance other than outright tyranny (the powerful are free to take advantage of the weak; and the weak are free to starve if they don’t want to take it).”

The problem is that progressives have a an archaic, stereotyped view of the employer-employee relations. According to this view you might imagine, for example, that workers earning near-minimum wage are the weakest of the weak who are terrified of losing their jobs and who meekly tolerate abuse of rich, powerful employers. But if you have any familiarity with running a business employing low-income workers, you’d know that one of the many headaches is no-shows and workers walking out and quitting without warning. Why? Because those workers have almost nothing invested in those jobs, next job will pay roughly the same, and a period of collecting unemployment is welcome (since, for low income workers, it replaces a much higher fraction of their working salaries). And the employers of such workers? Quite likely to be owners of businesses with high failure rates (e.g. fast-food franchisees) who are often working very long hours, are far from rich (and who, in fact, may have bet their savings and their house on the business).

Progressives have an extremely un-nuanced view of the power relations in the modern workplace.

david July 3, 2012 at 3:28 pm

You know what puzzles me, the CT post is all “libertarians have an archaic, stereotyped view of employer-employee relations” itself. Looks like nobody even agrees on the facts, never mind the ethics.

TallDave July 3, 2012 at 4:59 pm

But if you have any familiarity with running a business employing low-income workers, you’d know that one of the many headaches is no-shows and workers walking out and quitting without warning

No kidding! I would bet the collective brain trust over there has a net total of something like zero employer experience. The notion one word form you is going to ruin a low-level employees’ life is pretty darned funny.

byomtov July 3, 2012 at 8:33 pm

The problem is that progressives have a an archaic, stereotyped view of the employer-employee relations.

No. The problem is that libertarians have a totally abstract view of employer-employee relations that is based on sophomoric reasoning and is utterly disconnected from the way things actually work, the pressures people are actually under, and the choices various participants in the labor market actually have.

derek July 3, 2012 at 10:33 pm

I take it you are an employer.

Does anyone here know why an employer may require someone to pee in a cup?

Maybe someone could enlighten us with labor statistics showing what proportion of the workforce is employed by large faceless corporations, compared to small businesses.

Maybe someone could also speculate on whether a journalist is a rational guide to employer/employee relationships when their industry is being dismantled, and they are likely to be put out on the street.

byomtov July 4, 2012 at 9:17 am

Are you asking me?

Actually I have been an employer, and sort of still am. (I’m semi-retired but still active in some businesses on a part-time basis).

But my sentiments, as ought to be clear from my comments, are decidedly opposed to the attitudes expressed by Tyler and Alex.

TallDave July 3, 2012 at 2:47 pm

Yes, because there are so many starving people in America.

R.Mutt July 4, 2012 at 4:59 am

“In 2010, [in the United States] 17.2 million households, 14.5 percent of households (approximately one in seven), were food insecure.”

http://www.worldhunger.org/articles/Learn/us_hunger_facts.htm

Demosthenes July 4, 2012 at 8:30 am

Type mismatch.

JWatts July 4, 2012 at 3:04 pm

The phrase ‘food insecure’ is designed to for just that purpose. “There are three kinds of lies: lies, damned lies, and statistics.” Disraeli

Stefan July 3, 2012 at 3:33 pm

I suspect that he cannot do better than this. It’s not really surprising that this knee jerked in such an obvious way (yes, everyone in the world actually does understand how at-will employment works). Speaking of mood affiliation, notice how Alex consistently and falsely attributes “outrage” to the post at Crooked Timber? They are so blinded with outrage that they can’t even appreciate incredibly pat points about how feudalism is worse than the modern private sector!

Anon. July 3, 2012 at 3:44 pm

No, we completely disagree with the idea that mutually beneficial and freely entered-into contracts can somehow be exploitative or “taking advantage of”. This whole idea is by definition fantastical, and because it is a leftist keystone there can never even be conversation about these things.

It’s like arguing with a creationist. Their axioms are simply antithetical to yours; there are no facts you can use to convince them otherwise.

GiT July 3, 2012 at 6:46 pm

“No, we completely disagree with the idea that mutually beneficial and freely entered-into contracts can somehow be exploitative or “taking advantage of”.”

What a dumb idea on your part.

Let me be very clear about the argument I’m going to advance, by defining the key term:

being taken advantage of/being exploited- being subjected to a course of action which makes one worse off than one could have been.
Exploiting/taking advantage of – taking a course of action which makes another worse off than they could have been.

Note what these are not the same as:

making oneself worse off: taking a course of action which makes one worse off than one is
making oneself better off: taking a course of action which makes one better off than one is

Your supposedly non-dogmatic, reality matching axioms are a product of conflating ‘being made worse off’ with ‘being taken advantage of.’ The two ideas are not the same, and this means that the set ‘mutually beneficial actions’ and ‘actions in which one is not taken advantage of’ are not necessarily the same, though it’s a possibility. Your error consists in treating the two sets as the same.


Now, a quick demonstration

We are limiting ourselves to the set of ‘voluntary exchanges: exchanges where each part acts on the basis of their own will. Excepting caveats about fraud and what not, we can equate ‘voluntary’ with ‘proceeding from someone’s opinion of what will make them better off (e.g. voluntary decisions = rationally self-interested decisions).

I am negotiating for a car. My reservation price is 8k dollars, the reservation price of the seller is 6k dollars.

All prices between 6k and 8k would pick out exchanges which are mutually beneficial and thus can be, in principle, voluntary. (But not necessarily so – one can be coerced into what one would chose voluntarily absent coercion, of course).

Not all prices in that range, however, are equal. That is to say, the range we are dealing with is not an indifference curve. Each individual is not indifferent as to the outcome of the exchange, within the universe of possible exchanges.

Since any outcome chosen within the universe will leave at least one party worse off than an option that was possible and that he was not indifferent towards, any outcome chosen ‘takes advantage of,’ or ‘exploits’ at least one party, insofar as it leads him to pick a course of action which makes him worse off than he could have been. Most outcomes exploit both parties. In this way purely voluntary exchanges are nonetheless characterized by people disadvantaging themselves, though they may not be characterized by people making themselves worse off (that’s another question, which gets into paternalism and all that jazz).

Only voluntary exchanges defined by a set of possible outcomes between which both parties are indifferent (or defined by a set of only one possible outcome, where all outcomes are necessarily indifferent) are non-exploitative/non-advantage-giving. Almost no voluntary exchanges are so defined. Ergo almost all voluntary exchanges are exploitative, even though all voluntary exchanges are defined by being mutually beneficial.

It seems to me that the thought that all mutually beneficial exchanges are mutually advantageous is intimately tied to the thought that a perfect market, in equilibrium, creates only one possible price. If there is only one possible price, then no advantage or disadvantage is possible. But it is practically never the case that there is only one possible price.

Anon. July 3, 2012 at 8:01 pm

>Since any outcome chosen within the universe will leave at least one party worse off than an option that was possible and that he was not indifferent towards, any outcome chosen ‘takes advantage of,’ or ‘exploits’ at least one party, insofar as it leads him to pick a course of action which makes him worse off than he could have been.

This definition of exploitation is completely absurd. Just extend the logic to ANY transaction…I go to the 7-11 and buy a coke. I’d be willing to buy it even if it cost 5 cents more. Since there is consumer surplus on the table I am exploiting the coca cola corporation. Whoops, how evil of me! I feel like a tyrant already! It’s time for government to intervene and stop this obscene senseless extortion at once!

If we agree on your definition of exploitation, it is clear that it’s not a “bad” thing. It’s a completely natural side-effect of pretty much every transaction.

GiT July 3, 2012 at 9:39 pm

Well, when Marx (the usual go to for the theory of exploitation) formulated the theory, he explicitly said that it was a non-moralized concept, and that one could just as easily say that employees exploited employers.

So using a non-moralized definition of exploitation, rather than being ‘ridiculous,’ is actually just taking someone at their word when they defined the term.

And yes, the point is that exploitation IS a completely natural side effect of pretty much every transaction. After all, to stick with the Marxist origins, surplus labor (which, in the modern theory of value could be reconstructed as producer and consumer surplus) is a side effect of pretty much every transaction.

One could generalize by saying that every division of a fixed surplus is zero-sum, and every zero-sum transaction is a matter of relative advantage and disadvantage, and every matter of relative possible advantages and disadvantages is a matter of relative exploitation.

One can moralize the standard by which such surpluses are divided, but that the surplus exists and is divided to the relative advantage or disadvantage of the participants is simply a fact of zero-sum distributions (though it also applies to non-zero sum questions – which pareto changes to make to get to one of multiple possible optima is the same problem). I think it’s important to have a vocabulary to talk about different outcomes within those spaces.

Exploitation is a category which can add to that vocabulary, if we separate the meaning of ‘exploitative’ from the meaning of ‘detrimental,’ or something like that. (though part of the point is that any exploitative outcome is detrimental relative to what is possible but not necessarily relative to the status quo).

Take a simple complementary example – splitting a check for a shared meal. There are two possibilities to consider: a negative surplus, where everyone has put in what they thought they should and we’ve underpaid, and a positive surplus, where everyone has put in what they should and we’ve overpaid. Let’s say we’re splitting a check and there is 10 dollars unpaid for. For the purposes of the example, we can’t trace that $10 to any one party who deserves to pay (or we could, but this would impose costs which exceed the benefits for every party involved). Let’s say every person is willing to pay the full 10 dollars, because none would prefer the alternative of potentially shortchanging the restaurant or eating group meals while policing everyone’s consumption and pricing their valuation of ‘good service’ and ‘ambience’ &etc so as to come up with a full accounting of every cost.

There are many possible solutions to the problem. One would be an even split. Another would be a spontaneously emergent solution (whatever set of actions happens first to fill the pot). There are many others, but I won’t bore you by listing some.

Each arrangement will advantage or disadvantage people in different ways, and relies upon different underlying theories of the best, or most fair, way to distribute the costs. Some of those arrangements objectively exploit the rich, others exploit the poor, some exploit the thrifty, some the profligate, &etc. Whether any pattern of exploitation is ‘fair’ or ‘just’ depends upon what we mean by fair and just, not what we mean by exploitation.

You see this separation of our conception of what is just and fair from our conception of what is exploitatitve as ‘ridiculous,’ I see it as useful. I see mine as useful, because assuming each participant is not exploited only when they pay their reservation price (0 in excess of what they would pay voluntarily) emphasizes that, by necessity, there is no objective, uncontroversial principle of division available. Absent an argument, an even split or a proportionate split or anything else is a heuristic, not a principle by which to engage in collective decision making about a shared problem (and ‘who pays the rest of the bill’ or ‘who should get money back from what they put in’ are very practical shared problems we all face).

Nathaniel July 4, 2012 at 2:46 am

GiT, that explanation of explotation is causing me to flash back to college professors proclaiming that everything is a social construction. Then you glance around and everybody’s got a look on their face that says, “Okay, so… now what? What was the point of this exercise again?”

I can’t possibly see what value is added to the discourse by defining exploitation in such a manner as to classify virtually all human transactions as exploiting one or both of the participants.

If I’m to accept your explanation and understand that we’re all constantly, often even accidentally exploiting each other with virtually every interpersonal exchange, where does that lead us? What’s the point? How is this a useful lens through which to examine human relationships?

GiT July 4, 2012 at 4:38 am

Ok, good question.

I’d start by saying that we should recognize that the concept we’re potentially rendering useless here is ‘economic exploitation in the tradition of Marx,’ which applies only to nominally voluntary contractual relationships. So coercive exploitation (stealing) is distinct from voluntary exploitation (price gouging), and that distinction matters. By being specific about the concept of exploitation we’re using, we can avoid talking past one another.

If I say my concept of exploitation doesn’t end where volition starts, you can say ok, I see your point, but I don’t think any exploitation that is voluntarily taken on is important – i’m concerned about violent exploitation, not exploitation in general. I’ll ask you why you don’t think it matters if Party A enjoys all the advantage relative to Party B in a voluntary exchange, and you can ask me why I think it matters who is relatively more advantaged when both Party A and Party B are getting something they want.

Another point here would be that we’ve separated exploitation and coercion here. It’s possible to coerce someone but not exploit them (paternalism). It’s possible to exploit someone but not coerce them (an unfair trade). The libertarian impulse is to say that neither of these exist. All paternalism is exploitative, all trades are fair. But we have the ability to talk about more and less exploitative coercion, and more and less fair trade. Maybe, in a binary sense, all trades are more fair than unfair and all paternalism is more exploitative than benevolent, and the libertarian is right. But maybe, in a nuanced sense, some paternalism brings people advantages and not all voluntary transactions are to each party’s benefit.

The next point would be that treating economic exploitation as a binary is not useful when we limit ourselves to economic relationships, which are by definition voluntary. If we turn off the ‘voluntary’ variable, we’re no longer talking about economics.

Rather, things are more or less economically exploitative for a particular person given some standard other than the voluntariness standard. A perfectly price discriminating monopoly is maximally exploitative of a consumer. A perfectly price discriminating monopsony is maximally exploitative of a producer.

As a parallel, think about the case ‘violent exploitation,’ where voluntary is fixed in the off position. Here, the exactions someone places on another extend from the maximal amount of stuff someone can extract from you against your will to the maximum amount of stuff you’ll let people take from you for free. I won’t begrudge someone staring at me for a few seconds, but stare at me for 40 seconds and I might tell you you’re harassing me against my will. Take one sip from my drink without my knowledge and I could care less; drink half and you’re buying me another.

We don’t treat all coercion (non-voluntary impositions) the same, because coercion can be more or less exploitative. By analogy, we might (but this is merely a suggestion) not want to treat all exchange (mutually voluntary impositions) the same, because mutually voluntary impositions can be more or less exploitative.

The last point is to recognize that we have to construct standards of fair exchange, if we are to have independent standards of fairness. If we want to talk about fairness, it’s not enough to talk about volition. Fairness, when it is used usefully, is primarily used to distinguish between different varieties of voluntary exchange. When someone robs me, obviously it was unfair. When I trade with someone, we don’t know. Some trades are fair, some aren’t.

When I say a transaction is unfair, I’m not saying that it’s involuntary, I’m saying that it’s exploitative. In this way my definition of exploitation strikes me as quite useful, because it provides us with a way to talk about fairness as the distribution of advantage and disadvantage between consumer and producer surplus in a way that conforms with how we already talk about exploitation in the realm of economic exchange. What else could fairness be, unless fairness is a meaningless concept?

Importantly, insofar as our standards of fairness are constructed, it is a perfectly viable position to argue that there is no such thing is fairness – that fair is just another name for voluntary. But it seems more correct to me to argue that exploitation exists, but fairness doesn’t, rather than to argue that exploitation doesn’t exist, so fairness doesn’t. I’m more willing to buy the argument that ‘fair’ and ‘unfair’ don’t correspond to any quality of relationships (beyond, say, the quality of voluntariness or involuntariness), than I am to buy the argument that ‘more advantageous than was possible’ (more exploitative) and ‘less advantageous than was possible’ (less exploitative) don’t correspond to a quality of actual relationships.

This is because I’m much more apt to buy the argument that a particular concept we use isn’t useful or unique, than I am to buy the argument that it was not possible for me to have come out better in a voluntary transaction (that I was, relatively, exploited).

Nathaniel July 4, 2012 at 1:38 pm

GiT, now we’re getting somewhere. I do indeed believe that fairness is a meaningless concept. It can be defined however you want. Is it fair if someone is able to start a healthy productive business due to the cushy life they were born into? Some would say yes, we all have to work with the advantages we’re given, and he’s helping his workers by offering them jobs that would not otherwise be available, while others would say no, it was a cosmic accident that made him a master over the workers and it’s possible for him to exploit them by keeping the profit for himself and his business.

You see the problem here? These are irreconcilable viewpoints. There’s no objective way to define an agreed-upon standard for what is or is not fair because it’s so personal a judgement, so as a concept, I don’t find it very helpful to think that way. If two parties can’t agree on the definition of a term, the term is not useful in fostering communication or understanding.

JWatts July 4, 2012 at 3:09 pm

“If two parties can’t agree on the definition of a term, the term is not useful in fostering communication or understanding.”

I firmly agree with this, but it’s always helpful to keep in mind that the standard active Marxist response to an impasse tends to be violence. Just saying. ;)

GiT July 4, 2012 at 5:18 pm

“Justice” “fairness” “good” “evil” “moral” “right” “wrong” “beautiful” “ugly” “harmful” “beneficial” “equal” “free” “coercive” &etc are all terms of what Hobbes called “equivocal signification.”

What’s clear to me is that refusing to countenance words of equivocal signification is “harmful to communication and understanding.”

Nathaniel July 4, 2012 at 7:17 pm

How could it possibly be harmful to communication and understanding to try to avoid making arguments that hinge on impossible-yet-necessary mutual agreement to terms whose meaning is highly subjective and personal?

To bring this back to the subject at hand, we can’t hope to have a useful conversation on exploitation when I barely believe it even exists, while you see it in nearly every interpersonal transaction. Any conversation that concerns the proper social response to exploitation is therefore impossible because we disagree on the nature and existence of the discussed phenomenon. Instead, the conversation will inevitably drift toward arguing over our personal definitions of the term, which gets us nowhere because we’re both intelligent, thoughtful people with well-developed personal philosophies and are unlikely to budge in a verbal sparring match conducted over the internet.

See how this isn’t useful?

GiT July 4, 2012 at 9:07 pm

“How could it possibly be harmful to communication and understanding to try to avoid making arguments that hinge on impossible-yet-necessary mutual agreement to terms whose meaning is highly subjective and personal?”

How could it possibly be harmful to communication and understanding to find agreement where there appears to be disagreement and to isolate and specify where there is fundamental disagreement? How is it harmful to communication and understanding to communicate and understand at precisely what points our disagreements become, in essence, political?

I’d wager you would have no time or patience for it because of your predispositions, but I would nonetheless recommend the book “Disagreement” by the French anarchist Jacques Ranciere. Actually, the collection of essays “Dissensus” probably has a shorter statement of the position in the essay “Ten Theses on Politics.”

“To bring this back to the subject at hand, we can’t hope to have a useful conversation on exploitation when I barely believe it even exists, while you see it in nearly every interpersonal transaction. Any conversation that concerns the proper social response to exploitation is therefore impossible because we disagree on the nature and existence of the discussed phenomenon.”

Do you actually think the objective feature with which I identify exploitation does not exist?

To repeat, that feature is this: being less advantageous than a possible alternative, and, specified for economic relationships, being less advantageous than a possible alternative that could have been achieved through a mutually voluntary exchange. Those are long phrases, so I use the word exploitation, because it conforms with the classical definition of exploitation put forth by Marx, and because it captures the general sentiment of someone getting a “raw deal” or being “short changed,” “taken advantage of,” “ripped off,” or, in other words, “exploited” by a voluntary market transaction.

I don’t think you do. I think you agree that this is something we can predicate of actually existing arrangements in the world. I think you actually agree that this is a property of “pretty much every interpersonal transaction.”

What has actually happened, is that I have moved our argument from the question of “exploitation” (an objective quality, so long as we believe in multiple possible worlds) to the question of “fairness” (a subjective moral standard), by which we evaluate and compare different possible worlds.

On the basis of that process of conceptual clarification and conditional agreement, we’ve determined that our *political* disagreement concerns whether or not it is possible for voluntary exchanges to be *unfair* – whether it is possible that, among a particular subset of possible worlds, some worlds are in some sense better than others.

Understanding that the substance of our disagreement is about the scope, or existence, of *fairness* seems to me to be a significant advance. It has clarified that our disagreement does not proceed from one of us having a flawed objective picture of the world, but from our disagreement about how to morally evaluate objective features of a shared world. More deeply, it stems from our disagreement about whether or not it is possible to proceed from a state of irremediable moral disagreement to a world of common (let’s say, republican, as in res-publica) moral standards, and what, exactly, our political approach is when we encounter such moral disagreements

Put briefly, your approach seems to be to ignore and dismiss the disagreement as “meaningless” in favor of whatever the status quo position is. To breach into polemic for a second, I think an apt way to describe that position would be “reactionary,” “authoritarian,” and “anti-democratic.” But that should be fine, because from a libertarian perspective it is reactionary, authoritarian, and anti-democratic in all the right ways, insofar as it denies popular attempts to evaluate, and potentially regulate or modify, private voluntary exchange.

Dan Hanson July 3, 2012 at 6:15 pm

Libertarians have a fantastic theory of non-governmental governance: It’s called the market. Liberals tend to discount the regulatory power of the market to check the behaviors of bad actors, but they’re wrong. If the market didn’t regulate business, no one would make more than minimum wage, and I wouldn’t have an air-conditioned office.

In fact, libertarians argue that the market is a superior form of regulation to government in all but a few limited areas where market failures can be shown to occur.

Consider Enron. Liberals tended to see the Enron debacle as a failure of markets. But if they looked beyond their own biases, they would have seen something extroardinary: Large corporations like GE that had large capital divisions were getting hit in the marketplace because their trust was damaged by the scandal. The result was that many of them went to extreme efforts to open their books to independent auditors, or to divest themselves of these divisions, or to take other steps to reassure their investors that their company was different. Billions of dollars were spent in this effort, long before the government passed a single new regulation. These companies didn’t do this out of good will – they did it because their share prices were diving and their large investors and customers were worried. The market spoke louder and faster than the government did, and companies ignored the regulatory power of the market at their peril.

awfulconcoction July 3, 2012 at 9:43 pm

The point of the article was to highlight a glaring hole in the libertarian ethic: the free market lacks a concept of social justice.

In theory the market will bend to punish “wrong doers”, but in practice we don’t often see this. As a counter example to your point about the market’s reaction to enron: did the free market punish the banana companies for their behavior in exploiting labor in Central America? No. It rewarded them with profits.

Any moral theory that plausibly excuses racial discrimination and sexual harassment in the workplace on the vague and highly uncertain expectation that the free market will somehow punish them for it will never gain acceptance in modern American society.

This is exactly why the ethic is not accepted or practiced in reality. This is what they are discussing in the article and why it had such an impact.

byomtov July 3, 2012 at 10:05 pm

Any moral theory that plausibly excuses racial discrimination and sexual harassment in the workplace on the vague and highly uncertain expectation that the free market will somehow punish them for it will never gain acceptance in modern American society.

Nor will it gain acceptance among rational people in general, American or not.

That’s because any such theory can be shown to be absurd by both simple empirical evidence and logic.

ATGGAATAA July 5, 2012 at 11:31 am

That presumes that these people view racial/gender discrimination and sexual harassment as both an extant and unjust phenomena. Many voters and politicians do not.

Seth July 3, 2012 at 1:49 pm

Another assumption the two sides disagree on is what is meant by freedom, we should have separate arguments for workplace freedom to.. and for workplace freedom from. If we can get both sides to stipulate to both types existence and mutual distinction.

lackey July 3, 2012 at 1:53 pm

If you are going to be working for my firm, operating my machinery, and dealing with my customers; you will take the drug test, and you will pass the drug test. Your “personal lifestyle choices” can be shoved where the sun don’t shine.

The most eggregious form of worker discrimination is, and always have been: minimum wage laws. If you ask me, libertarians should move on to other issues only when the greatest objective has been taken care of.

david July 3, 2012 at 2:00 pm

Happily, we can always vote to regulate your firm, precisely when we the polity reject instances where you want to shove things where the sun don’t shine. Indeed I think that is the point of the discussion…? This is like waving your gun and yelling ONLY FROM MY COLD DEAD HANDS when the police snipers are already aiming at you.

H. Searles July 3, 2012 at 5:41 pm

And there it is. The brutality of the Progressive mindset revealed for us all. “We the polity” or “We the gangsters”?

TallDave July 3, 2012 at 6:16 pm

Wait, what happened to private companies being more powerful than the gov’t?

derek July 3, 2012 at 11:22 pm

Oh brilliant one, do you know why an employer would demand a drug test?

I don’t know about OSHA in the US, but in my jurisdiction if my employee is working with equipment or in a situation that could be dangerous, I am required to ascertain their lucidity. I could face criminal charges if one of my employees was working in a dangerous situation, hurt himself, and it was found that they were impaired.

Oh you ignorant one, you have already voted to regulate my firm.

Silas Barta July 4, 2012 at 8:42 am

Oh yes sirree, your noble polity can certainly do that, so long as it doesn’t mind a constant stream of workplace disasters or a refusal for businesses to come where they can’t be sure people will be careful with expensive equipment.

TallDave July 3, 2012 at 2:10 pm

Like most complaints about libertarian ideas, this one is mainly failure of logic. Any increase in workers’ “freedom” is a corresponding decrease in the “freedom” of their employers in how they choose to employ.

The employer-employee relationship is this: your employer (for whatever reason) has some money. You want his money. Could you live without his money? Yes (in this country, a thousand times yes). But you want it, because with his money you can buy stuff that makes life more fun. And so you form some contract under which you do some stuff for the employer (possibly including peeing when he wants you to and not being a Communist), and in exchange he gives you some money. In no way is any of this forced on you.

(Is money power? Of course it is. Should power be equally distributed? Of course it shouldn’t. The private economy exists largely to determine what things people want done and reward people (like, say, Jeff Bezos) for doing them by giving them more money (power). You didn’t create Amazon.com, so Jeff Bezos has more money than you.)

Contrast this with your relationship with the gov’t, which can not only make you pee on command, but may lock you up if it doesn’t like what it finds in your pee—none of which you agreed to, and for which it does not give you any money. In fact, you have to pay them taxes, again whether you like it or not, or you will be seized and imprisoned and fined. That’s coercion—you didn’t agree to any of it, it’s all imposed on you. Private entities, otoh, cannot tax, imprison, or take life (the primary purpose of gov’t is to prevent anyone but gov’t from doing so) which is why employees don’t need a Bill of Rights that says they can tell their bosses they suck or bring guns to work.

So the piece seems more than a little silly, and I’m not sure it merits the attention it received.

david July 3, 2012 at 2:15 pm

I’m not really sure there’s a meaningful difference between “I’m a state executive, and you have violated the law. I shall send armed men to punish you.” and “I’m a private entity, and you have violated this contract that we both concede was written in my favor. I shall ask the state to send armed men to punish you”.

TallDave July 3, 2012 at 2:20 pm

It’s the difference between rape and sex: you consented.

david July 3, 2012 at 2:23 pm

Did you read the same CT post that I did? It goes a lot into incompleteness of contracting.

TallDave July 3, 2012 at 2:41 pm

Hey, you said there was a contract, not me.

david July 3, 2012 at 2:48 pm

Labor contracts clearly exist in the real world, there’s no denying their existence, surely? The CT point is about what cannot be conscionably sold via contract.

TallDave July 3, 2012 at 2:53 pm

So, your argument is that they consented, but they didn’t really consent, because they might be asked to do something outside their expectations? And you think the State is going to haul them off to jail for that? This is exactly the sort of nonsense that makes the CT post so ridiculous.

david July 3, 2012 at 2:57 pm

I don’t know about you, but if I’m fired and I insist on hanging around on the premises doing work and expecting pay for it, I fully expect police to turn up and escort me off the grounds.

TallDave July 3, 2012 at 3:02 pm

For trespassing, not for violation of your contract. (Really?)

david July 3, 2012 at 2:36 pm

Actually, the incredibly apropos CT post that started this brouhaha was “fuck me or you’re fired”, which precisely expresses the idea that at no point was consent actually provided, contract be damned.

TallDave July 3, 2012 at 2:39 pm

If you didn’t contract for sex, there’s no violation.

Dent July 3, 2012 at 2:18 pm

Let’s not forget that being born is involuntary, being a child is involuntary, not having the right to citizenship of nation X is involuntary, existing in a universe with initial distribution of resources that one may perceive as unjust is involuntary, having a brain that can suffer greatly is involuntary, psychological, physical and biological limitations on free will are involuntary, even surviving suicide attempts is involuntary.

Libertarians seem to overlook the most fundamental ways in which Freedom just doesn’t and cannot ever exist. In this context, libertarian ideas of moral absolutes are almost autistic. I have never successfully seen a libertarian address the issue that we are born without consent with genes we didn’t choose into a world of unjust initial distribution we didn’t care for. The non-aggression principle goes out the window with birth itself, and it all goes downhill from there.

Brian Donohue July 3, 2012 at 5:24 pm

Don’t give me no hand me down world.

I got one already.

TallDave July 3, 2012 at 2:19 pm

Also, in addition to the excellent points made by Tyler and Alex, there’s another important one assiduously elided by this kind of argument — the employer is also much more vulnerable to civil liability, simply by virtue of having more assets.

This can matter a lot in terms of incentives. If an employee harms an employer, it is much more difficult for the employer to receive just recompense than for the employee who is harmed by the employer, simply because the employee generally lacks significant assets. So there are highly asymmetrical incentives there that work in favor of employees.

david July 3, 2012 at 2:22 pm

Doesn’t that only matter if jurisprudence and legislation do, in fact, agree that the employer has “harmed” an employee, so that civil liability can be invoked at all? i.e., the argument is precisely about what should be considered as harms?

TallDave July 3, 2012 at 2:42 pm

Only if there’s some significant difference between actual harm and what is legally recognized as harm, which there generally isn’t outside the Third World.

david July 3, 2012 at 2:49 pm

Methinks you are being circular about what you perceive as “actual harm” here.

TallDave July 3, 2012 at 3:04 pm

Whatever, it’s basically irrelevant. The asymmetry is real.

Sam July 3, 2012 at 6:53 pm

So there are highly asymmetrical incentives there that work in favor of employees.

Yes, and then again no. There are huge asymmetries between employer and employee, but they don’t all point the same way. Yes, employers tend to have more assets, so are more able to pay civil claims. The flip side of that argument is that employees, by virtue of not having assets, are less likely to be able to afford to make such a claim in the first place. Yes, there’s the small claims court, and maybe you can get a no win-no fee lawyer to take you on, but even if you win, you don’t get recompensed for the time you spent preparing for the court case, and for someone on the breadline it may be hard to justify taking that kind of gamble.

Employers are also often able to hide behind the limited liability shield. Employees are not.

Nathaniel July 4, 2012 at 2:59 am

“The breadline”? I thought we were talking about the USA here. All the folks I see on Judge Judy didn’t seem to have had any trouble at all opening civil cases, often for patently ridiculous reasons and despite an apparent lack of any cash. The show offers to take over existing civil suits, so every plaintiff on the show is someone who managed to initiate the proceedings on their own, on their own dime.

I’m sympathetic to the argument that it’s too expensive, overly complicated, and challenging for the lay person to navigate, but please, let’s not try to pretend that access to the courts is something reserved only for Bain Capital executives.

Rich Berger July 3, 2012 at 2:22 pm

Shorter CT: Reality is unfair. Waah. Waah.

UnlearningEcon July 3, 2012 at 2:26 pm

Good comment. We should all just accept things as they are an never question the institutions we were born into.

Rich Berger July 3, 2012 at 3:20 pm

When I don’t like my situation, I try to change it. If I can’t, I suck it up. What do you do?

UnlearningEcon July 3, 2012 at 3:35 pm

So by your reckoning all feudal peasants who were unable to change their situation shouldn’t have complained and instead just ‘sucked it up’?

Rich Berger July 3, 2012 at 3:45 pm

You are a feudal peasant? I thought they were extinct.

TallDave July 3, 2012 at 4:14 pm

Not according to this documentary.

UnlearningEcon July 3, 2012 at 5:48 pm

Nope, just saying your logic would apply to anybody under a system they hated but could not change, including feudalism.

Reactionary arguments never change.

TallDave July 3, 2012 at 6:03 pm

And your logic would apply to any ascaris lumbricoides that lived millions of years ago.

Parasites never change.

derek July 4, 2012 at 3:14 am

Let’s see. The 20th century produces some remarkable object lessons. There seems to be only one that is consistent.

Libertarian utopias, or those imagined by fools, are always produced by the collapse of governmental and societal structures by the application of leftist ideologies.

shecky July 3, 2012 at 5:52 pm

Wouldn’t that also describe the litany of libertarian complaints we see regularly here?

Dan July 3, 2012 at 2:40 pm

That workers have a greater ability to exit now than they did in the past is hardly evidence that they have sufficient right of exit. Black people in the 1880s were not enslaved, and that freedom was hard won. We do not disparage the sacrifices of the civil war by saying that black people were not free in the 1880s.

The fact that Alex relies on such lazy argumentation convinces more of the CTer’s point.

TallDave July 3, 2012 at 2:49 pm

How much do you plan to reduce their compensation in exchange for this perfectly sufficient right of exit?

Rich Berger July 3, 2012 at 2:54 pm

What the CTers are saying is that when two parties have reached a mutually agreeable deal, that they, an uninvolved third party, should have the ability to veto the deal. Because they don’t like it. Who do these clowns work for?

david July 3, 2012 at 2:58 pm

They exist in a universe where when two parties have reached a mutually agreeable deal, that the state is expected to come in and enforce it.

Rich Berger July 3, 2012 at 3:07 pm

The state has never enforced any details of my employment, other than to extract massive amounts from my paycheck. This seems to be the rote argument of the left that markets only exist because the state decrees that they exist. Markets arise when people are left alone.

TallDave July 3, 2012 at 3:15 pm

There’s a great discussion of that in Matt Ridley’s book — markets built on comparative advantage are found in the earliest settlements, they are perhaps the most unique distinguishing characteristic of humans; we’re the only animals who understand 10 of something you don’t like much may be worth more than 5 of something you like more.

Unfortunately, evidence from early civilizations also suggests states nearly always abhor free markets.

Dent July 3, 2012 at 3:42 pm

If you think about it, the men with guns (or the most competent physical aggressors generally) would be pretty stupid if they didn’t use their power to extract advantages.

The only idiocy in the men with guns today is their gullibility that they have to enforce laws written by unarmed men.

TallDave July 3, 2012 at 4:12 pm

Yep, that’s the pattern Ridley noted — trade usually built up until men with weapons seized the fruits. They feasted for a while, and then everyone was poorer.

Nigel July 3, 2012 at 6:09 pm

Well, evidence supplied by Matt Ridley’s chairmanship of Northern Rock suggests that states might well have good reasons to be suspicious of unfettered free markets.

TallDave July 3, 2012 at 6:23 pm

Yes, clearly we’re much better off when government is massively intervening in the mortgage markets.

RZ0 July 3, 2012 at 3:50 pm

Amazing to me how much of the argument adopts many of the same postures of British common law of the 1800s. Back then, it was virtually impossible to recover from your employer if you were injured at work. The common law defenses were near impregnable, and they were all based on the proposition that an employer-employee relationship was a equal business partnership.

For example, accepting a job was de facto acceptance of all the hazards inherent in the job. So when the under-maintained auger ripped your hand off, well you should have thought of that on Day One, when the boss shook that soon-to-be-maimed hand.

That the same arguments, nearly 150 years later, are marshalled when upwards of 20% of Americans are unemployed and underemployed . . . words fail me. How can anyone seriously posit that the employer-employee relationship is equal, let alone in favor of the employee?

Emil July 3, 2012 at 3:53 pm

Italy, Spain, Greece and France have a lot more “rights” for workers. Guess what? They alo have lower salaries and higher unemployment thn the US does. Case closed.

NickC July 3, 2012 at 5:22 pm

Nice argument, Perry, but Sweden, Denmark and Norway have even more rights than those 4 and yet…

JonF July 3, 2012 at 5:40 pm

Actually Scandinavia has much more flexible employment law than southern Europe does. What Scandinavia has instead is a strong safety net (and one also geared toward getting a person back to work if he is not working) so people who lose their jobs are not hopelessly screwed. That helps even the power relationship a bit without tying employers in red tape.

Emil July 3, 2012 at 6:21 pm

What JonF said (not to say that the scandinavian systems are perfect although they have most certainly improved since around 2000 when small villages in northern sweden had the highest rates of sick leave in the world (Lots were on leave for “stress”))

Anon. July 3, 2012 at 8:02 pm

…and they too have lower salaries and higher unemployment. Bad example.

GiT July 3, 2012 at 7:29 pm

We’ve got two binaries giving us 4 ideal types: Net/ No net (N/NN) and Reg/No reg (R/NR)

Right libertarian: NN/NR

UBI style left libertarian: N/NR

Ordoliberalism (?): NN/R

New Deal Liberal/Left: N/R

The question is how do we rank these types.

From any given position, I don’t think it’s entirely clear how one would order one’s preferences.

And from an ‘objective’ position, I don’t think it’s entirely clear how you would fit real world governments into these ideal categories and then rank them by their outcomes.

ac July 3, 2012 at 4:09 pm

It’s impressive to me how much this thread (and, even moreso, Tyler) misrepresents, misunderstands, or outright ignores the argument made at CT. I’m not even talking the specific points, but the whole gist of the argument! I’m not going to try to defend the CT post – I think it has problems – but c’mon guys, try a little harder to make this about the intellectual argument and not defending your tribe (though I imagine CT tribe defending would be more obnoxious).

Alex@stanford.edu July 3, 2012 at 6:34 pm

Agreed. It is as if Alex and Tyler didn’t even read the original CT post. I expect such crudeness of thought from Alex, less so from Tyler.

Anon. July 3, 2012 at 8:03 pm

Since we are all apparently missing the point, why don’t you enlighten us as to what it is, exactly?

Andrew' July 3, 2012 at 9:00 pm

I call hogwash. I saw nothing new in the CT post. Could it not be summed up in a sentence or two about asymmetric power in the employer/employee relationship?

Alex rightly “strikes” at the heart of the matter by pointing out that the labor can quit. Now, the CT folks will say something like “but they have no savings!” or “health insurance” or “inflation.” And libertarians tend to focus on the way government is screwing over workers.

alex@stanford.edu July 3, 2012 at 9:07 pm

If it ain’t obvious, there’s nothing I can say to help. Wait and see if Jacob Levy weighs in. He’ll give a smart, libertarian response. What Alex and Tyler proffer here is not equal to the task.

TallDave July 3, 2012 at 9:49 pm

That would be way more than it deserves.

Andrew' July 4, 2012 at 6:16 am

“If it ain’t obvious, there’s nothing I can say to help.”

Ha! Now you are too genius for use to even understand. That’s a new one.

Scoop July 3, 2012 at 4:23 pm

The idea of employers/employees negotiating rights vs. money leads me to a question:

Given that wages tend to be sticky, so they don’t often go down, even in a recession, do employers use recessions to push through more restrictive employment conditions without raising wages? When times get good again, do workplace freedoms grow or do workers demand wages again so workplace rules, once implemented, rarely disappear?

GiT July 3, 2012 at 7:33 pm

Nice thought. It would make sense as a sort of complement to the account I’ve read recently of how employer provided health insurance is an artifact of wage controls during World War II.

Andrew' July 3, 2012 at 9:31 pm

And soon insurance will be taxed at cost. So, a benefit that came into being because it wasn’t income is going to be treated as income.

steve July 3, 2012 at 4:27 pm

I find it odd that this argument assumes that all employees are the same. Many are clearly in a position where they can leave. Others really are not, except in some abstract theory. One of my most senior employees had her husband diagnosed with cancer last year. I happen to know that she has used up all her savings paying for her brother’s medical care. I could have pressed her for personal favors when the diagnosis was made knowing she was vulnerable. She would have had to choose between not getting care for her husband, who was insured on her plan, or doing whatever I wanted. Yes, she has a choice, but not much of one.

I think people also forget that for low level workers, part of the cost of leaving may be a bad recommendation, or word of mouth slurs that really will keep them from getting a job elsewhere. Suggesting that the employee that has the possibility of legal remedies is to be ignorant of how this will really play out.

Steve

TallDave July 3, 2012 at 4:43 pm

You mean, she would have to choose between a) doing whatever you wanted b) quitting or c) suing your unethical ass for every dime you and your company is worth. Also, her husband can’t be refused treatment for lack of ability to pay. And none of this is going to reflect well on your company, or you — the costs of behaving unethically are very high.

Suggesting legal remedies aren’t realistic is a pretty amazing thing to do in a country where such suits are filed roughly every minute.

JonF July 3, 2012 at 5:42 pm

Re: Also, her husband can’t be refused treatment for lack of ability to pay.

In what alternate universe?

TallDave July 3, 2012 at 6:00 pm

Wow, we’ve been having this healthcare debate for how long now?

steve July 3, 2012 at 7:37 pm

She could file suit, but then the clock is ticking for her, not for me. She can choose between her husband’s welfare, or doing what I ask. Her husband can only get emergency care for lack of ability to pay.

Steve

TallDave July 3, 2012 at 9:34 pm

Hospitals generally do not cancel your chemo because your spouse was fired. They bill Medicaid or send you a bill. (Now if he’s getting therapeutic massage, that might be a different story.)

She can also choose to sue you for millions of dollars and probably win. Then her and hubby can relax in the Bahamas while you fight with the other homeless people over who gets the bigger refrigerator box.

GiT July 3, 2012 at 7:39 pm

Having the right to sue over that sort of decision is a political decision. One could easily have a legal regime in which one would be unable to sue over such treatment. Since when do libertarians defend the right to sue over ‘wrongful’ termination (outside of what is specified in written employment contracts, and maybe some weak implicit assumptions enshrined in common law), or the right to sue in order to prevent increases in one’s workload for a given wage?

As to the costs of behaving unethically, where are they? Most people seem to have no problem saving money rather than demanding that employers act ethically.

TallDave July 3, 2012 at 9:26 pm

One could easily have all sorts of legal regimes that do all sorts of things, which doesn’t prove anything one way or the other.

You’re asking since when do libertarians believe in enforceable contracts?

The costs of behaving unethically might include the company looking very bad to the public with material impact to your bottom line, you looking very bad to your company and you being fired, your company being shut down by the gov’t, you being arrested by the gov’t, you being lynched by an angry mob, seizure of your assets by the gov’t, seizure of your assets by your victim through the courts, etc. I could go on.

GiT July 3, 2012 at 9:48 pm

But the question is about what is taken to be implicit in the contract, or how to interpret the scope of what is written in a contract, or what our conventions are about what one need not or does not specify in the contract.

So I’m asking what libertarians believe should be enforceable when it is not specified in a contract.

And now, on to the costs of behaving unethically – you’ve listed a lot of possible costs of behaving unethically. You haven’t established whether or not these costs should exist, or do exist, or are priced high enough such that they don’t occur. One of the heavily used examples in the CT piece was documented evidence of regulations people face on things like their ability to get up and pee. Many companies do this, for the most part people don’t care enough to do anything about, and whether the government is empowerd to do anything about it varies by the government.

GiT July 3, 2012 at 9:55 pm

To be a bit clearer on the first point, the assumption is that contracts don’t cover everything demanded by equity, and yet claims for equity need to be justiciable.

In order to make equity claims justiciable, you need a non-contractual basis for one’s claims. What are those? Public law, common law, natural law, whatever, pick your poison.

In any case, they’re not necessarily contractual in nature (unless you actually believe in contract theories of government and implicit consent and all that), they aren’t included in contracts, and talking purely about breach of contract does nothing to address the issue.

TallDave July 3, 2012 at 10:24 pm

Yes, the incompleteness issue. But it’s not relevant here, steve’s example clearly involved behavior that both parties know is abusive and not part of any implied contract (and if steve isn’t the owner, an agency violation as well).

GiT July 3, 2012 at 10:37 pm

Why is it “clearly” not part of any implied contract?

I find nothing clear about the claim that I can’t ask for more money from my employer or employee when I find out that they depend upon me and would suffer heavy losses if I left.

Why should anyone be protected from their dependence upon me? It’s not my fault they depend on me; they should have planned for contingencies if they don’t like my extorting them. Maybe it’s abusive, but why is it an illegal sort of abuse? Its just as abusive as my not risking life and limb to save a drowning child when no one else is around. Are you going to legally require me to do that? Why is it my problem that the child’s life depends upon my actions? I didn’t choose that. I don’t choose for people to depend upon me, and unless I have explicitly chosen to be responsible for their dependency, they can go **** themselves, as a matter of legal responsibility goes.

That, at least, would be the argument.

TallDave July 3, 2012 at 10:52 pm

Of course you can. But the issue here has nothing to do with whether she needs the job — in this case steve’s conduct is just as wrong either way. He isn’t asking her to do more more work, he’s asking her to do “personal” favors (I’m not 100% sure if he meant sex or just non-work-related activity). And presumably steve’s is not the only employer she could work for.

GiT July 3, 2012 at 11:23 pm

I don’t see why you are reading “personal favors” as either sex or non-work related activity, but not more work. In any case, either activity would be both inappropriate/unspecified labor, but also more labor.

The salient question is whether the extra work is wrong to ask for because it is more work, not because it is inappropriate work, and I’m pretty sure that’s the question steve was asking.

If she has become more dependent upon her work because of a shock to her living costs and likelihood of getting new employment, is it right to use knowledge of that fact as reason to renegotiate the terms of employment from a position of increased leverage by exerting pressure in those vast areas left unspecified by the contract – by simply increasing the number of tasks you expect the employee to complete for the same salary?

One can easily turn that around. Is it ok for an employee to decrease the number of tasks they complete for the same salary insofar as they discover they have become more essential to the employer (e.g., ‘aha, only I understand the horribly written code which this place relies upon, so I’m going to slack off’)

Nathaniel July 4, 2012 at 3:35 am

If she has become more dependent upon her work because of a shock to her living costs and likelihood of getting new employment, is it right to use knowledge of that fact as reason to renegotiate the terms of employment from a position of increased leverage by exerting pressure in those vast areas left unspecified by the contract – by simply increasing the number of tasks you expect the employee to complete for the same salary?

No, it is not right to use that knowledge against her. Not right one bit. But this is and should remain a matter of personal morality, not criminal law. Getting the government to interfere in interpersonal relationships like this may seem like a good idea when you use the sexual favors example, but down that road lies a rabbit hole that liberals do NOT want to go down, not least of all when conservatives get control of the government and decide they like this nice interpersonal relationship regulating power. Say, when was the last time you spoke to a pastor?

GiT July 4, 2012 at 5:28 am

Sure, and this general libertarian argument has made me more favorable to policies that increase autonomy from the demands of others as compared to policies that limit what others can demand. This requires a taxing and transferring power far beyond what most non left-libertarians support, so we still have beef, however.

But I don’t like the fuzzy conflation of all forms of regulation. Regulating commanders is different than regulating servants, and regulating the rights people are presumed to have until proven alienated is different than regulating the rights people can or can’t alienate. A large enough power can be used to do anything, so the conventions governing how large powers are used is important. Any government which can police crime and fight wars can police my workplace, if it wants to.

It shouldn’t just use the power because it has the power, but insofar as it has the power, it should use it usefully when it can, by, for example, defining harms specific to employer-employee relationships which are justiciable unless otherwise contracted. I would like to know what the presumed limits of those who I give the power to command me are, even if I am also empowered to alienate some, or all, of those limits, and my work contract alone isn’t the best place to do that.

byomtov July 4, 2012 at 9:39 am

Sue? For what?

In libertarian world the employer has the right to ask for sexual favors as a condition of employment. Just see the other thread, or Alex’s comments about “employment at will.”

The only reason she can sue is because the government has specifically defined this sort of thing as out of bounds, passing laws libertarians consider massive infringements on individual liberty.

And even so it’s a fact that legal remedies are often not realistic. Cancer is usually reluctant to wait for the courts to decide matters, and lawyers aren’t free.

Paul Johnson July 3, 2012 at 4:51 pm

This is all a bit odd. Anyone is free to start their own company. Be an entrepreneur. There, now you have all this awesome power. No one is forced to be a salaried employee.

TallDave July 3, 2012 at 4:56 pm

No, sorry, your only options are slavery or starvation. That’s why you need their help.

FYI July 3, 2012 at 5:07 pm

But what about all the sick children? And my mortgage? And that really cool trip to Cancun? Are you saying I don’t deserve to take a vacation? Will I have to pee in a cup? What? Are you saying that I need to invest my own ‘life savings’ and might come out with empty hands if people don’t buy my product?

We should arrest people like you Paul Johnson.

GiT July 4, 2012 at 7:12 am

Generally, those who advocate that people should have their children’s health provided for, access to housing, and a right to a vacation, advocate for that for everyone, regardless of whether or not their life savings is invested solely in their human capital, or in both their own human capital and a business entity and its physical assets.

NickC July 3, 2012 at 5:23 pm

Do you not have barriers to entry in your world?

TallDave July 3, 2012 at 9:47 pm

He doesn’t have to start SpaceX.

derek July 4, 2012 at 3:17 am

You mean that employers actually need some kind of asset to be in business? You mean it’s difficult to gain market share, to establish a reliable cash flow?

Who would have known. I thought it was about hiring a bunch of people and abusing them.

kebko July 3, 2012 at 5:37 pm

+1

An important factor is the choice, on the margin, to be a laborer or an employer. The solution to these problems is to make that choice more readily available. Hoisting a bunch of regulatory burdens on employers is exactly the opposite of what would help the problem.

Alex K. July 3, 2012 at 7:21 pm

+1.
I’d argue that this argument is best framed in terms of optionality. Every worker has one or more job choices before him or her. Some workers will obviously have far more than others–a talented individual may have thousands. Every worker also has the distinct choice of prison (for non-compliance with government decrees). Group the career and prison opportunities into a single set of starting options. Dis-association from a job does not practically take other options off the table, so this act reduces the set by exactly one element. On the other hand, government coercion results in confinement in jail, which makes impossible *all* other options. The set has been reduced to exactly one element. Only government coercion is capable of such a massive destruction of choice.

byomtov July 3, 2012 at 10:08 pm

True. You can always borrow the money needed from your parents.

kebko July 4, 2012 at 12:33 am

Think at the margin.

Derek Carline July 3, 2012 at 5:23 pm

Manchester, England in the 1930′s. A boss tells a worker to do a job; the worker being busy replies that he has only one pair of hands, the boss then says get your cards. Now that is what I would real power and no doubt Cowen and Tabarrack would find that acceptable.

kvm July 3, 2012 at 6:36 pm

Those historical fiction foreman bosses are just so evil. The horror….the horror

Nathaniel July 4, 2012 at 3:45 am

Boy, it’s too bad this fictional worker has no other prospects besides refusing the demand and being fired on the spot. A real shame he can’t ask the boss which task is more important to him, or use his initiative to figure out how to do both tasks, or find employment at another firm, or go into business with a friend to start one of his own, or start one by himself, or relocate to an area where those things are possible, or live off any savings he’s accumulated until such time as he can do any of those things, or move in with friends or family to reduce expenses and do simple manual labor to pay the diminished bills, or become a homesteader and build his own house and not need a wage to purchase food and pay rent anymore.

Yeah, sure sucks not to have any of those options. Now I can understand why the employers are so coercive.

Go Kings, Go! July 3, 2012 at 5:52 pm

Our Nanny has become a total pain in the ass by absconding to study for college & take exams, demanding a salary that puts us in debt, refusing to clean up around the house, and treating our dogs poorly. I don’t have enough money to pay her to stop, I can’t fire her because (a) my kids, and my relatives love our nanny and (b) it’s terribly difficult and inconveniencing to find a good nanny (false starts can be disasters).

I should write my local politician to legislate that nannies shall put dishes in the dishwasher, take dogs for walks, and get paid an amount that permits employers to stay in the black?

Nathaniel July 4, 2012 at 3:48 am

Clearly you are being exploited and coerced and your nanny should be subject to the fairness-enhancing hand of the state. Regulate the hell out of those exploitative employees– er, oops.

Ryan July 3, 2012 at 6:00 pm

My theory is that the policy of opportunistic disinflation has eroded the ability of workers to bargain for higher pay and better working conditions. A worker’s bargaining power is greatest at the height of the boom when job offers are plentiful the cost of finding and training a replacement is high. It is lowest at the bottom of the recession when job offers are few and there is competition from a relatively large number of relatively well-trained unemployed workers. By shortening the boom and lengthening the bust, the Federal Reserve has shifted the cyclical balance of power towards employers.

ohwilleke July 3, 2012 at 8:24 pm

Colorado has for many years had a lot prohibiting employers from firing people for non-workplace related reasons, in general. The penaltities for violating this law are most modest than an ordinary wrongful termination suit, but there are penalties. This is not given rise to the parade of horribles claimed. Neither has a Montana law requiring termination for cause with limited remedies. Unemployment compensation laws (which influence unemployment insurance rates and govern eligibility for unemployment benefits) likewise distinguish between for cause and no cause terminations routinely and efficiently.

U.S. law which allows someone to be fired for any reason, except bad reasons, is logically bankrupt, even though it works. Passing laws that limit contractual rights in situations where the person limited has little legitmate reason to gain from it, and the person restricted is greatly harmed, is a time honored feature of private law that pops up all over the place.

Andrew' July 3, 2012 at 8:40 pm

Dear labor,
Learn to garden.
None of your capital is at risk.

Yancey Ward July 3, 2012 at 8:56 pm

The ownership of capital is basically the complaint, isn’t it? If I own a car, CT would not question my right to give a ride to anyone of my choosing nor my ousting such a rider for any reason. But let me own a factory, and my rights to make contracts are of a different nature, but I, for the life of me, can’t quite understand why.

TallDave July 3, 2012 at 9:46 pm

Don’t worry, they’ll get to your car later.

GiT July 3, 2012 at 9:57 pm

Really? You can’t figure out why? Sometimes, changes in scale produce changes in quality, not just quantity.

TallDave July 3, 2012 at 10:18 pm

So, if he has a really small factory…

GiT July 3, 2012 at 10:25 pm

Yes, owning a factory with 10 employees is qualitatively different than owning one with a thousand employees, and may lead to different sorts of moral limits on what one can and can’t do.

Vadim July 4, 2012 at 12:00 am

What if this giant thousand employee factory was owned by a thousand different owners? Owners who depended on the income of the factory for survival. Without the factory’s income they would not be able to buy food and would starve. And they cannot work themselves because they are all widows, orphans, and elderly. What are the moral limits then?

GiT July 4, 2012 at 1:45 am

I don’t know what the limits are.

My point is that the limits are sensitive to the particular institutional arrangement, such that different kinds of institutions may end up morally requiring different rules.

In general I would say that, yes, individual’s different material circumstances dictate different principles for interacting with them, morally, and sometimes those principles should be legislated, just as different institutional structures may dictate different principles of interaction, morally, and sometimes those principles should be legislated.

So maybe it’s moral to price gouge the rich but not the poor (different material circumstances), while it’s moral to compliment your friends’ looks but not those of your employees (different institutional circumstances). Whether either of those should be legislated is a different question.

Andrew' July 4, 2012 at 6:24 am

When I was employed by one of the evil corporations, my most egregious example was the drug testing. But if some number of the employees refused they couldn’t have gotten away with it.

Now, you might think the answer is unionization. But how do I know they would increase my individual freedom? They might even double-down on the drug testing. It’s bizarre to me to claim that unions increase individual freedom. They simply push for the collective will of the union. Maybe it aligns with you personally, but maybe it doesn’t. It seems to me less about scale than finding a company and group of employees with similar desires as yours. If you go with international unionization or DC regulation you get one-size-fits all. They mistake survivorship bias with freedom.

Anon July 3, 2012 at 8:58 pm

Doesn’t tyler cowen have tenure? Easy for academics who don’t actually deal with at-will employment to tell the rest of us peasants to just man up…

Nathaniel July 4, 2012 at 3:51 am

Zing!

Andrew' July 4, 2012 at 7:22 am

Ah, now people can only discuss things they have tacit knowledge of.

NOW we’re talkin’!!!

JVA July 6, 2012 at 9:02 am

Well, they do require you to pass practical driving test before allowing you on the road.
At least in Europe.

Tony July 3, 2012 at 9:05 pm

The libertarian position assumes that the worker, if he is to be worthy of participation in the economy, has the ability to rationally negotiate and defer gratification. In fact, workers are systematically irrational and impulsive, and employers gleefully exploit that irrationality. The result is that, in a laissez-faire environment, the life of a worker tends to suck pretty badly.

Labor laws are about forgiving people for their lack of perfect rationality, and preventing them from being played by the rationalist elite. The libertarian argument of voluntary association effectively says that if you behave irrationally, there is no limit to how severely that defect should be exploited. I reject that as immoral.

I would say that basic human decency should motivate laws that help protect workers against well-known consequences of bad decisions. It’s not obvious that current labor law furthers that goal very well, but it’s not like it’s impossible to do so.

TallDave July 3, 2012 at 9:45 pm

Whereas employers are perfectly rational, never impulsive, are never exploited by somber hardworking workers, and (let’s face it) are probably not even human, so basic human decency insists we protect employees and punish employers.

Tony July 3, 2012 at 10:02 pm

Almost correct. Eliminate the hystrionics that leads you to qualify these tendencies with “perfectly” and “never”, and you have summed up the situation rather well.

Employers have access to more capital, and participate in the same transaction many times, whereas employees tend to lose their capital through impusiveness, and engage in the employment transaction much less frequently (so they have less experience at it). It’s a deeply asymmetrical relationship that serves us best when it is constrained by laws that mitigate its inherent inequality.

TallDave July 3, 2012 at 10:16 pm

Au contraire, “perfectly rational” was your histrionics. Sorry, you own them, along with “gleefully,” “no limit” and “suck pretty badly.”

There are other inherent asymmetries that naturally favor employees — employers have much more capital to lose in the relationship, he is much more likely to be defrauded, he has much less ability to be recompensed. Did you read Alex or Tyler’s post?

In any case, a system that rewards stupid behavior will get more of it, which is what usually happens in Marxist economies.

GiT July 3, 2012 at 10:30 pm

Tony never used the phrase “perfectly rational,” so no, it was your histrionics. And, in fact, Tony never said anything to imply that employers are not themselves prone to systematic irrationality from which they, too, should be protected. More of your chronic bad faith in conversation, it seems.

Tony July 3, 2012 at 10:45 pm

I believe the phrase was “lack of perfect rationality”, which happens to be a truthful statement about workers. A better wording would be “lack of adequate rationality”, since their rationality probably would not have to be literally perfect to avoid exploitation.

As for there being “no limit” to the exploitation of the irrationalities of others, that does seem to be an accurate statement about libertarian ideology. Feel free to articulate what limits there ought to be, if you think I’m wrong.

And yes, as GiT notes, there are likely to be laws that would help protect against common irrationalities committed by employers as well, since making it easier to be an employer is also good for the economy. I just can’t think of any at the moment.

TallDave July 3, 2012 at 11:00 pm

-1 for reading comprehension, GiT. More of your self-inflicted embarassment, it seems.

Limits? Libertarians do not believe you should be allowed to pay someone $10 to blow themselves up with dynamite for your amusement — even if you aren’t doing it gleefully. Gee, that was easy. So much for your “accurate statement.”

Oh good, so we’re protecting employees from employers and employers from employees. So, I guess there won’t be any more bad decisions. Now, if we can just do something about that glee…

GiT July 4, 2012 at 1:09 am

If we want to talk about ‘reading comprehension,’ one would do well to note that “perfect rationality” and “perfectly rational” are very different phrases, just as ‘immortality’ and immortal’ are very different. Immortality is a useful concept – it defines a regulative ideal: perfect mortality. And yet, there is nothing that is immortal.

So to talk of the real world as if it was populated by ‘immortals’ is a little ridiculous, but talking of the world as if people more or less approximated “perfect mortality” (immortality) is not. Compare with, say, a color, where ‘perfect blueness’ (no yellow or red pigment) might actually obtain, and so talking about perfectly blue clothes makes sense. (But not perfectly durable clothes – no clothes are perfectly durable). The general point is that talking about the existence of the regulative ideal is not reason for assuming that someone believes that the regulative ideal obtains in the real world.

kebko July 4, 2012 at 12:44 am

Have you ever told one of these impetuous man_children to their face what your justification is for these regulations. I wonder if they would show you due gratitude.

GiT July 3, 2012 at 11:31 pm

What’s embarassing is thinking that saying workers ‘lack perfect rationality’ and that employers are ‘rationalist’ implies that the group ‘employers’ are perfectly rational.

As to ‘what libertarians believe,’ how is denying someone’s right end their own life for whatever reason they wish libertarian? Certainly, there are some libertarians who would oppose that, but not really on libertarian grounds. Your proposed limit is not a libertarian limit.

TallDave July 3, 2012 at 11:37 pm

Labor laws are about forgiving people for their lack of perfect rationality

Tony never used the phrase “perfectly rational,”

Maybe a little less drinking before you post?

Obvious my tongue-in-cheek comment was to point out the nonsense implied there — no one is perfectly rational, it’s a wonderful example of a statement that either means nothing because it applies to every member of the set, or is meant in contradistinction to something that doesn’t exist. Sorry if that was hard to grasp.

GiT July 4, 2012 at 12:40 am

One might reasonably think that many laws are a matter of “forgiving people their lack of perfect rationality,” and as before, there is no reason to infer that “labor laws” being about “forgiving people their lack of perfect rationality” implies that they are only about forgiving laborers there lack of rationality, or that they are the only laws about forgiving people their imperfect rationality.

The point of your tongue in cheek comments are nearly always obvious, and your nearly always obvious points are nearly always ignoratio elenchi.

That no one is perfectly rational tells us nothing about whether the law can or can’t, or should or shouldn’t, be used as a means of improving our individual or collective rationality in general, or in any specific situation.

Would you have a problem with the statement, “Cancer treatments are about addressing people’s mortality, and preventing people from being played by “immortalistic” (read – tending to/capable of living nearly forever) cancer cells.” Please note – both cancer and people are mortal, and neither possess ‘perfect mortality’ (read: immortality)

I imagine not. Despite the fact, of course, that no one needs to be told that all people, or all life, is mortal, and the claim that people are mortal is tautological, as ‘mortal,’ along with ‘rational,’ is included in the definition of ‘people’. But apparently, talking about the relative mortality of people implies that some people are immortal. Or some mortal things are immortal. Or who knows. It’s hard to tell what things imply when dealing with someone like you.

Given the opportunity to willfully misinterpret someone and make a spurious argument with regards to something he sees as liberal, well, we can all guess what TallDave will do.

TallDave July 3, 2012 at 11:42 pm

OK, definitely drunk.

The implication in my example is that the person is so stupid, he will trade great harm for something not very valuable. He doesn’t want to die, he’s been tricked by someone more rational into an unconscionable agreement.

But ok fine, you should not be able to pay someone $10 to blow up his sister with dynamite.

I’ll leave the rest of this to you and Jack Daniels.

Tony July 4, 2012 at 12:02 am

“But ok fine, you should not be able to pay someone $10 to blow up his sister with dynamite.”

Backpedaling already? And before I could even unleash my witty riposte! Your revised example is obviously outside the bounds of voluntary contract, so it doesn’t represent a limitation on the exploitation of irrationality through those contracts. Guess that was a pretty slippery slope you found yourself on. Perhaps my comment about libertarians knowing “no limits” on exploiting the irrationality of others was more accurate than you first thought.

“he’s been tricked by someone more rational into an unconscionable agreement.”

Excactly my point. In contrast with libertarianism, liberalism is largely about defending the stupid. There is nothing wrong with being stupid; some people happen to be born that way. And that’s exactly why I consider myself a liberal. The only mistake liberals make is shying away from that central truth.

John David Galt July 4, 2012 at 12:05 am

I have yet to see or hear of any individual employee bargaining with an employer, successfully or not, about the kinds of rights these posts are about, because an individual previously unknown to the employer has no effective bargaining power at all (and, of course, because such a bargain wouldn’t help — even if an employer has promised not to fire me for posting on economics blogs, he can always do so anyway and then refuse to tell me why he fired me. I would have no possible defense — think about it.)

I would love it if the author’s assertion of the Coase theorem were true. But unless we go to a system of law where employers must explain every termination and prove the alleged reason, it will never be possible for the employee to prevent or punish an at-will firing, even if laws and/or contracts purport to give him that right. And without that ability to enforce an agreement about the conditions of employment, bargaining can’t work.

I still, on balance, do not approve of unions; they’re nothing but gangsters. But sometimes I wonder if they’re necessary or at least better than not having them.

kebko July 4, 2012 at 12:50 am

Think at the margin. The employer also enters the negotiation facing a huge set of preliminary expectations. If an employer from Malaysia opened a factory in the US, they had better make some major modifications to the labor contract. The potential employees don’t need a union for this to be the case.

Andrew' July 4, 2012 at 12:34 pm

You don’t get to bargain individually with the union or government, even less so. I know more than one, in my two-person family who have bargained on salary and vacation. Why is that?

John David Galt July 4, 2012 at 1:38 pm

Strawman. Salary and vacation are big, easily provable things and therefore possible to enforce if they’re part of an employment contract. Not firing me because of my choice of sex partners (off work) is neither. The Coase theorem can only work when the agreements it produces are possible to enforce.

Sam July 5, 2012 at 6:54 pm

But unless we go to a system of law where employers must explain every termination and prove the alleged reason,

If you are a member of a “protected minority”, this is a reasonably good approximation of the system that we actually have.

GeoffBr July 4, 2012 at 2:20 am

“A job is an exchange with mutual consent and benefits on both sides of the bargain. The freedom is in the right to exchange not in the price at which the exchange occurs… To understand freedom and true coercion let us remember that American workers have the freedom to bargain and exchange with American employers, a freedom that gun, barbed wire and electrified fence deny to many millions of less fortunate workers from around the world.”

This begs the question. The central point being made by the Crooked Timber authors is that the libertarian view of “freedom” is too narrowly constrained and thus excludes what they would consider to be (colloquially) coercive.

As an aside, I would assume that libertarians would then be favorably inclined towards unions (the freedom to bargain and exchange with American employers), yet this rarely seems to be the case. I’d welcome an explanation.

kebko July 4, 2012 at 6:26 pm

Currently, when you shop for groceries, you are presented with a collection of items and prices selected by the store. Your freedom generally consists of deciding to buy or leave. Would you feel more free if you were compelled to join a neighborhood buying club that negotiated with the store for you to determine what items you would buy and at what price?

GeoffBr July 4, 2012 at 8:44 pm

kebko, I assume you’re addressing only the union point of the above. Would it be correct to assume that, if union membership were not explicitly compelled, you would be in favor of them?

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improbable July 4, 2012 at 6:03 am

The libertarian position seems to work best when you are paid cash for your work, and thus saying “stuff you I resign” is a pretty good defence against exploitation because you only forfeit tomorrow’s pay.

One way in which this seems unrealistic is that in many jobs the employer does have more of a hold on you. The most obvious are old-style company pensions, where a 59-year-old might have a great deal to lose. You can argue that she signed up (40 years ago) with a contract that had a giant lump-sum at the end, voluntarily… but I think it’s also not unreasonable to see this promise of a pension as an asset that is rightly hers, which her employer is threatening to confiscate.

And I think that many jobs have a less obvious version of this going on. Perhaps your company pays senior people a lot as a reward for the good work they did as young hot-shots. Perhaps your field demands letters of recommendation which will be denied if you quit… but which your work (up to right before your boss told you to sleep with him) deserved. Perhaps it just hurts your employability to have too many jobs on your CV… you don’t necessarily get a fair hearing about who’s fault it really was. Perhaps you live in a place with a bizarre healthcare system in which losing coverage while ill is very costly.

For most of my examples here, it seems like things are moving the right way. Certainly pensions are more often 401k etc, and worse things like company housing have all but died out. Healthcare (in the US) seems like the biggest thing amenable to government action, again perhaps improving.

Andrew' July 4, 2012 at 12:33 pm

It’s even moreso. Governments are about to reneg on pensions. Many companies already can and do, but many don’t, why?

Saturos July 4, 2012 at 6:23 am

Beautiful post. Bravo Alex.

Nigel July 4, 2012 at 6:58 am

“To understand freedom and true coercion let us remember that American workers have the freedom to bargain and exchange with American employers, a freedom that gun, barbed wire and electrified fence deny to many millions of less fortunate workers from around the world.”

You might like to take a look at the US penal system in the light of that statement.

I’m also struck by the phrase ‘true coercion’.
It is extraordinarily simplistic to suggest that only absolute coercion can be ‘true’ coercion. To ‘understand freedom’ requires a little more work than that.

Andrew' July 4, 2012 at 7:29 am

They assert with no support other than that some of the bleeding hear libertarians supposedly agree that taxes aren’t slavery. Then they say you can’t contract into slavery.

To me, the ability to contract into slavery is a big improvement over being born into it based on some social contract that isn’t a contract and was never asked or signed.

Roger July 4, 2012 at 9:21 am

GIT,
I find your definition of exploitation peculiar, to say the least.

Are you saying that one is exploited if they voluntarily agree to a transaction and get less than they hope they can get within a win win framework? Doesn’t this mean that all voluntary transactions are exploitative for at least one party, and usually for both?

How does your theory handle that utlity is marginal and that there is no way to determine what the real utilities are other than via revealed preference? Are you assuming a third party knows what the real utilities are and can arbitrate between them? Do you assume the third party is unbiased?

It seems to me that the only real world way to get to fairness within win win voluntary transactions is to allow competition to establish a market price.

Payam July 4, 2012 at 6:05 pm

+1

GiT July 4, 2012 at 10:42 pm

On peculiarity: Well, my definition of exploitation is in line with Marx’s (who wrote that exploitation is a ‘non-moral’ category and can be used just as well from the viewpoint of the employer) and I think it is in line with common intuitions, such as feeling that one has been ripped off by a car salesmen, even though the transaction contained neither force nor fraud, so I think it’s less peculiar than it appears at first glance. Rather, it accommodates our subjective disagreement about the fairness, or unfairness, of voluntary exchanges and offers a regulative ideal for *quantifying* unfairness, given a particular subjective position or subjective standard, and also allows for the position that all voluntary exchanges are equally fair, or rather, indiscriminately fair.

On getting less in a win-win framework: Yes, it does. And I would argue that’s perfectly reasonable. It seems obviously true to me that many voluntary transactions I engage in could have turned out better for me, (or better for someone else), and insofar as it didn’t, someone else benefited at my expense (or I benefited at someone else’s expense).

On revealed preferences: I think it would be reductive to say that preferences as revealed by price paid are the only way we have to know something about what peoples’ reservation prices are in all circumstances. I assume that third parties can sometimes approximate real utilities and arbitrate between them. My gut feeling is that it doesn’t make sense to talk about unbiased standards of arbitration here – any standard will be biased.

On market pricing: I agree that this establishes *a* standard. Whether it’s a fair standard or an unbiased standard, or the standard that should hold sway in the last instance as the final word on what counts as a just distribution is a different question. *How* any given standard is biased will be a function of *who* our arbitrators are and *how* they arbitrate – and this applies not only to mediators but also to first and second parties and their potential agents participating in a market.

More generally, I don’t mean to imply that a judge or the law or an agent should come in and help arbitrate every exchange, though perhaps some exchanges (obvious example: emergency care. Controversial examples: employment contracts, mortgages). Further, introducing mediators to an exchange is not the only way of producing a different distribution of surplus, if that’s what one wants to do.

Brian Donohue July 4, 2012 at 12:46 pm

So I read the CT piece on the recommendation of the lefties here.

It was polemical and relied on a caricature of an employer as someone who creates a business for the purpose of extracting sexual favors from employees, which I’m pretty sure is illegal anyway.

At bottom, this is about the illusory ‘guarantees’ that we enjoyed in some golden age when we were a poorer country.

Vestiges of the cradle to grave vision still exist, prominently in the public sector. The authors suggest that the private sector take a cue from the public sector in terms of employment arrangements. Recent indications from Wisconsin indicate that the American people disagree.

Anyone who wants to see more jobs, which includes any politician who opens his mouth these days, would do well to move in the opposite direction of this CT advice.

These

mulp July 4, 2012 at 4:47 pm

Ok, thanks for the hint – I should never donate an organ, but should insist on being paid a minimum of five years wages plus health insurance for life,especially if selling to any boss.

mulp July 4, 2012 at 6:00 pm

“To understand freedom and true coercion let us remember that American workers have the freedom to bargain and exchange with American employers”

Obviously an embrace of union contracts, the contract mechanisms for enforcing the contract, and a condemnation of breaking labor contracts.

As most employers are a collective of hundreds or even hundreds of thousands of employer-capitalists with a single representative for them all, then unions represents the single voice for all the workers. Just as any employer-capitalist can exit the corporate collective by giving up rights to income, so can any employee exit the union collective and give up his income.

To think otherwise requires arguing for any shareholder taking individual action for his own benefit without regard for the other shareholders, like taking part of the product for a price he negotiates for himself with an employee without seeking approval from the others.

Seriously, corporations are granted special rights by We the People to further the collective welfare of We the People, and that is just in the limited liability privilege of corporations and other collectives. An individual in the role of an employer is different from an LLC’s owner as the employer is different from a corporation with a representative of BOD representing the owners as employer is different from an employee of the CEO as agent of the owners as the employer.

An individual as employer has a personal relationship where his personal values are reflected in the market transaction for labor – if he denies himself the excellent work of a gay out of bias, he pays the cost for his bias. But when a fifth level manager denies the corporation and the shareholders the benefits of an excellent gay employee, he is forcing the owners to pay the costs of his bias. But the shareholders in US corporate governance have no effective control over policies because of the way the people in control of corporations have protected themselves from shareholders by negotiating laws to block shareholder governance beyond token votes that resemble the election of Mubarak and Putin – in comparison to corporate elections, Chavez is elected by a free and fair open elections.

Worker rights are based in law passed by the representatives of We the People who are overwhelmingly workers employed by others, but those worker rights are strongest for the employers with the greatest privilege, the large corporations, with medium employers subject to weaker rules, and small businesses almost no rules both in law, and in practice. But the small businesses are the one where the employer is the owner and the one who is most often bankrupt by his personal decisions, so as a society we grant him the most freedom of action, even if offensive.

As a current example of outrage, the Libor corruption and fraud likely includes cases of employees threatened with firing and blacklisting if they not only refused to keep silent, but refused to participate in crime, and the result of workers lacking rights to report crime – whistleblower – harmed millions of customers of banks not involved, the shareholders of Barcleys and other banks in the conspiracy, and uninvolved banks, and harmed society’s trust in the integrity of banks, and banks operate on trust, so without trust a bank is bankrupt.

J_S July 13, 2012 at 3:50 pm

As posting on the original website is closed…

Prof. Bertram,

I fear your post reflects a naivety as to how law actually works and the libertarian ideal.

With respect to the first point:

Laws are a social tool and often must be seen as part of a process, as opposed to simply having the function of you can or can’t do X. Laws are enforced by lawsuits, which are inherently expensive, time consuming and risky. A law can significantly change relationships in unanticipated ways merely by existing.

I suspect, in part, why many libertarians would advance opposition to the regulation of an employment relationship because of: (i) the fear of trumped-up lawsuits and (ii) the additional cost of monitoring business relationships for signs of such abuse. With respect to (i), most small businesses cannot defend lawsuits on a contingency basis, but many lawyers may be willing to fight employment lawsuits on a contingency basis. With respect to (ii), small businesses, again, be less able to absorb the monitoring costs.

Additionally, your comments overlook the compartmentalization of law. Law is divided into areas, tort, contract, constitutional, etc. in part because different types of disputes have different pragmatic concerns. Typically, an employment dispute involves the breakdown of a relationship between parties. The dispute is often that one of the parties no longer wants to deal with the other, period. It isn’t that I’m firing “A” because of this specific instance, but I’m firing “A” because I know longer want to work with him for a plethora of reasons. While a Court could attempt to resolve the dispute, usually by the time a Court is involved it is simply too late. The working relationship can no longer be saved. From an employee’s perspective, if my employer demanded I provide her my kidney or be fired, I would not want to rekindle the relationship.

With respect to the second:

Lawsuits themselves can undermine a sense of personal empowerment and responsibility libertarianism tries to foster. Most people would not describe a lawsuit as an “empowering” experience. Trials also usually involve a feeling you’ve lost control. Your actions are those of your lawyers and you rarely understand the trial process. One is reminded of Kafka’s the trial. So, in a sense, a lawsuit can actually undermine the sense of independence and self-empowerment libertarianism holds dear.

Further, part of a trial involves leaving a third party to objectively determine what i did or did not do (i.e. to make a finding of fact). Having to prove the truth of my immediate experiences to a third party alienates me from my immediate experiences and memories. In effect, it harms my sense of self.

Another issue is that lawsuit often has a chilling effect. While this could be a consideration of a misguided law, it also plays into the libertarian philosophy in that the personal relationships (i.e. those not mediated by the state) are no longer free flowing because of the states involvement. Employers begin to document events and become more formal and less open with employees. Employee evaluations, for example, are a direct result of needing to create a record to fire an employee without a notice period. We risk having bosses less willing to actually speak frankly with their employees or engage in meaningful dialog because of the risk of being misunderstood by a third party. This harms the intimacy of the relationship, to the extent such intimacy is possible, and is a harm to the human spirit. Given the level of formalities that already exist at work, it would be truly sad if the ability to truly engage in dialog with people we spend most of our time with was further frozen.

Also, law is only one means of behavioral control. Honour codes have become a significant topic of discussion as of late, and one would imagine that part of the libertarian honour code involves not coercing others in the abusive ways described. By insisting the honour code be formalized as a law does harm to the existence of that code in that we are saying the code is so regularly abused it needs the sanction of law.

Finally, the libertarian ideal is that of the self-employed individual not of the worker. Being a menial worker isn’t to be too comfortable, as the goal is self-empowerment and creative destruction through small business.

Apologies for the crudeness and grammatical errors, as this is an off the cuff response, but I hope you find the response somewhat relevant.

ne July 18, 2012 at 10:58 am

I agree, lawyers by definition take away rights… push the law to the fringes to that everything is so well defined that people actually can weight the “cost” of breaking the law…

Thanks for wrecking the world.

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