Good, and insightful article about a question that I think many people have in their mind when they question the maket (price) system. Nice to see the question well articulated. One problem, with the farmer - worker analogy. I think the farmer and worker are the same. The farmer looks to prices to decide what to plant. He then must spend the remainder of the season tending to that crop (decision). Likewise, the worker decides which firm to work for, and then spends his time tending to that firm. Both have an exit strategy, when the cost of tending to the crop/job exceeds the cost of quitting. And both periodically revisit their commitment decision - after harvest, the farmer again must decide what to plant, while the employee periodically considers outside offers (or the possibility of them).
...the price watching is just a further division of labor, correct? in a one-person farm, the farmer is doing everything. In a larger farm ecosystem (like smithfield, for example), the meat-bosses are determining what to pay for pork, which determines kill plants output.
What I'm saying is, how does this really differentiate the firm from any other business type? In any situation other than sole proprietorships, very few people are making price-negotiated decisions about their jobs...
Looking forward to what I assume is going to be an upcoming econtalk feat'ing this. :)
4 comments:
great piece!
Good, and insightful article about a question that I think many people have in their mind when they question the maket (price) system. Nice to see the question well articulated.
One problem, with the farmer - worker analogy. I think the farmer and worker are the same. The farmer looks to prices to decide what to plant. He then must spend the remainder of the season tending to that crop (decision). Likewise, the worker decides which firm to work for, and then spends his time tending to that firm. Both have an exit strategy, when the cost of tending to the crop/job exceeds the cost of quitting. And both periodically revisit their commitment decision - after harvest, the farmer again must decide what to plant, while the employee periodically considers outside offers (or the possibility of them).
...the price watching is just a further division of labor, correct? in a one-person farm, the farmer is doing everything. In a larger farm ecosystem (like smithfield, for example), the meat-bosses are determining what to pay for pork, which determines kill plants output.
What I'm saying is, how does this really differentiate the firm from any other business type? In any situation other than sole proprietorships, very few people are making price-negotiated decisions about their jobs...
Looking forward to what I assume is going to be an upcoming econtalk feat'ing this. :)
For me, the point is that salaries are a poor way to pay/incent employees and we should discourage labor market inflexibility.
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