Saturday, January 13, 2018

Simple Supply and Demand Economics

At the post, Corporate America Warns the Stable Genius, the Lab Manager comments:
I would like RW to prove me that the unemployment rate is really single digits and we truly need more people from these poop hole countries to allegedly fill jobs Americans won't do. I'd be more than happy to teach at a university for example; too many foreigners at most of them and those jobs should really go to Americans.
The market for labor is not different than any other market. It is all about supply and demand. Prices adjust (wage prices in the case of employment) until markets clear. Except during a major period of restructuring of the economy during the down phase of the business cycle, there is nothing but limited unemployment---other than government created unemployment by minimum wage laws and the paying of people not to work by unemployment insurance.

As for foreigners coming here to work, as explained in the video in the original post, they add to the pool of goods and services available to all of us, that is, our standard of living increases here because of their presence/

As for Lab Manager's inability to get a job, it means no university values his services enough to hire him or he is asking too large of a salary. Markets clear. To argue otherwise is to deny simple supply and demand economics.



  1. "All I want for Xmas is white genocide" tweeted a professor at Swarthmore University recently. Factors other than salary go into hiring decisions. Is it possible that those hiring at universities are pro diversity and anti US citizens?

  2. Lab,

    To "prove you" some more, check out Mises from Human Action:

    "As far as there is unhampered capitalism, there is no longer any question of poverty in the sense in which this term is applied to the conditions of a noncapitalistic society. The increase in population figures does not create supernumerary mouths, but additional hands whose employment produces additional wealth."

  3. We don't live in a free market labor environment. We simply don't. A free market isn't just a clearing aspect, it's one free of distortions caused by government. Those distortions clear at some price sure, but that doesn't mean there aren't problems.

    The distortions set up by the political class through their interventions have created negative effects for many which now Trump aims to address with more interventions.

    If either Trump or corporations were seeking to remove the previous interventions then there is a free market case. Neither seeks to do so. Trump is looking for the ability to say he kept his promise while corporate interests want to continue to enjoy labor rates that are kept artificially low through taxation funded subsidies and central bank policy and more.

    Immigration is an issue because we don't have a free market system. Not only here in the USA but around the world. Even if the USA had a perfect free market what governments did elsewhere (including fedgov's foreign policy) would distort the labor market here. Although not as badly of course.

    1. Finally someone calling the 300 lb gorilla what it is. What Robert and many seem to think is that since there is free will to choose what you will do in a market equals free market.

      It doesnt. Nor does low paying part time work in the face of a lack of middle class full time employment add up to quality employment. As Jimmy pointed out there is no way to get there from here.