The important takeaway from this is that both sides of the labor/salary negotiation are based on voluntary, individual preferences for labor, leisure, and monetary income.Īt this step, we realize that we are all monopolists because we all charge a positive price for our own labor as its sole “producer.” Either that or none of us are monopolists and prices in the unhampered market are fairly determined by consensual, peaceful negotiation based on individuals’ preferences. The only reason she can do this is because CBS’s demand for her labor as a journalist is partially inelastic, i.e., a higher price/salary results in fewer labor hours demanded, but still greater total expenditure on Stahl’s labor. Is Stahl therefore a greedy monopolist, restricting output and increasing the price of her labor to maximize monetary and psychic gain? In short, no. She agreed to work only a certain amount, based on her own preferences. Stahl made a conscious decision to work a certain amount of time, which means she also consciously set aside a certain amount of time for leisure, weighing both in tandem with potential and actual salary offers from CBS and other demanders of journalists’ labor. Certainly, if can earn a higher income by working less, will do so, since also gains leisure thereby.” 1 “In judging how much of labor to sell and at what price, the producer will take into consideration the monetary income to be gained, the psychic return from the type of work and the ‘working conditions,’ and the leisure forgone, balancing them in accordance with the operation of various marginal utilities. When she accepted her salary offer, she weighed it against alternatives, specifically the next highest valued alternative in her preference ranking. Stahl sells her labor to CBS-the two have an agreement on work load (either by time or by output) and have settled on a price, or a salary in this case. Let us begin with Lesley Stahl herself, as a producer of news, reports, exposés, and the like, her labor is primarily as a journalist. You might also expect that, for causal realists, the analysis starts with individual preferences and proceeds deductively from there. The Austrian (or “ causal realist”) treatment, as you might expect, provides deeper insights into the concepts and implications of monopolies than mere points on a graph, and has a rich understanding of prices and their meaning. These differences and consequences are compared to the “perfectly competitive” X-marks-the-spot standard. The standard neoclassical treatment of monopolies is a neat and tidy graph that shows the differences in price, quantity, and consumer and producer surplus as well as a nifty triangle depicting “dead weight loss,” or loss in total social welfare. Other hard-hitting remarks like “How does the consumer benefit from all of this?” and “Your prices are still high,” were met with nonchalant (yet true) answers like, “Everything is worth what people are ready to pay.”ĭo Guerra’s profits indicate that he is a consumer-harming monopolist? What light does Austrian economics shed on this question? We Are All Monopolists Not easy, and there is a lot of work behind them.” This is one of the very few objects that are 100-percent functional, 100-percent aesthetical, and they need to fit your face for 15 hours a day. They can be very expensive.” Guerra, with a heavy Italian accent, responded with “They can. In her interview, Stahl complained about the prices of Guerra’s products, saying, “they're very expensive. At times, she almost seemed to scold the successful CEO for, well, being so successful. Stahl interviewed the CEO of Luxottica, Andrea Guerra, and questioned his business practices, the prices of his products, and Luxottica’s growth over the years. The report identified a possible monopoly in the market for glasses, a firm called Luxottica, which owns almost all the leading brands of eyewear, four large retailers of glasses, and even a popular vision insurance provider. A recent 60 Minutes piece by Lesley Stahl cut into an extremely urgent problem of our day: expensive sunglasses.
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