| HN Mirror

> See also efficient market hypothesis.

On your original post, you said they pay lower in other places because they can, which I agree with, of course companies will pay as little as they can, because margin on labor is the key profit margin that enables capitalism to function. But I disagree that this is due to efficient markets. Instead I believe it's because corporations can be sociopathic, whereas humans are humans, and come with feelings and flaws. A corporation can for example leverage the human desire for being a part of something larger, or local culture social pressure, to extract more hours of work out of someone than they're contractually obligated to give (see for example Japan or Taiwan working culture). Corporations are immune to these sorts of things so it's a one way, non-market-based street of exploitative behavior. Furthermore of course is the fact that corporations weild far more capital and thus power than individual workers, and will often collude with governments to prevent worker collective bargaining.

Furthermore, I believe your idea applies too much autonomy and collaboration between corporations. Example:

> . And if they would pay higher wages there, the local economy would have to start paying local doctors and engineers more to keep them all from becoming engineers

This seems to suggest that companies are colluding to prevent macroeconomic effects such as wage inflation. It's post ipso facto explanation, kind of like when make presumptions with evolutionary sociology: "ADHD people served an important role as guarding early human settlements. Their heightened deep focus and obsession with finding details in noise made them ideal to scan the horizon at night." Assuming evolution is an intelligent designer that made different sorts of humans for serving distinct purposes, rather than the reality that we have different sorts of humans because of entropy, and humans happen to be sentient and can leverage these sorts of diverse manifestations to their advantage sometimes - or perhaps, our society just was built in a way that reflects the reality of different sorts of people existing, either way, thus you have people misattributing purpose to chance.

I feel the same when I hear people make market-based justifications for some economic reality like geographic labor cost diversion. My confusion isn't around why it happens, it's why laborers tolerate it. The Invisible Hand of The Market isn't setting labor rates because it needs to maintain cross-role equilibrium between well defined roles, labor rates are simply, as low as a company can get away with.

Markets aren't efficient. A doctor in Taiwan must study for ten years longer than an engineer, in the USA the same is true but also the doctor must take on potentially hundreds of thousands of dollars of student debt. In medical school a student must sacrifice both their mental health and social life and dedicate themselves entirely to completing the curriculum. If they fail they're saddled with debt they have no hope of paying (in the USA, Taiwan not so much), and even still, many fail. Then there's residency. Then in the USA you get a relatively high paid job, but also depending on your role, one of the highest stress, highest legal-exposure, highest-stakes jobs on the market. In Taiwan, same, except, the pay isn't even that good! And in the USA, because of the debt and the timeline before productivity, you'd be far better off simply immediately becoming a software engineer out of college and leveraging compound interest to come out at worst at retirement the same place the doctor does. In Taiwan, in the end the engineer will always come out ahead, and have a social life to boot.

In an efficient market, nobody would ever become a doctor. It's not like people determine whether to go through the hell of medical school based on whether they'd make more as an engineer, monitoring shifting salaries year on year as they come up through highschool.

The vast majority of people aren't making their career choice based on compensation. Compensation plays a role, but the vast majority are making choices based on interest, local availability, local culture, their personal experience (people who were strongly affected by a good teacher or therapist are more likely to become a teacher or therapist), and of course their personal capabilities. This is the sort of thing that's irrelevant to a corporation, and an efficient market hypothesis can't account for.

The market is skewed to protect profits since the market, analyzed in aggregate, represents the will of corporations to extract profit against the sloppiness of humans who are motivated by things other than money, and are also sometimes stupid and irrational, and often at a severe information disadvantage. Furthermore sometimes stupid people run corporations so the corps will behave irrationally rather than sociopathically profit driven like they're supposed to.

Rates are lower in Taiwan because it was basically a third world country living under military dictatorship 40 years ago where a ruling class was an invading military force that took land by force and then stumbled upon incredible profits by turning Taiwan into the chip manufacturing hub for the world. The amount of wealth flowing into Taiwan is astonishing but it's mostly captured by a small subset of chip industry founders, mostly all older than 50, and most of whom have some familial connection to the KMT that let them get government protection as well as having the capital to set up things like foundries. The little these companies pay out to their workers is recaptured by the same class, who own something like 80% of the land in Taiwan, in the form of rent or selling property at outrageously inflated rates.

So, wealth has clumped, and so has power, and so when google sets up an office in Taipei, they find out that engineers there get paid 30k to do a job an sf engineer would do for 120k, so they pay 30k. Or maybe 35 to get the really really good ones. Hell that might be why Google showed up at all.

One final aspect: Google can take advantage of geographic arbitrage, but an individual taiwanese engineer can't, because things like borders, visas, cost of moving, mental toll of leaving behind home, and familial responsibilities don't exist for Google, but they do for the Taiwanese engineer.