The people harmed by the externalities of your personal choices because you live in a society where some degree of cooperation with the larger community is required.
The wage effect of the personal choice of what wage to work at it is not an externality. An externality is when one party's actions deprive you of something you are entitled to, like your person or property. The opportunity offered by another individual, is not yours to begin with, and that other indivual has a right to withdraw it by contracting with someone else at a lower wage.
By way of analogy, imagine if you training to become physically more attractive made other male suitors less attractive to women in general. You did not, by virtue of making yourself more attractive, impose a negative externality on other men, as they were never entitled the affection and engagement of women in the first place.
Moreover, the absence of labor regulations and social democratic policies is associated with more rapid economic growth and larger wage gains, so the premise of the notion that there are negative externalities emanating from contract liberty is wrong. The free market is far and away the most efficient way to organize an economy, because the market is the ultimate coordinating tool, and helps raise productivity, which has enormous positive externalities.
These sound like the fundamentalist tenets of an ideology, that just happen to further the interests of the rich, but the statistical/empirical evidence has constistently validated these assertions, as do rationalist deductions based on game theory and widely accepted economic axioms like supply and demand and the efficiency of equilibriums established by them.
> The free market is far and away the most efficient way to organize an economy,
By 'free' do you mean unregulated?
And efficiency (which you seem to equate with 'return on capital') isn't the only positive value, nor is efficiency necessarily a good proxy for all other positive values.
In any case, while a theoretical perfect market without any asymmetries might be most efficient, in practice we have markets that are imperfect in many ways that induce market failures, and regulation is needed to compensate and restore market efficiency. The market for labor is no exception, as the asymmetries in labor relations are huge.
>>And efficiency (which you seem to equate with 'return on capital') isn't the only positive value, nor is efficiency necessarily a good proxy for all other positive values
Efficiency is the only thing that matters. Take two countries: Pragmatia and Utopitia. Pragmatia solely pursues efficiency, in line with its pragmatic ideals, while Utopitia pursues social democratic ideals, in line with its utopianist ideals.
Pragmatia consequently sees GDP grow at an annual rate of 5% a year, while Utopitia sees its GDP grow at 2.5% a year.
From a starting point as equals in 2022, Pragmatia acquires a 3 to 1 per capita GDP advantage over Utopitia within 50 years, providing Pragmatia's residents with a vastly better standard of living than Utopitia's, irrespective of how large of a percentage of the latter's GDP was expropriated by the state for social democratic redistribution.
This was basically the story of Hong Kong vs Mainland China from the 1950s to 1980:
>>In any case, while a theoretical perfect market without any asymmetries might be most efficient, in practice we have markets that are imperfect in many ways that induce market failures, and regulation is needed to compensate and restore market efficiency.
Imperfect markets don't imply that wages are below what they would be under free market conditions, or that a crude intervention, like granting labor unions with collective bargaining monopolies over companies' hiring practices will counter-act the wage-inhibiting effect of some market inefficiency, let alone do so without introducing far larger and more significant inefficiencies of its own.
Basic supply and demand theory tells us that the employment standard mandates, like minimum wage controls, advocated by unions, to the extent that they have an effect, harm economic efficiency. In the absence of the ability to conduct controlled experiments to prove definitively its effect one way or another, we should opt to trust basic economy theory.
>>The market for labor is no exception, as the asymmetries in labor relations are huge.
Asymmetries are irrelevant. Apple is worth over $2 trillion, yet cannot force me to buy a Macbook Pro. It can only induce me to do so by offering more value than competitors.
If we let Apple and its social justice PR firms convince us that we need the government to control the consumer electronic market, then Apple could, through regulatory barriers, keep competitors out, or through taxation, force us to indirectly buy its products, by funding the state that does.
>>And efficiency (which you seem to equate with 'return on capital') isn't the only positive value, nor is efficiency necessarily a good proxy for all other positive values
Efficiency is the only thing that matters. Take two countries: Pragmatia and Utopitia. Pragmatia solely pursues efficiency, in line with its pragmatic ideals, while Utopitia pursues social democratic ideals, in line with its utopianist ideals.
Pragmatia consequently sees GDP grow at an annual rate of 5% a year, while Utopitia sees its GDP grow at 2.5% a year.
From a starting point as equals in 2022, Pragmatia acquires a 3 to 1 per capita GDP advantage over Utopitia within 50 years, providing Pragmatia's residents with a vastly better standard of living than Utopitia's, irrespective of how large of a percentage of the latter's GDP was expropriated by the state for social democratic redistribution.
This was basically the story of Hong Kong vs Mainland China from the 1950s to 1980:
>>In any case, while a theoretical perfect market without any asymmetries might be most efficient, in practice we have markets that are imperfect in many ways that induce market failures, and regulation is needed to compensate and restore market efficiency.
Imperfect markets don't imply that wages are below what they would be under free market conditions, or that a crude intervention, like granting labor unions with collective bargaining monopolies over companies' hiring practices will counter-act the wage-inhibiting effect of some market inefficiency, let alone do so without introducing far larger and more significant inefficiencies of its own.
Basic supply and demand theory tells us that the employment standard mandates, like minimum wage controls, advocated by unions, to the extent that they have an effect, harm economic inefficiency. In the absence of the ability to conduct controlled experiments to prove definitively its effect one way or another, we should opt to trust basic economy theory.
>>The market for labor is no exception, as the asymmetries in labor relations are huge.
Asymmetries are irrelevant. Apple is worth over $2 trillion, yet cannot force me to buy an Mac Pro. It can only induce me to do so by offering more value than competitors.
If we let Apple and its social justice PR firms convince us that we need the government to control the consumer electronic market, then Apple could, through regulatory barriers, keep competitors, or through taxation, force us to indirectly buy its products, by funding the state that does.