Reply To: wage "gouging" employers.


There is a large literature in economics on so-called “hold up” problems. Here are a few pieces by Peter Klein:–KLEIN-x.pdf

The basic point is that contracts can be tailored to mitigate hold-ups. Both employers and employees can use contractual terms to protect themselves against exploitation.

If your disagreement is not about merely factual aspects of the market, but ethical claims then there is an important distinction to make between different kinds of ethical claims: those concerning private property rights and those concerning the exercise of private property rights.

As long as the employer and employee abide by the terms of their contract, then the ethical claims of private property “rights” are upheld. The ethical claims about the “exercise” of a person’s rights are a further issue. To address that issue, a person must have a developed theory of ethics. For example, private property rights criminalize aggression against the legitimate property of another, but do not criminalize failure to “love one’s neighbor as himself.” Perhaps those whom you cannot convince have a different system of what ethical behavior is than you do. In particular, perhaps they hold that charging for insider information, so to speak, at a level that brings financial hardship to another is immoral although not a criminal violation of the other person’s private property rights.

Take a look at Murray Rothbard on this issue: