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by pfisch
2478 days ago
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What you are describing isn't how the free market works though. It is just a fantasy of yours. In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital. Also the ceo answers to the shareholders who hired him with the job of maximizing returns. Unless this is a coop there is no reason for it to operate the way you are talking about. |
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> In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital.
And as a good theoretical exercise it's pretty useless. In reality most of the markets are not efficient, changing salaries is not 'free' (i.e., employees work differently depending on how you treat them, and replacing unhappy employees has a cost), and there's more to companies and employees than pure economics.
> Also the ceo answers to the shareholders who hired him with the job of maximizing returns
This is what I am criticising, the 'maximize returns over everything' philosophy. Any company already has a lot of power over any employee, and they abuse that position to the point of cheating people out of their fair share of what they produce just because they live in a different place. And in this case we're talking about a relatively benign situation, but the same philosophy pushes companies to lower wages below a living level, condemning people to poverty so that the company "maximizes profits".