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Originally Posted by aceventura3
You would have to take the role of buyer at the moment of purchase to determine what someone's skill are worth. If my employer thinks my skills are worth $1 million, and signs a contract with me good for the million. That was the price, that was the worth, even if that is not what you would pay. If I add $1 million in value to my employer is another issue. At the end of the contract he may find my skills were worth $10 million, or $0.
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If you define X as X, yes then X is X. If you define "X is worth what would be paid in a free market", then yes free markets pay everyone exactly what they are worth, no more and no less.
Proof by defining terms so you are correct isn't interesting.
Second, note I mentioned "why your skills are worth".
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If a CEO or a person like Warren Buffet as the unique ability to manage and deploy capital and in the process make billions of dollars after taxes for his company and investors, he should be paid accordingly.
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Notice the use of "ability" in your post.
If it is Buffet's reputation that makes him worth the money, then his ability has nothing to do with it. If you pay a CEO a high salary with golden parachutes not because of the CEO's unique skills, but rather to ensure he doesn't go up and quit on you half way through the contract -- that isn't what the CEO's skills are worth, that a the cost of having a corperate structure with a CEO at the head.
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In a free market you get a true measure of worth. In a controlled market you don't. For example: If the government says I Have to use Union labor at an inflated wage, then you have a situation where not all pricing is what your skills are worth.
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Yes, if that is how you define the terms.
But what do you mean by a free market -- I notice you didn't mention "regulated free market". In a free market, any idiot can see the economic benefits of claiming, buying or forming a monopoly, especially a natural monopoly.
The labour laws don't
force anyone to hire someone from a union -- they usually just prevent you from hiring a non-union employee for the reason. You won't hire another employee unless you expect them to make you more money than it costs you to hire them.
To the buyer (employer) at the moment of purchase (when they hire another union employee), the value of the employer is
at least as high as the salary offered. That was the price, that was the worth.
So by "free market", do you mean a market with free competition? Monopolistic competition? Natural monopolies? Oligopolies? Cartels? Patents? Copyright? Trademarks?