Reference no: EM13818236

Loosely Regulated Markets and Government Regulation:

The United States has one of the world's freest labor markets. For this thread, explore the AFL-CIO's Job Tracker database to see some of the aspects of loosely regulated markets. What type of market exists in your local area? What are the pros and cons of free labor markets? Based on your reading and analysis, is there a need for government regulation?

The First Student Response-Jennie Bradley

The freer the labor market is, the more flexibility there is in regards to the staffing and compensation of businesses. Pros to having a free labor market include, firstly, the ability of companies to hire and fire in a way that is beneficial to the company. According to Forbes, more restricted labor markets are characterized by unemployment due to the inability of companies to hire and fire without complicated regulations. Countries like France are less likely to hire based on the mandatory benefits and vacation time they have to give new hires in accordance with market standards (Weinberg & Dukcevich, 2003). Another pro to having a free labor market is that it by nature promotes fairness. Workers are free to move between companies in order to find the best compensation, which compels businesses to work to offer fair wages in order to attract employees. The emergent property resulting from the self-organizing dynamics of the free market promote fairness within the labor market (Venkatasubramanian, 2010, p 1515).

I feel that if government is to impose regulations on the labor market, that those regulations should be limited to what is necessary to protect the health and safety of workers. In regards to wages and compensation, I think businesses will be compelled to offer fair wages in order to remain competitive.

References

Weinberg, A. & Dukcevich, D. (2003). The World's Freest Labor Markets. Forbes. Retrieved August 19, 2015, from https://www.forbes.com/2003/01/30/cx_aw_0129labor.html

Venkatasubramanian, V. (2010). Fairness Is an Emergent Self-Organized Property of the Free Market for Labor. Entropy, 12(6), 1514-1531. Retrieved August 19, 2015, fromhttps://rx9vh3hy4r.search.serialssolutions.com/?ctx_ver=Z39.88-2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info:sid/summon.serialssolutions.com&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Fairness+Is+an+Emergent+Self-Organized+Property+of+the+Free+Market+for+Labor&rft.jtitle=Entropy&rft.au=Venkatasubramanian%2C+Venkat&rft.date=2010-06-14&rft.eissn=1099-4300&rft.volume=12&rft.issue=6&rft.spage=1514&rft.epage=1531&rft_id=info:doi/10.3390%2Fe12061514&rft.externalDBID=n%2Fa&rft.externalDocID=10_3390_e12061514¶mdict=en-US

The Second student-Genita LeNoir

"Economists consider a labor market free when wages are set by the forces of supply and demand, and not by non-market factors (such as minimum wage laws, pressure from unions, and so on)" (Unknown, n.d.). In our area the main labor market is the Army. As I understand it, there are so many rules and regulations that are set out by the government that makes this particular market a part of the "free" labor.   Tejvan Pettinger sets out in his article some of the pros and cons to having a free labor market.  Some are economic freedom which helps political freedom; efficiency, firms in a capitalist based society face incentives to be efficient and produce goods which are in demand which incite firms to cut costs and avoid waste.  State owned firms tend to be more inefficient (e.g. less willing to get rid of surplus workers and less incentives to try new innovative working practices.) (Pettinger, 2013). Pettinger further discusses that the cons are monopoly power, inherited wealth and wealth equality, the social benefit will be ignored and inequality creates social division and diminishes marginal utility wealth (Pettinger, 2013).

Steve Harry position is that having a free labor market is "needed in times of economic turmoil" (Harry, n.d.).  He also discusses that having a free labor market will bring about a drastic change in the economy as we are used to it, however, it will eliminate unemployment and raise our standard of living by having no mandatory collective bargaining and no minimum wage, employers will have the power to pay as little as they wish (Harry, n.d.).   Our textbook states that "economics emphasizes free-market transactions because of the belief that perfect competition maximizes efficiency and aggregate welfare.  Monopolies, laws, and other barriers to competition is bad" (Budd, 2012, p. 477).  It is necessary for government regulation in that if no regulation was in place, we will still have the same labor problems today as we did in early years whereas people will make up their own rules. Some "people" you would not want to be able to "make the rules." Personally, could not image working on a job where an employee could treat you as they wished and possibly not paying you wages that you worked for.  In contrast, after researching this discussion board topic, it is debated that the government's role to regulate the free market may not be favorable to the economy.

In an excerpt by Belman and Belzer, states that "Federal, state, and local governments play an immediate role in markets when they engage in economic regulation-the direct regulation of economic processes including prices and quantity-or social regulation-regulation intended to ensure the market attains socially desirable ends" (Belman and Belzer, n.d.).  We do need to have government regulation to protect the worker. However, Josh Clark discusses in his article that greed is the basis of capitalism, and capitalism is founded on a free market (Clark, 2015). He states that this is has been a long-standing debate over how "freely a free market should be allowed to operate" (Clark, 2015). His view is that under capitalist theory, the government should not step in to help business such as bailing out banks and mortgage lenders to save the economy that they should have just allowed the economy to fail. He believes that "how can a free market be 'free' if it's regulated?

"For the wages of sin is death, but the free gift of God is eternal life in Christ Jesus our Lord" (Romans 6:23).  This verse teaches us that if we work, we should be compensated and as a Christian we must continue to put our trust in the Lord.

References

Budd, J.W. (2012). Labor relations: Striking a balance (4th ed.). New York, NY: McGraw-Hill Irwin.

Belman, D., and Belzer, M.H., (n.d.). The Regulation of Labor Markets: Balancing the Benefits and Costs of Competition. Employment Regulation, Chapter 5. Retrieved from https://www.msu.edu/~drdale/Publications/Govt%20Regulation%20&%20the%20Minimum%20Wage/Government%20Regulation%20of%20the%20Employment%20Relationshiop.PDF

Clark, J., (2015). Is a free market "free" if it's regulated?  HowStuffWorks, a division of InfoSpace LLC. Retrieved from https://money.howstuffworks.com/free-market-economy.htm

Harry, S., (n.d.). Imagining a Free Labor Market. Retrieved from https://www.steveharrypublicpolicy.com/Unions/imaginingafreelabormarket.htm.

Pettinger, T. (2013, March 20). Pros and Cons of Capitalism. Economics.Help. Retrieved from https://www.economicshelp.org/blog/5002/economics/pros-and-cons-of-capitalism/

 Unknown Author, (n.d.). Definition of a Free (Labor) Market. Retrieved from https://instructional1.calstatela.edu/tclim/s05_courses/power-overheads.pdf

A sample of a student's reply for Genita LeNoir

Great post, Genita. I agree with your references from the Josh Clark article, stating he believes the government should not have stepped in to bail out the economy and should have instead let it fail.

 In his 2008 article, Government regulation, not free market greed, caused this crisis, Steven Horwitz places the blame of the housing and credit crisis of the early 2000's on government regulation, disagreeing with those who would cite greed as the culprit. Specifically, Freddie Mac and Fannie Mae pushed homes and financing on low income, high risk individuals, and, along with the Fed, who moved interest rates to the lowest levels in a long time, profited from loans originated to these buyers. At this time, "they were "government sponsored enterprises" (GSEs). That meant they enjoyed all the profit potential of a private business, but carried none of the risk" (Horwitz, 2008). These government programs led people to believe it was irresponsible of them to not buy their dream house, or to not try to flip houses for a profit.

Had the government not interfered with this part of the economy, people would have continued buying and selling responsibly, within their budgets, for the most part, free of the idea that it was the best time in history to take a chance.

 Refernces

Clark, J., (2015). Is a free market "free" if it's regulated?  HowStuffWorks, a division of InfoSpace LLC. Retrieved from https://money.howstuffworks.com/free-market-economy.htm

 Horwitz, Steven. (Oct 22, 2008).Government regulation, not free-market greed, caused this crisis. The Christian Science Monitor [Boston, Mass] Retrieved from https://search.proquest.com.ezproxy.liberty.edu:2048/docview/405562173/AACE02222F0C4729PQ/1?accountid=12085