You Get Paid What You Deserve

I’m one of those rare capitalists that believes the government has an active responsibility in regulating the “free market” and making sure that the wealthiest among us don’t subjugate the poorest among us.

In fact, when I hear people trot out nonsense like “free market” most of the time it makes me roll my eye so hard they nearly fall out of my head.  With a background in Economics and Political Science, I can see that most people have no comprehension of what the “free market” actually is and more importantly, why it’s an impossibility in contemporary life.

The truth is, we live in regulated economies because 100% of us agree that this is necessary.  We might debate the level, types and amount of regulation, but pretty much everyone accepts that there needs to be some health and safety regulations, there needs to be a code of civil and criminal justice that is administered “fairly” across society and that things like police and firefighters are better provided by the government.

So fundamentally, we have a level of regulation.

When people then talking about allowing “free market principles” to effectively run amok in that kind of environment, it simply doesn’t work because it eventually turns into some dystopian lunacy.

What most people don’t seem to fully understand is that you can actually “win” at capitalism in a fully free market environment.  Companies or interests could leverage their wealth in one area to crush out the competition in other areas in a predatory way and over time simply eliminate any and all forms of competition or at least limit it to a small number.

The Japanese refer to this as a keiretsu and the South Koreans call the companies that make up that system chaebols.

When you point this out to simplistic “free market” advocates they immediately say that there are anti-trust laws to prevent monopolies from forming.

Suddenly, the “free market” isn’t free anymore, it’s a regulated economy and now we’re back to debating just what level of regulation we have – which candidly is a much more sensible and productive conversation.

So where is this coming from?

Today I saw someone I like on Facebook run an argument about Virtual Assistants and how much you pay them.  I will say that this person has served in support and VA type roles in the past so perspective is a bit skewed.

I’ve been looking at hiring a couple fo VAs lately to just get and keep a few things ticking over within the Casual Marketer business.  I’m probably not going to pay much for those roles because frankly, they are pretty low level and if they don’t happen, it’s more of a nuisance to me than anything else.

This person on Facebook was putting forward a position that it isn’t “right” to pay VAs low wages like $5/hr because that’s not enough to
live on in the Western world.  They also were arguing that hiring people in developing nations and saying that this sum “is a lot for their local economy” is a form of justifying within yourself paying people below what the job is worth.

The part that I found most interesting and is relevant to the points I made up above around “free markets” is when this person said that you’re not really “hiring” these people because you’re not paying them benefits or their taxes, that effectively you’re entering into a relationship with another business owner, which they said was your peer.

I decided to respond and politely disagree.

I agreed with the idea that in this kind of situation you’re not hiring an employee, you’re bringing on a services supplier from another
business.  I think that’s a more accurate description if we’re being honest.

My objection was that employees have “rights” and there are regulations to ensure that they achieve a certain quality and level of compensation.  You can’t call these people business owners, overtly say they are not employees and then in the next sentence convey upon them the rights of employees while also attributing them the rights as business owners.

That’s having your cake, eating it too and then asking the person paying for it to wash the dishes when you’re done.

When I’m looking for a VA, I’m entering into an ongoing transactional relationship with what I perceive to be another business owner.  They have a service that they provide and I have money that they want.  We get to freely determine what the exchange rate of my money for their services are.

That’s a great example of free-market economics and principles at work and why I love capitalism.  If the VA doesn’t want to do the services that I want to be done at the price I’m looking to pay, they’re free to negotiate different terms or say no to my offer.

Likewise, if I’m unwilling to pay their price, I’m free to look elsewhere or not have the work done if I can’t find anyone to do it.

Injecting social justice claptrap into this kind of relationship and situation helps no one.

When you’re setting your prices for your products and services, that’s where the market is usually the freest –  you are in control of the outcome.  Similarly, as a consumer of goods and services, you get to determine whether the price someone is asking fits your business’ budget or now.

This is what you need to remember, you’re the boss of you.  You can charge whatever you like for your products and services and you can only agree to spend on things the amount you want to spend.

And you own the outcomes in all situations.

That’s where capitalism really works because winners and losers work themselves out.

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