"the salary should be based on the value the employee is bringing"
This is really so vague as to be meaningless. A McDonalds can't operate without someone at the drive through. So isn't the value of the drive through worker incredibly high since they are essential to the operation of the business?
No. Labor Economics tells us that an employee will be paid at the market rate. They are paid based on how many other people are willing and capable of doing the job and what rate they will accept.
Not necessarily. The drive through employee is essential, but the cook is also essential, and the restaurant manager is also essential probably... The value is shared among them.
Also, Labor Economics tells us what happens, and I do not argue with that. I am saying that we should take more into account actual value and avoid extreme profit-driven views, such as reducing someone's salary for the exact same job just because they live in X country instead of Y.
What you are describing isn't how the free market works though. It is just a fantasy of yours.
In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital.
Also the ceo answers to the shareholders who hired him with the job of maximizing returns. Unless this is a coop there is no reason for it to operate the way you are talking about.
I know that's not how the free market works now, precisely I'm arguing for changing that.
> In an efficient market your theoretical business would be driven into bankruptcy or bought out by the competition that is properly allocating capital.
And as a good theoretical exercise it's pretty useless. In reality most of the markets are not efficient, changing salaries is not 'free' (i.e., employees work differently depending on how you treat them, and replacing unhappy employees has a cost), and there's more to companies and employees than pure economics.
> Also the ceo answers to the shareholders who hired him with the job of maximizing returns
This is what I am criticising, the 'maximize returns over everything' philosophy. Any company already has a lot of power over any employee, and they abuse that position to the point of cheating people out of their fair share of what they produce just because they live in a different place. And in this case we're talking about a relatively benign situation, but the same philosophy pushes companies to lower wages below a living level, condemning people to poverty so that the company "maximizes profits".
This is really so vague as to be meaningless. A McDonalds can't operate without someone at the drive through. So isn't the value of the drive through worker incredibly high since they are essential to the operation of the business?
No. Labor Economics tells us that an employee will be paid at the market rate. They are paid based on how many other people are willing and capable of doing the job and what rate they will accept.