Breaking The Iron Law: A Game of Social Arbitrage

Builds Upon: Social Immunity

A common issue in affluent nations:

“The immigrants from poorer countries are taking our jobs and driving wages down.”

How might immigrants compete against locals and drive their wages down?

If the pay is so little that adult locals can’t survive on it, how could immigrants manage to do so when they too are faced with the high living expenses of an affluent nation?

Not only do these immigrants survive, they often have extra money to send back to their home countries.

Clearly the immigrants must thrive where the locals starve because they have more effective survival tactics.
They’re used to living in a land where the iron law of wages is set considerably lower. Thus even the scarcest wage in an affluent land is a considerable improvement over their usual options.

The immigrants succeed in playing a game of arbitrage switching from one society to the next as it suits their needs. By so doing, they are able to break the iron law that holds dominion over all classes and societies.
How does a sub-subsistence job in an affluent society become a source of wealth?

The iron law adjusts to the mandatory expenses of most workers.

Therefore: If one figures out how to eliminate expenses that are mandatory to everyone else, one can break the Law and get ahead.

Thus, two dollars are not equal. A dollar covered by the iron law is a non-existent dollar. It belongs not to the laborer but to the Law. It will disappear in exchange for survival.
Typically, we strive to earn a dollar beyond the requirements of the Law. This can only be done if one has a skill in high demand. By definition a skill is in high demand only if a few people have it.
Therefore: most people cannot have a skill high in demand. Most people will never in their lives possess a dollar.

There is another option. Instead of going beyond the Law, one can work outside of the Law and exploit its loopholes to the fullest.

This exactly what illegal immigrants in affluent societies manage to do.
How do they do it?
They establish public resources.
They share the cost of housing units between multiple people. They live off of collectively purchased food commodities instead of pre-packaged food products. They establish cohesive neighborhoods that offer an array of cheap services catering to their income bracket.
For the most part, they simply bring a microcosm of their home country with them. This microcosm turns out to be a safe bubble from where they can flout the iron law.

So busy are most locals protesting against these immigrants that they fail to perceive: There is a lesson to be learned.
Yet the immigrants benefit only so long as the locals blindly persist as individual earner drones who want their own private everything.
Otherwise the market would readjust and the newcomers would quickly lose their edge.


4 responses to “Breaking The Iron Law: A Game of Social Arbitrage

  1. Perhaps the iron law of wages is simply the initial stage of the immigrant economy. Historically they, and definitely their children, do not stay at the bottom end of working wages and conditions. They work hard, sacrifice, and live with relatives of in the backs of their businesses until they have saved enough to move up a level. That has been the story in my family. Both my mom and dad came from other countries, did not speak English, but slowly worked their way up the slow ladder to more success and economic rewards. It is still done all the time. Many Korean immigrants in my area of the so. California Mojave desert have bought businesses with their life savings, are sacrificing now, and slow success is building for them. Our American capitalism still works for those willing to do what they need to to access slow and steady success.

  2. As you explain, immigrants make measured sacrifices to achieve their goals. They take steps many citizens are unwilling to take to cut costs. As a result they are able to save up on what most people would consider starvation wages.

    Is living with family in the back of your own business such a bad thing?
    One eliminates a dangerous, time consuming, frustrating commute, and the need for a car all in one step.
    What sacrifices does one make?
    Living with a sometimes loud and annoying family must provide plenty of its own frustrations, but in the choices available to us, we merely trade one set of frustrations for another.

    Commuting and car ownership. Or living with one’s own family. There are tradeoffs no matter what we do. So which requires the greater sacrifice?

    Car and commute sucks money down the drain day after day without giving much in return besides a bare minimum of transportation.(That’s when it’s not breaking down and destroying months worth of savings in costly repairs.)
    Let’s face it, that car is just a thing.

    The family contains human relationships. It provides provides companionship. It provides a security net whenever things really get bad. Though immigrants cut costs out of necessity, I often think their solutions are the right idea in general.

    Your typical commuter spends so much time just going back and forth they all too often have little time for human relationships. Even when things are going good, they must live knowing they haven’t much of a safety net to rely upon. One wrong move in traffic and they’re dead. That’s when the traffic is actually moving.

    I guess what this whole article is asking:
    Is moving up or ‘success’ always what we suppose it to be? Is everyone having their own private everything really the human paradise it’s supposed to be? Is prosperity best measured in raw income or in the amount of income exceeding living expenses?

    • Wow…this is really very interesting. I was thinking more about how it could apply to other groups and situations. Is there documented data / research on this topic? Thanks for publishing!

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