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View Diary: Forever 21 Employees wake up to bad news UPDATE: Company Confirms (141 comments)

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  •  It's the Prisoner's Dilemma problem. (7+ / 0-)

    The Prisoner's Dilemma is a classic exercise in game theory and this is an example of it.

    If your company is the ONLY company screwing over its employees then you can still make profits because the profits aren't coming from your own employees buying from your own store (it can't, when you think about it because they're just giving you back a portion of the money you gave to them in the first place).  To generate profit requires outsiders to buy things from your store.  So what matters isn't "can my own employees buy things from my store", but rather "can the employees of other companies buy things from my store".

    So it's the case where low wages only makes your business fail when everyone ELSE is doing the same thing.  As long as you think it's just you, you think you'll come out ahead.

    It's the classic prisoner's dilemma.  The best result globally overall is for no business to undercut the wages of another, but if yours is the business that tries to enter into a trust with the other businesses to not lower their wages, and then they break that trust and DO lower their wages, you lose out and they win.

    And that's the argument for wage standardizations and minimum wage laws.

    •  That's what Henry Ford said (0+ / 0-)

      Henry Ford was criticized by other factory owners for paying his workers several times the going wage.  He said he wanted his workers to be able to BUY the cars they were building, so he could sell enough of them to make a profit.  Of course, by defying the "prisoner's dilemma" logic he eventually forced OTHER companies to match his wages and helped create the "Roaring Twenties."  Of course, they "roared" a bit too much, leading to the Depression, but that triggered the New Deal, which brought about the prosperity of postwar middle class America, which lasted until the anti-FDR forces hitched up with phony religion and phony patriotism and brought us Reagan (as Archie Bunker wished for "a man like Herbert Hoover again" every week for ten years).  Reagan's "morning in America" led us to today's "mourning for America."

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