04
Sep
11

Transaction costs redux

I’m not (cough)blessed(cough) with children of my own, so there are a lot of “parenting” things that I Just Do Not Understand.  Even so, I have a feeling that this list of features from a proposed piece of Californian legislation would suffice to make me decide against hiring a babysitter — or, actually, two:

  • Parents will have to hire two babysitters in order that each can receive 10-minute breaks every two hours and a 30-minute lunch every five hours, as required by law.
  • Parents must provide worker’s compensation insurance.
  • Parents will need to provide detailed paystubs including “an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee…, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions …, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and his or her social security number …, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.”  This statement must list all deductions, which “shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement or a record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.”  Parents likely will be forced to consult professional tax and/or legal services concerning the complete and accurate reporting of “all deductions,” how to prepare the statement in the proper format, and what a “piece-rate unit” is.

Frankie fuck a fencepost, I’ve been writing software on contract for the past five months and I haven’t come near the level of regulatory folderol expressed in that paystub requirement for a night’s babysitting.  The above is taken from the following:

whose comment thread degenerates predictably into progressives (“Are you saying that live-in full-time nannies who take care of your precious children don’t deserve any human rights at all?”) and libertarians (“Are you saying that the process of finding a babysitter for a nice dinner out should require a month-long negotiation with four relevant local unions?”) arguing past each other.  Largely ignored is author Tim Kowal’s cui bono:

The new law means dollar signs to established nanny service providers.  Such providers will be better able to absorb the administrative and legal costs of developing workplace policies and accounting guidelines, preparing legal and accounting forms, and drafting standard agreements in order to allay parents’ fears about compliance with their myriad legal obligations just to hire a babysitter.  This is likely why the CEO of eNannySource.com, Steve Lampert, has admonished parents to “calm down” and “Don’t get upset about it.  Don’t get hysterical about it.  You’ll be able to work it out very well with your caregiver.”  Mr. Lampert offers no explanation why parents shouldn’t worry, of course.  That’s what the new law will force parents to pay him for.

But now that I’ve worked out my wookiee rage over the facepalmingly obvious deadweight loss and regulatory capture issues involved, I want to revisit the transaction cost issue upon which I touched a couple weeks ago.  I wonder if progressives tend to overestimate transaction costs in TANSTAAFL societies because their first intuition tends to be that private transactions are zero-sum: one party always seeks to “win” over the other, who must to some extent “lose”.  Informal exchanges become exercises in ritualized coercion — the other guy’s obviously trying to put one over on you, to gouge you as much as he thinks possible; you have to be on the defensive, have to be sharp, have to pay attention or you’ll get screwed.  To avoid the psychic load of that kind of confrontation, exchanges must be formalized, in which the party of the first part agrees to provide to the party of the second part some form of carefully-vetted good or service in exchange for a standardized and certifiably-equitable payment or equivalent non-monetary form of compensation.  Either one sounds like an exhausting ordeal to undertake just to wander through a pretty grove of blossoming cherry trees in downtown Vancouver, should that grove happen to be privately owned and maintained and fenced off.

Libertarians, on the other hand, don’t give a shit.  “Oooh, that’s a pretty grove of blossoming cherry trees.  What?  Five bucks?  It’s not five bucks pretty; I’d rather have some unagi maki for five bucks.  Mmm… is that a sushi place?”

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1 Response to “Transaction costs redux”


  1. September 6, 2011 at 18:03

    What next? Will parents who hire sitters also have to ‘decorate’ their walls of their homes with workplace postings? Make sure their entire home is ADA compliant in case a sitter with disabilities might come along? Should card check apply to baby sitters?

    And what about the poor gardener, dog walker, pool boy and house cleaning staff? Don’t they have “rights” too?

    This is why I refuse to hire any employees. And I can chalk it up as one more reason I’m not disappointed that I never had kids…


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