wage "gouging" employers.

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    If a skilled worker builds a product for an employer (capital, a machine, or a computer program), they have an extremely nuanced understanding and knowledge of that product.

    If the employer does not take care to assure that knowledge is documented or taught to other workers, this one worker will literally be the only person who knows enough to rapidly make future changes to that product. In some case the product would have to be researched by a new worker for a long period of time.

    I have seen workers who left the company long ago, brought in as independent contractors because they were the only ones who knew how to make changes to their products. In these cases, I’m pretty sure the worker was paid much higher than before. I see no problem if the worker asked for this rate and got it.

    I see no problem with this from a moral perspective, and I actually find it morally efficacious. My opinion is that the business made a poor decision to not document the workings of the product and should suffer losses by paying elevated rates. If this contributes to the demise of the business, then so be it, they were poorly allocating resources and I have helped in freeing those resources for potentially better uses.

    Some people seem to have the opposite perspective, that asking for the elevated rate is somehow “wrong” and that they are gouging the employer. That you should not want your employer to go out of business even if they make bad decisions? How can I better explain this to these people?

    Thank you.


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




    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:



    Thank you. Your reply was enlightening.

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