One of the things that first attracted me to economics is that its logic leads us sometimes to counterintuitive conclusions. A perfect example of this is the regulated workplace. The minimum wage raises incomes for some workers and lowers incomes for others. Workplace safety regulations advantage those who are very risk averse at the expense of those who are willing to accept higher risks in exchange for higher incomes. Laws against “child labor” benefit the relatively well off at the expense of the needy. FULL ARTICLE
Source link: http://blog.mises.org/9257/the-minimum-wage-discrimination-and-inequality/
The Minimum Wage, Discrimination, and Inequality
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You need to protect the Free Market forces from themselves, otherwise the whole system will blow…
If you want to start bossing people around, the burden of proof is on you.
…even if it means tweaking the well-known theories a bit…
You speak of economic theory the way a young-earth creationist speaks of the “theory” of evolution. The economic theory you refer to is a set of laws, no more open to “tweaking” than the theorems of mathematics.
“Check the UN development Index…”
Brady, you do realize, right, that the UN is quite possibly the vilest institution on the planet?
What is a free market ?
For Ludwig von Mises “The market is free; [when] there is no interference of factors, foreign to the market, with prices, wage rates, and interest rates.”
http://mises.org/daily/2979#part3
But it is only an imaginary construction, a tool to try to better understand what is going on in the real world.
There is no such thing as a free market in the real world.
I think that we need to clarify what is a free market. A free market is dominated by mutually voluntary, honest associations. Many institutions fall short of this yet are often labeled “free market” because they strive for profits.
A perfectly free market is a myth that will never exist. I think that the more thoughtful readers here will agree with me on that. It is overly simplistic to assert that markets will be free once government is restrained or abolished. Because of scarcity, there will probably always be individuals who choose expropriation over violence. We should be mindful to oppose these people for who they are — enemies of liberty — whether they are government officials, executives of corporations or petty thieves.
Do you really think that without a minimum wage, everyone would exist at a subsistence level? That is nonsense, both in theory and in practice. Case in point: Germany does not have universal minimum wage laws (yet
). Yet most people there have quite a decent standard of living… and even those who earn little only start out that way, as they become more experienced, their productivity rises and so do their wages. Take that opportunity away, and you will entrench social differences, creating a permanent underclass of young, unemployed, and angry people. Now that’s a recipe for unrest and violence (see: US inner cities).
Art Carden wrote: “One of the unintended consequences of the minimum wage and workplace regulations is that they perpetuate inequality.”
Are you saying that if there were no minimum wage and no workplace regulations, the inequality would not perpetuate, and therefore, progressively disappear?
Are you equally saying that before the introduction of minimum wage and workplace regulations, there were no perpetuation of inequality, that is to say, there were no inequality, and that inequality and its perpetuation is only due to the introduction of minimum wage and workplace regulations ?
You may be interested to read about the Iron Law of Wages. This applies under certain combinations of population, resources, property and other institutions, and starting resource distributions. I think the contention is that those combinations would obtain in the modern western world if things like minimum wages and unemployment benefits were removed.
P.M.Lawrence,
Can you cite someone who thinks that the premises of the Iron Law of Wages (especially with respect to demography and capital accumulation) are true in the modern Western world?
RE: lukas
Lukas, I am tired of repeating myself on the issue of minimum wage…
The minimum wage is a necessity in a certain geo-political entity to uphold a certain minimum living standard…
You are quoting Germany. The reason why they do not have an offical minimum wage set is that they do not have a relatively lurge influx of cheap foreign labor or significant enough outsourcing (yet)… And the young are given a decent minimum wages for theentry-level positions, since if offered less, they simply can survive on the unemployment benefits and other social hand-outs… The moment the flow of free governmental money and subsidies dries-up, you will how soon those nice young germans will turn into the most rigorous rioters and uninists, since their very physical survival will be at stake…
I am amazed that this seemingly libertarian and openminded community is so dense on getting simple truities about real life…
Oh, well, I give up (don’t tell me I didn’t warn you when a Chinese or an Indian guy will start writing your blogs sometime soon, and you will be competing with them for a bowl of rice generosely offered to you as a charity (or maybe as “scientifically” determined current market rate for your not-so-productive servcies) by the financial elites, or present you with yet another generous opportunity to re-educate yourself as a more productive plumber…)
@Umair
“In other words if you don’t have regulations for a minimum wage then the workers will not be paid enough to buy the very things they are producing. ”
Your assuming that what they are producing is of value, you also fail to note who recognize’s this value. It is not the producer but the consumers as a whole. Your argument supports a shop of employee’s painting rocks at $100 an hour. The idea that their rocks are worth $1000 a piece. Sadly no one buys them, so you blame the free market.
Also it’s a chicken and egg argument.
Wages need to raise to support the poor?
Or is it
Prices/wages need to drop to support the poor?
The prior argument actually causes far more exploitation.
@ Pbergn
You’ve posted on this topic before. Sometimes your argument is legitimate but you misblame flaws. Many of your arguments which may represent extortion and exploitation of employee’s you accredit to free market functions. A kind of “comes with the territory” attitude. Almost in a zealous fashion that all free-markets will always bring about evil company’s. As if free-trade always equates to corporate fascism. The truth is, if an example is provided where an employee was legitimately taken advantage of it was probably in violation of his/her personal private property rights. All libretiarian’s hold this value as one of the highest ideals which need to be upheld and protected. There are legal avenue’s to protect citizen’s in this way. The failure is when instead of enforcing existing Private Property rights out there, we constantly make up new ones. Instead of enforcing what we have we bury ourselves in constant new legislation.
I do not believe free-trade will equate to poverty stricken employees. I believe it’s a historical political mindset that man is entitled to a job. He is entitled to stay at that job inevitably and he is entitled to constantly get an increase in compensation regardless of whether or not his production reflects the raise. Men who know that they are a function of the market are much more intellectually equipped at finding work on the fly and keeping jobs. While getting real compensation raises because they are motivated to constantly improve their performance.
You’ve spent enough time on this site by now I hope to know what type of ideal Private Property is held to. We’ve heard your arguments many time parading the guise of free market but arguing the points of wage/price controls.
Have you ever stopped to wonder how the minimum wage amount is arbitrarily decided upon? If the idea of minimum wage worked why don’t we just force everyone to earn 100k a year? How can you not see the flaw in this logic?
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