Amazon versus the Market

The Huffington Post reports on the working conditions at Amazon.com, including the fact that workers are:

  • Warned that the company refuses to allow sick leave, even if the worker has a legitimate doctor’s note. Taking a day off sick, even with a note, results in a penalty point. A worker with six points faces dismissal.
     
  • Made to work a compulsory 10-hour overnight shift at the end of a five-day week. The overnight shift, which runs from Saturday evening to 5am on Sunday, means they have to work every day of the week.
     
  • Set quotas for the number of items to be picked or packed in an hour that even a manager described as ‘ridiculous’. Those packing heavy Xbox games consoles had to pack 140 an hour to reach their target.
     
  • Set against each other with a bonus scheme that penalises staff if any other member of their group fails to hit the quota.
     
  • Made to walk up to 14 miles a shift to collect items for packing.
     
  • Given only one break of 15 minutes and another of 20 minutes per eight-hour shift and told they had to notify staff when going to the toilet. Amazon said workers wanted the shorter breaks in exchange for shorter shifts.

Predictably, the reaction at LRC (see here and here) has been unsympathetic: “Do you mean to tell me that Amazon employees actually have to work?”

But a better question would be: “Is it likely that Amazon would be able to get away with this crap in a non-oligopsonistic labour market?

warehouse scene from RAIDERS OF THE LOST ARK

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45 Responses to Amazon versus the Market

  1. Briggs December 13, 2009 at 3:56 pm #

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    Perhaps too many of my brain cells have been dedicated to cramming for finals but I fail to see how the government made Amazon monopsonistic.

    Could you briefly explain how Amazon has used government as a competitive advantage over other firms?

    *Note: I really enjoy seeing the vastly different interpretations of the same facts as seen by left-libertarians & right-libertarians. You should do more of these.

    • Roderick December 13, 2009 at 7:34 pm #

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      Could you briefly explain how Amazon has used government as a competitive advantage over other firms?

      I don’t know to what extent Amazon has actively lobbied for its privileges (apart from the one-click thing). But a) large firms in general benefit from the policies I describe here and here, and b) big-box stores like Amazon benefit in particular from transportation subsidies.

  2. Tristan December 13, 2009 at 4:56 pm #

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    And some wonder at the use of the term left libertarian. Why on earth would we need to distinguish ourselves from LRC and co when they come up with this sort of thing?

    Briggs:
    Amazon is not monopsonistic, but the labour market is oligopsonistic and that is thanks to government.

  3. Brandon December 13, 2009 at 4:57 pm #

    Chromium 4.0.269.0 Linux

    There are some similarities to working conditions at Dell, when I was there.

    Point one: we were allowed ten sick days, which were unpaid and heavily abused by staff — Friday before a long weekend was often turned into a “sick day”. We were given 15 paid days off for vacation.

    Point two: overnight shifts were given a shift premium of, I think it was 12% more money per hour, and were not mandatory (I actually wanted to do them for the extra green.) We never had to work every day of the week. Never more than four or five days a week.

    Points three and four: Our performance was metric-driven and we were punished as individuals for being on underperforming teams, and being arbitrarily grouped with bad teammates. One of our metrics as technicians was to sell products to the customers who called us asking for help with their computers. We all found this extremely distasteful to say the least — nobody likes a salesman and nobody who trains as a technician wants to be turned into a salesman.

    Point six: Lunch was unpaid, so we were onsite for at least nine hours, not eight. In those nine hours, we got two 15 minute breaks. Calls often ended past the point in time where our shifts ended. We could not simply hang up on customers we were helping. However we were not paid “overtime” wages for this extra work, just regular salary. Our bathroom breaks were monitored down to the second, and so were lunch and any other time we were out of the queue. I don’t see any way around this given the necessity to have people in the queue when calls come in.

    However, on the bright side:

    We were paid handsomely, far above the standard tech support wage, and on top of that got benefits, stock options, bi-annual bonuses (which often added up to $2k extra) and chicks dug us. OK, chicks didn’t dig us. We got double-time and a half for working stat days too.

    Having our time measured down to the second got very annoying but the worst part of the job was having to deal with American customers, a sizable percentage of whom were functionally illiterate and couldn’t find their own country on a map.

    • Roderick December 13, 2009 at 11:06 pm #

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      Our bathroom breaks were monitored down to the second, and so were lunch and any other time we were out of the queue. I don’t see any way around this given the necessity to have people in the queue when calls come in.

      That’s fine; but I bet if the people running the phones were also the people making the rules and collecting the revenue (thus bearing both the costs and the benefits of whatever policies they enacted), they’d find some acceptable balance that would be preferable to having the rules made by people who reaped the benefits but didn’t bear the costs.

      • Brandon December 14, 2009 at 9:35 am #

        Chromium 4.0.269.0 Linux

        I don’t disagree at all. I’m sure if we could have set policy for ourselves things would have been different. 8 hour shifts instead of 9 hours shifts for one thing.

  4. Neverfox December 13, 2009 at 6:50 pm #

    Firefox 3.5.5.NETCLR3.5.30729 Windows Vista

    While a non-oligopsonistic labour market is certainly preferable to a oligopsonistic labour market, isn’t the real problem that labor is considered something that is rented on a market? I’m not referring, of course, to the act of voluntarily accepting money in return for working at a firm but rather I’m referring to the interpretation of such an act with regard to who does and does not have a right to delegate authority for the firm once they are a part of the workforce.

    If firms are treated as property rights (which I don’t think they can be) then it’s a matter of identifying the owners and that’s the end of the story. But if firms are (correctly, I think) viewed as a group of people in the functional role of working for the firm – as opposed to other types of stakeholders like customers, suppliers or capital owners leasing to the firm – then even a slight regard for democratic principles (which seem well-suited enough for firms, where it isn’t for states, simply in terms of scale) would place the delegation of authority as by the consent of the governed, i.e. those in the functional role of working there from top to bottom. While democracy has problems relative to markets, no one is really under the illusion that firms are internal markets, right? They are clearly, even in capitalism, an acceptable deviation from pure markets due to issues like transaction costs. If that’s the case, what arguments are there against democracy vs. monarchy within the firm? Perhaps the Hoppeans have some?

    So I’ll rephrase the question as I see it: Is it likely that Amazon would be able to get away with this crap if by “Amazon” you mean the collection of people that work there, with the right to delegate and withdraw authority from managers or boards of directors?

    • Roderick December 13, 2009 at 11:00 pm #

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      Well, I’m broadly sympathetic in general to what you say, but I think people could voluntarily agree to a hierarchically structured firm with nasty rules, and that such an arrangement, if so agreed to, would be just (though not good). But I don’t think very many people would agree to it if their options hadn’t been artificially constrained by state violence.

      • Neverfox December 14, 2009 at 2:44 am #

        Firefox 3.5.5.NETCLR3.5.30729 Windows Vista

        Thanks, Roderick. I don’t disagree. I’m actually arguing for the right to agree to such a structure but also the right to agree to something else. In other words, I’m positing that being part of the firm – all those that appear intersubjectively to be something more than simply affected stakeholders in a business venture such as customers, suppliers, owners of leased capital etc. – is akin to a type of “citizenship” and as such something akin to a constitutional democracy is implied as the just system for internal affairs of a voluntary collective entity.

        So my question for someone life yourself (putting aside for the moment whether or not my conception of the firm is a good one) would be: do you find democratic theory at the level of the firm to be compatible with anti-democratic theory at the level of political society, i.e. anti-statism in all its forms? It seems to me that firms are already a deviation from pure market transactions (Coase’s transaction cost theory of the firm as one possible example) and as such it seems to open the door to forms of governance that would be unthinkable at the level of large communities; they seem like they make sense in tight-knit, fully voluntary and more clearly consensual contexts like business enterprises. Further, do you think that among the possibilities that constitutional democracy rises to the top as the best approximation of justice when you are “outside the market”? Or do you think that it fails to find justification even at this level (again assuming the model of the firm as a social collective form rather than a property right with a clear owner)?

  5. Xavier M December 13, 2009 at 7:38 pm #

    Firefox 3.5.5GTB6.NETCLR3.5.30729 Windows Vista

    Roderick, please see the comments I had posted on Spangler’s blog.

    I do not see that “oligopsony” as it is usually understood (“few” competitors) would be sufficient per se for the described outcome, worst working conditions and/or lower wages all around than on the free market. On the other hand it seems to me that sufficient conditions can be identified thanks to a refined Rothbardian monopoly theory along the line I proposed on Spangler’s blog.

    I have a paper almost ready to be submitted to the QJAE where I developed the idea. If you would be interested to take a look at it before I cannot edit it anymore, I would be more than happy to send it to you.

    • Roderick December 13, 2009 at 10:23 pm #

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      If you would be interested to take a look at it before I cannot edit it anymore, I would be more than happy to send it to you.

      Sure.

  6. Joe December 13, 2009 at 9:15 pm #

    Chrome 3.0.195.33 Windows Vista

    I suppose I am also a member of the unsympathetic camp.

    My question is: are these individuals getting paid a premium for working in this kind of work environment?

    What is their alternative? Is it possible it offers more pay and benefits then the other jobs they are qualified for?

    The article says:
    “The pay starts at $10.50 an hour for day shifts, and $11 an hour for nights.”

    I am guessing they get benefits as well.

    I think it’s likely there is a trade off here: Where individuals agree to work in a more demanding, stressful environment because it pays a premium over the other options.

    Anecdotally, I can say when I worked in warehousing for a summer, working hard, if you told me I could get paid 11/hr nights at a real hectic place – I just might have agreed to it.

    • Roderick December 13, 2009 at 10:14 pm #

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      What is their alternative?

      Well, first, treating people like crap is immoral even if they consent to it. But second, we should be asking not just what their alternatives are under present circumstances, but what their alternatives would be in the absence of state violence. If my brother throws you down a well, and then I come along and demand your life savings before I’ll pull you out, then sure, you may prefer my offer to the alternatives, but your alternatives have been artificially constrained.

  7. Anon73 December 13, 2009 at 9:54 pm #

    Firefox 3.0.15.NETCLR3.5.30729 Windows XP

    I’m not sure that just declaring things to be a “free market” will fix these problems. Places that exploit their workers more will make more profit, hence become stronger and win out. You have to change either laws or culture to stop this from happening. In other words, how can you be sure that there would be sufficient competition to fix this problem, even ignoring the fact that transportation subsidies are already here and not going away?

    • Roderick December 13, 2009 at 10:21 pm #

      Firefox 3.5.5.NETCLR3.5.30729 Windows XP

      I’m not sure that just declaring things to be a “free market” will fix these problems

      I agree that declaring a free market won’t fix these problems. But actually achieving one would.

      Places that exploit their workers more will make more profit

      Not if it were easier to start new businesses. Then a) there would be more businesses competing with Amazon, so Amazon would have to improve its treatment of employees in order to avoid losing them to competitors; plus b) it would be easier for workers to start their own firms, whether cooperatives or individual proprietorships or whatever.

      how can you be sure that there would be sufficient competition to fix this problem

      I talk a bit about that in the pieces I linked to.

      even ignoring the fact that transportation subsidies are already here and not going away

      Well, whether they go away or not depends on what the ruled decide to do. That’s what liberation movements are for.

      • Anon73 December 14, 2009 at 1:34 am #

        Firefox 3.0.15.NETCLR3.5.30729 Windows XP

        What about Marx’s analysis that economy-of-scale precludes small business from starting up and competing?

        • Roderick December 14, 2009 at 2:34 am #

          Firefox 3.5.5.NETCLR3.5.30729 Windows XP

          I’ll see your Marx and raise you a Carson.

          In other words, I think Carson makes a strong case for the claim that past a certain point, diseconomies of scale outweigh economies of scale unless state violence can be used to shift the costs of the diseconomies onto third parties.

        • Tracy Saboe December 14, 2009 at 3:18 am #

          Firefox 3.0.15 Windows XP

          Rothbard even said that. The problem of Bureaucracy plagues businesses too. This is why in a free market, businesses can’t get too big, because if they do they’ll start to have the same calculation problems that a state does.

          Tracy

        • Rad Geek December 16, 2009 at 4:20 am #

          Chrome 3.0.195.33 Windows XP

          Anon73,

          Marx was wrong.

          There, that was easy.

          It’s worth noting as well, in addition to the points that Roderick and Tracy make, that the relevant question, in this particular case, actually isn’t whether the economies of scale in online retail sales would be large or small under freed-market conditions. For all I know, they might well turn out to be considerable. (Certainly, there is a natural economy of scale involved in a lot of long-distance shipping and tightly-packed warehouse storage.)

          But the real question here is what the economies of scale are, not only for potential competing retailers, but in all competing uses for the distribution center worker’s labor — since the question is not only whether the worker could make as good a living or better setting up as a competitor for Amazon, but also whether or not the worker could make as good a living or better in other lines of work outside the industry, or possibly outside of the cash-wage economy entirely. So there is not only the question of opportunities for entrepreneurial competition with Amazon downstream in the retail market, but also the question of opportunities for entrepreneurial competition with Amazon upstream, in the *labor* market.

          If it is true (as Kevin has argued, and as I argued in Scratching By) that, absent the state, most ordinary workers would experience a dramatic decline in the fixed costs of living, including (among other things) considerably better access to individual ownership of small plots of land, no income or property tax to pay, and no zoning, licensing, or other government restraints on small-scale neighborhood home-based crafts, cottage industry, or light farming/heavy gardening, I think you’d see a lot more people in a position to begin edging out or to drop out of low-income wage labor entirely — in favor of making a modest living in the informal sector, by growing their own food, or both, quite apart from the question of economies of scale in the formal retail sector. If that’s the case, then, on the one hand, workers who dropped out wouldn’t have to deal with Amazon’s taskmastering at all; meanwhile, back at Amazon, in order to convince others to stay in, Amazon would have to offer them a corresponding premium to make it worth their while — whether in the form of wage increases, improvements in conditions, or both.

  8. Michael Wiebe December 13, 2009 at 10:14 pm #

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    Roderick, do you still stand by your statement that “libertarianism is not a comprehensive moral theory; it is simply a theory of justice”?

    If so, how do you incorporate concern for the labor movement as a part of libertarianism? Is it that thickness considerations expand the scope of justice to include non-rights-violating issues?

    • Roderick December 13, 2009 at 10:53 pm #

      Firefox 3.5.5.NETCLR3.5.30729 Windows XP

      Roderick, do you still stand by your statement that “libertarianism is not a comprehensive moral theory; it is simply a theory of justice”?

      Yes.

      If so, how do you incorporate concern for the labor movement as a part of libertarianism?

      Well, concern for the labor movement isn’t a comprehensive moral theory either. But in any case, as far as grounds thickness goes, it seems to me that libertarianism includes not just policy conclusions but, e.g., the reasons for them; otherwise libertarianism would just be a bunch of unargued, free-floating assertions — and a course on libertarianism would just be a list of policy proposals without any arguments for them. Now I don’t think any particular set of reasons is an essential part of libertarianism (since someone still counts as a libertarian even if they embrace the conclusions for the wrong reasons); in that sense, nothing is necessary to libertarianism beyond what Gary Chartier calls the libertarian principle. In that sense, what he calls the libertarian ideal is not a necessary to libertarianism; but insofar as the libertarian ideal is (part of) the best reason to accept the libertarian principle, I’d say its connection to libertarianism is not exactly accidental either.

      Let me try out the following analogy, though I’m not sure how far I’m committed to it. My arm isn’t a necessary part of me, because you could cut it off and I would still be me. But it’s still not just an optional accessory like a hat or a glove either; it’s a part that I can exist without, but it’s still a part that I ought to have, a part that I will have when I’m healthy, in my natural state, or in good working order.

      Incidentally, I find it odd that no one (except Walter Block, and even him only in certain moods) asks the equivalent question about free-market economics. If someone gives an argument with economic premises and libertarian conclusions, are the premises not part of libertarianism? Should a teacher of libertarianism be chided for going off-topic if she starts talking about free-market economics? And if she says free markets will make everyone prosperous, should she be told that that has nothing to do with libertarianism, since libertarianism per se has no commitment to valuing prosperity. But hardly anyone objects to this use of consequence thickness; so why isn’t it acceptable, as an argument for free markets, to point out that such markets would make workers better off?

      A related point: most libertarians are against statist propaganda. But isn’t being against statist propaganda irrelevant to libertarianism? After all, statist propaganda by itself doesn’t violate any rights; so why shouldn’t libertarians be chided for going off-topic whenever they discuss it?

      Is it that thickness considerations expand the scope of justice to include non-rights-violating issues?

      No. (I assume we’re talking about special justice, not general justice. here.) Treating workers like crap is not itself a violation of justice. But — sticking to just consequence thickness and grounds thickness for the moment — pointing out that rights-violations have made this bad thing possible (consequence thickness) and pointing out that this bad thing is bad for reasons similar to those for which rights-violation is bad (grounds thickness) both seem like perfectly libertarian moves, ones that no libertarian objects to in other contexts.

      And I haven’t even gotten into the strategic-thickness problems with bossism.

      • Michael Wiebe December 15, 2009 at 1:44 am #

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        But isn’t being against statist propaganda irrelevant to libertarianism?

        Heh. I remember using this argument against a thinlib, but he bit the bullet and said he wasn’t opposed to statist propaganda. Consistent thinness is mighty weird!

        pointing out that rights-violations have made this bad thing possible (consequence thickness) and pointing out that this bad thing is bad for reasons similar to those for which rights-violation is bad (grounds thickness) both seem like perfectly libertarian moves

        So would you say that thickness considerations mean that (special) justice has commitments beyond rights-violations? I’m just wondering how to accurately characterize thicklib.

  9. Kevin Carson December 14, 2009 at 1:58 am #

    Firefox 3.5.5 MacIntosh

    “Well, first, treating people like crap is immoral even if they consent to it.”

    Interesting you should raise this point, Roderick. I recently read an Anarchy e-list posting by Iain McKay, of An Anarchist FAQ, who’d seen John Stossel on Bill O’Reilly. O’Reilly started in on his “war on Christmas” bullshit and whined about department store employees being ordered to say “Happy holidays.” Stossel responded that it was the employer’s business, and the employer had the right to order employees to greet customers standing on their heads and singing. If they didn’t like it, they could go elsewhere.

    This point that it’s wrong to treat people like shit, even if it’s “just” in a strict libertarian sense, is one that needs to be made again and again.

    • Roderick December 14, 2009 at 2:38 am #

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      Any report on how O’Reilly answered?

  10. Kevin Carson December 14, 2009 at 2:01 am #

    Firefox 3.5.5 MacIntosh

    “Places that exploit their workers more will make more profit…”
    Anon73

    That strikes me as counterintuitive. For a growing share of businesses, more equity results from human capital than from physical capital. It’s the worker’s Hayekian knowledge and job-specific skills, and willingness to contribute those skills to the production process, that make money for the firm. Trying to cheat the people who make money for you sounds like a good way to get minimal effort, apathy and sabotage. I know that’s how it works for me, anyway.

  11. Tracy Saboe December 14, 2009 at 2:42 am #

    Firefox 3.0.15 Windows XP

    I guess my question is “How much do these workers get paid in exchange for putting up with these types of demands.”

    My guess is, a whole lot more then I do.

    Tracy

  12. Bob Kaercher December 14, 2009 at 1:12 pm #

    MSIE 6.0 Windows XP

    This discussion is interesting against the backdrop of an unemployment rate of anywhere from 10%-20% that arose *not* from the conditions of a free market, but from the government’s and central bank’s massive debt and inflation binge of recent years resulting in a massive misallocation of scarce resources exposed by the bust, one of those resources being labor. The mantra of today’s work force in this un-free market-created environment is, “Man, you’re lucky if you have a job.” A lot of people lucky enough to have a job—any job—are afraid to get anywhere near the boss’ bad side for fear of losing their means of income when other opportunities are so scarce and so many others would gladly eat shit for 9-10 hours a day if it meant their kids didn’t go hungry.

    It’s because the reality is what it is that I think Lew Rockwell has a good point that people should buy more Amazon products. If sales volume really were to increase in the days ahead, the increased productivity and the fact that it’s Amazon’s busiest time of the year would give the workers that much more leverage if they chose at some point to use slow-downs and threats of walk-outs in order to effect a change in workplace policy.

    “Direct action,” as they say, “gets the goods.”

    • Bob Kaercher December 14, 2009 at 1:15 pm #

      MSIE 6.0 Windows XP

      BTW, to add just one little qualifier to the above, it all depends, of course, on how the Amazon workers themselves evaluate their own situation.

  13. Richard Garner December 14, 2009 at 6:18 pm #

    MSIE 8.0 Windows XP

    To play devil’s advocate, is it not possible that amazon’s policy of treating its workers like crap is what ensures it a greater productivity than its competitors, and so actually enables to pay its workers a greater income than competitors? If so, then wouldn’t this entail that treating its workers more nicely would result in a loss of income for them?

    • Neverfox December 14, 2009 at 8:54 pm #

      Firefox 3.5.5.NETCLR3.5.30729 Windows Vista

      If you are referring to the obligation to the shareholders to maximize profits, let me recommend Roderick’s paper on “Stakeholder Theory for Libertarians”.

      • Richard Garner December 15, 2009 at 6:17 am #

        MSIE 8.0 Windows XP

        I am not referring to any such obligation. I am referring to the possibility that the way Amazon treats its workers may account for its competitiveness, and therefore its market share, and therefore its ability to pay its workers the income it does rather than something less. Of course, I have no idea whether that is true, and also of course, some workers may be willing to trade a drop in income for nicer conditions. All I am doing, though, is suggesting a possibility that making Amazon’s employment conditions less harsh (so they are allowed sick leave, so ten hour overnight shifts are not compulsory, so quotas are less strict, so that the bonus scheme doesn’t institutionalise collective punishment, so that they don’t have to walk 14 miles a day but get those little electric car things instead, and so they get longer breaks) may mean that Amazon is less able to pay them more than competitors, and so cause a loss of income to the workers.

  14. Neil December 15, 2009 at 3:47 pm #

    Firefox 3.5.5 Windows XP 64-bit/Server 2003

    I’m curious. With all your criticism of Amazon, what justifies your use of Amazon product links in order to receive kickbacks from them?

    • Neverfox December 16, 2009 at 3:23 pm #

      Firefox 3.5.5.NETCLR3.5.30729 Windows XP 64-bit/Server 2003

      Neil, good for Roderick that he is neither a Justine nor a Juliette.

      • Neil December 17, 2009 at 8:50 pm #

        Firefox 3.5.5 Windows XP 64-bit/Server 2003

        I’ve read the paper before. I’m not referring to its legal justification so much as I’m referring to the apparent hypocrisy. I don’t think he is a hypocrite, but I know the same sort of question would be asked of me if I were, e.g., complaining about wal-mart and then shopping their “low low prices.” With small contributions to evil regarding the state, its understandable since the proverbial gun is against one’s head to make the contributions, but with Amazon it just isn’t there. It just looks bad, you know?

        • Roderick December 18, 2009 at 2:52 pm #

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          Given prevailing conditions, it’s not obvious that a boycott of Walmart or Amazon would do all that much good. (Though as Amazon starts restricting its content, it may well create its own boycott.)

  15. Sheldon Richman December 16, 2009 at 3:28 pm #

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    Thanks for the post, Roderick, and the discussion it prompted. Your core point is one libertarians had better come to grips with if they want to be relevant to the debate over political economy. It’s as if it has never occurred to most of the movement that government intervention reduces alternative opportunities for workers and diminishes their bargaining power. It is we who should be saying, “Workers of the world unite!”

  16. Mike December 16, 2009 at 3:45 pm #

    Chrome 4.0.249.30 Windows XP

    What is the work experience some of you people have? The mom and pop shops I have worked for (from waiting tables in restaurants, to working on survey crews, to construction, etc) had working conditions and rules very similar and often more burdensome than these. I guess I never really thought about it because I knew what a manual labor job entailed. If I didn’t want to do it, there were dozens of others waiting in line. Luckily, I eventually learned to work smart instead of just working hard – and moved on.

    • Sheldon Richman December 16, 2009 at 4:08 pm #

      Firefox 3.5.5.NETCLR3.5.30729 Windows XP

      But those other jobs were still within the same context of massive state intervention that creates barriers to self-employment, etc.

  17. Peter G. Klein December 18, 2009 at 12:31 pm #

    Firefox 3.5.6.NETCLR3.5.30729 Windows Vista

    Guys, guys, do some homework before taking Times and HuffPo reports at face value. For example, having employees “[s]et against each other with a bonus scheme that penalises staff if any other member of their group fails to hit the quota” represents a very common type of group incentive plan. Firms of all types, large and small, corporate and cooperative, rely frequently on team-based bonuses in which one person’s bonus depends on the individual performance of other team members. The idea is to encourage within-group monitoring/ There is nothing the least bit sinister about it (though, like other bonus schemes, it has both benefits and costs). BTW this type of plan is the heart of the Grameen Bank approach lauded by many of my lefty friends — borrowers are put in groups and can only take out secondary loans when all members of the group have repaid their initial loans.

  18. Neverfox December 18, 2009 at 2:05 pm #

    Firefox 3.5.5.NETCLR3.5.30729 Windows XP 64-bit/Server 2003

    The idea is to encourage within-group monitoring/ There is nothing the least bit sinister about it

    I remember that from elementary school; it was referred to as “whole class punishment”. One of the “costs” was resentment and even violence.

    BTW this type of plan is the heart of the Grameen Bank approach lauded by many of my lefty friends — borrowers are put in groups and can only take out secondary loans when all members of the group have repaid their initial loans.

    OK but maybe you should ask those of us here if Grameen means anything to any of us. Or are all lefties alike? Frankly, the fact that Grameen does this adds fuel to the “sinister” theory because Grameen has a reputation that is more than a little creepy and cult-like.

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