The Legal Janitor

Given the many comments I’ve received, I thought it best that I put replies, rebuttals and refinements into a new post.

Trowa:

Shianux has explicitly stated that he is a believer in Hayek’s economic ideals… I will simply state that the world will, in my opinion, be a much more scary place than as it is today, should free-market policy take rein in this world.

I’m curious as to whether you’ve read Hayek or not. The caricature that you have painted seriously does not do him justice.

In fact, no matter what one makes of governments, they are at least an institution that is publicly accountable to the people. Their role has always been to serve the people to some degree, even if we have enormous discontentments against their self-serving roles.

On top of that, every single flaw that you have ascribed to corporations is equally applicable to governments. The main difference, is that governments have a monopoly over the use of force, hence they must be constrained.

Is Nestle, Cargill and ADM suffering from business profits for their child labour abuses? Anyone remember Enron? Did anyone think the Enron crisis was due to less government intervention or too much? Ever heard of SLAPPs?

Yes, we sorely need anti-SLAPP legislation in Singapore. You do realise who the primary initiators of SLAPP lawsuits are in Singapore, don’t you?

And as to child labour abuses… do you have any information as to who were doing the kidnapping of the children? I speculate that the corrupt regime running Cote d’Ivoire had something to do with that.

The alternative to Enron’s failure, would be the zombie keiretsus in Japan, or the vampiric state-owned enterprises in China. Fact of the matter is, enterprises fail regularly in a free market, and that is a good thing. It means that mistakes are corrected, and value that is locked in to undead business can be released for other more efficient enterprises.

Now, you might question what happens to all the shareholders who lost their life savings. Firstly, one must bear in mind, that Enron had the tacit support of the Republican Party, and Ken Lay, the then CEO, was close chums with GWB. Beginning to see a pattern here?

Secondly, the reason for existence of government can be justified and confined to the prevention of violence, coercion and fraud. This ties in neatly with my next point.

Exactly, who has that power to charge criminal sanctions or stop paying them?

On the point about enforcing criminal sanctions: I guess I might not have been clear about this, but I’m no anarchist. My position, libertarian/minarchist, is that governments serve to prevent violence, coercion and fraud, through the use of their monopoly on force. Hence there is no incompatibility between a small, constrained government and the enforcement of criminal sanctions.

where those who struggle in the bottom ladder (yes, hierarchies will still exist) continue to question the justifications for their oppression (their answer would be because they aren’t valued for their productivity thanks to the subjective tastes of the majority)

I think the central focus is on free will and consent. You say that corporations can oppress the minority because of the subjective wants of the majority. But which society has never oppressed their minorities? Throughout history, even the most liberal of democracies have become majoritarian tyrannies at times. A glaring example in Singapore would be the rights of homosexuals within a conservative majority.

The the flaw is not in the system, but in all of us, that we as humans are fallible. The main point is, how do we prevent fallible humans to concentrate power in the hands of a few?

that system should not be owned by any set or class of elites, who have narrow interests to serve and nonetheless, fend off themselves from public scrutiny and accountability with power of any kind, social, economic, or political.

I agree with you completely that we should prevent that from happening. We differ on how. I believe governments have a natural tendency to build up its own power, through legislative and coercive monopoly. Show me the proof that corporations can deprive us of life, liberty and property that does not have the hand of government in it.

Businesses however, face competitive pressures that governments never have to face.

The gross inequality in this world is due to the unrestrained power of people, such as Rupert Murdoch, Bill Gates and other CEOs, who utilize much of the world’s limited resources for profit gains… How we go about designing a fair system of distribution is certainly a difficulty question to tackle, but in principle, we wouldn’t want to increase the very foundations of the problem: namely, to allow more individuals hold more private power to own these resources.

Lastly, I believe you need to understand the meaning of ‘limited resources’. The truth is, such limits only matter if the extent and type of use is static, but through the free market, in which people are free to innovate AND capitalise on their innovations, effective limits do not exist. Name me one resource that has depleted and no longer in existence. As a reference, do check out this article.

sieteocho:

Market wage = fair wage

If you read the previous post carefully, you will realise that never once did I say that the market wage == fair wage. What I did in fact say, is that I don’t believe that there IS such a thing as an objectively ‘fair wage’. What is fair? Who decides what is fair? Is what is fair for Ahmad fair for Ah Long or Vivian? Do we centrally legislate a single rule for wages that would apply to everyone, regardless of individual circumstance?

The reason I argue for a market wage system is because the market takes into account all individual subjective preferences and costs. And before you accuse me of being uncaring or heartless about the plight of the poor in Singapore, I would like to point out that currently wages in Singapore are NOT freely set by the market conditions, but is instead artificially suppressed by the NWC. God knows what the real market wage should be, but I would hazard a guess, market clearing wages in some sectors of the economy would probably be higher than what they are now.

What I am against, is government interference of any sort, whether it be to push up wages, or to suppress it.

If the employer is holding all the cards, then it is in the employer’s interest to make him work for nothing, and if the government isn’t going to intervene, the worker’s not going to be paid the fair wage.

Really? You think so? Real-world evidence doesn’t seem to bear your assertions out. Note that the WSJ article was published a year ago, and the People’s Daily reports are just 2 months old, meaning that this is a continuing trend, rather than just a one-off blip.

While a few large Western-owned factories for years have been offering some perks like better pay and English classes, Pearl River Delta’s labor shortage is pushing more manufacturers to offer better working conditions in order to retain staff. Some factories are now building facilities with previously unheard-of luxuries like swimming pools, dormitories equipped with television sets, as well as libraries, gymnasiums and even churches. Apache II Footwear Ltd., which makes sneakers for Adidas-Salomon AG, recently put two counselors on staff to act as sounding boards for workers, who are mostly teenage girls living far from their hometowns in China’s hinterland.

I know, you’re probably going to point out that China has official mandates for minimum wage, but I’d like you to keep in mind, they’re rarely enforced properly, and that they seldom ever apply to MNC’s, as MNC’s pay wages far higher than the minimum anyway.

Then, why do the manufacturers decide to increase pay and benefits unilaterally? Profit motive, pure and simple. They need to make money. They need workers. Ergo, to retain staff, they raise wages and benefits. I think your assertions are not based on fact, nor sound reasoning.

If I wish to make as much money as possible, sure, I need to watch my costs, of which labour is one of the factors. But this need to watch costs is balanced by the requirement that I need my workers to be productive. The reality is that bosses squeezing workers for all they are worth certainly does happen, and from personal experience and that of friends, it happens very often in Singapore. No surprise then, that many Singaporean companies and businesses are shit, simply because they do not know how to treat their workers right.

But does this justify interference from the state in the form of minimum wage legislation? No. Why? Because a business owner who does not know how to motivate his/her workers will suffer the cost of that ineptitude, namely the failure of the business.

Who bears the cost of minimum wage? Taxpayers. Is it fair for taxpayers to bear that cost? I say no, but you may disagree. Still, I have attempted to explain why minimum wage legislation is unnecessary, and unfair to those who have to bear the costs of its implementation. Hopefully, you can see the line of my reasoning.

Last thing to note, did you know people can be paid far above minimum wage levels for doing nothing at all? Moral of the story: the existence of alternatives provide choice, and where there is choice, there is competition for labour. When there is competition for labour, wages go up. An undistorted free market provides the greatest number of choices, and thus provide the greatest opportunity for wage increases.

In fact most of the increases in the costs of living over the last 20 years have been driven by the cost of land, not the cost of labour.

I love this point. I agree with you completely. There is a very big reason for this however, which supports my arguments, and I will come to this later. For now, just remember who the biggest landowner in Singapore is.

When you consider that our economy has always been very open, we consume goods that are manufactured overseas, and therefore the effect of raising wages upon the cost of living gets further discounted. Shianux’s “vicious cycle of leapfrogging” will never come to pass.

You forget that increasingly, services make up a large part of what we consume as well. Let me give you an example. The average cost of a plate of chicken rice in Singapore would be anywhere between SGD$3.00 to SGD$4.00. The same would cost double that here in Melbourne, even taking into account currency exchange differences. The thing is, the raw materials for making chicken rice costs almost the same both in Singapore and Melbourne. What accounts for the huge price difference? Labour costs of making the dish.

Now, you might well argue that those who are paid the minimum wage and above would be able to afford the high prices of eating out here in Melbourne. But this is where the unintended consequences must be remembered. The increase in numbers of unemployed as a result of minimum wage legislation can ill afford the cost of eating out, not even when unemployment benefits are paid out. Imagine if the same thing happens in Singapore. Remember that eating out at the hawker center is still one of the few things that almost all Singaporeans can afford.

CEOs are able to hold their companies to ransom for obscene salaries because everybody’s playing “follow the leader”.

I disagree with you that CEOs hold their companies to ransom, or even have the ability to do so. How do they do it? What hold do they have over their board of directors to demand such a ‘ransom’? When you say ‘follow the leader’, do you actually mean that different companies are competing for the services of CEOs, thus bidding up their pay?

I’ll copy and paste a lovely story for you which I found over at Coyote’s blog to illustrate why your understanding is wrong:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism. In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters). The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays. I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both.

I picked up a handful of sand, and said “this is almost pure silicon, virtually identical to what powers a computer. Take as much labor as you want, and build me a computer with it — the only limitation is you can only have true manual laborers - no engineers or managers or other capitalist lackeys”.

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn’t have any and bankers would never lend them any.

I told her - assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need. The only restriction I put on it is that you may only buy raw materials - steel, land, silicon - in their crudest forms. It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded “but I can’t - I don’t know how. I need someone to tell me how to do it”.

That, my dear friend, is why CEOs command such huge salaries as compared to different workers. It is the ideas that they provide and the decisions which they make that provides the value to a business. And I quote Coyote again:

For the true source of wealth is not brute labor, or even what you might call brute capital, but the mind. The mind creates new technologies, new products, new business models, new productivity enhancements, in short, everything that creates wealth. Labor or capital without a mind behind it is useless.

True, there are plenty of scumbags out there who would masquerade as capable or even competent CEOs. But that does not illustrate a failure of the system: it illustrates the weakness of human beings. If the CEO is incompetent, make him/her bear the cost of their ineptitude. Stop paying them, or make them repay their gains, or even charge them with criminal sanctions. But this does not mean that ALL potential CEOs are scumbags, or that there is justification for forcing ALL of them to accept less pay.

Shianux has claimed that the statement, “At the moment the PAP is using vulnerable foreigners to make vulnerable locals even more vulnerable” is nativist and racist rhetoric.

Yes, but did you fully comprehend the meaning of what I was saying? I was criticizing CSJ for being a sanctimonious prick, because his usage of the phrase ‘vulnerable foreigners’ implied that he was concerned about the plight of these foreigners. The thing is, if he really was so concerned, why the hell does he want to chase them away? Why not let them stay in Singapore so that they can have a better life?

Governments have the ability (and duty) to moderate the ill effects of globalisation upon the labour markets. Even if it does nothing, it would already have taken a position of not defending its workforce. For me this statement is tad dramatic but not wholly unjustified. There should be no doubt that globalisation makes the workforce more vulnerable.

Isn’t that another way of saying that you don’t give a flying fuck about what happens to the poor who wish to come here to Singapore, do you? I quote you:

If we put a foreigner out of a job he goes away, tail between his legs.

You see, my main beef with CSJ, is that for all his claims to be such a great humanitarian and defender of human rights, he really doesn’t give a shit about poor people. Because if he did, then he would defend the rights of ‘vulnerable foreigners’ who wish to come in to Singapore to make a better life for themselves. So much for human rights.

“employ foreign only if local cannot be found” is technically unimplementable.

This is not true: the US has already done it. I think they have stringent rules about some jobs. If we open the floodgates for foreign labour (but we have already done so to some extent) we have to think hard about the consequences.

Yes, some states have passed similar legislation. You know what the consequences are? The companies outsource the work to India. That is exactly the sort of unintended consequences which I say you and many others did not foresee. If cheaper labour does not come to the business, then the business will go to the cheaper labour.

You shouldn’t equate free trade with free movement of labour. That’s equivalent to commoditising people, and is a hark back to slavery.

Au contraire, mon ami. I believe in free movement of PEOPLE because I believe people should be allowed to travel wherever they want and seek employment wherever they wish to. It has nothing to do with slavery, and everything to do with human rights. You do care about human rights, don’t you?

Governments, corporations, regulations and freedom

I’m putting the most important part of this post here.

The corporation is a dictatorship. If you are pro-business, then in a way you are pro-corporation, and hence pro-dictatorship. Political freedom for the people is usually inversely proportional to the power of corporations.

This is the biggest load of shit I’ve ever heard in my entire life.

Governments can lawfully take away your life[capital punishment, Penal Code s53], corporations cannot.

Governments can lawfully take away your liberty[detention without trial, Internal Security Act s8], corporations cannot.

Governments can lawfully take away your property[compulsory land purchase, Land Acquisitions Act s5], corporations cannot.

Corporations are constrained by the need for profit. In order to make profit, they have to give consumers what they want. The moment they fail to do so, or do it ineffectively in competition with other corporations, they will fade into irrelevance. More accurately, the freedom of corporations is directly proportional to whether people still want to buy what they sell.

Shianux has fudged government ownership of business with regulation of business, by playing on the word, “control”. Maybe the dual role of the government in GLCs has added to the confusion.

There is no confusion here. The ‘fudging’ is intentional. I shall explain why.

The owner of the business is your towkay. The regulator of your business is the guy who chips in to tell the towkay, “hey, pay your workers fairly”, or “clean up this workplace, it’s unsafe.” It hardly needs to be said that these 2 roles are fairly adverserial.

Ironically, you have chosen to portray the government in the most favourable light, despite being seemingly critical of them. A more realistic example of regulation would be, “sorry, you can’t build this in your HDB flat”, or “sorry, this lot is not designated for this type of business”, or “sorry, our current policy does not allow this”.

If your towkay is a small-business owner, the various onerous bureaucratic red-tape measures could very well put him out of business. There goes your job. No more wages.

The most important thing that you must remember, is that you are making the exact same mistake as the PAP is, except in a totally reverse manner.

The PAP claims that social freedoms are unnecessary, and economic freedoms are all that is required for a society to be happy.

You, and various other people of socialist bent, including CSJ, think that economic freedoms and social freedoms are somehow mutually exclusive, and that we must sacrifice economic freedoms in order to enable social freedom.

You are both wrong.

If the state can kill you, lock you up indefinitely, force you to sell your land to them, pays your wages, controls the media through which you understand the world, tell you how to run your business, control the number of women who can enter the medical profession, control the number of ethnic minorities who can enter specific professions in the military, control the quotas of people who graduate from specific courses of study…

then they sure as hell can tell you what you can or cannot say; tell you that you will go to jail if your wife/consenting adult girlfriend, in the privacy of your home, gives you a blowjob unless you proceed to fuck her; tell you that consenting adult gay men cannot “love” one another without attracting criminal sanctions; tell you that they have right to decide what is desirable for society and what is not, which is still subject to change at their pleasure, and therefore you should think in a certain way and be in a certain way that is desirable etcetera etcetera.

This has nothing to do with ‘market fundamentalism’. There is no such thing. There is only freedom, and proscription of freedom. Private property rights and the free-market is the surest guarantee to individual freedoms.

Wannabe Lawyer ? Blog Archive ? Democracy is not a populist whore

Seksi Matashutyrmouf: Market fundamentalism
The Police State: Tri-Debate
I am Hikikomori ? Politics! Read all about it!

Coyote Blog: 60 Second Refutation of Socialism, While Sitting at the Beach
Coyote Blog: In Praise of “Robber Barons”

Asian Labour News: China: A Chinese puzzle: Surprising shortage of workers Source: Mei Fong, “A Chinese puzzle: Surprising shortage of workers,” The Wall Street Journal, 16 August 2004.
People’s Daily Online — Migrant laborers shortage triggers rising labor costs: survey
People’s Daily Online — Experts differ on China’s rising labor costs
Abstracts - Poverty, Inequality, Labour Market and Welfare Reform in China- Economics Program - RSSS - ANU
The Line Starts Here (washingtonpost.com) via Cafe Hayek

Don’t get into a lather over sweatshops | csmonitor.com(full working paper here[PDF]) via EconLog and Marginal Revolution

Labor theory of value - Wikipedia, the free encyclopedia
Transformation problem - Wikipedia, the free encyclopedia