Many of us are victims to educational malpractice. One of the many symptoms of this can been seen in the way we’re told that capitalism exploits workers, especially women and minorities. This is really a Marxist idea. But when you put it under scrutiny it quickly falls apart.
The Profit Motive
First, keep in mind that capitalism operates with the profit motive. Businesses are in the business of making profit. They’re not in the business of exploitation or keeping certain minority groups down. They’re in the business of providing value to consumers. If they don’t do that, no one will buy their products or services.
The profit motive is a good thing. It incentives people to provide value for others. As long as all transactions are voluntary and no one is being coerced, each party gains from each transaction. In order for the capitalist to make more profit, he has to serve more people. People wouldn’t voluntarily part with their money unless they thought they would gain from it.
Capitalism vs Crony Capitalism
Before we go any further, I have to make one thing clear: many of the problems that are blamed on capitalism aren’t caused by real capitalism. Capitalism is the scapegoat for the problems caused by crony-capitalism. When I talk about capitalism, I mean free-market capitalism. Free market capitalism is without any help or hindrance from the government. When people complain about lobbying, bank bailouts, and monopolies, they’re complaining about crony-capitalism because corporations teamed up with government to get political favors.
It is the connection between corporations and government that makes it so dangerous. If the government didn’t have the power to offer favors to those who lobby, it would level out the playing field. The free market would have let the banks fail. They deserved to. If they make bad decisions, they suffer the consequencs. This is how the free market regulates itself. Businesses that make good decisions get rewarded, and businesses that make bad decisions are penalized; not by government, but by the market.
In a free market, government isn’t allowed to pick favorites. Therefore, lobbying distorts the free market. Monopolies are also caused by government granting exclusive licenses and privileges. The free market allows competition, so no monopolies are allowed. If someone is overcharging people in a free market, another business person can enter the market and charge less to gain market share.
Think about it: if you have the option of purchasing two equivalent items, but one costs less than the other, you’ll probably buy the cheaper one. That’s how the free market prevents consumers from overpaying for goods. If someone is making an extraordinarily high profit margin other entrepreneurs will offer the same thing for less, in order to earn the business. Capitalists are always seeking to provide the best deal, because that’s what consumers want.
How Capitalism Prevents Underpaid Labor
In the same way people won’t voluntarily make a transaction unless they think it’s in their best interest, they won’t work unless they think it’s in their best interest either. After all, if someone can get a job for $15 an hour, why would they work for only $10 an hour?
Employers pay people what their labor is worth to them. If an employer pays you less then you’re worth you can just get a job that pays you what you’re worth. If no one will pay you more, than your labor probably isn’t worth any more. If it were, someone would hire you.
Let’s say, for example, a guy gets paid $12 an hour for the job he works. If there were a girl that could do the same job equally well, why wouldn’t the same employer pay the girl just as much? If the girl was willing to work for $11 an hour, the employer would be throwing money away if they paid a guy to do the same job $12 an hour. If that employer had 5 girls and 5 guys working for him, and though they all did the job equally well he was paying the girls $1 less per hour, it wouldn’t take him long before he realized he could fire all 5 of the guys and hire girls instead to save money. Remember, capitalists want to make as much money as possible, and reducing costs means more profit.
In the same example above, let’s say for whatever reason the employer keeps the guys and girls working, and continues paying the guys more. Some other entrepreneur would see an opportunity here. They’d see labor valued at $12 an hour that they can buy for $11 an hour. That’s a great way to make money! But if everything about the two jobs were equal, such as driving distance to work, working conditions, etc., why would the girls leave their job only to make the same amount of money? They wouldn’t. But if the other employer would offer them $11.50 per hour they probably would. Then the girls win by making more money, and the new entrepreneur wins by getting labor below market value.
The Value of Labor
Labor has value. Like anything of value, if someone can get it below market value, and sell it at market value, they can make a profit. If someone finds a cheap doo-dad for $1 at a yard sale and they know they can sell it for $10, why wouldn’t they? The same goes for labor. If someone can find labor priced below market value, why don’t they start a hiring service to connect the undervalued workers with employers, and make a profit?
No business man is going to pay anyone more solely because of their gender. Wages are determined by the value a person brings to the company. Some times women are preferred, and will get paid more money for the same job. Many bars would much prefer to have a good-looking female bartender than a good looking male bartender who can bartend equally well. Not just because of the gender, but because of the value the female gender brings to the bar. If the clientelle is mostly guys, the bar owner would prefer to have a female bartender because that’s what guys want.
If an employer pays a guy more just because he’s a guy, the employer is basically shooting himself in the foot. He’s throwing his money away. The gender itself doesn’t necessarily change the value of the labor, though it can. But if it does, and someone gets paid more because of it, it’s because of the value the gender brings, not because of the gender itself.
But What About The Gender Pay Gap?
We all know it’s easy to lie with statistics. Well the gender pay gap is a good example of exactly that. It’s a myth perpetuated to further a political agenda. The gender pay gap myth was created by comparing the average income of men versus women. What they forgot (or purposely ommitted) to consider was the hours each gender worked. Men, on average, work more.
It’s no secret that men and women are different. Gender alone could explain the difference in hours worked. But there’s one indisputable difference between men and women that directly affects how many hours they work – pregnancy!
Obviously women get pregnant and men do not. When a woman has a baby she absolutely has to take off of work. Sometimes women take weeks off after giving birth, while others take months or years. It takes a woman time to recover from having a baby. Even after that her work isn’t done. Ideally, babies should be breastfed. Though opinions differ, two years of breastfeeding is optimal. It’s not hard to see how having a baby could reduce the amount of hours a woman works.
Though men don’t give birth, men have children too. So what’s a man’s role in all this? Well, if the woman isn’t able to work as much because she has to take care of the newborn, maybe the man has to work more to make up for her lost income.