Labour Market

Recently, I heard someone saying how suprising it was for society to value Michael Jackson more than nurses who require a lot of training. I found this funny because one of the articles in my Philosophy textbook talks about the same exact example.

According to the textbook this is because the labour market is ruled by the laws of demand and supply. The labour market does not value the moral value of a job. It only finds the price where demand for a particular job is equal to supply of the same job. I think this is the best explanation to why society values Michael Jackson more than nurses.

I’ll try to explain what this means. In the case of Michael Jackson, there was and will always be only one Michael Jackson with his talent. Even if he is not alive anymore, there will never be someone like him. This is true whether we like the guy or not. In Economics terms, because he was the only one on earth who possessed something a lot of people wanted, the demand for his talent was very high whereas the supply for his talent was very low. This created an upward pressure on the price for his talent. This is why he got paid so much or the ticket price for one of his concerts was relatively high.

Now, in the case of nurses, it’s a different situation. Although Canada could use more nurses, the demand for nurses are not high enough compared to the supply of nurses to create an upward pressure on the price of nurses. How many nurses hospitals can hire depend on their budget, at least in Canada. Therefore, the price of nurses won’t be very high. The price of nurses has nothing to do with the moral value of a nurse. If less and less people enter the nursing field and more and more people leave it, then the price of nurses, too, will rise. This will be because the demand for nurses will be higher than supply of nurses.

In short, the market for jobs, like any market, is very impersonal. It does not care whether the job required years and years of training. All it cares about is how much demand for and how much supply of job exist.

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Out Of Job Yet? Keep Buying Foreign!: Perfect example of economic stupidity

From time to time I see an “Out of Job Yet? Keep Buying Foreign” sticker on an American car on the roads. This never fails to make me smile and say to myself: “A perfect example of economic stupidity naivety.” I wonder if the owners of these vehicles realise that their cars are not 100% American. Chances are the CD player and the cloth of their car seats are either made in China, Korea, Taiwan or some other countries in Asia. I also wonder if these same people also buy made in USA/Canada running shoes and sport equipment because if they buy Nike (American brand) products, the chance of having these same products made in USA/Canada is pretty much 0%. Let’s not start talking about computer and electronics because it is even worse.

The opposite is also true. Toyota and Honda have manufacturing plants in North America: they are Japanese make, but made in USA/Canada.

Why most of the products we buy today are made in Asia can be explained using economic principles, but at the end of the day it comes down to one simple reason: for a given level of quality, the same product made in USA/Canada can be made cheaper in Asia!