It takes two to tango, or another fundamental flaw in the statist reasoning

Statists tend to view every economical interaction as, to some degree, a zero-sum game: one party wins, another party loses. Even in cases when both parties obviously win from the interaction, there is still a struggle between the parties over which party wins more. This is seen as undesirable, especially in light of the (questionable) idea that one party typically has a stronger bargaining position than the other party.

This view ignores the fact that the parties need each other and can only win by benefiting each other, otherwise they would not be interacting in the first place. But this is not what I would like to talk about here. There is another, darker side of this view and proposals it leads to: the idea that it is possible to curtail one party's freedoms without simultaneously curtailing the other party's freedoms.

Let us take the popular idea among "worker rights" advocates: the minimum wage laws. The argument goes as follows: since the employer has a stronger bargaining position and can afford to not hire the applicant, while the applicant cannot really afford not being hired for an extended period of time, the employer must be forced to pay a "decent" wage to the employee. This, of course, is seen as directly benefiting the employee: after all, the employee cannot be underpaid now, right?

There are many flaws in this argument, but the main flaw rarely is pointed out: it is that, while restricting freedoms of the employer, it simultaneously restricts freedoms of the employee. It takes two to tango; it takes two to sign a contract. The minimum wage laws not only deprive the employer from the ability to hire cheap labor, but they also deprive the job seekers from the ability to be hired as cheap labor. There is a multitude of reasons why someone might want to be hired as cheap labor, and taking away their freedom to negotiate such contracts obviously limits their opportunities.

If you look at various economical regulations aimed at protecting one group's interests from another group's control, you will see that in every single case the regulations actually limit freedoms of both groups equally. The freedom to sell marijuana, for example, cannot be taken away without taking away the freedom to buy marijuana. The freedom to not pay high corporate tax cannot be taken away without taking away the freedom to buy low-priced corporate products.

Why is it that the other side of the issue - restrictions of freedoms of the "beneficiary" of a given policy - is never addressed by its advocates? Why do they see many economical exchanges as fundamentally dictated by one of the parties, "forcing" the other party into accepting its terms, when in reality both parties actively negotiate the terms on their own behalf and can only sign a contract upon mutual agreement on the terms? It is not a very complicated idea that something cannot be accepted without it being offered.

I think we are dealing with some deep blunder in most people's understanding of economics, or even human interaction in general. This idea that in human interaction one party sets the terms of the interaction and the other party has little choice in the matter is so obviously wrong, it hardly warrants pointing out at all - yet somehow it slips under the radar more often than not. What do you think is its primary cause?

Posted Aug 17, 2020, 5:36 PM UTC

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AdamasNemesis•

Good comment. I would also add that libertarianism, at least as applied in state societies, has its own dichotomy, the state versus the individual, to the extent "Do you hate the state?" has been applied as a litmus test. Of course this mentality is not a repudiation of but rather an effect of seeing everyone as having the right to act as equals.

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Scaliwag•

You have a point but at the same time it's a non-reply, a point that dodges the question.

They may be operating from a different "root" but not all premisses are true, and some are literally mutually exclusive.

tldk; kumbaya denied.

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WERMcrack•

Great post! As you said, it's a concept so common sensical that it almost feels like it doesn't need to be expressed, but I think, especially these days, there is value in breaking it down in simple language and examples, as you have done.

The only answer that I can come up with, as to why statists disregard basic economics, is that they are so devoted to their ideology they can't allow anything that questions it to exist. Statism is a religion and anyone who presents alternatives, no matter how backed up by logic and evidence they may be, are heretics. See: the Church v. Galileo.

Hopefully, in time, human thought and society will evolve beyond statism. Hopefully it doesn't take another 400 years!

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AdamasNemesis•

Excellent post. Immigration and border controls might be an even better example of this logic; to the extent you restrict foreigners' freedom to visit a country and find friends and lovers, you also restrict your own citizens' freedom to invite foreigners into their lives and find friends and lovers. In other words, you cannot dictate who foreigners are allowed to befriend and marry without also dictating who your own citizens are allowed to befriend and marry, a violation of a rather fundamental human freedom. Free immigration and travel would be much more popular I'm sure if its advocates talked more about that and how restrictions aren't in the interest of citizens either rather than tying immigration and travel to guilt-tripping people into sacrificing their own livelihoods to help poor helpless refugees.

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IpickThingsUp11B•

"BuT nObOdY wAnTs To WoRk FoR a NoN-lIvInG wAgE"

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rugosefishman•

Basic economic theory is not taught well (at all) in grade school or high school. I am still not clear why that was not in my primary grade education.

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PeppermintPig•
  1. They're ignorant and can't teach you what they don't know.

  2. They are not in control of the curriculum.

  3. They may not have the time or interest.

  4. They are ideologically incentivized to teach you things that aren't true.

There's a lot of potential factors against getting real economic knowledge. Usually you get them through tuition (life).

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rugosefishman•

It’s difficult to overstate exactly how true #1 actually is.

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Scaliwag•

As with most human interaction in life it's easier to just go for whatever you think is good for yourself while avoiding getting punished for that, than to reason and act based on principles that may even have an end result to your own detriment.

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ToyOfRhamnusia•

You can never avoid that one party tries to take advantage of the other when this party cannot walk away from the deal. Only by ensuring this possibility can you SOMEHOW curb this, but never completely (unless the parties are equal), so you have to live with that possibility whether or not you like it. The deal must be to ensure that this possibility is minimized, and that can only happen when both parties are given the opportunity to walk away and close no deal with each other.

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