Here is a debate on the minimum wage between two learned scholars, whom I label S and C, for socialist and conservative. The debate took place on the lawn of the campus of Liberty University on July 25, 2011.
C: We would like to see the minimum wage eliminated in total. We see no need for it.
S: Why would you want to do that?
C: It interferes with market mechanisms to set proper wages.
S: That’s just nuts.
C: No. We find that when wages gravitate towards their natural level, markets work their best. It’s natural efficiency.
S: Nuts, I say. Where do you get these crazy ideas.
C: Are you going to argue or sit there and call me names?
S: I asked where you get these crazy ideas. Are you going to answer me?
C: Econ 101.
S: What the hell does that mean?
C: It’s bonehead economics.
S: Are you a bonehead, then?
C: No. You are.
S: Why so?
C: Because you can’t see why markets work the way they do. If someone is only worth $2.00 an hour, and I have to pay him $7.25 an hour, then I won’t hire him.
S: But people do get hired at $7.25 per hour.
C: Not as many as we would have hired at $2.00 per hour.
S: One, how the hell do you know that, and two, who can live on $2.00 an hour?
C: I know it because studies have shown that employment goes down when the minimum wage is raised. And if you are only worth $2.00 per hour, why should I pay you more? Why should I care how you live? Develop your talents, and I’ll pay you more.
S: That’s just nuts.
C: Would you stop with the nuts talk, bonehead?
S: Well it is. It’s just stupid. Where do you get off telling people they have to make do on $2.00 per hour?
C: It’s not me. It’s the market speaking.
S: Tell you what. Let’s talk back to the market.
C: You can’t talk back to the market. The market speaks and you can’t talk back to it.
S: Is the market god, then?
C: No. It just is there and you can’t make it do things it doesn’t want to do.
S: Why not?
C: You can’t make it obey you.
S: But it’s not a thing. That’s just nuts.
C: There you go again.
S: Well it is. Just plain nuts. Does this stuff come out of some university? Where do you get these nutty ideas?
C: They’re not nutty, asshole. We have universities and think tanks who study these things. You’re too blind to listen.
S: You mean see? Too blind to see?
C: Whatever.
S: OK, ass face. Is that a copy of Atlas Shrugged in your pocket, or are you just happy to see me?
C: I’m not happy to see you.
S: All right, dickwad. Here’s what happens: We tell your fucking market that we want a minimum wage of $7.25 per hour. You pay it or you don’t hire. If you can’t make your business go paying that wage, you shouldn’t be in business.
C: But the market …
S: Fuck the market! Here’s what really happens – we set the terms, and the market adapts.
C: More people are out of work.
S: Evidence! Show me evidence! And not from one of your wonky stupid think tanks, or Atlas.
C: It’s Econ 101.
S: That again! Markets are people, not things. We make them work for us. It’s $7.25 per hour. Got that?
C: God-dammed dictator. That’s what you are. Making us do things we don’t want to do. That’s freedom we’re talking about. Freedom.
S: Oh fuck your freedom. Having to work for $2.00 per hour is pretty un-free. Ya think?
C: The market!
S: Fuck the market! People are in charge.
C: Communist.
S: Fascist.
Piece of Mindful 
We tell your market that we want a minimum wage of $7.25 per hour. You pay it or you don’t hire. If you can’t make your business go paying that wage, you shouldn’t be in business.
This is the heart of the matter. The marginal worker and marginal business gets chased out of the marketplace. That may or may not be a good thing.
The wealth of a system depends on so many other things. To imagine one can legislate prosperity is hubris.
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It doesn’t even work that way. Evidence! Evidence!
You seem caught up in this notion that efficiency is paramount. This is the view of the accumulators. If MW is inefficient, I do not care. If someone takes home $7.25 when he only produces $5.00′ I don’t care. But the point is that there is no evidence to support you, and more evidence that the market can be made our servant. We say $7.25, and it adapts.
The whole of the notion that markets are wise is bunk. That they are efficient? Maybe, but efficiency leads to inequality. So we make the market our servant.
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You might not be interested in efficiency, but…
Yes, make the market our servant, but the trouble is that you want to destroy wealth and make everyone poorer. Bad service.
The joke here is that Liberals don’t really care about a minimum wage. It is just a device to signal to other Liberals that they hold the proper view. Liberals don’t care much for lower class White people who would benefit from the enforcement of a minimum wage, including limiting immigration. Illegal immigration completely blows away enforcement of a minimum wage, but we must have sanctuary cities and the like as another status symbol.
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Illegal immigration completely blows away enforcement of a minimum wage, but we must have sanctuary cities and the like as another status symbol.
I can agree with you to an extent, but at least notice that conservatives do the same thing by refusing any sort of amnesty. If all illegal immigrants were instantly made legal and the minimum wage was applied to them, they would no longer be able to undercut the lower class white people about whom you are concerned. Incidentally, why just lower class white people? I imagine the burden of our broken immigration system actually falls disproportionately on legal immigrants, who have to deal with much of the same discrimination and language barriers, compounded with persistent questions of their legality and competition with very cheap workers.
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Conservative’s are problematic on illegal immigration, also, wanting, as many do, cheap labor, and many conservatives are also caught up in signalling non-racism, which support for illegal’s seems to do.
But amnesty is a joke. Conservatives supported the amnesty in “86, which just opened the flood gates. Without border enforcement you just get more illegals, and more people in general, increasing the labor pool and driving down wages despite minimum wage laws. The best way to raise wages is to have a labor shortage.
why just lower class white people
Lets capitalize “white” here. The conflict here is intra race. Blacks and Hispanics get affirmative action and a general pass on bad behavior from white Liberals, whereas lower class Whites bear the brunt of losing out in this and other Liberal plans, such as section 8 housing and support for illegal immigration.
Legal immigrants tend to be higher status and have more job skills and generally aren’t mucking around in the minimum wage milieu.
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I fail to see how spreading wealth around “destroys” it.
Your insight into the signals liberals send one another is stunning. There are many of the liberal persuasion who are also free traders – in fact, once you leave this country liberalism and free trade are brothers. Since deals like NAFTA are the driving force behind immigration from the south, you are right to say that those liberals don’t care about minimum wage.
But we are not all one. Don’t lump us all together.
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I fail to see how spreading wealth around “destroys” it.
I like to tease you.
Since deals like NAFTA are the driving force behind immigration from the south
Somewhat, but not to the level you imagine. The number of ex-Mexican corn farmers coming to the US is small.
Don’t lump us all together.
Well, I guess you’re not this type of liberal, but you still have some dichotomy issues what with your support of unions/illegal immigration, support of diversity yet vote with your feet otherwise.
My side is pretty bad also, what with conservatives calling for smaller government yet lining up for many perks that flow from such, etc. I guess humans love waulering around in hypocrisy.
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Minimum wage is a floor upon which people and families can depend. Government stepped in because “private enterprise” would enslave all workers if it could get away with it. It is simply a mechanism to control greed. The rate is so low, many at the lowest income levels struggle with whether it is smarter (more efficient) to receive food stamps, child support and various other benefits, or go to work at minimum wage. Raising minimum wage to a “living” wage would reduce pressure on many other programs, and improve attitudes in low income neighborhoods considerably. Work that won’t pay the bills and makes you question your sanity is demeaning. That is the intent, isn’t it? What good is it to be rich if you can’t feel rich and act rich for everyone to see, which includes the God-given right to ignore and demean have-nots. Isn’t status the emotional “gold star” for self-absorbed rich folks?
demean have-nots?
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Mark – I don’t think many mainstream economists support eliminating the minimum wage. But it is a fact that countries with higher minimum wage relative to market wages tend to have higher structural unemployment. You can’t make the market hire someone for 7.25 an hour if the conditions don’t exist for that person to contribute 7.25 an hour to company; they will just be unemployed. Or, they will work illegally, in either case exacerbating the problem. There’s a point to which efforts to enhance equality are definitely worth it; there’s a point at which that level of equality brings down the total sum of wealth so much that equality is a slim comfort for poverty.
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I totally get what you’re saying and understand the 101 part of it, so don’t explain further. I don’t believe it. Show me the countries on a graph with higher minimum wages and demonstrate the correlation between minimum wage and structural unemployment.
I do not think that we have a good model of how economies work, and that the reasons are that 1) they are human systems and can’t be modeled effectively, and 2) the studying that we do is financed by the financially wel-off for their own ends.
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Are you insinuating that the unemployment problem in America is structural?
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No, the unemployment we have currently is not structural unemployment. It’s based on current economic conditions, though increasingly there is a possibility that it will become the new norm. It’s hard to prove that structural employment is affected by minimum wage, because we don’t have a hundred countries that are identical except for in minimum wage. But Mark, do me a favor. Go on Wikipedia, look up minimum wages by country. Sort the list by “% of per capita GDP”. Generally speaking, countries with economies we’d like to live in are between 30 and 60 percent. Lower than that suggests a government doesn’t even care; higher suggests that a large swaths of the population work illegally or not at all.
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Are you not saying what I said, that correlation is nonexistent? If you can look at that list and see anything other than random, you are dazzling magician.
The 30-60 thing is backwards logic, nothing more. And illegals can be controlled where the business class is not in charge, as they are here.
Wages reflect power relationships more than value-for-value. Look at it this way: if wait staffs and garbage collectors go Galt on us, we descend into chaos. They are very valuable. But they are paid shit because they are not unionized, generally, and so have no power.
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Mark – the reason the correlation is unprovable is the difficulty in defining structural unemployment and separating it from economic swings. But I suppose I agree with your basic premise – the minimum wage can definitely be used to achieve positive effects. It has to be used carefully – Oregon is a good example of where it is too high, and yet Washington can support an even slightly higher rate.
The idea that NAFTA caused Mexican immigration is just silly. It may have increased it (though the increase was also caused by a growing US economy that needed labor), but there was certainly high levels of immigration prior to that.
And finally, it is not ONLY the business class the causes the illegal immigration problem. Countries throughout the world, experiencing varying levels of corporate influence, have problems with immigration. It is a combination of two movements, one that refuses to accept the influx of people with accents and dark skin, and another the refuses to just kick them out and keep them out. This afflicts many countries, and ultimately if neither side can take control of the situation, the default is a large population of illegal immigrants. Those who are uncomfortable with the cultural influx manage to keep amnesty and legal immigration from happening, but the humanitarians can prevent the border patrol and immigration ‘services’ from being effective, and business sits back and enjoys the situation.
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Silly? Are you willfully blind? Correlation is not causation, but in this case, it is not an accident of timing.
Maquiladora wages are so small that the lure of across-border jobs is strong. Restrictions were lifted on sale of peasant land, and as agribusiness moved in, they had to go elsewhere for work … north. Where immigration used to be regional, a few Mexican states to the American southwest (where Europeans immigrated in the 19th century), it is now from all of Mexico to all of the US. Transnationals have prospered, of course, and intellectual property is well protected, but Mexican growth is anemic, agriculture now another corporate business. Of course the come here. What choice do they have?
The fact it is not only the business class is not at issue. The fact that skin color is part of it is not at issue. The fact that it is a problem elsewhere is not at issue. That’s diversionary.
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Of course the come here. What choice do they have?
Your take on immigration does not fit with the facts, but it fits with your narrative of divine retribution for evils done by us to them: we must be punished.
You carry a grudge against trading and commerce, and this elides into immigration, which you tacitly acknowledge is not an economic good, amounting to essentially the importing of poverty, but it also serves as a sort of imperialism by the poor over the rich, so you cheer-lead that aspect of it.
So as I’ve come to expect from you, your social-emotional satisfaction trumps economics.
My question: why should we pay any attention to you when you talk economics?
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The fact that a massive increase in immigration from all of Mexico to all of the US, as opposed to from five Mexican states into the American southwest, coincides with NAFTA is my imposing of a “narrative.”
Your desire to personalize reality by imposition of a devil-like persona on me is also interesting. Why don’t you just ask me: “Why do you hate America?”
I don’t really talk economics, as I don’t understand it, per se. People react to circumstances, ergo immigration in the wake of NAFTA. But to presume that this whole process can be quantified by some formula is nonsense. The right wing, via oligarchy-funded think tanks, have channeled right wing “thought” through the “science” of economics. So you should not listen to me if I ever talk “economics” any more than I listen to Randians or Friedmanites when they talk “economics”, especially “Econ 101.” It’s bunk.
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That is a cop-out response, saying that economics is unknowable.
Am I imposing a persona, or just reporting what I see? Do you hate America?
Mexico, economy and otherwise, is not that bad of a country, not bad enough to warrant emigration for economic reasons or other.
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I said and repeat that scientific modeling of human systems is impossible, and I think I said that it is done for political purposes. I think that it was Bertrand Russell who said that when a group is in charge they will hire people to devise reasons why the things that are good for that group are good for all of us. That’s economics in a nutshell – bought people paying back their buyers.
Now respond to this:
No copping out please. How do you avoid cause and effect here? And please, no overarching statements like
You made that up on the spot. You do that a lot.
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You’ve never shown much interest in immigration issues. Now you count to one with the NAFTA thing, which happens to fit your “imperialist’s chickens come home to roost” masturbation fantasy.
A slow roll of immigration started in 1965, with Ted Kennedy’s bill opening our borders, and a spike in 1986 with the amnesty bill.
The fact that a massive increase in immigration from all of Mexico to all of the US…
Not much into Vermont. I guess the bearded liberal craftsmen have it figured out: keep a shabby economy relative to your neighbors.
as opposed to from five Mexican states into the American southwest…
Wasn’t that much into New Mexico. The Castizo knew what was up, and put the Indios on a bus to North Carolina.
coincides with NAFTA
Correlation isn’t always causation.
And then your whole thing about, “well, we really can’t know anything about economics, so I can propose any public policy and not worry about the economic consequences, kind of like a preacher who says we really can’t know anything about paleontology, and besides, scientists are always changing their theories and fighting with each other, so who needs them?”
You need to be mocked and shunned.
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Yes, correlation is not causation. I think I’ve said that several times now. But again, the weakened Mexican economy and its virtually nonexistent growth, the massive exodus of small farmers and change in laws regarding ownership of land, and a massive influx into the US form all of Mexico all coincide with NAFTA. You’re in denial?
You’re still just making things up as you go, by the way. Hard to argue with made-up facts, which serve you well as a diversionary device.
If economics was a valid science, there might be agreement among economists of various “schools” about the past and present. They can’t even agree on the causes of the Great Depression. Far from offering reasonable explanations, the differences among them coincide with political philosophies, with the dominant one right now, so-called” free” markets, used to explain the idea that government caused market collapse. You might think that a “science” could make reasonable predictions about the future. They can’t. Even noble concepts like “free trade” don’t explain things like the success of countries that don’t engage in it. Economics might have some substance at its very core – the fact that we sometimes weight various non-emotional factors in making financial decisions, but that’s generally not the way investors or consumers behave.
Economics is bunk.
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Would you agree that the longer our country continues to have severely high unemployment and underemployment that structural unemployment will set in? That whatever “new economy” that the establishment envisions resurrecting our current economy is neither being planned or trained for.
Lack of vision in our ruling political oligarchy is driving this country into a position where structural unemployment will cement the desired state, which is a country highly divided into the haves and the have nots, one serving at the mercy of the other. Almost everything happening politically these days points in that direction.
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I do not think that we have a good model of how economies work
So then you are offering economic advice based on what?
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Human need. The idea that markets fairly determine wage levels itself is ludicrous.
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Then your operative phrase is “to each according to their need”.
I’m squirming to say something snarky (like, “where do I sign up to get a gun to shoot those that don’t go along with your grand plan?”) but I’ll note that you still have the problem of how to distribute our few resources among the almost limitless human need that is generated in today’s world.
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