Cafe Hayek - Latest Comments in Billboard Jobs

Re: Billboard Jobs

JohnDewey — Mon, 15 Jan 2007 13:50:02 -0000

spencer: "Of course, I realize that there is no causal relationship here"

IMO, that's the most important part of your post. I think you were trying to imply a causal relationship. Otherwise, why try to show that minimum wage hikes and real income moved in tandem?

My guess - and it's only that - is that real income growth came first, and it allowed near-meaningless hikes in the minimum wage.

Artificially raising the wage floor by over $2.00 an hour will not be meaningless.

Re: Billboard Jobs

spencer — Mon, 15 Jan 2007 13:43:04 -0000

in the 1950s, 1960s,and 1970s we had rapid increases in the minimum wage and it was associated with strong growth in capital per worker which was associated with rapid growth in real per capita income.

After the late 1970s-early 1980 we saw a massive decline in the real minimum wage as nominal minimum wages stagnated. It was accompanied by stagnating real capital stock per employee and stagnating real income growth for the typical employees. Of course, I realize that there is no causal relationship here, but the change in trend growth rate of the economic well being of the popultion is fantastic.

I mean even through there is a wealth of evidence that has emerged in main stream economics over the last 20 years that increases in the minimum wage do not lead to drop in employment -- only the National Restaurant Association and David Nuemark

have been able to find any evidence that implies that moderate increases in the minimum wage leads to a drop in minimum wage employment -- I will not confuse any of the readers or writers of this blog with these facts.

Even the msasive drop in the real minimum wage over the last quarter century has not been associated with a drop in the percent of the black teenage population not employeed. Of course all of the theories advanced at this blog strong imply that the drop in the real minimum wage should have caused black teenage employemnet to soar. But, again, I do not want to confuse any of your with the actual evidence.

Re: Billboard Jobs

Robert — Mon, 15 Jan 2007 12:32:08 -0000

Don Bourdreaux, in the original post, is repeating illogic exposed about half a century ago.

Re: Billboard Jobs

cpurick — Mon, 15 Jan 2007 12:23:19 -0000

The whole point of representative government is that we elect leaders who understand the problems of the minimum wage better than the general public, and who will protect the rights of those who would be hurt by such fallacious, populist policy.

If the Republicans can't stand in the face of simple public ignorance, then they're just unprincipled political hacks like the Democrats, and no more deserving of power.

Re: Billboard Jobs

Bruce Hall — Mon, 15 Jan 2007 11:05:16 -0000

Steven W. takes a lot of grief here and at other sites such as Economist's View, which tends to take positions quite opposite those taken here.

Perhaps, instead of hurling insults at those who question the "truth" of the posts, it might be better to offer up some serious support... in this case... published studies that both support and question the assumption that raising minimum wages is detrimental to those who hold minimum wage jobs.

I know that isn't as much fun as supplying anecdotes, but it could be an antidote for brow-beating. Of course, if enough studies disagree, then the issue goes back to the political arena where hurling insults is considered intelligent debate.

Re: Billboard Jobs

JohnDewey — Mon, 15 Jan 2007 10:07:18 -0000

Steven Warshawsky: "It's a sure political loser, and will gain no added supporters for the free market perspective."

I agree it is right now a loser position. What is needed - what has been needed for a long time - is for the voting public to understand economics. I guess that means the most important issue is what gets taught in high schools.

I disagree that opposing the minimum wage "will only discredit your entire philosophy in the public's eye." The key will be in convincing the general public of the harm wrought by minimum wage laws. That's admittedly a long term battle.

I'm referring to the libertarian philosophy, of course, and not to the Libertarian Party, as you have. One can be for democratic principles without endorsing the Democratic Party. Likewise, one can believe in general libertarian principles without endorsing the Libertarian Party.

Re: Billboard Jobs

Randy — Mon, 15 Jan 2007 09:38:13 -0000

Steven,

You do have a point about the Republican party and the minimum wage. I've been thinking that the best strategy would be to go the Democrats one better. If the Dems want $7.20, raise it to $8.20. Make it obvious that its just a political game. Stupid ideas will only be destroyed when people see clearly that they are stupid ideas. If the people say they want it, give it to 'em, good and hard.

Re: Billboard Jobs

Steven M. Warshawsky — Mon, 15 Jan 2007 08:16:00 -0000

Are we discussing the economic equivalent of how many angels can dance on the head of a pin, or are we talking about making public policy in the real world?

In the real world, even the most fervent advocates of laissez faire are constrained by existing political and economic arrangements. Among these constraints, whether you like it or not, is public opinion.

Telling the public that you want to abolish all minimum wage laws, all government safety nets, all workplace safety rules, blah blah blah, will NOT move you closer to your goal of greater economic freedom, because taking such "extremist" positions will only discredit your entire philosophy in the public's eye. (And the liberal propaganda machine will do its very best to paint your position in the darkest of terms.)

While the Libertarian Party can afford to fight such quixotic battles -- because it is a meaningless political force -- the Republican Party cannot. If the Republican Party wishes to move the country in the direction of greater economic freedom, it has to pick and choose its battles wisely.

I don't see much wisdom in opposing the proposed min wage increase. It's a sure political loser, and will gain no added supporters for the free market perspective.

Re: Billboard Jobs

Patrick R. Sullivan — Mon, 15 Jan 2007 07:32:25 -0000

'It seems to me that money qualifies as private property. So do you oppose any form of taxation that results in the taxpayer not receiving a benefit'

Well, it did take a Constitutional Amendment to give us the income tax. And, the whole idea of government is that it's a benefit to the people, so yes.

Btw, flaggers on highways are covered by Davis Bacon prevailing wage law, so they're usually paid well above market wages.

Re: Billboard Jobs

undergroundman — Mon, 15 Jan 2007 04:49:15 -0000

"Umm, what do you think they do with these profits, hide them under their mattress? More profits equals more investment or consumption leading to.... more jobs!"

Sure. Investment and consumption. But when the factories are increasingly automated or overseas, the money isn't going to people so much. It's just going to other capitalists. And they make huge returns on their investment while the rest of us are stuck with jack-shit. It's pretty much the easiest thing in the world to make a ton of money once you have a ton of money. You just toss it in a mutual fund and you're done. But for the poor people it's nearly impossible.

Think about following the money hard and long, and you'll see what I mean. Of course, the internet is a major help to the underdogs, but how long is that gonna last?

Re: Billboard Jobs

Adam Malone — Sun, 14 Jan 2007 20:50:10 -0000

One thing that has been batted around quite a few times in this discussion is the idea of "good vs. bad". That many of us on here don't like min. wage laws because they are "bad". It almost sounds as if these laws are running around robbing people with a gun in one hand and crack pipe in the other. And we can do nothing but sit on the corner and say "Oh no, the BAD laws are coming to get us. I hope the GOOD laws will come save us."

Min. wage laws, trade barriers, unions, etc promote inefficiency. All of these things are ultimately sold to the population at large as a "benefit to society". Good vs. Bad promotes a knee jerk reaction. This type of rhetoric encourages more philosophicaly charged debate than anything else, because it morally reprehensible to be for "bad" things.

But this idea of good vs. bad is not actually a premise of economics. The issue is efficient vs. inefficient. Drs. Roberts and Boudreau (sp?) have spent a lot of time and effort to promote the idea of effective communication from economists.

To effectively communicate our point we need to abandon any premise of good vs. bad, and use better language.

Minimum wage laws promote the ineffiecent use of resources. They force a new and unnatural set of parameters onto decision makers (ie business people). The ability to contract labor at a market determined rate allows business people to do EXACTLY what they determine to be the most efficient use of their resources. On the other hand, minimum wage laws force business people to consider things like "At 3.50 an hour (approx $7,000 annually) I was going to hire three people ($21,000 annually) but min. wage laws will force me to 7.00 an hour (42,000 annually for all three employees) so I will just invest XYZ Capital imrovement and hire one worker." Instead of being allowed to make such decisions on their own business people are forced to do things that they would not normally do in a free market.

------------------------------------------

It is ironic to me that we discuss the framer's intent in discussions of Constitutionality yet we often ignore the economic climate that encourged those men to rebel against England:

1. High taxes that provided little benefit in the form of social services or defense for those that paid them.

2. Government mandated monopolies that forced above market prices onto consumers.

It seems apparent to me that the framers considered high taxes and government mandated monopolies to be in opposition to the liberty that they fought and died for.

Re: Billboard Jobs

Sam Grove — Sun, 14 Jan 2007 19:39:26 -0000

The purpose of the constitution was/is to define and constrain the federal government.

But safegaurding liberty cannot be left up to a document or to politicians and bureaucrats.

People act according to what they believe is their self-interest, either in or outside of government. It's just that people inside of government may have more power than those outside. Unless you are very wealthy.

Re: Billboard Jobs

True_Liberal — Sun, 14 Jan 2007 18:20:07 -0000

JohnDewey has some great points in his Jan 13, 2007 7:23:22 PM post.

I'll add one: "The government shall mint no currency with a face value less that its scrap value" (noting the penny and the nickel now cost more than their face values, and can be melted down at a profit...)

Re: Billboard Jobs

JohnDewey — Sun, 14 Jan 2007 16:08:11 -0000

undergroundman: "So yeah. Those beliefs are crazy"

Sorry, but I don't see anything crazy about eliminating federal government safety nets. I also don't see why governments should fund pure scientific research. As for the other three positions you criticized, I confess I haven't studied them. I certainly wouldn't call such ideas crazy just because I may disagree with them.

I don't agree with all libertarian positions. My guess is that few who call themselves libertarians would either. But just because one doesn't endorse alll of the libertarians ideas is no reason to reject their general principles.

I know several people who feel that abortion is not only crazy but also murder. That hasn't stopped them from being Democrats, presumably because they agree with more Democratic positions than with those of other parties or philosophies.

Re: Billboard Jobs

Isaac Crawford — Sun, 14 Jan 2007 14:56:07 -0000

"Of course, then we must face the fact that all of these new profits (especially in the billboard example) are being shunted straight to the rich capitalists/investors, and must recognize the fact that the welfare state will likely have to grow to allow the less-skilled workers to survive."

Umm, what do you think they do with these profits, hide them under their mattress? More profits equals more investment or consumption leading to.... more jobs! Simplified I know, but I can't imagine a downside to people making more money when it comes to them honestly.

Isaac

Re: Billboard Jobs

undergroundman — Sun, 14 Jan 2007 14:06:30 -0000

Why not let those jobs go the way of the dinosaur? I think that's the better question.

Of course, then we must face the fact that all of these new profits (especially in the billboard example) are being shunted straight to the rich capitalists/investors, and must recognize the fact that the welfare state will likely have to grow to allow the less-skilled workers to survive.

"Do you honestly feel these positions held by most libertarians represent a "mere blip"?"

No, those aren't. But the others that seem to come with orthodox libertarianism are, such as:

1) Deregulated (natural and unnatural) monopolies.

2) Zero regulation for activities which cause external harms.

3) Zero governmental safety net.

4) Zero funding for pure scientific research.

5) Zero environmental protection.

So yeah. Those beliefs are crazy. I like libertarianism, but I definitely see those problems with its mainstream platform.

Re: Billboard Jobs

Randy — Sun, 14 Jan 2007 11:39:58 -0000

Steven,

My point in emphasizing individual responsibility, private property, and contract, is that the minimum wage undermines them all. I don't see a gain to the "general welfare". I see a significant loss.

Re: Billboard Jobs

cpurick — Sun, 14 Jan 2007 11:16:40 -0000

You're just being an idiot.

"Due" is listed as a synonym for "just" at dictionary.com. If you're hung up on such semantics, then you've lost your ability to reason.

You're just as stupid as liberals (and might as well be one) if you're going to accept a minimum wage simply because "all public policies have economic effects."

Public policies *do* have economic effects, but none are more contrary to the stated goals of the policy than the minimum wage.

I'm glad you've chosen to be a statist; that is your right. Now, are you just going to accept the product of the democratic process, or are you going to demand that our representative government be intellectually honest about its policies?

The people here already know that most people are too economically ignorant to understand the minimum wage. Are you here to defend mass ignorance, or to promote education.

For a conservative, you make me quite sick.

Re: Billboard Jobs

Steven M. Warshawsky — Sun, 14 Jan 2007 09:47:40 -0000

Randy --

Of course it takes more than a constitution to make a nation work. Although according to most "libertarians," it doesn't take much more than an agglomeration of individuals "freely contracting" with one another to constitute a nation. As a conservative, I believe that a "nation" is much more than this (i.e., common language, broadly shared political and ethical frameworks, shared sense of history and culture, bonds of "brotherhood" that go beyond mere commerce, and so on).

But my point (in response to Russell) was simply that the U.S. Constitution does not enact Ayn Rand's libertarian vision. So one cannot necessarily rely on the text or history of the Constitution to support a libertarian argument. Sometimes, yes; sometimes, no.

Similarly, I'm all in favor of "individual responsibility, private property, and contract" -- but those labels alone do not provide answers to specific public policy questions. At best, they provide concepts that inform our analysis and positions. But these are not the *only* concepts and values that are relevant.

Procrustes --

I am well aware of "the role of relative prices in signalling for business decisions between capital and labour." But this concept does not answer the question whether min wage laws are necessarily bad. To answer that question requires defining, and defending, what one means by "bad" and explaining why it applies in a particular situation.

I stick to my initial comment that it is a non sequitur to conclude that min wage laws are "bad" simply because they have particular economic effects.

All public policies have economic effects. All ways of defining the "rules of the game" influence business decisions. But to get from the IS to the OUGHT, you need a set of philosophical and ethical principles that guide your analysis and judgment -- and those principles are open to debate.

Russell --

If the Constitution has any meaning, surely that meaning inheres in the

actual words used in the document (just like with any other written contract). Once you start allowing different words to be used ("due" instead of "just"), then you're no longer engaged in constitutional interpreptation -- you are merely doing philosophy. As a conservative, I cannot subscribe to this decidedly liberal and extralegal mode of interpretation.

Re: Billboard Jobs

Flash Gordon — Sun, 14 Jan 2007 09:18:21 -0000

You all need some facts on flagmen at construction sites. It used to be that the position of flagmen was a reward to the older guys who had put in many years of hard construction work. They were making pretty good change by that time and were allowed to spend their last few years as flagmen at their same wage level. It was a sweet deal for a guy who had proven himself and deserved it.

Affirmative action for women ended all that. Construction companies now fill their quota of female hires by giving them the flagman job, at a wage rate considerably higher than the minimum wage. Women get the flag jobs because there are few other jobs on a highway construction site they can do physically.

Personally, I think it sucks. A pretty young thing now gets to do the job that used to reserved as a plum reward after many years of hard work. She could do a lot of other jobs. Her horizons are unlimited, but she takes a job from a guy who earned it the hard way and has no other prospects.

This is another example of how a free market is usually more just than a market plagued by government interference.

Re: Billboard Jobs

procrustes — Sun, 14 Jan 2007 09:09:10 -0000

Umm, if I could just return to the point of Steven M W's original comment.

He asked what was the point of the post.

In doing so, he demonstrated a poor grasp of the role of relative prices in signalling for business decisions between capital and labour.

The original post was no non sequiter.

Minimum wage legislation would undoubtedly influence decisions about employing labour of different skill levels and choices between labour and capital.

New technology is only relevant to this discussion to the extent that its take up is influenced by this change in relative prices.

This billboard example is no libertarian rant and is one that I intend to use to illustrate some of my many concerns with minimum wage legislation.

Re: Billboard Jobs

Randy — Sun, 14 Jan 2007 08:45:39 -0000

Steven,

I'd say it takes more than a constitution to make a nation work. For example, what do we mean when we speak of the "general welfare"? Does the phrase override our belief in the value of individual responsibility, private property, and contract? I'd say not. In fact, I'd say the idea of a "general welfare" is meaningless without these more basic beliefs - an impossibility.

Re: Billboard Jobs

Russell Nelson — Sun, 14 Jan 2007 08:44:00 -0000

The paper, if he is arguing that due is different than just.

Re: Billboard Jobs

Leviathan — Sun, 14 Jan 2007 08:23:48 -0000

Is your allegiance to the paper or the ideas that are writ upon the paper?

Re: Billboard Jobs

Steven M. Warshawsky — Sun, 14 Jan 2007 07:53:27 -0000

Very interesting discussion.

Russell --

The Constitution (which I've read and wrote about many times) does not use the phrase "due compensation" -- it says "nor shall private property be taken for public use, without just compensation." (Fifth Amend.)

So the question is what constitutes "just" compensation? Assuming we rely on the understanding and intent of the Framers of the Fifth Amend (which I consider the most appropriate interpretive principle), I am quite confident that they did not think in such Randian terms as "individuals must be not sacrificed for the group." Such radical individualism would be wholly foreign to their way of thinking, and way of life.

The Constitution most definitely is not a libertarian document. See, e.g., Art. I, sec. 8: "Congress shall have the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States. . . . To raise and support armies. . . . To make all laws which shall be necessary and proper for carrying into execution the foregoing powers." Etc.

While a libertarian perspective can (and should) inform the choices we make in these various areas, the Constitution does not enact Ayn Rand's objectivist philosophy, anymore than it enacts "Mr. Herbert Spencer's social statics." (Justice Holmes in Lochner v. New York)

As a conservative, my primary political and philosophical allegiance is -- must be -- to the Constitution, not to free market economic theory.