Defining the free-market
I just read an article by Rusty Tanton on the minimum wage where he mentions a letter signed by 650 economists that endorse an increase of the minimum wage to $7.25 an hour:
According to a widely-discussed University of Georgia Survey Research Center survey, 89.7 percent of Georgians (i.e. The Market) support an increase in the minimum wage.Yeah, I don't get it either. Government intervention in the economy on wages is collectivist (or socialist, whatever you wish to call it).State Sen. Robert Brown (D-Macon) has responded to market forces and will introduce legislation to raise the minimum wage from $5.15 to $7.25 per hour in next year's Legislative session.
And yet, the socialist Republican majority appears poised to step in and deny the free market the wage increase it demands.
"I personally don't support it. You start eliminating part-time jobs for young people when you raise it," House Majority Leader Jerry Keen told the Augusta Chronicle.
Setting aside the belief of 650 economists that Keen's statement is hogwash, I have to ask: Rep. Keen, who are you to deny the market what it demands?
On the 650 economists, this is what Cafe Hayek wrote about that a few months ago:
What were they thinking? Little or no effect on employment? How can you sign your name to something like that and call yourself an economist? I guess you could argue that there's little effect on TOTAL employment. That effect is very hard to find empirically because so few workers are affected by the minimum wage and its impact gets swamped by other factors. But among low-skilled workers, the ones we want to help? Maybe the people who signed believe that "modest" increases in the federal minimum wage (to $7.25) would effect so few people (many of whom are already covered by state minimum wage laws), that the effect is mainly symbolic. So signing a petition is more of a political statement than a statement about economic reality.Just because the mob wants something doesn't mean that they'll get it. After all...Gore won the popular vote in 2000, right?It wouldn't bother me if they petitioned for social programs that would help workers who lose their jobs due to an increase in the minimum wage. You can be in favor of that and still be a first-rate economist—you believe that the benefits of increasing the minimum outweigh the harm and you'd like to mitigate the harm. But to argue that there's no harm, that there's a free lunch because the demand curve for low-skilled labor is vertical? How do you defend that?
You have no right to a job. You have no right to a minimum wage...and you have no right to use government to force another person to live for you. End of story.
Comments
Heh, well, to a point the whole thing was meant to be sarcastic. But it was half serious in that I believe there are separate marketplaces to reckon with that most people who talk about free markets ignore: marketplaces not just of economics, but also of ideas.
Posted by: Rusty | December 15, 2006 06:41 AM
I understand, but the idea is to use the police power of government to achieve that end. It doesn't promote liberty, it promotes force and slavery to the mob.
Good seeing you and Amber last night.
Posted by: Jason | December 15, 2006 07:32 AM
I didn't know that "the market" needed the power of government to determine whether or not an employee's labor was worth $5.15/hr or $7.25/hr.
Posted by: Danny | December 15, 2006 08:11 AM
But Danny,
If the market demands to be governed or even enslaved (as Jason so eloquently stated), then is it not a socialist tendency to say "we think freedom is best for you despite the slavery you demand"?
The whole point of this exercise was to go through a logical loop to demonstrate my lack of faith in rigid ideological principle. The world doesn't operate that neatly.
Posted by: Rusty | December 15, 2006 09:01 AM
Oh, and it was good seeing you to Jason. Hope to run into you at more haunted mansions next year.
Posted by: Rusty | December 15, 2006 09:05 AM
Rusty, I am interpreting your "exercise" to mean that 89% of Georgians want the gov't to make decisions for them regarding min wage.
To deny them their want is socialist because the gov't is making the decision not to give the mob their wish.
To allow or not allow them their wish, which will be enforced by gov't, is socialist because the gov't controls the wage regardless.
Is this the "loop" in which your referring?
Posted by: Danny | December 15, 2006 10:42 AM
Yes, and thanks for the snark quotes. Your "point of view" is "appreciated."
Posted by: Rusty | December 15, 2006 10:44 AM
Well Rusty, you're welcome for the "snark quotes" used. I was delighted to assist you.
Now if you'd only learn the real meaning of socialism instead of trying to redefine it...
Posted by: Danny | December 15, 2006 11:07 AM
I detected more sneering contempt than I did delight, but hey, one man's sneering contempt is another's delight. That's what's beautiful about language — it's arbitrary.
Which brings us to our next point of contention...
You appear to be arguing for a narrow definition of socialism that applies only to economic systems, whereas I am arguing for a definition that applies to all systems of human interaction (be they economic, ideological, political, etc.).
In this case, the government is imposing a policy on the population that it doesn't support. In a marketplace of ideas, that's a socialist position.
And that's why language rocks... we're both right. Or we're both wrong, depending on your perspective.
Posted by: Rusty | December 15, 2006 11:28 AM
Well wtf DO you have a right to, then?
Posted by: Amber | December 15, 2006 11:29 AM
Hey, Amber...
The answer to your question is the life, liberty and property (ie. Natural Rights or negative liberty).
Posted by: Jason | December 15, 2006 11:36 AM
Sooo... you have a right to property, but not to a job? That seems more than a little bass-ackwards to my mind.
Posted by: Amber | December 15, 2006 11:37 AM
You're the one worked up, I was only quoting your words because that's what was written. That being said, you're confusing the definitions of democracy & socialism. There's a difference.
To the girlfriend, let him fight his own battles. Using terms like (and here come the quotes) "wtf" makes you appear immature. It's uncalled for. If you have to argue off of emotion instead of logic, then you have no argument worth recognizing.
Posted by: Danny | December 15, 2006 11:42 AM
You have the right to own property...if you have the money to purchase it.
Posted by: Jason | December 15, 2006 11:42 AM
Aww, Danny, sorry if my raging retaliatory snark quotes triggered your fight or flight mechanism. Or maybe you're just projecting your own anger onto me.
Oh, and saying I'm confused over and over again until you're blue in the face hardly makes it so. Try again.
Posted by: Rusty | December 15, 2006 12:13 PM
And you get the money to purchase it, how...?
Posted by: Amber | December 15, 2006 12:16 PM
Sorry to hurt your feelings Rusty. You can certainly believe what you want. To do otherwise would be...what is the word..."bass-ackwards", right?
Posted by: Danny | December 15, 2006 12:21 PM
And you get the money to purchase it, how...?
By not making minimum wage, either the current or the proposed.
Posted by: Jason | December 15, 2006 12:32 PM
I'm not hurt, Danny. I like you. You make me smile.
Posted by: Rusty | December 15, 2006 12:34 PM
"I like you. You make me smile."
Agreed.
Posted by: Danny | December 15, 2006 12:44 PM
So if you make minimum wage you;re fucked, basically. (Which is pretty much true at present.) But as a libertarian your solution is... too bad, so sad? Who gives a shit about other people? Fuck em?
Posted by: Amber | December 15, 2006 12:53 PM
To do otherwise would be...what is the word..."bass-ackwards", right?
That's my word, dumbass. And quit being so passive aggressive. It's unbecoming to a gentleman.
Posted by: Amber | December 15, 2006 12:54 PM
It appears that your "word" is indicative of your intelligence level.
And if your definition of a gentleman entails my acceptance of "wtf" and "bass-ackwards", I'll take that as a compliment. Thank you.
Now, get off the internet & go turn off the fry buzzer. They're done. It's annoying the customers waiting to order.
Posted by: Danny | December 15, 2006 01:11 PM
This issue -- and this poll -- show why "democracy worship" is dangerous, if by democracy we mean always following the will of the people at any given time.
I have no doubt that the vast majority of Georgians support an increase in the minimum wage. But if the poll question had read "Should the government set the wages for workers in the private marketplace?" an almost equally large number would be against it. People seem to like the idea of "helping" those when a specific situation is called for, but oppose such measures if taken more generally. Or, in other words, their feelings towards specific hardships conflict with their thoughts on general philosophy.
Another example of "the people" holding incongruent opinions is a poll I saw the other day about Iraq. A majority wanted the U.S. to start removing troops out of the country even if it meant more violence and instability in Iraq in the long run. But in the same poll, 80 percent thought it was either important or very important for the U.S. to achieve "victory" in Iraq. I don't know how these poll respondents define "victory" but these inconsistent results seem strange.
My point, I suppose, is that the Founders were right when they set up our democratic republic. The people get to choose their leaders, but these leaders should not be slaves to public opinion.
As Edmund Burke put it so rightly: "Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion."
Burke's point is that his constituents do not know enough about what's best for governing -- either because they are ignorant, or more likely, because they are too busy living their lives to care much about esoteric policy. The Founders also knew that no men-- including politicians -- had enough knowledge to successfully govern the affairs of other men. Therefore, they set up a system of limited government that allowed the representatives to focus their knowledge on only a narrow band of issues, leaving the rest for men to work out amongst themselves, either at the level of local government or in the private marketplace.
Our system of government is not some sort of "socialism" for ideas; it's carefully crafted to withstand the heated -- and very temporary -- opinions of the public at large. Our system is meant to put a clamp on people whose ideas are not thought out and may very well change this time next week for no good reason at all.
To close, I'll give an example that Rusty would probably agree with. In the run-up to the Iraq war in late 2002 and early 2003, nearly 70 percent of "the people" supported the invasion of Iraq and the ouster of Saddam Hussein. Looking at these poll numbers, most politicians, even Democrats who now claim they didn't think the war was a good idea, voted to give the President authority to go to war.
In retrospect, wouldn't things have turned out differently if these politicians had used their own judgment instead of sacrificing it the peoples' opinion?
Posted by: Doug | December 15, 2006 01:25 PM
It appears that your "word" is indicative of your intelligence level.
Oh here we go again.
That reminds me, I've been meaning to do a blog post about stuff like this... you know, people correcting grammar/spelling, people being so proud of themselves when they use a phrase such as "indicative of your intelligence level"... and so on.
And, yeah, people who work in fast food are st00p1d, lolz!!1!!1 That's why they make minimum wage!! Lower-class folks don't have brains, that's why they're poor! Case closed.
Posted by: Amber | December 15, 2006 01:27 PM
And, yeah, people who work in fast food are st00p1d, lolz!!1!!1 That's why they make minimum wage!! Lower-class folks don't have brains, that's why they're poor! Case closed.
I couldn't have said it any better myself.
Posted by: Danny | December 15, 2006 01:50 PM
Danny,
If you believe in any government at all, then your application of "liberty" is selective just like everyone else's is. After that, we're just quibbling over details.
True liberty would be the tyranny of the majority you described as a danger; it would be the group in power murdering anyone who opposed it.
Economics is a microcosm of the greater spectrum of human interactions, and true liberty doesn't work any better there than it does in the real world outside it.
That's when 9-year-olds work in coal mines and people lose appendages in meat-packing plants and my bananas are laced with arsenic.
So, don't throw around the word liberty unless you mean it.
Posted by: Rusty | December 15, 2006 01:53 PM
True liberty would be the tyranny of the majority ...
No it wouldn't. That would be anarchy, not liberty.
The government does have an important role to play in society -- chiefly in the marketplace. The government is the only institution large enough and has universal legitimacy to set rules that govern the transactions in the marketplace as well as adjudicate disputes between private parties.
That's why there are laws against swindling old people out of their money in phony roof-replacement schemes, etc. This is called "fraud" and there is no loss of anyone's "liberty" if the government prevents people from defrauding others by banning such practices through general rules known to everyone in society, as well as adjudicating such disputes in a court of law.
"Liberty" does not mean being completely free from government regulations. It means being free from arbitrary and/ or specific governement edicts. There is nothing wrong with government regulations as long as they are generally stated and applied to everyone the same.
Posted by: Doug | December 15, 2006 02:13 PM
Rusty,
Why do you hate freedom?
Posted by: Amber | December 15, 2006 02:14 PM
Why do you hate freedom?
Don't try to caricature the opposition when you no longer have anything useful to say.
Posted by: Doug | December 15, 2006 02:19 PM
Doug,
I don't disagree with you that the government has an important role in society. But I'm also not preaching a free markets cure everything mantra, because the idea that there's a role for any regulation completely undermines the concept of a free market.
Posted by: Rusty | December 15, 2006 02:24 PM
Doug's right, there is anarchy & there is liberty. And there is a difference.
So, don't throw around the word liberty unless you mean it.
Rusty, where did I throw that word around? Can you quote me on it?
Posted by: Danny | December 15, 2006 02:24 PM
Actually, Danny, I had read "liberty" in one of Jason's comments and somehow gotten it in my head that it came up in that manifesto of yours earlier on the page. So I misquoted you. Apologies. But the basic gist of what I said still stands as is, save for misquoting the actual language.
Posted by: Rusty | December 15, 2006 02:27 PM
Rusty,
Is enforcing the law a "regulation." Laws are there to protect citizens from things listed in Doug's last paragraph at 2:13.
Posted by: Danny | December 15, 2006 02:28 PM
As I pointed out on Peach Pundit in a related post, if they truly wanted a "free market" labor and wage system, then employers would be able to hire and bring in legally any immigrant labor whereever they are found and pay them whatever they are willing to make. But, instead, our government sets up artificially low amounts of legal immigration that has no relation to actual needs, therefore, artificially increasing wages for legal workers. The same people who support a "free market" labor and wage system and oppose the minimum wage also usually oppose immigration. How strange?
Again, if we truly wanted a "free market" labor and wage system, we would allow children to work in factories again, wouldn't we, because you could pay them less than adults. But we don't, do we?
Don't you think people made the same "free market" arguments back then, before we passed child labor laws?
Posted by: Decaturguy | December 15, 2006 02:29 PM
Yeah, so whenever someone mentions freedom they're actually referring to anarchy.
Posted by: Danny | December 15, 2006 02:31 PM
Danny,
Conceptually, laws are artificial barriers on commerce. So, if you have laws, you don't have a free market.
Posted by: Rusty | December 15, 2006 02:31 PM
There are barriers there to prevent things such as fraud. Do we not have the freedom to travel where we want because there are red lights on the streets?
Posted by: Danny | December 15, 2006 02:33 PM
If you stop at a red light, you're making a concession of your freedom to travel where you please, when you please to what has been determined to be the common good. And there's nothing wrong with that— it's how society functions without people constantly killing each other. But you are conceding some freedom there.
Posted by: Rusty | December 15, 2006 02:36 PM
DG,
You continue to show you lack of understanding of the free market and capitalism.
No one is advocating child labor. To say that by supporting free markets we are supporting child labor is ignorant.
Posted by: Jason | December 15, 2006 02:47 PM
Are you comparing people abiding with the law for the safety of everyone, with me & Bob from Account Temps coming to a private, contractual agreement?
In going on the road you agree to relinquish some freedoms in order to access those roads because it's not YOUR road.
When you are hired for a job it is the EMPLOYER'S job. They should have the freedom to offer to pay you what they want or what they think you're worth.
If you agree to work for that amount, even if it's low, so be it. That's the employee's problem.
Posted by: Danny | December 15, 2006 02:49 PM
You know what, I get the feeling that some people think that Libertarians are for anarchy. If so, those people are badly mistaken.
Some laws are necessary. Unnecessary laws are becoming the norm. Not in the name of protecting the rights of the individual, but in the name of collectivism & society.
Posted by: Danny | December 15, 2006 02:59 PM
[I]f we truly wanted a "free market" labor and wage system, we would allow children to work in factories again, wouldn't we, because you could pay them less than adults. But we don't, do we?
Nations that are not well off financially do not have the type of safety and welfare regulations of wealthier nations, if they have them at all.
Have you ever wondered why this is so? It's because when a person is very poor, the very first concern is to make enough money to feed yourself and your family. After that, you try to clothe and house yourself the best you can. If this means that you have to work in a factory that is not the safest place in the world, so be it. If it means that you bring your 10 year old to work, then so be it.
Why does this happen? It happens because the type of work that people in third-world countries do is very labor intensive, and requires less brain power than brawn. That's why 10 year olds are expected to work: because their two hands can do nearly the same amount of packing boxes, cleaning fireplaces, sewing garments, etc. as adults. In developing countries, most work requires almost exclusively manual labor. Therefore, children are valuable members of the work force.
Take Guatemala for instance. There, many children work. They work, not because the adults are not "enlightened" enough to know that they should send them to school, but because they need the income their children provide just to survive. Today's Guatemala looks like 1880s America.
The United States did not focus on aboloshing child labor and implementing other health and safety regulations until AFTER it got wealthy enough to overcome such ineffeciencies in the market. Other developed nations -- such as Britain -- followed the same pattern.
And to be sure, such health and safety regulations are inefficient. In many cases, it may require companies to entirely replace certain, old equipment that may still work but is dangerous to work with. It also may require an extensive oversight regime, etc.
We have such regulations in America now precisely because the benefits of such health and safety laws outweigh the problems caused by the ineffeciency they cause.
But in developing countries, they cannot implement such rules. If they did so, then the people would starve (or more likely, ignore the rules) because the population at-large does not have the education necessary to shift from a brawn-based economy to a brain-based economy.
Posted by: Doug | December 15, 2006 03:01 PM
The point is that a market ceases to be free when it's regulated. I'm sure y'all don't support child labor, but by taking that position, you also no longer support a truly free market.
Posted by: Rusty | December 15, 2006 03:05 PM
Don't try to caricature the opposition when you no longer have anything useful to say.
I'm not sure I ever had anything useful to say in this here boy's club. Maybe "useful," sure, but not useful.
I won't worry my pretty little head over it, though.
Posted by: Amber | December 15, 2006 03:19 PM
DG,
You continue to show you lack of understanding of the free market and capitalism.
No one is advocating child labor. To say that by supporting free markets we are supporting child labor is ignorant.
I'm not saying you should support child labor, I'm just saying that if you advocate for free markets so much that you do not see the need for a minimum wage (by the way a decision that was made in 1938, since which time the U.S. has had the greatest economic expansion of all time), then you probably should support child labor, because, by not doing so, you are artificially inflating adult wages, just as you are artificially inflating legal citizens wages, by keeping immigration to low levels.
If you want to let the free market work, then let the free market work. Let parents decide whether or not their child should work in a factory or not for $2 an hour.
Posted by: Decaturguy | December 15, 2006 03:24 PM
Let parents decide whether or not their child should work in a factory or not for $2 an hour.
Maybe we could give them vouchers if they choose to do so.
Posted by: Amber | December 15, 2006 03:27 PM
Capitalism is an economic and political system that supports individual rights.
http://capitalism.org/faq/children.htm
DG,
I'm sorry, but you haven't done your homework.
http://www.mises.org/rothbard/agd.pdf
We had a depression in 1937, it was clear FDR's economic policies weren't working.
The only time that unemployment dropped was after 10 million men were forced to fight in WWII.
Amber,
The sarcasm and profanity don't really help your arguments. Not to mention the lack of empirical data
Posted by: Jason | December 15, 2006 03:28 PM
Heh. Capitalism Magazine, huh. That's like asking a Jew to tell us about Palestine.
Posted by: Rusty | December 15, 2006 03:37 PM
No more than someone who uses government to force their agenda on private employers trying to tell a capitalist about liberty.
Posted by: Jason | December 15, 2006 03:41 PM
The sarcasm and profanity don't really help your arguments. Not to mention the lack of empirical data
Ha!! I wasn't aware I was making an argument. And I'm going to start playing a drinking game everytime some dude on a blog says the words "empirical data." I'll be schnockered WAY before National Drunk Blogging Day.
Maybe I should change my header quote today, in honor of this thread, back to:
"Use of expletives to get a point across only serves to make women in general look uneducated and hysterical." - Dumbass commenter on Grayson's blog
from:
Using my communist tools to silence the truth since 2002
(inspired by crazy MRA commenter at another blog I read)
Posted by: Amber | December 15, 2006 03:43 PM
Well, this thread has gotten pointless.
I have a press release to write.
Posted by: Jason | December 15, 2006 03:48 PM
Jason, the Depression started with the stock market crash in 1929. So, are you saying that since 1938, when the minimum wage was instituted, we have not seen great economic progress? Maybe we should do away with overtime laws as well.
I hate to tell you, but the country (and even Georgians) are squarely against you on your insane point of view.
Posted by: Decaturguy | December 15, 2006 03:56 PM
I guess I'll end this thread with a something nice to chew on.
If we were to imagine a composite of the most typical minimum wage earner, what would it look like?
Would it more likely be the head of a household from a group normally discriminated against in society who works a full 40 hours a week?
Or, would it look like a white teenager working her first ever part-time job from a family with a median income exceeding $50k per year?
The answer may surprise you.
Posted by: Doug | December 15, 2006 03:57 PM
"Jason, the Depression started with the stock market crash in 1929. So, are you saying that since 1938, when the minimum wage was instituted, we have not seen great economic progress?"
I'm saying that the record is clear...FDR's economic policies were a failure.
Nobel Prize winning economists have agreed to that.
I hate to tell you, but the country (and even Georgians) are squarely against you on your insane point of view.
First of all, it's not insane. The idea was supported by Friedman, Rothbard, Hayek and many more well known and respected economists.
And I don't really care if the majority of Americans or Georgians back me or not. The majority of Americans and Georgian don't believe all individuals should have the right to marry who they want, does that make it right?
Posted by: Jason | December 15, 2006 04:03 PM
According to the Department of Labor in 2005 about 75% of people earning at or below the minimum wage were over 19 years old. So, the prototypical minimum wage earner is not teenager in their first job. However, they are not your full time head of household worker either.
Posted by: Decaturguy | December 15, 2006 04:17 PM
Hardly the end of the thread Doug (dude, you don't say "and to end the thread" and expect that people will actually let you end the thread).
I call B.S. on that. According to this issue guide from the Economic Policy Institute (yes, the same think tank that put out the statement from the 650 economists):
So, no, it's not little blonde Missy saving up for a detail job for her BMW. It's grown adults.
Posted by: Rusty | December 15, 2006 04:20 PM
Also, everyday Georgians do not need some fancy pants named economist to tell them that the minimum wage shouldn't be increased or that they shouldn't receive overtime, etc.
Posted by: Decaturguy | December 15, 2006 04:23 PM
It's not the purpose of government. The only purpose of government is to protect the rights of the individual.
If this policy goes through, where does it end? What else are people entitled to?
I can't support it, it's an individual's job to make sure they earn a decent wage, not the job of government.
I'm sorry we don't agree.
Posted by: Jason | December 15, 2006 04:31 PM
Rusty,
Here are the official numbers from the federal government.
http://www.bls.gov/cps/minwage2005tbls.htm#1
Individuals between the ages of 16 and 24 accounted for 53 percent of all minimum wage-earners in 2005.
And those people between 18 and 24 more than likely brought it upon themselves by dropping out of high school. They simply don't have the skills to warrant paying higher than market wages. That's why many of them will lose their jobs if a minimum wage increase is passed that far surpasses their productivity. That's just a fact, man.
Posted by: Doug | December 15, 2006 04:39 PM
I think you're reading the table wrong (it's confusing, and hell, it's possible I am too).
As I'm reading it, it says:
75,609 total workers over 16
16,374 who are under 25
59,235 who are 25 and over
Which would bear out what the Economic Policy Institute said within 2 percentage points.
Posted by: Rusty | December 15, 2006 04:50 PM
Those numbers were "Number of workers (in thousands)," and have the percentage of the demographic making minimum wage listed by them:
75,609 total workers over 16 = 100.0%
16,374 who are under 25 = 21.7%
59,235 who are 25 and over = 78.3%
Posted by: Rusty | December 15, 2006 04:58 PM