Have you ever sat in a bar trying to watch a football game and the guy next to you turns out to be some blowhard who thinks he knows more about football than John Madden? So you try to ignore the guy but as he keeps talking you realize that he has no idea what he is talking about. He starts yapping on about Peyton Manning’s free-throw percentage and Brett Favre’s slap-shot. Eventually you realize that this is just some nut throwing around terms without having any idea what he is talking about.
This is basically the feeling that I had recently while reading the staff editorial in the Park Record regarding affordable housing.
The staff editorial starts out with "In a pure capitalist system, where demand determines value, the more scarce a resource is, the greater its value, right?" Since this was phrased as a question, I will take the liberty of answering it. The answer is no. What I think you meant is that in a pure market economy, relative supply and relative demand determine price of a good in equilibrium.
Then the staff editorial continues to say, "the most valuable commodity in Park City today isn’t real estate, it’s employees." This is wrong too. Since the supply of employees in Park City is filled with an abundance of legal foreign workers on H2B visas who often are being subsidized by their parents back home, in addition to a very large number of illegal foreign nationals, the relative supply and demand of workers keeps the equilibrium wage for entry-level workers in some cases below the federal minimum wage in 1968 ($10 in 2007 dollars) and also below the wage for similar jobs in Salt Lake. So, as evidenced by the low equilibrium wages paid in Park City, by definition the most valuable commodity isn’t employees.
Then quite nonsensically the editorial goes on to say, "you would surmise, then, that local politicians and citizens would be doing everything in their power to enlarge the local work force." Since we were talking about a "pure capitalist system," how did we inject politicians since in a pure market there is no government involvement? And why would local citizens want to take action to enlarge the workforce, or increase the supply of labor, if that would further lower prevailing wages for the rest of us? To do so would make all existing workers less well off. The only way it would make sense for the "citizens" to be in favor of increasing the supply of workers would be if you assumed that we are all employers and not employees. Not a very good assumption.
Then even more bizarrely, the editorial goes on to advocate mandated below market-priced housing. Well, again, what happened to the "pure capitalist system" the editorial started out with and now it is advocating mandates for below-market priced housing. This is pretty much by definition, not market based, so how does the editorial support this argument with some vague inaccurate reference to a "pure capitalist system."
The editorial correctly points out that the resort jobs "attract fewer local applicants." Well, of course there are fewer. Let me spell this out for everyone. The pay for these jobs is too low. Many pay below the 1968 minimum wage, below what the same job paid 30 years ago, and below the pay for similar jobs in Salt Lake. They pay so low because the resorts aggressively recruit thousands of Australians, New Zealanders and South Africans to come here on their H2B visas and also because the whole town looks the other way regarding its illegal workers. This is called an artificial surplus.
So next time the editorial staff tries to use big words it doesn’t understand, please don’t.
Now, I need to get back to watching the Yankees play in the Super Bowl.
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