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The market is all merciful and compasionate. The market is the most pro worker social system in the earth today.
In countries where free market is not the norm, the rich gets richer and the poor gets poorer.
Why?
Because outside the market system, the rich make money by manipulating workers. Let's examine the case of communist countries like North Korea for example. In communist countries, Kim Yong Ill, manipulate workers through wide spread propaganda, torture, jail and slavery. So Kim gets richer and richer while the workers in North Korea starve to death.
Why does Kim do that? Because it's the law of nature that humans maximize profit. When honest means of producing wealth is punishable by tax while various information and entertaintment are censored then the best and brightest among us will simply find other ways to earn wealth. They do so through corruption and dictatorship.
Such is not the case on countries that promote free market. Under free market, the greatest among us are those who provide the best service to the most customers.
Under free market, the rich gets richer by consensually and mutually beneficially interacting with others. A rich entrepreneur, for example, gets rich by increasing workers productivity. The entrepreneur that succesfully does that is then rewarded by the super fair market by the difference between the prevailing workers' salary and workers' productivity.
This provides incentives for such entrepreneurs to increase labors' productivity. Entrepreneurs that do that will also want to hire as many workers as possible. This will create a demand pressure for workers and increase labors' market price's salary.
This increase in labors' salary will be felt by all workers in all industry, including industries whose entrepreneurs fail to increase labor's productivity. Hence, the increase of labors' productivity benefit labors at the expense of the capital owner.
Let's examine the case of American civil war. In the North America, the labor's productivity is higher due to industrialization. This creates a demand for workers in North America.
Hence, workers in the South want to move to the North. The capitalists in the north want the end of slavery. Sure, it'll increase workers' salary now that we need to persuade workers to work for us. However, labors' productivity is high anyway that the loss due to higher workers' salary is still much less than the extra profit capitalists make from being able to hire more workers.
The land lords in the South want to keep slavery. That's because the increase of labors' salary in the North also increases labor's salary in the southern farm even though the southern farm do not improve their labors' productivity. Hence, the southern land lords want to prevent their slaves from moving to a job in the North.
Here, the capitalists that fail to improve labors' productivity are the one that demand oppression and slavery, such as subsidy and protection. The capitalists who are succesful in improving labors' productivity are the ones that eventually increase labors' salary and demanding better political terms for workers, such as slave emancipation.
Even though I do not support minimum wage due to the market distortion it causes, we can all agree that it's industry with the lowests labors' productivity are the one that hate labors' salary increase the most.
Currently, labors' salary do not go as high as it should be. Why?
Because governments punish profitable businesses with income tax and subsidize and protect failing businesses. None of those programs benefit workers. Governments simply take money from one rich entrepreneur to another rich entrepreneur. In the process, governments punish productivity to reward unproductivity.
Hence, incentives to increase labors' productivity gets reduced and workers salary raise go slower due to governments intervention in economy.
About the Author:
Jim Thio is a silver medalist in International Physics Olympiad. He uses his Math skills to provide free financial, business, and marketing advices in http://FasterFinancialFreedom.com/art.390.0.html
Read more articles by: Jim Thio
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