Comment by Animats | Hacker News Reader

Comment by Animats | Hacker News Reader

Much of this is the overhead of competition. Consider athletics. The amount of training and effort required increases steeply as you approach world-class performance levels. Yet those levels are maybe 20% beyond reasonable performance levels. A good high school mile run is 5 minutes; 4 minutes is world class, and the world record is 3:43:13. The level of effort to get the last 20% is huge.

Manufacturing isn't like that at all. In manufacturing, if you double your inputs, you get at least twice as much stuff out, and through economies of scale, may get more. This works so well that manufacturing employment is only 7% of the US workforce, yet the US produces more stuff than ever. (Yes, even with importing a lot of stuff.) This also applies to construction, mining, and agriculture - all the real stuff.

Finance, however, isn't like that at all, because it's mostly zero-sum. Winning matters. Avoiding losing matters more. In subsystems where winning matters, there is an incentive to put excessive resources in to avoid losing. This is also true of advertising, startups in crowded fields, and businesses with high brand recognition.

The reason people in the US are working so hard is that there's no effective pushback against this in the zero-sum sectors.

I think there are good ideas in your comment, but you are also skipping some key points. A worker doesn't "inherit" the market his company is operating in, so the competition and profits to be had in that market don't automatically flow to the workers. For instance, the iPhone dominates the smartphone market, but that matters little to the Foxconn workers who make it in China.

A worker operates in his own market - the labor market. His/her pay and working conditions depend on the supply and demand for workers with his skills in the market.

In the last 15 years or so, the US labor market was opened up to workers from all over the world through a wide range of measures - outsourcing, free trade, illegal immigration, H1B visas, etc. So now you have workers from a population of 3-4 billion people competing for US jobs. The trouble is the US economy is still sized for 320 million people.

Corporate interests want you to believe this is the "technological future", but it's really just the huge labor market imbalance that's causing low pay and poor working conditions.

Isn't a global labor market a net win? Lower pay than a closed US market, but higher than a closed Indian market. And more productive overall so better for the consumers.

The problem is that they (US corporations and local elites in the developing countries) haven't built a global labor market. Rather they built very large pipelines into the US labor market.

This means that workers in a country such as China work 14 - 16 hours a day, eat in the company dining hall, and sleep in the company dorm. But they get paid a tiny amount, while US corporations and local elites who control the pipeline capture most of the profit.

Because of this, workers in developing countries act like a full worker (or 1.5 - 2x a full worker) but they don't act like a consumer. So you get 3-4 billion workers competing for jobs in an economy of 320 million people.

That Chinese worker may be worse off than the US worker he replaced, but he's better off than whatever else he would have done instead. That's why it's a win for the Chinese worker. It's also a win for the consumer who gets a cheaper phone and a win for the US company which reduces costs. The only loser seems to be the US worker, but is that really such a bad thing? Isn't this a force for equality? The poor getting richer and the (relatively) rich getting poorer?

I won't disagree that a privileged minority is making huge profits from this, but it's not a zero sum game so it isn't necessarily bad that that's happening.

I'd like to know if there's any other reason to restrict the international labor market beyond US workers being seen as more deserving than foreigners.

Well, there is the fact that is US (and other) corporations that sell products in the US market, but are able to skirt US rules by offloading those costs to other countries without contributing much to the US wellbeing. It is not about being more deserving, is about taking advantage of 'loopholes' in the whole process. For example, in Europe, it is quite common for employers pay on top of the salary 20-40% extra in taxes and social security for a local employee. Even if they pay the same salary to an offshore person, and skirt those 20-40% of taxes, the company wins, the offshore person may win, but the company that uses the country it is doing business in isn't paying it's fair share.

Think of this differently. Imagine a company that offshores all costs (employees, manufacturing, etc) and just has a director/owner in the US. They also use creative accounting so their tax rate is very low. Lets ignore the costs of using the infrastructure as well. Now, this seems like an amazing deal for the owner + their non-us suppliers right? IS it fair for the citizens? What would the owner ask the gov. to do if the citizens then just decided to rob the owner blind? Or destroy the cargo ships as soon as they entered the US? Would he just say "well, tough luck" or they would fight tooth and nail to get the gov/police involved?

I'm fairly liberal, but more and more believe there has to be a balance of responsibilities between corporations and the citizens, because if not, there will be a point where something will change, and most likely by force (check European countries history in the last decade for example)

The taxes attached to a local salary are hopefully paying for services that an offshore worker is not consuming.

Which is to say, determining what is fair is not a simple thing.

The Chinese worker loses because instead of participating in a functioning labor market (like the ones in US, most of Latin America, East/West Europe, etc) his only choice is slave-like factories. The US worker loses because he loses his job. "The consumer" is the same as the US worker, so under this scheme everyone loses, except a small cartel of US corporations and local elites in some developing countries.

The point is not to restrict the international labor market, but to free it from this artificial pipeline that is only possible because US corporations work together with local elites in countries like China to suppress their local labor markets.

The Chinese worker can't participate in the US market because as you said, it's too small even if he was allowed in. So that's not an alternative that might have happened. He couldn't do it in China because either because the value of the RMB was too low for him to buy a nice imported car and phone. Factory workers now can afford iphones of course, but only because of the exports they're producing.

With the US worker and consumer being the same person - I'm not so sure, we're mainly talking about manufacturing, where most people don't work - The rest of the consumers would otherwise be subsidizing the overpaid US worker. Is it right that all consumers (people) in America pay a bit extra in charity to a minority of people who somehow aren't being as productive as they could?

What kind of solution do you propose? More freedom of the labor markets, or less, or something else?

severus_bro. I'm still not sure what you're suggesting. Is it that the Chinese government is allowing its people to be treated badly by employers? That may be true, but could they actually do much better? Improved working conditions mean reduced competitiveness and more unemployment.

Anyway, "I don't want to repeat myself" tends to be a sign that somebody has come to the end of their chain of reasoning. So there's probably nothing further for us to discuss. I hoped you might be someone who could explain a valid reason behind this popular idea. More than "Be like the better ones."

Global labor is not automatically a net win. If companies shop for legal regimes where labor protection is minimal or nonexistent, all you get is a race to the bottom where no one wins, not even the capitalist class, not after the economy contracts because there is hardly anyone left with any leisure time or disposable income.

  > This is also true of advertising, startups in crowded 
  > fields, and businesses with high brand recognition.

Peter Thiel has an interesting stance about startups in crowded fields. He argues that you should pick a niche with little competition and own that niche completely. While growing from that always avoid competition and aim for a monopoly.

Lecture 5 - Competition is for Losers (Peter Thiel)

https://www.youtube.com/watch?v=5_0dVHMpJlo

Transcript:

http://genius.com/Peter-thiel-lecture-5-business-strategy-an...

Previous discussion:

https://news.ycombinator.com/item?id=8310301

How could an effective pushback look like?

Removing most of the exemptions to the overtime requirement of the Fair Labor Standards Act would be a good start.[1] Bigger penalties for non-compliance, like triple damages, would help, too.

[1] http://www.dol.gov/whd/regs/compliance/whdfs23.pdf

Exactly. Adopting a world wide standard based on the European Working Time Directive would be a step in the right direction.

They need to negotiate things like this in trade agreements. Labor standards need to be the similar worldwide and not be a race to the bottom.

Why would any country agree to this if others do not? And it is a big advantage to be able to outwork your competitors so there will always be holdouts.

In the context of a trade agreement.

If they don't agree to harmonized rules, then they aren't part of the trade agreement, and they pay a tariff on all exported goods to balance it out.

Unions? Seems to be the only proven to be working solution.

I wonder though if high paid professionals are actually looking for lower hours or just more pay. That is, is it the employers or the employees driving it? Perhaps some companies are willing to hire part timers but can't find suitable applicants?

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