[branchless]

It just amazes me people can't see this. Workers produce value, their labour is the product. The difference between the value produced and the cost of labour is the profit.

Paying labour as little as possible is capitalism. Competition between companies means there is no choice other than to seek to maximize this.

[laughfactory]

Well, as an economist, you're close, but not quite there. In truth, in the US, what we've had for a long time is NOT capitalism. It is what you get when you start with capitalism and then add in centuries of rent seeking behavior. Ultimately, at best, what we have is crony capitalism, where corporations and institutions (including labor unions and the government) lobby (aka "rent seek") for preferential treatment under law.

Crucially, I'd argue that we don't get fair capitalistic pricing of labor when there is asymmetric information in the market: Employers pay for access to salary data so they know how much you are worth (approximately), but you have no such knowledge (though this is better than it used to be with services like Glassdoor and Paysa and Salary.com). You're guessing as to the supply and demand for your skill set. Add in the common practice of requiring past salary history to be submitted as part of the application process, and you've got a recipe for suboptimal outcomes, at least on the employee side of the labor equation. If your price gets set below your market value early in your career, it may remain permanently below your actual value because employers often adopt policies which only allow for paying a candidate 10% (or some arbitrary number) more than their last position. This can happen because you underestimate your value initially, or price yourself according to the local market and then move to another market later (say from Salt Lake City to San Diego), or you're out of the labor force for some time (like mothers or fathers who spend them first couple years at home with their new child). The smart candidates will insist on keeping their compensation history confidential (I.e., not sharing it with potential employers), and pass on those organizations who insist that the data be shared. Force them to tell you how much your skill set is worth to them. I've used this strategy to move to a new employer with a 68% increase in compensation. I've also passed on opportunities which required compensation history to be submitted before an offer would be issued. Hopefully legislation will be enacted to make this unnecessary in the future and employers will simply be banned from asking for such data.

Plus, there's a host of policy-related distortions which I won't go into, but basically, no, what we have is not a free market, and not capitalism. What we have is a mess.

[JauntTrooper]

You would think there would be plenty of demand from job-seekers to get accurate salary info.

How much would you pay to get an HR professional to give you an accurate quote, backed by solid data, on what your compensation should be at your next job interview? $250? $400? And if they could advise you in salary negotiations? Would you pay a % of the increase they help you get?

I bet there's a real business opportunity here.

[branchless]

Interesting that the one reply that wasn't completely dismissive, in the economics hell-hole that is hacker news, was from an economist.

[lj3]

Funny. What I got from his response is that you're still wrong. He just said it in a nicer way than the rest of us.

[anigbrowl]

No. I hate capitalism but this is not how economics works. Please, get a textbook or two (Barron's publishes some excellent revision guides that are well-written and cheap on a variety of business subjects, including economics), and study it for a year or two.

[branchless]

I disagree.

[capisce]

Exactly, it's one of the coordination problems inherent in a free market economy. It can be ameliorated or patched through regulation, unionizing, or solved indirectly through industry shifts causing increased labor bargaining power in a given sector. Although the trend doesn't seem to be heading in the direction of increased demand for labor.

[mistermann]

> Paying labour as little as possible is capitalism.

Overly simplistic, and incorrect.