What's the German word for "schadenfreude"?

Remember how the Left went into a warm-n-fuzzy swooning meltdown when an eeeeeevil corporate CEO finally turned from the Dark Side and started paying his employees a Living Wage by massively slashing his own salary? To the point where he was paying ALL of his workers at least $70K per year?

The fact that he's got that nice-guy-Jesus thing going for him probably had a lot to do with the liberal swooning
The iron laws of economics put paid to that particular feather-brained idea in no uncertain terms:
A chief executive of a credit card company is counting the cost of his decision to set a minimum wage of $70,000 (£45,000) for all his 120 employees. 
Dan Price, who slashed his $1million a year pay package to help fund his altruistic gesture, is now being forced to rent out his own home to make ends meet.

The issue of poverty pay is a sensitive one in the USA and some states are already setting higher rates than the federal minimum of $7.25 (£4.64) an hour.

But Mr Price went considerably further on hearing of the problems faced by one friend who said she was struggling to survive on $40,000 a year £26,000), rather more than he was paying his own staff in Seattle

It was a move which gained global attention and a fair measure of scorn from conservative commentators, such as Rush Limbaugh.

When he announced the move, it was greeted by enthusiastic applause by staff.
But the honeymoon did not last long. 
Some clients objected to the “socialist” gesture and withdrew their business [from] his company, Gravity Payments. [Didact: My kind of clients!]
Two valued members of staff resigned in protest at the decision not to increase their pay as well to maintain some sort of differential. 
As far as they were concerned market forces was the traditional American way of doing things. 
Somewhat chastened [Didact: now there's an understatement for the ages], Mr Price told the New York Times, “I’m working as hard as I ever worked to make it work. 
“There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs.”
Actually, Mr. Price, the only way you can minimise those downsides or trade-offs is to go back to doing what worked in the first place: pay your workers based on actual performance, not based on what your unbandaged bleeding heart believes they should be paid.

It turns out that the Laws of Supply and Demand are, in fact, precisely that- laws. They aren't suggestions, approximations, or best-guesses. They are rules. And like most rules, they have a nasty habit of slapping you silly when you try to short-circuit them.

One of the logical consequences of those rules is that, if you pay your unproductive people far in excess of the monetary equivalent of what they are producing- i.e. you set the price of their goods to high- you will immediately face an oversupply of underproductive workers, and your profits will suffer because of it.

Another logical consequence, which Mr. Price evidently is discovering first-hand, is that if you pay your bad people pretty much just as well as you do your good people, the latter will leave because they have zero incentive to stay. Just ask anyone who has ever worked at the local US Post Office.

But the best part of the whole story, and the one that genuinely warms the cockles and crannies of my evil Vile Faceless Minion heart, is the fact that some of this guy's clients objected to his harebrained scheme on the basis of it being "socialist". In fact, I rather hope that they sell guns, ammo, and combat knives- y'know, useful stuff.

Make no mistake- it is socialist. I'm just chuffed to bits to see that there are still companies in this misbegotten bastard of an age that recognise the fact.

I would, however, like to address one contention made by the two former employees who objected what Mr. Price was doing.

They claimed that market forces should set the prevailing wages for every position in the company. I do not object to this because I agree, completely. But they then claimed that the use of market forces to determine wages is the "traditional American way of doing things".

In this, they are mistaken.

In fact, this country has a long, dishonourable, and disgraceful history of trying socialist ideas- and watching them fail spectacularly, with considerable human suffering created in the process of that failure.

That history goes all the way back to the very first attempts to colonise the American wilderness. This excellent article by Thomas DiLorenzo should be required reading in every school around Thanksgiving:
At Thanksgiving, Americans recall their blessings around bountiful meals, with imagery going back to Pilgrim days, especially Plymouth Colony's 1623 Thanksgiving. But little attention is paid to what allows that bounty to be created — capitalism — though Jamestown and Plymouth both illustrate that lesson. 
Reflections restricted to our bounty ignore that most colonists in both Jamestown and Plymouth starved under their initial communal property rights. Then, when private property rights were established, starvation gave way to increasing prosperity in both.

In Jamestown, colonists were indentured servants, whose first seven years' output was to go into a common pool. In Plymouth, all accumulated wealth was to be held in common (against colonists' objections) by sponsors worried they could not otherwise collect on their distant investment. In both places, the fruits of people's efforts went to others, with disastrous results. 
Sixty-six of the initial 104 Jamestown colonists died within six months, most from famine. Only 60 out of 500 arrivals two years later survived that long. The consequences of this "starving time" included cannibalism. Plymouth's first colonists fared little better, with only about half surviving six months. Some, in desperation, sold their clothes and blankets to, or became servants of, Indians. 
Common property's disincentives produced terrible results in both colonies. Shirking was so severe at Jamestown that Thomas Dale noted that much of the survivors' time was devoted to playing rather than working, despite the threat of starvation. Plymouth Governor William Bradford noted that "this community of property was found to breed much … discontentment and retard much employment that would have been to their benefit and comfort," even with whipping used to limit shirking, with results described as "injustice" and "a kind of slavery." 
In response, both Jamestown and Plymouth moved to systems where people could produce for their own benefit. 
In Jamestown, each man was given three acres of land, in exchange for a lump-sum tax of two and a half barrels of corn, and communal work was limited to one month (not during planting or harvest). In addition to creating private property, it made the marginal tax rate on most of colonists' efforts zero, and turned indolence into industry. Rather than starving, they became "exporters" of corn to the Indians.
Socialism, as Mr. Price has now rather painfully discovered, is not a logically coherent economic system. It is not rational. It is not justifiable. To quote the late, great President Reagan,
[Socialism] is neither an economic nor a political system; it is a form of insanity, a temporary aberration which will one day disappear from the Earth because it is contrary to human nature. But I wonder how much more misery it will cause before it disappears.
I have no sympathy whatsoever for Mr. Price. None. And the reason is very simple. What he tried to do is quite admirable; he put the welfare of his employees above his own and tried to make them happy by doing what he thought was right. There is nothing in the world wrong with paying good people well to do their jobs to a high standard- that is precisely the point of incentive-based compensation, after all.

Unfortunately, that is not what Mr. Price actually achieved. And it's perfectly obvious as to why. By making the playing field as level as possible, he essentially eliminated incentives to perform well and work hard. He tried to achieve his goals by resorting to "magical thinking":

The idea that paying everyone in a company vastly in excess of their own productive capacity, and thereby reducing the gap between the best and the worst employees to essentially nothing, will then result in massive increases in productivity and greatly increased profits, is pure magical thinking. It is not merely an absence of logic or evidence- it is an utter rejection of both.

The reality is that if you pay your hard-working, talented, skilled employees pretty much the same as you pay your lousy, lazy, shiftless ones, the former leave and the latter stagnate. And then everyone suffers.

From the lessons of Jamestown and Plymouth Rock to Mr. Price's foolish attempt to defy the laws of economic gravity, the lesson is clear: it is not possible to defy reality forever. And sooner or later, we all come crashing down to Earth with a rather sickening, often quite spectacular, and sometimes really horrifying, crash.


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