It’s instructive to wonder why Venezuelan rulers felt forced to print money so wantonly. Ie. why did what should be a prosperous country given their natural advantages need to devalue their currency so massively, where did their debts, ruined oil industry, and fiscal irresponsibility come from?
The answer is at least in part that the state attempted to deliver benefits to the poor not directly and honestly through taxing and redistribution, but through wage & price controls, and outright nationalization. Direct massive manipulation of the market. Obviously implementing occupational safety standards, or collecting resource extraction royalties at a rate similar to Canada wouldn’t have had this effect, neither would have a modest increase in the minimum wage that reflected natural wage growth. However there is something to GPs point; the history of labor laws in developed countries haven’t only altered the conditions a competitive labor market must operate in, but also reflect changes that have already been achieved through the competitive market. The laws against child labor, for instance, were only possible once a critical mass of the population had already pulled their children out of the labor market as productivity and living standards increased and made this possible (and don’t forget that unpaid child labour was rampant in agricultural families, and to this day remains largely exempt from legal censure in developed nations).
As productivity reaches higher levels, labor has been able to demand a greater share of the surplus through competitive labor markets and eventually agitate to institute that in laws, but it’s always been an interplay between these two effects. The massive unprecedentedly rapid reduction in absolute poverty in China where millions have left the brutality of rural poverty to work in factories that many of us in more developed nations would consider inhumane has seen this played out in an incredibly compressed timeline, and I’m certain that there are very few people living in a Chinese special economic zone who would trade places with a resident of Caracas in 2018.
The answer is at least in part that the state attempted to deliver benefits to the poor not directly and honestly through taxing and redistribution, but through wage & price controls, and outright nationalization. Direct massive manipulation of the market. Obviously implementing occupational safety standards, or collecting resource extraction royalties at a rate similar to Canada wouldn’t have had this effect, neither would have a modest increase in the minimum wage that reflected natural wage growth. However there is something to GPs point; the history of labor laws in developed countries haven’t only altered the conditions a competitive labor market must operate in, but also reflect changes that have already been achieved through the competitive market. The laws against child labor, for instance, were only possible once a critical mass of the population had already pulled their children out of the labor market as productivity and living standards increased and made this possible (and don’t forget that unpaid child labour was rampant in agricultural families, and to this day remains largely exempt from legal censure in developed nations).
As productivity reaches higher levels, labor has been able to demand a greater share of the surplus through competitive labor markets and eventually agitate to institute that in laws, but it’s always been an interplay between these two effects. The massive unprecedentedly rapid reduction in absolute poverty in China where millions have left the brutality of rural poverty to work in factories that many of us in more developed nations would consider inhumane has seen this played out in an incredibly compressed timeline, and I’m certain that there are very few people living in a Chinese special economic zone who would trade places with a resident of Caracas in 2018.