March 31, 2009

When will they learn?

                The idea of the Treasury Secretary controlling all the wages of the workers in the companies the government contributes to just sounds like a bad idea.  The problem with this article is that they avoid the economic impacts.  It’s like minimum wage, except it’s maximum wage?  I understand that all these companies messed up and the government wants to watch their money, but it might be better to have someone act more like a supervisor than someone simply controlling it all.

                If the government begins to put a maximum level on their wages, what’s the incentive to work harder?  They’re saying that they will be fair wages and such, but really?  When people lose that incentive to work harder then companies don’t improve themselves as quickly.  The workers don’t work harder and faster, they just work. 

                It also takes away from the workers market.  The higher the skill the higher the pay, so the company can chose between the more skilled workers who can get things done faster, or two workers who aren’t as skilled and together get as much done in the same period of time as the one worker.  If the more skilled workers think that they can make more by working for a company not controlled by the government they will.  Those that don’t and are getting these likely lesser wages are distorting the market saying that a company can get more highly skilled workers for less than they’re actually worth.  When those wages change the input prices change so it my (eventually) look like those companies are making a positive economic profit inviting firms to enter the market and if the government backs out at the wrong time and the workers demand the pay they actually deserve, then input prices will quickly rise, and we will be back to the point where some of these companies will be failing.  On top of that, what’s the point in being skilled if you can make the same money if you’re not a highly skilled worker?  So there will be less skilled workers in the workforce all together. 

Oh the government should just stay out of these things.  Distorting markets is not the way to fix them.

No comments: