The wealth generators in our economy, entrepreneurs, are often exploited by the wealth destroyers, government officials. Somehow, politicians think it’s completely reasonable to exploit entrepreneurs in the name of preventing the potential exploitation of anyone else. FULL ARTICLE by Aaron Smith
Source link: http://archive.mises.org/12999/the-exploitation-of-entrepreneurs/
The Exploitation of Entrepreneurs
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Interesting commentary. While I fully agree that airlines can include whatever fees they want, when they start to fail, I don’t see why we should bail them out either. Customers who don’t want to pay the fees can go to competing airlines – such as Southwest – who don’t charge the added fees. Too bad for the entrepreneurs at Spirit when their quest for profits puts them out of business.
I also think that there shouldn’t be a need for a minimum wage – as long as employers meet reasonable standards. The wage should be fair for the job in that particular market. Sadly – as comedian Chris Rock notes “Minimum wage means that if they could pay you less, they would.” Again, if the market demands a certain wage, the employer who pays too little will find himself hard pressed to find quality employees who will represent their business in a manner that will keep customers coming back.
Exactly, so what’s your point? You seem to have a “but” there, but I don’t see it.
Why the qualifier “when they start to fail”?
“as long as employers meet reasonable standards. The wage should be fair for the job in that particular market.”. Who decides? What is fair?
Again, I can be totally misunderstanding, but what’s your point? You seem to be disagreeing somehow, yet immediately refute yourself.
Doctors and medical providers are already seeing their salaries capped in the most awful way, through government reimbursements.
I understand the real impetus behind the Free of Fees For Carry-On Act is that ticket prices are taxed while charges for accessories–which bag fees currently are classified under–are not taxable.
Companies can destroy entrepreneurs as well. Especially the big ones.
To help me understand your post, can you let me know how the owner of a big company is not an entrepreneur?
When I read the statement all is heard was “entrepreneurs can destroy entrepreneurs as well”
Tyler you are pointing the finger in the wrong direction. The companies that you are thinking of use the state to destroy their competition through stifling regulations which they use the economy of scale to disproportionately harm their smaller competition, and through gov’t subsidies that make them unfairly competitive by socializing some of their costs. Without the state there would be no legal way for a large company to “destroy” an entrepreneur as everything would be voluntary.
Ref. Ernie, “The wage should be fair for the job in that particular market…”
Fair schmair.
The wage is what I’m willing to pay and what the provider is willing to accept.
“As long as employers meet reasonable standards.”
If you think my standards are reasonable, we got a deal. If you don’t, then I am out of luck and need to find someone else who will help me.
“Sadly – as comedian Chris Rock notes ‘Minimum wage means that if they could pay you less, they would.’…”
Darn right. And thank God for it. Why is it sad? I need my grass cut and if the kid next door will do it for 10-bucks, I’ll pay him instead of my other neighbor’s gardener who gets five times that.
Is that sad?
Tell Chris Rock to open up his shows for free. In fact, tell him to accept 50-grand for his next _Rush Hour_ sequel. Wait. 50-grand? Hell, no; make it 50 bucks. Who the hell does he think he is, demanding all those millions? There are hungry comedians who can’t scrape together two nickels, two blocks from his latest gig, wondering how they can pay their rent while he spews his schlock racist tripe.
Not a very “fair” guy, is he.
Man, I get riled when I hear these Hollywood numbskulls.
>Somehow, it seems completely reasonable to overtly exploit entrepreneurs for their resources in the name of preventing the potential exploitation of anyone else.
As Rand makes painfully clear in _Atlas Shrugged_, the economic ignorance of anti-capitalists is trivial compared to their altruist claim that “man has no right to exist for his own sake, that service to others is the only justification of his existence, and that self-sacrifice is his highest moral duty, virtue and value.” Entrepreneurs achieve values instead of sacrificing values and thats why they are hated. More, anyone who achieves values is hated. Thats why ecofreakies cry about oily pelicans but not the people whose costs for everything will rise with the loss of the oil which powers modern economies.
I resent the use of the word “exploit” as if it has an inherently negative connotation.
The fishermen exploited the waters off the coast. Exploit mean to use or to use unfairly. Fair has 20-30 definitions, making it a method for fraud.
“Exploit” simply means “to use.” There is no automatic negative connotation. That was most likely attached by anticapitalists.
I’ve never read such a blatant cry for the return of the Gilded Age and all it’s horrors. How easily we forget history. There was a magical time in American history, after the frontier was closed, and after industrialization (which makes it a better comparison to today than the agrarian Jacksonian democratic model), but before the progressive movement and before workers had any rights. It was called the Gilded Age, and was so awful for the masses that the groundwork for all the institutions “free market” capitalists hate so much were mostly founded out of the progressive movement it spawned (which included Republican Teddy Roosevelt).
Families protested limits on child labor, especially in coal country, where it was and still is a difficult place to make a good living. They didn’t want to lose the income from their children’s labor. So by the logic espoused in this article, it is therefore preferable to have 10-yr olds working and dying in coal mines, since that is the most economically efficient way to get coal out of the ground, and would provide a small amount of added income to families. You want to have a third-world hell-hole with a massive underclass appear here even faster than it already is? Get rid of the minimum wage. I’ll never understand why so many people want to turn New York into New Delhi.
Golly, Jim, you sure make a lot of assertions without any apparent reasoning to back them up. This lack of justification is particularly surprising given the fact that your assertions fly in the face of known economic laws, and that you openly advocate coercion against those who disagree with you.
“you openly advocate coercion against those who disagree with you”
Where do I do that sir?
And my “reasoning” backing up my “assertions” is called basic high school American history. You can find many fine textbooks on this period of American history at your local library. If you are arguing that there never was a Gilded Age, that workers were not treated poorly, and that this did not lead to what is commonly called the progressive movement (not to be confused with the way progressive is used now), then I’m sure I can find and cite specific authors for you.
The Inventive Age, condemned by collectivists as the Gilded Age, had historically huge increases in the standard of living. Progressives, ie, Marxists Lite, reject man’s ability to live in reality for equality of condition even if its a poor condition. Workers were treated as well as the extent of capitalism and capital allowed, an extent vastly greater than anywhere before. But, by the standard of Marxist fantasy, they were treated poorly. Well, yes, they didnt live in the workers paradise where prosperity was bubbling out of the spontaneous, collective subconscious, as we know from hippie communes and their diseased, impoverished, mentally ill, drug addicted members. Beyond the absurdities of Marxland, man must struggle to produce knowledge and tools to produce increasing wealth. And Progressivism was the product of corrupt, collectivist philosophers, not the economy. Note how this pseudo-educated fool distinguishes early and current Progressivism as if they both were not basically a type of collectivism ,ie ,the sacrifice of independent thought and action to the fantasy of society as the creator of reality. Note that the failure of socialism to produce prosperity caused the rejection of prosperity called environmentalism. So much for his “fine,” “basic” textbooks.
And as my last retort, please note that this pseudo-educated fool doesn’t use “ie” multiple times to sound more educated, uses proper capitalization and paragraph structure, and did not resort to name-calling.
So on that note, eat a dick you stuck up asshole : ).
Jim, when resorting to insults and vulgar language, that is nearly as good as an admission of your inability to articulate your position soundly.
In fact, it may even be better because I like to think that ignorant people can be educated, but I forget that many times they are just emotionally handicapped and this is why their capacity to participate socially is so anemic.
What was to be gained by announcing that you would leave the discussion, and then tossing in an insult for good measure? It didn’t win the argument, it won’t make Steven feel bad, it makes everyone who reads this regard you as someone of poor character, which may color how they view your previous arguments (sound or unsound).
You’ve undone all of the effort you put in so far with such self-defeating behavior.
˙∫∫¨©¨¨˙ˆˆ¨ˆ¨÷––º˚ª∞¢¢∞£∞
“Workers were treated as well as the extent of capitalism and capital allowed, an extent vastly greater than anywhere before.”
And much worse than they were in the post-New Deal era. History has shown what has happened very clearly every time he have been given anything closer to a free market in labor. The Gilded Age saw considerable standard of living increases, but it was on sliding scale of desperate poverty. Socialist, statist policies backed up by the threat of aggression are what created the standard of living we know today.
Are you being facetious? Because the affirmation that “Socialist, statist policies backed up by the threat of aggression are what created the standard of living we know today” doesn’t make sense
>The Gilded Age saw considerable standard of living increases, but it was on sliding scale of desperate poverty.
This socialist evasion of capitalist prosperity is new to me. What is a sliding scale of desperate poverty?
“And my “reasoning” backing up my “assertions” is called basic high school American history. You can find many fine textbooks on this period of American history at your local library. If you are arguing that there never was a Gilded Age, that workers were not treated poorly, …”
Were the workers working against their own will? Were they being coerced, physically forced to labor? Or did they choose to work because they felt it was the best alternative available to them.
Regarding the minimum wage, what do you say about those who sincerely desire to work even if for less than the minimum wage, but are prohibited by law of engaging therefore? E.g., what about a 14-year-old son who would crave a job as some sort of office-gofor-guy in a business in which he has professional aspirations. No way anyone could afford to pay him $7.25, but he would love to work for less. Oh, I see, let’s just instead consign him by law to the rest of the pool of unemployable summer or full-time vagrants.
Cheers,
John
“Were the workers working against their own will? Were they being coerced, physically forced to labor? Or did they choose to work because they felt it was the best alternative available to them.”
I would just like to point out that anyone who makes this argument can never argue against taxation on the basis of it being “coercion” because the only reason anyone lives in a society which requires the payment of taxes is because they believe it is the best alternative available to them. Otherwise they could attempt to live on Antarctica or something, or go hide out in a vast African desert.
The theory of an implicit social contract holds that by remaining in the territory controlled by some government, people give consent to be governed. This consent is what gives legitimacy to the government. This is a case of question begging, because the argument has to presuppose its conclusion: the person who makes this argument is already assuming that the government has some legitimate jurisdiction over this territory. And then they say, well, now, anyone who is in the territory is therefore agreeing to the prevailing rules. But they’re assuming the very thing they’re trying to prove – namely that this jurisdiction over the territory is legitimate. If it’s not, then the government is just one more group of people living in this broad general geographical territory. But I’ve got my property, and exactly what their arrangements are I don’t know, but here I am in my property and they don’t own it – at least they haven’t given me any argument that they do – and so, the fact that I am living in “this country” means I am living in a certain geographical region that they have certain pretensions over – but the question is whether those pretensions are legitimate. You can’t assume it as a means to proving it.
Daniel:
Whether the presumption are legitimate or not, you are still living in an area under which a state actively holds and acts upon those presumptions. Why? Because you prefer it to the alternatives. This is the exact same argument as the “because they prefer it to the alternative” arguments in regards to “supposedly” exploitative wage labor. The theoretical leap to presuming the legitimacy of the state is no greater than the theoretical leap to presuming the legitimacy of private unregulated ownership of the means of production in the opposing argument.
There is a difference between choosing to work at a job in which you can quit anytime and being forced to pay tribute at gunpoint just because you want to live and trade with other human beings. See if you can tell what it is.
Jonathan:
No, there is not much of a logical difference in that you can apply to “preferring it to the alternative” argument to both situations.
The labor example: A man takes a job because he prefers it to the alternatives. Even if this job happens to have deplorable working conditions and terrible pay, he still prefers it to the alternatives, clearly. Now, what is the alternative? Starvation, in the form of not being able to pay for food; crime, in the form of stealing for survival and the risk of being subject of punitive action; starting up a business to support himself.
State example: A man lives under a government because he prefers it to the alternative. Even if he happens to dislike paying taxes and following economic regulations, he still prefers it to the alternatives, clearly. Now, what is the alternative? Starvation, in the form of moving to a barren, uninhabited area of the world where a state will not exercise influence over him; crime, in the form of not following the state’s rules and being subject to punitive action(or violently overthrowing the state); or starting up a new state in uninhabitable lands no one wants.
In either example, the latter is clearly the most productive choice. And for a poor man, starting up a sustainable business is about as feasible as it is for a rich man attempt to perhaps build a very reclusive town in an area of the world where it would be very difficult for a state to exercise control.
The options are there. People submit to the state because they prefer that submission to the alternatives.
Tim:
So you’re basically saying that the “best alternative” argument doesn’t justify private owners paying low wages and having poor working conditions nor does it justify the state using coercion to obtain their loot? I think I agree with you if that is the case.
However, in my view, the real argument is that of ownership. The private owner can make an offer of crappy wages and crappy conditions and if someone accepts than they have a deal. The owner’s offer is legitimate because they came to own the business in a voluntary way, just like one can own a house, computer or tie. They have the authority to set the rules in that way.
The state on the other hand claims “ownership” in a way over a vast geographical territory which I would hold to be illegitimate because it is based on force not by any voluntary means. Therefore, the state’s claim to the wealth of the people living under their “territory” is also illegitimate.
…except for the complication of the passport system. people are trapped within their own borders, at least until they negotiate a costly and uncertain transfer.
if someone holds you up, you always have the choice of handing over your wallet and avoiding physical harm. you just decide which is the best available option. you can’t complain.
>If you are arguing that there never was a Gilded Age, that workers were not treated poorly, …”
Poor, in the context of his hidden Marxism, means a lack of equality. Marxists condemn unequal prosperity. Thus the disappointed socialist/environmentalist praise of hunting-gathering culture. This poster is an intellectual fraud and a destroyer of prosperity.
You must be a little new here Jim.
Please don’t be dissuaded to a seek a forum with more friendly views. There are actually very strong arguments against the minimum wage. Below are links that should direct to to some. As for the history textbooks you mentioned, those were written for governmentally run schools, and so had every motivation in the world to depict the state as our great savior. There is a very different story of history that if you stick around Mises.org you will be exposed to. It will be up to you to decide which narrative is true, but don’t discard it before you have read more.
http://mises.org/daily/3261
http://mises.org/daily/3478
http://www.forbes.com/2009/10/16/minimum-wage-labor-economics-opinions-contributors-art-carden.html
A very civil answer to an uncivil post, Jake. Would that everyone here countered arguments with information, as you and a number of others do. As for Jim, his initial post contained some merit, his responses, less so.
The spirit of debate lives on.
>As for the history textbooks you mentioned, those were written for governmentally run schools, and so had every motivation in the world to depict the state as our great savior.
Motive does not tell one that the state is or is not a savior. Ideas do.
Jim,
You ask where do I advocate coercion against those who disagree with you. You did, in the very post that proceeded where you stated that you support minimum wage laws. That is coercion. You are not just preventing those “evil capitalist pigs” – as you might call them – from hiring people at an agreed upon wage, you are preventing young people and low skilled labor from freely negotiating their wage. Perhaps you feel that you know better than them. That’s nice, possibly true, but irreleveant. It’s still coercion to force someone into unemployment because you don’t like the wage they would negotiate for themselves.
@ Stephen Grossman:
Workers were not treated poorly in comparison to a “marxist fantasy”, they were treated poorly based on what they felt the human condition should be. Labor reform movements were massive then, and popularly supported enough to have legislation enacted bettering the state of workers. Were all of those people whose support made the legislation possible “marxists”? Do you see marxist boogeymen under your bed? There were GRASS-ROOTS protests; where did those people get their ideas from that they were being treated poorly? There weren’t millions upon millions of insidious reds, hiding under every rock and tree. Was Teddy Roosevelt a marxist also?
@ John:
If the choice is between starving or working with substandard conditions with no other alternatives, then yes, the workers are de facto working against their will. The solutions are to either create a welfare state in which people can still eat without having to work, which some liberals seem to want but I do not, or to establish minimium conditions on the quality of the workplace and workers rights. And your example of an “office gopher” paints of picture of an easy job with minimum risk; if you legalize underage, sub-minimum wage working, are you going to do it by industry? So your boy can be an office gopher, but is there some limit on even younger kids having more dangerous jobs? At what point do you draw the line?
I think the human condition should be booze, hoes and video games. Who do I vote for?
Hear! Hear!
Workers were treated poorly in comparison to what? In the late 1800′s American workers received compensation and lived by standards that made Kings of the early 1800′s look like peasants.
Workers in America had no love for socialism back then. No love for unions. No love for the tired collectivism we are told they embraced. Read up on some scholarly Socialist literature of that time, which bemoans the fact that Americans will not embrace the wonderful utopia they promise, unlike the Europeans. See the reaction to Coxey’s Army in 1894 (?), a lovable Socialist march for worker’s power across America.
When Coxey’s Army arrived in DC, the were asked, “did any of you starve on your way here?” Nope. “But you brought no money and didn’t work, and yet you look well fed.” Yep, everyone was very hospitable to us. “Then what are you complaining about. Get your butts to work.”
And that was the real America of the late 1800′s.
Jim says there are no Marxists under the bed but decribes a political movement in economic terms.
I like brown and green but not color. I like pine and maple but not trees. Its a sleazy intellectual fraud. Throw so many isolated facts at your audience that they are unable to integrate them into a principle.
Marxism, in more or less diluted and scattered form, was influential in 19th century America. It has nothing to do w/any arbitrary standard of poverty. Marxism was advocated all throughout the historically amazing increase in prosperity over the last 150+ yrs. Marxism is a systematically nihilist demand to destroy individual achievement in favor of a collectivist sandbox of equal fools.
“Workers in America had no love for socialism back then. No love for unions. No love for the tired collectivism we are told they embraced.”
But that was precisely the time when union activism, not to mention socialism as a political movement, were at their zenith among American workers. Thanks to their efforts we have those other socialist practises, like the forty hour week and workplace safety laws. And in 1894, Coxey’s Army was only one of forty armies that marched across the country to confront the government in Washington.
They were dispersed at gunpoint, not via snappy dialog such as you describe.
“But that was precisely the time when union activism, not to mention socialism as a political movement, were at their zenith among American workers.”
Well if by zenith, you are pointing to the whopping 1% of American laborers who fell for that crap then, yeah, sure. But that’s not the case. The zenith you describe came much later, when the government gave unions political power. They bought their votes cheap. Which is easy to do because union workers don’t know their own value – which is why they are in unions in the first place.
Did any of the people from the forty “armies” you cite go starve on their way to Washington?
No. They didn’t. They were well fed. Then they got to DC, refused to work, and agitated for better conditions. If it was my private property they ended up on, I would have shot them myself. They were just lazy (well fed) malcontents. Nothing more, nothing less.
My point stands, the vast majority American workers in the 1800′s weren’t begging for a socialist revolution to save them from the evils of capitalism. They knew better.
David– The 1890s were a key period in the galvanizing of American industrial and craft workers under the new idea of achieving collectively those goals they couldn’t achieve individually. And these new ideas caught fire rapidly around the country, despite armed and violent opposition on the part of local police forces and private armies (like the Pinkertons) who worked in the interests of the bosses. Here:
“Entering the twentieth century, the AFL appeared to have a winning strategy. Union membership rose sharply in the late 1890s, doubling between 1896 and 1900 and again between 1900 and 1904. Fewer than 5 percent of industrial wage earners belonged to labor unions in 1895, but this share rose to 7 percent in 1900 and 13 percent in 1904, including over 21 percent of industrial wage earners (workers outside of commerce, government, and the professions). Half of coal miners in 1904 belonged to an industrial union (the United Mine Workers of America), but otherwise, most union members belonged to craft organizations, including nearly half the printers, and a third of cigar makers, construction workers and transportation workers.”
http://eh.net/encyclopedia/article/friedman.unions.us
Your low figure of 1% is a very lowball estimate of membership among ALL workers, farm and nonfarm, those who work as clerks and shopkeepers’ assistants, etc, where union member ship is not an issue. If we look at everyone who holds down a job, those figures still show a doubling of union membership in every decade. In 1890 1.4% of total workforce, in 1900 2.7%, in 1910 5.6%, and so forth.
ushistory.councilforeconed.org/visuals/lesson32_visuals.pdf
The actual percentages of people working in large shops where unionism was a viable strategy is much, much higher.
Also, at that time socialism was a rapidly expanding political philosophy among laborers and intellectuals alike. Check out this snippet, Socialism’s Ties to Labor:
http://en.wikipedia.org/wiki/Socialism_in_the_United_States#Socialism.27s_ties_to_Labor
“My point stands, the vast majority American workers in the 1800′s weren’t begging for a socialist revolution to save them from the evils of capitalism. They knew better.”
Not according to ANY historian of the era. Industrial workers, craft workers, unskilled and skilled laborers alike, were all coming to see the benefits of bargaining collectively.
You would find it far easier to build a case that this view is essentially dead today. There’s very little sympathy for or even understanding of, the potential for union activity anywhere but at the bottom of the American pay scale. We may expect organizing efforts on the part of chicken packagers, fruit pickers and other disadvantaged workers, but the rest have been subjected to influences turning them against any organized solution to the problem of chronic low incomes. Americans now mostly accept it as a fact of life.
Also, this meme seems to have formed very solidly in your mind: “Did any of the people from the forty “armies” you cite go starve on their way to Washington? No. They didn’t. They were well fed. Then they got to DC, refused to work, and agitated for better conditions. If it was my private property they ended up on, I would have shot them myself. They were just lazy (well fed) malcontents. Nothing more, nothing less.”
I believe the part about your being so angry you could shoot someone. That seems to be a hallmark of Tea Party emotional thought (when one is frustrated, reach for your gun first). But do you have any direct evidence that all these unemployed marchers were well fed? If so, please point me toward your sources.
“So your boy can be an office gopher, but is there some limit on even younger kids having more dangerous jobs? At what point do you draw the line?”
I don’t draw the line. The family does.
the state is la famiglia.
>Workers were not treated poorly in comparison to a “marxist fantasy”, they were treated poorly based on what they felt the human condition should be.
I apologize for thinking that your context was fantasy rather than emotion. My concern with knowledge of reality must have temporarily blinded me to the difference. Perhaps you may elucidate the critical academic distinction between fantasizing that flying saucers are real and feeling that they are.
teddy roosevelt was a fascist, a corporativist.
I know this child labor line of reasoning. In fact, Thomas Woods crushed it in Applying Economics to American History (its on YouTube). Basically, Tom points out that kids weren’t running in the fieds singing tra-la-la all day long before capitalism came around. They were working…. in manual labor…. and dying at young ages from disease and sickness.
The question I would like you to answer JIm, is why were the kids working? And why are kids still working in underdeveloped countries?
In many underdeveloped countries, the kids are forbid by law from working. Instead they turn to child prostitution, stealing, etc.. Yep, that’s a whole lot better isn’t it?
So why are the kids working?
They’re working because the labor in those countries is so physically unproductive (i.e. it doesn’t produce a lot per labor hour), that if the kids do not work the family starves. So what good does it do to keep the kids from working? None. It’s a childish response to a serious issue.
David– You say that “kids weren’t running in the fieds singing tra-la-la all day long before capitalism came around. They were working…. in manual labor…. and dying at young ages from disease and sickness.”
But that’s precisely when capitalism started. Once kids began to be employed in poorly paid labor, rather than in family subsistence mode, capital began to enjoy the fruits of accumulating profit. Those early victims were paid poorly in exactly the degree to which their bosses profited from their labors. So what you should say instead is that they weren’t “singing tra-la-la all day long ONCE capitalism came around..”
You also say that “In many underdeveloped countries, the kids are forbid by law from working.”
Which ones?
“But that’s precisely when capitalism started. Once kids began to be employed in poorly paid labor, rather than in family subsistence mode, capital began to enjoy the fruits of accumulating profit.” If their living conditions were better supported by “family subsistence mode” of production, then those parents would have never sent their kids to work as a “poorly paid labor”. This is precisely the point libertarians are trying to make. The employment is voluntary. You could try to produce things on your own, but this won’t get you far. Consequently, you choose to enter the labor market and sell you labor because you know you will be able to achieve a higher living standard. It’s not that capitalism came and people became poor, but it’s the other way around. People were poor, and then capitalism came, and we saw predictably a consistent rise in the living standards. Also, don’t forget that capitalism allowed for an explosive population growth, so that it accommodated and ever increasing living standard for an increasing population. That’s something no planner will ever be able to achieve!!!!!!!!!!!
Bangladesh is an example of where the law prohibits child labor. Consequently, kids turned to prostitution or starvation.
Michael, sorry my previous post came out messed up. Let me try to repeat it:
“But that’s precisely when capitalism started.Once kids began to be employed in poorly paid labor, rather than in family subsistence mode, capital began to enjoy the fruits of accumulating profit.”
If their living conditions were better supported by “family subsistence mode” of production then those parents would have never sent their kids to work as a “poorly paid labor”.From their perspective, working in the so called “poorly paid labor” is a great opportunity. It’s not up to me, you, or some government official to say that it is poorly paid position. It’s a relative thing!!! An individual places his subjective value on it, and then he acts upon it. If he accepts the position that means he values that position more than his previous occupation. This is precisely the point libertarians are trying to make.
The employment is voluntary.You could try to produce things on your own but this won’t get you far. Consequently, you choose to enter the labor market and sell you labor because you know you will be able to achieve higher living standard.It’s not that capitalism came and people became poor…it’s the other way around. People were poor and then capitalism came and we saw predictably a consistent rise in the living standards.Also don’t forget that capitalism allowed for an explosive population growth so that it accommodated an ever increasing living standard for an increasing population. That’s something no planner will ever be able to achieve!!!!!!!!!!!
Bangladesh is an example of where the law prohibits child labor.Consequently, kids turned to prostitution and starvation.
Just adding… Out here in India, child labour is prohibited
In sub Saharan Africa today, as well as in SE Asia, there are lots of families that can’t afford to feed their children on their tiny farms, so the sell off the excess children to brokers. These brokers find work for them in the city– but often it’s as sex slaves. Those put to work harvesting cocoa live lives that are scarcely better. Most die before the age of thirty. None are paid for their efforts. And the nations involved are so small they evade enforcement efforts by shipping the children back and forth across the numerous borders.
But hurrah for libertarian principle! It’s just the free market in desperately hungry people, being allowed to work its magic.
In South Asia (Pakistan, Bangladesh and India) it has been the case for centuries that families get bound up in debt peonage, so that young children are still working off lifetimes’ worth of debts incurred originally by their grandparents. It’s precisely this that has led to laws against child labor and contract labor. But such countries are run by the ancient landed gentry, so the laws tend to be very selectively enforced.
Again, let’s hear it for the miraculous powers of the labor market! Government sanctions are always bad. Entrepreneurs trafficking in hungry children are always the good guys, bringing work to eager young hands. Without pay.
Prostitution and starvation continue to occur in these free labor markets. The good looking ones get culled from the herd and put to work in tiny bedsties in dark rooms. The rest, not as cute, get to cut jute under the sun. Or make bricks all day for zero income, while their owners get fat.
“..don’t forget that capitalism allowed for an explosive population growth so that it accommodated an ever increasing living standard for an increasing population. That’s something no planner will ever be able to achieve!!!!!!!!!!!” Add more exclamation points!!!!!!!
@ michael
Human trafficking, slavery, and child prostitution are not examples of the libertarian principle being adhered to. In fact, they are examples of the principle being violated. On another note, would you rather have children working voluntarily for food but no wages or dying due to starvation because their families could not feed them?
Jonathan– Thanks for your comment. “Human trafficking, slavery, and child prostitution are not examples of the libertarian principle being adhered to. In fact, they are examples of the principle being violated.”
The libertarian principle is that we should all be free to pursue whatever methods we choose to create personal prosperity for ourselves. How is that in contradiction to running a slavery operation? That’s what we get in every nation on earth where government enforcement is weak.
“On another note, would you rather have children working voluntarily for food but no wages or dying due to starvation because their families could not feed them?”
I’d rather see more people choosing birth control. We live on a planet whose resources were well suited to its population, back when we were three billion strong. Now we’re seven billion, on our way to an eventual nine. At that point demographers agree, the increase starts breaking down. We run out of an adequate supply of fresh water, food and fuel.
The current wage market enabling slavery is just a function of willing workers having no bargaining power. There’s an oversupply of people relative to jobs. Back when the Black Death decimated Europe it was the reverse: all of a sudden there weren’t enough people to fill the openings, and wages tripled or more.
Want to see a city that’s already achieved libertaran utopia? That would be Lagos, Nigeria. Cash is king, and there’s no functioning government to speak of. Criminal gangs run every area of commerce, and the police all work for themselves. There are no rules to the game.
Yet everyone who goes there agrees, the place is dynamic and exciting. because it’s a Darwinian sink. You have to hustle your neighbor to survive. Only the smartest or the strongest manage to flourish.
Indeed. Wages go up and down primarily due to supply. High wages in one sector should attract competitors who will bring wages down to a parity level. High wages really means there’s a labour/skill (/government-union imposed) shortage in a particular area than whether the workers are necessarily more productive per se.
“But that’s precisely when capitalism started. Once kids began to be employed in poorly paid labor, rather than in family subsistence mode, capital began to enjoy the fruits of accumulating profit. ”
Where did you read this? Do you really believe it? That kids did not work before capitalism? What history book did you read that said that kids stayed home and played all day while the family work.
Rubbish. Kids have been working since the beginning of time. This is so basic I can’t believe it has to be covered.
less children had to work because of capitalism not the other way around
socialists wish to monopolize the smugness market.
Me: “But that’s precisely when capitalism started. Once kids began to be employed in poorly paid labor, rather than in family subsistence mode, capital began to enjoy the fruits of accumulating profit. ”
You: “Where did you read this? Do you really believe it? That kids did not work before capitalism? What history book did you read that said that kids stayed home and played all day while the family work.”
This is a category of erroneous thinking I find to be very common at this site. No, I never said that, nor did I read it, nor do I believe it. Instead I said that kids used to be employed in “family subsistence mode”. I ask you: is that the same as saying they “stayed home and played all day while the family work”?
What you’re doing is trying to propagate false ideas. Give it a break, and engage in the actual discussion.
Here in Brazil child labor is also prohibited
Just like in India, chlidren in Brazil beg for money. That is working.
http://www.globalgiving.org/projects/support-brazil-street-children-1/
There are laws in Brazil, certainly. Yet in the backlands slavery is also widely engaged in. Wages are optional in the camps of the gatos. And that’s illegal too, on paper. But the courts are far away, and the gatos are themselves the constabulary.
Franklin, I’d just like to point out it is Chris Tucker who acts in the Rush Hour movies not Chris Rock.
Indeed. My ire got the best of me and sent me into a tirade. Thanks for the correction.
This article fails to mention how minimum wage increases the cost of everything. Some get paid more but they in fact become poorer.
>This article fails to mention how minimum wage increases the cost of everything.
When socialists attack this w/statistics, recall that coincidences are not causes and that statistics can mask economic law. If the legal minimum wage and the material standard of living both increase, its because productivity was so high that it partially cancelled the destructive, disequilibrating effect of the legal min. wage. If there had been no legal min. wage., production would have been even higher.
Stephen– Were you aware that only 2.2% of all hourly workers earn minimum wage or less? I would suggest that this trivial number of people exercises no great “destructive, disequilibrating effect” on our economy, much less on our pricing structure.
If anything, we have a small handful of bond dealers and arbitrageurs on Wall Street who have each been earning greater than one billion dollars per year. I would suggest that this amount of money being subtracted from the net worth of everyone else would have a somewhat greater chance of impacting us with a “destructive, disequilibrating effect”.
michael,
2.2% of workers is a lot of workers. But that’s not even the point. You are only seeing the bridge being built, as Henry Hazlitt would say.
You are ignoring all the people that would be fully employed if the minimum wage was repealed. You probably don’t like that they would be paid less than that magical arbitrary number that has no economic basis, but that is irrelevant. You are not King.
Milions of young people, unskilled labor, and most interestingly, minority workers are FORCED into unemployment because they can not be hired at the minimum wage.
Labor rates are a price – the price of labor. If the government decrees that I must charge $100 per hour for my labor, but it only worth $50 per hour, I will end up unemployed. It is no different than if the government decrees that I must charge $8 but I am only worth $4.
Milions of young people, unskilled labor, and most interestingly, minority workers are FORCED into unemployment because they can not be hired at the minimum wage.
maybe , maybe not…perhaps it brings about calcualtions at teh family level where youth can be put to work beutifyig hthe home, chores or off the books babysitting that turns out to be more valuable anyway???
“maybe , maybe not…”
There’s no maybe about it. It’s an economic law. If you raise the price of a good or service above the market rate, there will be a shortage. This is an objective reality of our world. You can’t hem and haw past it. It’s like arguing that MAYBE gravity won’t cause you to crash to the earth if you jump off that building.
“perhaps it brings about calcualtions at teh family level where youth can be put to work beutifyig hthe home, chores or off the books babysitting that turns out to be more valuable anyway???”
If that was true, and we’re not even talking about kids here – we’re talking about teenagers and unskilled labor, then the families would keep them home. But the families that don’t want or can’t afford to subsidize their teenagers tell them to get a job. Again, no “maybe” about it. If a 16 year old is worth $4 or $3 or whatever the market determines, then it does you no good to have a minimum wage law.
“Milions of young people, unskilled labor, and most interestingly, minority workers are FORCED into unemployment because they can not be hired at the minimum wage.”
George, I’ve hired a lot of low wage workers through the years. And I’ve never found my business to be hampered in any way by the wage component in my expense column. Further, I have no problem with those people who can’t hack it in a world where the minimum the law allows is a living wage. They’ve made a choice not to compete. Let them live off their girlfriends, or their parents.
Or, let them decide they’re going to exchange services of value to their employer for a decent monetary compensation. Then I’ll be glad to give them a chance.
Another thing. Anyone who can’t make his business profitable if he pays his people more than five bucks an hour probably needs to get into another line of work. He just doesn’t have the touch.
David– You say “There’s no maybe about it. It’s an economic law. If you raise the price of a good or service above the market rate, there will be a shortage. This is an objective reality of our world.” I suppose here, you’re talking about a shortage of customers. That’s the only way your comment makes sense.
And that isn’t some universal scientific law, it’s only a mental construct. So it’s only a reality in the intellectual world you believe to be true. Let’s test it.
1. If the minimum wage rises, does that mean we run out of potential employees? No, the pool stays the same. Does the amount of work needing to be done change? No, it stays the same.
2. If I decide to pay my help more than my competitor does, no sudden shortage appears. Maybe I don’t raise my rates. And maybe I decide to even lower my rates. That makes me competitive for customers, because I charge less… and also competitive for good help, because I pay more. So I run a more robust operation.
And as a result I get more business. I make less on every deal but I make up for it in volume. If any shortage results, it’s in my competitor’s profit column. Because he’s now losing business to me.
“You are not King.”
Precisely the point, David. For that matter, neither are you. Both of us are just participants in a participatory democracy. And as such, each gets one vote.
Minimum wage workers speak with a voice too quiet to be heard, as they tend to be both few in number and political nonparticipants. So we don’t hear much from them unless we know one. However others do speak up for their interests. And, of course, against them.
I would remind you once more that we’re not speaking of $100 an hour. We are speaking of keeping the minimum wage, which nearly Americans seem to support, at a par in buying power with what it was decades ago. And I would offer that such a modest request only seems fair. I, for one, would not mind if McDonald’s 99 cent specials went to $1.10. But I understand how you would. Disgraceful! Such prices!
As for all those people who might be employed were the minimum to be repealed, I know those people. I’ve worked in the low-rent neighborhoods. And they’re mostly not worth hiring. If they wanted to improve their skill set they could find work at eight dollars– if only they tried. But they don’t try. So let them be unemployed, and those who try, let them be employed at a living wage.
In reality I don’t know that a lot of jobs would go well below the minimum, as most fast-food restaurants and such in this area were already offering more than 7.25 when it increased to that recently. But then, we weren’t hit as hard by the recession as other places in the country, so I can’t speak for wages elsewhere.
What I do know is that “sticky wages” is a problem that Keynesian’s solve through credit expansion which induces malinvestment and leads to bubbles that will inevitably burst. Even if they are small bubbles people are put out of work, and then have to find what they are really worth in a sustainable industry.
What most people support is up to them, but I won’t support price floors because I’d rather those priced out of the current market be doing something rather than taking money from others or some government subsistence program.
@michael
“Both of us are just participants in a participatory democracy. And as such, each gets one vote”
This country is supposed to be a Republic where individual rights are protected. Democratic process is supposed to be reserved only for trivial issues and war. How can individual rights be maintained if majority can simply outvote an individual on issues that take away his individual rights?!
“I, for one, would not mind if McDonald’s 99 cent specials went to $1.10. But I understand how you would. Disgraceful! Such prices!?”
You might think that 99 cents is a small increase that you are ready to pay; however, you have no right to impose this choice on others. Through your precious democracy you can impose your will on all of us by passing a minimum wage law. If you want to help these people, nobody is stopping you to donate your money to low paid workers through charity. It is easy to be charitable through minimum wage when you use other people’s money, but it’s also very hypocritical.
“As for all those people who might be employed were the minimum to be repealed, I know those people. I’ve worked in the low-rent neighborhoods. And they’re mostly not worth hiring. If they wanted to improve their skill set they could find work at eight dollars– if only they tried. But they don’t try. So let them be unemployed, and those who try, let them be employed at a living wage”
Again, you are trying to impose your will on other people, which is a clear violation of individual rights. You simply point out to a group of people, and then say that they are not worth hiring, so let’s price them out of a market and put them on government welfare program…this is such an elitist position! For this fetish of “living wage”, you are ready to deny employment to low skilled people while at same time pretending how you are helping the most unfortunate and poorest people. Of course, elites like you and our benevolent overlords have such an insight into the market process that you know exactly what the minimum wage ought to be.
As for the fetish of a living wage:
When I worked security in a club, I worked with couple of Mexicans who worked as busser for a below minimum wage. They worked a lot of hours but could make enough money to pay for housing and food, send money to their families in Mexico and save some money on top of that. One of them was telling me that he saved enough money to buy a house. Even though they don’t make much, they are able to move up the social ladder with their accumulated savings. If he insisted on receiving a minimum wage, he would have never gotten a job. The other option would be to get on a governmental welfare program. Since he is an illegal immigrant, he couldn’t do that, so he had to accept below minimum wage. It’s great he couldn’t get on a welfare program because then he would always stay there. He wouldn’t develop an ethic of hard work and saving money that ultimately lifts people from poverty
By pricing people out of the labor market and forcing them into welfare programs, you are effectively creating an underclass that is always going to be an underclass and a drag for the whole society. Please, don’t tell me that you know what a living wage/minimum wage ought to be. Please, don’t tell me that you are trying to help a poor and unfortunate people. Your position represents such a hypocrisy
Slobodan– I think you’ve got the wrong country. If you think that “This country is supposed to be a Republic where individual rights are protected. Democratic process is supposed to be reserved only for trivial issues and war”… that’s not America. Keep looking, if you want to live someplace the voters and citizens have no say other than in unimportant things. We not only still live in a democracy, we’re ready to fight to keep it that way.
“You might think that 99 cents is a small increase that you are ready to pay; however, you have no right to impose this choice on others.”
Not me. I don’t have any say in where McDonald’s wants to set their prices. I’m just saying if their payroll costs go up and they decide to pass it through to their customers, I don’t mind paying $1.09 for what used to be a 99 cent burger. Really.
“Through your precious democracy you can impose your will on all of us by passing a minimum wage law.”
Again, not me. It takes a majority of public opinion being passed along to our elected representatives, to vote the way we would want them to vote.
And if you’re ridiculing our “precious democracy”, I really would suggest you go elsewhere. But don’t try Canada. They have one too.
You have a real issue about my “imposing my will” on things. But if you’re in my house and you’re acting like a nuisance, I WILL impose my will on you. And if you don’t like the way I do business, my competitors are just down the street. Try them instead, and see whether the service is more to your liking.
Finally, as a long-time employer of unskilled and semiskilled help, I will tell you the same thing every other employer in this country will. Some people work out. Others don’t make the cut, no matter how much or how little you plan to pay them. Don’t lose a lot of sleep over them, they know how they want to live their lives. And this isn’t the Soviet Union. I don’t have to support them.
it may be that the minimum wage just sends many to off the books type of employemt.where the govt cant report such data. by the time you do all the paperwork for a curent below minimum wage it is probably common to just pay off the books. so i dont know if millions are forced into anything.
a phone call to little so and so to pick up some paper clips and printer paper at the office depot for 10 bucks or so.
This figure conveniently excludes all the people who can’t get a job because what they have to offer isn’t worth minimum wage. Also, if minimum wage were really such minor a thing, wouldn’t that be an argument in favor of its abolition?
>Were you aware that only 2.2% of all hourly workers earn minimum wage or less? I would suggest that this trivial number of people exercises no great “destructive, disequilibrating effect” on our economy, much less on our pricing structure.
Then you agree that, whether great or small, a legal, forced-at-the-point-of-an-omniscient-benevolent-bureaucrat’s-gun, minimum wage is disequilibrating. Welcome to the science of economic law, going boldly beyond economic history, statistics, and coincidences.
forced-at-the-point-of-an-omniscient-benevolent-bureaucrat’s-gun, minimum wage is disequilibrating.
probably to no great extent though as far what the govt can do to dis-equllibrate…if such a thing can even be done.
get a list of youths in your neighbrhoods to do off the books errands for you…it may actually have no real effect at all except from a philosophical freedom aspect.
by not having lengthy emplyoee/er contracts and paper work a list of youths or elderly to for off the books errands paid with pocket/stash cash may just be what actually happens. disequillbrating effects as you claim there are as memorable as a hiccup.
Congratulations for recognizing that govt intervention disequilibrates. But then how will you now rationalize govt intervention?
“In our society of victims, entrepreneurs are blamed for many of the hardships that ail our economy. Whether it is because of high prices, low wages, or substandard economic conditions, they are often accused of exploitation in their quest for profits.”
Nope. I’ve never heard anything like that. And I’ve been an entrepreneur. Corporations, yes. They get a lot of blame. But sole proprietorships are held in very high regard, being considered to be something like the soul of America.
So someone is playing the emotional card, so as not to have to come up with a more reasonable basis to characterise his pet bugaboos. Unless he is sincerely confused as to the distinction between corporations and entrepreneurs. He does seem to conflate Exxon-Mobil and “Fortune 500 companies” with the people he thinks of as being entrepreneurs.
Small businesses, sole proprietorships, do end up paying more than their fair share of the freight.. in the exact degree that taxation of corporations has halved over the years. Someone has to pay the difference, and it gets shared between employees and small businesses. The fix I think fairest would be to put corporate taxes back on par with personal income and schedule C taxes. Then we might start paying down the debt and bringing our finances back into balance.
michael,
Being held in high regard by society is a different subject. The Marine Corps is held in high regard too, but the government certainly exploits Marines all the time (most famoulsy Ira Hayes: http://en.wikipedia.org/wiki/Ira_Hayes)
“Small businesses, sole proprietorships, do end up paying more than their fair share of the freight”
That’s exactly the point of the article.
David, I don’t think that’s exactly the point of the article. It begins
“In our society of victims, entrepreneurs are blamed for many of the hardships that ail our economy. Whether it is because of high prices, low wages, or substandard economic conditions, they are often accused of exploitation in their quest for profits.”
And I don’t see that entrepreneurs either are or should be blamed for anything. Small business owners are in fact responsible for more job creation than that other sector of the economy, large corporations. They are vital to our economic health.
And many do feel the pinch when caught between profits and payroll, whenever the minimum moves upward. This would be a lot easier to take if it were linked to the cost of living, as so many other plans are. But Congress in its obstinacy never quite sees its way clear to that. So what happens is that every umpteen years there’s a big wrench, and everyone says ouch.
But a dollar extra per employee’s not necessarily the end of the world– particularly when your competition’s going through the same thing. You each pass through the increase in your rate structure, and move on.
What would make a very real difference though would be to make corporations carry more of the load in corporate taxes. To the degree that they have been reduced, taxes on schedule C filers have gone up. So the playing field is anything but level. Setting both kinds of taxes at par would allow small businesses to lower their rate structure. And would bring back a sence of fairness and equity to the tax code.
“Someone has to pay the difference”
So, what is the difference? What dollar amount is proper for the US and state governments to spend, and on what?
The proponents and opponents of minimum wage should simply be held to the standard of discussing all aspects of a move. If the move is below a clearing line, it will have different implications than above one.
Those arguing for a “living wage” or other notional benefits to an increase should have to address the losses of full jobs that accompany the increased benefit. What does the incremental benefit (or loss if the other way) do for those who lose at the expense of those who gain? How can they be “for the worker” but only those who keep their jobs?
When those paid higher than minimum argue for an increase, should they also have to answer the question of about restricting competition from the less skilled for their work?
Should the same people who argue for hire taxes to use for economic job growth also have to answer the question of why not just lower wages? That’s what a tax increase is, someone else gets to decide where the money goes.
For those arguing for no minimum wage, should they also have to discuss the mechanisms and detection methods to address the malicious mispricing of labor for all kinds of reasons? Should they have to have addressed some enforcement for wages excessively below a market prices? Whose, price, etc.?
No, because they aren’t arguing for any interference in other people’s business. Only the people arguing for such interference have to justify it. A buyer of labor is merely saying, “If you do such-and-such, I will pay this much for it”. A seller of labor is merely saying, “If you pay me this much, I will do such-and-such.” Neither is harming anyone else by making the offer, and thus there is absolutely no justification for using force to prevent them from making such offers.
Charlie– You come to the crux of the argument nicely, here:
“Those arguing for a “living wage” or other notional benefits to an increase should have to address the losses of full jobs that accompany the increased benefit.”
Bully for that. Concomitantly, I think those arguing that any increase will or must result in the loss of jobs would have to support their case by pointing to actual evidence, where the minimum increased and directly following that, employment decreased. Are you with me so far?
Let’s take a look at the data on this page:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LASST53000003
It happens that at the beginning of the decade, approx. 2000, Washington State approved a statute linking the state minimum to the cost of living. (I think you’ll recall that that was the state that started this discussion.) So what impact did that have on employment?
A: It bottomed out at the beginning of 2002, at the depth of that recession. From that point it climbed every month until the beginning of 2008– where it remained steady for a full year before beginning to drop. A better than average record, wouldn’t you say?
I don’t see the presumptive job-killing effect of the statute anywhere in the record. But please search the database further. Maybe you can find a link in some other state that will support your case.
I’ve still failed to see why some government stat that knowingly leaves people out (long term discouraged workers and others who don’t take unemployment) is supposed to be the be all and end all of existence.
I’ve still failed to see why this stat is always going to change simply because of the minimum wage variable when there are lots of other variables in play in every single city, state, country, timeline, etc.
All one needs to do is point to any anecdote to show jobs lost due to minimum wage changes. American Samoa is one example. I’m sure you can probably find others who at some point were unable to hire people because of the minimum wage. Here’s a youtube example (not recent, but has a businessman who claims he’d hire more without a minimum wage, and going through some stats on the effects on young African Americans, http://www.youtube.com/watch?v=7DS0XXFdyfI )
Matt, you raise two red herrings.
The point is that the minimum wage ROSE during a certain period. And so did employment. We’re not discussing the merits of the way they define employment. What they do is count it. And when they count it the same way every time, and the count increases, that’s valid data.
So I have found an instance that would seem to confute the general rule being bandied about, that any increase in the minimum wage must necessarily result in a reduction in employment. That’s all.
It’s only valid data if it’s the only external or internal factor that changed. Correlation is not causality.
Second, different states have vastly different costs of living and prices (which include average wages). The reason that the minimum wage increase was so devastating to American Samoa is that it’s prices/wages were not at the level of the rest of the country. Washington’s minimum in real terms (what you can buy with it) may not be that much higher than 7.25.
Even you have to admit this, as this is the reason you don’t like reductio ad absurdum arguments on the grounds that you aren’t asking for a 100$ minimum wage.
I’ll admit I didn’t check your bls link the first time, so you were right that the employment increased and not only the employment rate. But, you should not minimize the fact that you don’t know every single thing that’s gone on in Washington state (what businesses have come in, regulations added/repealed in Washington or in surrounding states, etc.) such that you can’t tell me with any certainty that minimum wage had no detrimental effect.
I’ll grant that the empirical data here doesn’t show that there was a detrimental effect either, but my argument has never been that any increase in the minimum wage will cause a huge amount of lost jobs. A simple example of this would be, “what if the minimum wage was $1.”
You say that you can’t imagine people being worth less than 7-8$ (I can, especially in some regions where cost of living is much less), but, at the same time I’ll go so far as to admit that I can’t imagine regular labor being worth less than $1. I’m just not willing to try to dictate the same minimum wage across an entire economy where there are many different situations. I don’t see any benefit to setting the minimum at all. It’s pure paternalism in my view.
By regular labor I’m excluding categories like internships, where the costs of training and the benefits to the intern by way of experience in a unique field may more than compensate them without any monetary exchange.
Matt, you’re still making the same mistake. If you tell me that theory predicts any increase in the minimum wage MUST reduce employment, and I show you an instance where an increase resulted in, or was accompanied by, a strong increase in employment, I have falsified your theory. It doesn’t do what you hoped it would do.
Now if you like, you could put in some time and energy to see what other factors may have been present. But certainly overall, Washington wages began to be higher than those of nearby states. And employment increased, year after year during that period. So you can’t just shrug and say “Oh well, it must have been due to some other factor” while still believing in your mantra. Go LOOK for some other explanation.
See, for instance, whether employment in those adjoining states also went up during that period, and in like degree. Then get back to me when you have something besides your hunch. Search Idaho, Oregon and Montana, using the page I referenced.
You haven’t falsified anything michael. That’s an arrogant statement if I ever saw one. Are you claiming to know everything now? That’s basically what you are saying when you say you’ve proven something false because I haven’t presented another specific factor (which I’ve said elsewhere is your job, because it’s your own stat and you don’t know what goes into that stat).
The most you can claim is that WA statistics don’t clearly show the relationship between unemployment and the minimum wage. You cannot say that you know what employment figures would have been had the minimum wage not been increased or did not exist, because you don’t know. You should measure your wording more appropriately.
I can say the same thing about you LOOKING to prove me wrong in regards to this stat of yours. If you think that there are no other factors in WA then prove me wrong. I’m not the one claiming to know everything about WA by saying I’ve falsified your view. I’m not the one who thinks the government should eliminate the freedom to make their own decisions on wages and employment, so in no moral fashion should I have to prove that government machinations don’t work.
Statistics does not disprove (or prove) a theory*. The way to do so is to show
1. errors in the reasoning
2. errors in the premises
You are doing neither. Hence, you are talking rot (as usual).
* Monetary Theory and the Trade Cycle – Friedrich A Hayek – pp 27 to 48
“Statistics does not disprove (or prove) a theory*. The way to do so is to show
1. errors in the reasoning
2. errors in the premises”
Bala– This is an utterly basic misconception. And one that explains so much about the kind of reasoning I’m finding on this forum.
In mathematics, logic is an essential tool. But in the real world, the world amenable to scientific examination, a theory MUST be verified by fitting well with the observed facts. Really. If you don’t understand this there’s little I can do for you.
If the theory falls down, as many entirely logical ones do, then it has to either be discarded entirely or modified so that it DOES fit the observable facts. A good example is the current thinking that we live in a highly inflationary period, because of increases in the total money supply. Yet prices have been dropping somewhat over the past two year period, and M3 is dropping sharply as well. Reality doesn’t support the theory.
It’s not sufficient that a theory merely make sense. Marxist theory made perfect sense. Yet reality did not support it, so it has been discarded in most quarters. And I think Austrian theory also either has to evolve in light of the facts, or join other elegant theories on the dustheap of ideas.
Good cite! Im presently reading that Hayek book. Difficult but worth the mental effort.
My Lord! dot gov Are you really citing a government statistic? That’s like citing the Bible to prove the existence of god.
Statistic
Numerical characteristic of a sample (taken from a population) computed using only the elements of a sample of the population.
if the govt showed you a numer of what they taxed you and you saw that money taken from you woyudlo that be a statistic and woudlo you consider that to be true??
George, you do need to exercise some critical judgment when looking at statistics. I was not saying you have to uncritically accept everything someone puts on a page. Do some work.
Here’s what not to do: make up some imaginary definition of what a statistic is. What you have defined is actually a survey or poll, not a statistic.
They’re best when they rely on hard data. That is, if your child is in school and you count every child in the classroom; then you ask the teacher how many children are absent that day, you add the two figures and come up with a statistic on classroom size. It is not a sample. It is better than a sample. It is an actual count.
Likewise if you find your local school district’s web page and it gives a number for total number of students in attendance, that’s probably a very precise number. They don’t lie or attempt to mislead about things like that.
I will suggest also that until you get very good at analyzing and crunching statistical data, you’ll never find out whether the theories you read about are any good or not. Theories need verification. And that takes effort on one’s part.
RTB: Find a better statistic. And if you can’t find one in the private sector, try this:
Go out and price things. Price houses (those prices have dropped). Price gasoline (no longer $4). Price food (a little higher). Price consumer goods (lower). Price cars (lower).
Price everything you spend money on, and average those prices. Tell me they’ve been going up. Your dollar goes a little bit further now than it did two years ago, except in one very important sector: health care. Price increases there are uncontrolled, and for the very reason people on this site say they are: the health insurance and pharmaceutical industries have bought the government, and have hijacked the just-passed HC bill.
There’s a very interesting examination of that process on Frontline this week, pinning the blame on players like Billy Tauzin and Max Baucus. Watch the whole program:
http://www.pbs.org/wgbh/pages/frontline/obamasdeal/view/
While you’re at it, tell me why you think the money supply has recently been increasing, while M3 has been dropping. There may be more money ‘out there’ beyond the Federal Reserve’s discount window. But most of it is sitting locked up just as tightly in bank vaults as reserves. It’s not hitting the street. So the necessary connection between money supply and pricing is currently missing.
havent various amounts of money sat in vaults at different times while prices were still measured in some way throughout history???
some have said that parts of m3 are a double counting of money. the money supply may be increasing according to those other measures.
Prices rise and fall according to the amount of money in people’s pockets, whether it’s spendable income or just borrowing power. Price fluctuations don’t have much of a link with the total money supply unless this money is getting to the street somehow. Raising a price offers evidence that someone has a little more money and is willing to pay it for your product. Or that he can’t do without it and will pay anything you ask, as is the case with pharmaceuticals. Were that not the case, the vendor would find no takers and would roll back his price.
And it doesn’t matter whether there is any problem with our definition of M3. There has in fact been some debate about that metric. For our purposes, all that’s needed is that whatever definition we use remain constant– so we can track it.
And what we see now is that M3 has been dropping, for the reason that so many commercial and investment banks have been using their loans from the Fed to build up reserves rather than put money on the street. So tracking M3 serves the useful purpose of showing us that fact. It’s money hidden from sight, out of use.
There may be more money ‘out there’ beyond the Federal Reserve’s discount window. But most of it is sitting locked up just as tightly in bank vaults as reserves.
i was told that the discount window accoutns for very little of the federal reserves ‘thin air’ money is that not true??
when you say that money is sitting in vaults as reserves what form is the reserve money (do you mean dollars) in???
“And it doesn’t matter whether there is any problem with our definition of M3. There has in fact been some debate about that metric. For our purposes, all that’s needed is that whatever definition we use remain constant– so we can track it.”
if a portion of the m3 money supply is a double count of has less effect on consumer prices that could very well be a problem….like when mises-site videos state standards of living are decreasing and all economic woes can be traced to the federal reserve.
if more direct forms of dollars show greater effects in consumer prices falling m3 may not offer much insight.
“And what we see now is that M3 has been dropping, for the reason that so many commercial and investment banks have been using their loans from the Fed to build up reserves rather than put money on the street. So tracking M3 serves the useful purpose of showing us that fact. It’s money hidden from sight, out of use.”
does much of the money in m3 apart from physical dollar cash show or display a finacial asset for many financial insitutions?????? does the fdic somewhat change the equation in a way that m3 really isnt out of sight???? cds that are loaned yet allow for panalty withdrawl??? hundreds of billions of dollars appearing on balance sheets and not under mattersses impossible to count???
As Bernanke is my witness!
>those arguing that any increase will or must result in the loss of jobs would have to support their case by pointing to actual evidence, where the minimum increased and directly following that, employment decreased.
From common human experience, immediately known, man wants less as price increases. The concrete measurements of this depend on the concretes of concrete situations. No concrete measurements can contradict this basic fact about human action. Measurements do not explain themselves but must be interpreted. There is no fact of common human experience which can justify the claim that man wants more as price increases. Economic supply and demand are often masked by complex situations but economic tendencies always exist as long as man is man.
Gravity always exists even tho my computer does not fall thru the table on which it rests. The tendency for gravity always exists even tho its application in concrete situations may be masked by the concretes of a situation. As wages rise, there is always a tendency for less hiring even tho that may be masked by the concretes of a concrete situation. Higher wages with stable or more hiring merely means that other economic facts exist in that situation. An infinity of statistics and pseudo-mathematical economics cannot validate or invalidate this because they must be interpreted within economic law. Statistics do not provide economic law but merely the operation of economic law, known previously, in a concrete situation. A coincidence between higher wages and more or stable hiring may result from such an increased demand for production that even higher wages are consistent w/higher profit. Or the coincidence may have another concrete cause. This is for economic historians, not economists. Mainstream economics is invalid. See Mises ‘_Human Action_ for a systematic, integrated, principled, consistent economics without even a graph, never mind math.
>malicious mispricing of labor
Ferraris are despicably mispriced because I cannot afford one. Up against the wall, Enzo! The
People demand a screaming, 12-cylinder GT.
The socialist has returned from the mountain where the correct price has been revealed unto him from On High. This pathetically impotent ,out-of context, dishonesty reveals only the abysmal state of modern education after a century of Progessive Ed. Progressive Ed is mispriced.
Entrepreneurs Do More Than Generate Wealth.
In the article entrepreneurs were described as “wealth generators.”
True but this is the effect not the cause. The cause of the wealth is the entrepreneurial spirit or the alertness of the market participant. Discovery preceeds the generation of wealth.
Why is economic intervention always immoral, and more specifically, immoral when it is directed at entrepreneurs? Humans, by nature, are seekers after truth. They are inherently alert but also subject to latency which is caused by anything that distorts or camouflages knowledge. It is a type of oppression to inject into the economy a corrupting influence. It is an oppression that violates human rights and property rights by definition.
Violation of laissez-faire is immoral and scientifically proven to be a corruption of the economy.
$7hr is too low. I say $25 should be the minimum wage because then everyone could live very comfortably, pay for their kid’s college, and buy a house. Poverty solved.
…and more importantly, champagne socialists can enjoy a warm self-congratulatory rush.
I vote for $50/hour so I can buy that house, big screen TV and boat all the auto union workers have! (or used to have)
$25 is too low. How about a quadrillion bucks a second?
>michael>And that isn’t some universal scientific law, it’s only a mental construct. So it’s only a reality in the intellectual world you believe to be true. Let’s test it.
Socialism is the product of the pre-scientific mentality of coincidences without causes. The coincidences are arbitrarily selected. Tests are arbitrarily selected and interpreted. Mises strikes again!
I’m going to clip this comment out and frame it on my wall. Classic anti-rational thinking. Measuring theory against the evidence is the Devil’s work. One must have faith!
Evidence is relative to rationally selected observations, hypotheses, tests, measurements , theories and interpretations. The arbitrary destroys science. Empiricism is a package deal meaning arbitrary observations and of a random flow of experience. Note the lack of reality and logic, ie, objectivity. Socialism depends on coincidences without economic law so that the state can, allegedly, do anything.
Great article!
If there is anything I might take exception with it is this: “While drawing such illogical conclusions wouldn’t score a teenager any critical-reading points on the SAT, it does help legislators get bills passed in Congress.”
Given the present state of affairs in academe, I think drawing such illogical conclusions on the SAT might just garner an automatic “Ace”.
Did I read this wrong, or did you just put Exxon Mobile in the category of “entrepreneur?” Because that would almost the opposite definition of the word.
Austrian Economics doesn’t use “entrepreneur” in the sense you’re referring to.
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