Picture this. You are called in to a local court and asked by town officials about your earnings over the last year. It is revealed that you have had a really great year. Your pay went up and you were able to pay down your existing debt. You have a few skills that make your labor much in demand. Demand is so great that you will see a massive increase in pay this coming year.

Now, one of the idiot politicians asks, “Since you made so much money last year and since there is a shortage in alternatives to your work skills, why not work for less next year.” I’m willing to bet that you would probably want to ask the idiot politician what he or she was smoking and whether they were willing to share.

Let me make sure you understand what I am saying. You have a highly demanded skill, but there are alternatives for your customers. Unfortunately, all those alternatives are even more expensive than purchasing your skills. Your customers are hitting hard times and they need financial relief from your high prices.

So, the politicians have decided to ask you, not threaten you, but ask you to lower your price. You will accept a lower price and your customers will get a break in the price they pay for your skills.

So, would you do it?

Would you cut your price even though you know that all alternatives to your skills cost even more than your current price?

Would you cut your prices when all your customers are lining up with money in their hands ready to pay you the price you are charging right now?

Capitalism is based on the idea that sellers want to sell their product for the highest price they can get and that consumers want to buy that same product at the lowest price they can get. If the seller can negotiate a price with the buyer that allows her to make a profit then the seller has a good reason to be in business.

If the seller cannot fetch a large enough price for her product to cover her costs and to make a profit then, unless she has unlimited funds, will quickly be out of business. The consumer wants to pay the lowest price she can find. She will drive the price low enough that she gets a good bargain. In this way, the seller and the buyer can act in only their own self interest and the price will reflect the fair market value of the product.

On a broader scale, the fair market value of all products is reflected in the price. That price involves millions of people thinking only of themselves when determining what that price should be. The neat thing about this price system is that it actually works. Left alone, without interference from government, prices tend to reflect all the problems and all solutions of the system which moves products from suppliers to consumers.

As long as all suppliers are trying to get the highest price from all the consumers, who are trying to get the lowest price, the price system will accurately reflect the fairest price of any particular item. A price high enough to give the supplier a profit and low enough to be purchased by the consumer.

Not all products are created equal. Some products are in short supply. Some may be difficult to produce or complex to assemble. Some may be perishable, but all fit into the price system the same. The price reflects the supply and the demand for the product. Products in huge demand with limited supply command a higher price.

Some suppliers are unethical. They will use violence to deliberately drive the supply of their product down, thus pushing up the price. Some suppliers are forced to use these violent methods or to close their doors. Forever.

While some of these violent methods are criminal and can prosecuted, most are created through rent-seeking and endorsed by governments. DeBeers does this. They use the violence of several governments to force the supply of diamonds down and they use great marketing to drive up the demand for diamonds.

There’s an anecdote about the people on the beef cattle farm never meeting the consumer of steak. The number of people involved in getting a steak to your table is astounding. There are hundreds people involved in just raising a cow from birth to killing it for food.

One of my neighbors raises dairy calves from 6 months old to a year. They buy them at auction when they are 6 months old and sell them to the dairy when they reach 12 months. They specialize in the 6 to 12 month old calves. They buy them for the lowest price they can get, care for, feed and occasionally lose a few and then sell them for the highest price they can get. They are in it for the money and for the pleasure they get raising the calves.

It turns out that the dairies prefer it this way. They have very little use for very young cows. They want cows that are milking. There are other steps along the way for these calves and each person who touches them throughout their life could care less about you being able to buy milk at the grocery store.

Like you, they care about getting paid a fair wage, caring for their family and living to a ripe old age. They don’t need to focus on the end product and they certainly don’t need to know anything about you or me. They only need to act in their own self-interest. If they do that, you and I and millions of people around the world can keep buying safe, cold milk at the grocery store.

So, getting back to my question: All other things being equal, would you accept less for your skills if some politician asked you to?

Let me ask this another way, If your skill was being able to competently run a large oil company and if one of your products was gasoline, would you lower the price of a gallon of gas because some politician asked you to?