Monday, August 8, 2016

Is it ethical for the state to forcibly price out of jobs some workers in order to artificially boost the incomes of other workers?

Social Engineering Is No Less Cruel When Dressed in 21st-century Pieties Than It Was When Dressed in 20th-century Pieties by Don Boudreaux.
"Here’s a letter to the New York Times:
Unlike most minimum-wage proponents, Robert Gordon admirably admits that raising the minimum wage will destroy jobs for some workers (“Can Clinton or Trump Recapture Robust Economic Growth?” August 8).  Nevertheless, he supports a minimum-wage hike because “the wage boost to those who retain their low-income jobs substantially exceeds the extent of any resulting job losses.”
Let’s not quibble about the impossibility of quantitatively comparing a rise in some workers’ incomes to increased joblessness.  (By how much does Jones’s income have to rise in order to “substantially exceed” Smith’s resulting inability to find employment?)  Instead ask: is it ethical for the state to forcibly price out of jobs some workers (who, not incidentally, will be the least-skilled and most-disadvantaged workers amongst us) in order to artificially boost the incomes of other workers?
Prof. Gordon obviously believes that the answer is ‘yes.’  This answer makes him an early 21st-century version of early 20th-century Progressives who, as documented by Princeton economist Thomas Leonard in Illiberal Reformers (2016),* endorsed (in addition to eugenics) minimum wages to price “inferior” workers out of jobs in order to prevent these mostly swarthy workers from dragging down the incomes of their pearly skinned ‘betters.’
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030
* Thomas C. Leonard, Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era (Princeton: Princeton University Press, 2016).

Gordon is like the “Progressives” of a century ago also in that he mistakes statistics for flesh-and-blood people.  Gordon’s stated reason here for supporting a hike in the minimum wage is that it will reduce income inequality.  And so it might (at least statistically measurable income inequality).  Gordon supports a hike in the minimum wage even though he recognizes that it will necessarily (and not just frictionally) destroy some jobs.  Sigh.  It’s distressing to realize how readily the typical academic advocates policies that sacrifice the well-being of real but anonymous people in order to achieve prettier statistics."

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