This is not bad in itself. It's just the first step in the market evolution. Given a free market (barriers aside) an equilibrium will be found sooner or later, but this step needs to happen first.
Talking about a free market with perfectly informed, rational actors is like talking about perfect, frictionless spheres in a vacuum in physics. It's fine for theorizing, but useless once you're building things in the real world.
If every employee knew what all other employees earn, what their training is, what their workload is and what degree of productivity they have, as well as the return on investment generated by their own labor force.
And, what this would mean in comparison with other employers (i.e. comparative salaries, etc), we could think about whether we can speak of an (ideal) free market. To do so, the possibilities to change the company as well as the actual profession would have to be transparent and open.
In addition, most theories on the free market also assume rational actors. Which has been sufficiently refuted as a model of reality.
But even this would not be the problem if the basic assumptions above were fulfilled. But in most cases they are not. I do not know what the colleague next to me earns. I don't know how much ROI my employer gets with my work performance and I certainly don't have the chance to get analogous data to other companies in the market. In addition, as an employee I am also very much tied to the local area due to family situations and therefore cannot act like capital on the free market worldwide.
All in all, in this "game" of the employee is always the weaker market participant - which is why, for example, there are facilities and institutions in consumer markets that protect the consumer, because there is an imbalance in information.
For this reason there is (at least in Germany) state intervention in the employee market just as there are trade unions or works councils. There are analogous instruments in many markets worldwide - to create a counterweight to the imbalance of information and power.
coldpie|5 years ago
sdoering|5 years ago
And, what this would mean in comparison with other employers (i.e. comparative salaries, etc), we could think about whether we can speak of an (ideal) free market. To do so, the possibilities to change the company as well as the actual profession would have to be transparent and open.
In addition, most theories on the free market also assume rational actors. Which has been sufficiently refuted as a model of reality.
But even this would not be the problem if the basic assumptions above were fulfilled. But in most cases they are not. I do not know what the colleague next to me earns. I don't know how much ROI my employer gets with my work performance and I certainly don't have the chance to get analogous data to other companies in the market. In addition, as an employee I am also very much tied to the local area due to family situations and therefore cannot act like capital on the free market worldwide.
All in all, in this "game" of the employee is always the weaker market participant - which is why, for example, there are facilities and institutions in consumer markets that protect the consumer, because there is an imbalance in information.
For this reason there is (at least in Germany) state intervention in the employee market just as there are trade unions or works councils. There are analogous instruments in many markets worldwide - to create a counterweight to the imbalance of information and power.
nickpp|5 years ago
newsclues|5 years ago