Quote Originally Posted by Fuchs View Post
The status quo wages and salaries are not justified by market principles as 'right' wages and salaries simply because market distortions (power asymmetry, principal agent problem) are in effect.

They just happen to be wages, there's no reason to see them as best or 'right' and resist influences on the market for reason of market efficiency, for market efficiency is not given in status quo.
If the absence of unions is perceived as a market distortion, what would you call the presence of unions that are capable of shutting down an employer who doesn't give them what they want... perhaps looking at Britain in the late 70s as an example? Is that not an equally distorted market?

Would a the power of labor in a non-distorted market be the ability to leave and seek work elsewhere, not the ability to not only stop working, but to apply coercive force to prevent anyone else from taking over the job? That seems like a fairly severe distortion in its own right.

Nobody complains about the impotence of American unions when unemployment is low and jobs are plentiful: if you don't like your job, you don't need to strike, you quit and go work somewhere else. In those conditions unions seem largely irrelevant and the dues start to seem like an imposition, especially since American unions have not always handled their money responsibly, to put it mildly. Of course when unemployment is high, all that changes.

Similarly, when we go into bubble mode neither the populace nor the government has anything bad to say about the financial industry: they cheer the business on, tap into the bubble as much as they can, tell themselves how smart they are to be "winning". When the bubble pops and nobody seems quite so smart, all the fingers point to Wall Street. It's a bit like passengers in a car screaming "faster, faster" and handing the driver drinks, then filing lawsuits for negligence when there's a crash.