Obama Mis-Represents Adam Smith On The Minimum Wage

See Barack Obama, Adam Smith, and the Minimum Wage by Timothy Taylor of "The Conversable Economist." Taylor is managing editor of the Journal of Economic Perspectives. Excerpt:

"In a speech earlier this week on economic mobility, President Barack Obama quoted Adam Smith in support of a higher minimum wage. Given that minimum wage laws were not a hot topic in 1776 when The Wealth of Nations was published, I went looking for context.

Here's the comment from the transcript of President Obama's speech:

[I]t’s well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office. (Applause) This shouldn’t be an ideological question. It was Adam Smith, the father of free-market economics, who once said, “They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.” And for those of you who don’t speak old-English -- (laughter) -- let me translate. It means if you work hard, you should make a decent living.

The quotation appears in Book I, Chapter 8, of The Wealth of Nations. I quote here from the ever-useful version of the book at the Library of Economics and Liberty website. At no point in the chapter is Smith considering the advantages of a minimum wage; however, he points out that in the politics of the time, there were occasionally political proposals to hold wages lower. He argues that the real standard of living for common workers--that is, what a common worker can afford to buy--has been rising, in large part due to technological improvements. Obama's proffered quotation comes up when Smith is explaining that this increase in real wages over time should not be viewed as a cause for concern."

Taylor goes into alot more detail. He finishes with

"There is always an embarrassingly high risk of anachronism when applying eighteenth-century writing to modern policy arguments. After all, Adam Smith was writing before the start of the Industrial Revolution and the two centuries of transformative economic growth that have followed, and he was writing before the development of arguments about how wages are linked to the marginal productivity of labor. But frankly, it is ridiculous to cite Adam Smith in support of minimum wage legislation"