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Friday, February 22, 2013

Unintended Consequence of the Minimum Wage?

"Ironically, the minimum wage creates a reserve army of the unemployed. That in turn allows employers to be less thoughtful, helpful, and kind. It destroys the civilizing effect of competition by muting it. That encourages exploitation. It reduces the cost to employers of racism or cruelty. Before the increase, being obnoxious or racist made it much harder to find employees. A minimum wage makes it easier to indulge in bad behavior. The costs are lower. Before the minimum wage, a cruel, selfish employer might have had to mentor his employees or train them or be nice to them despite his nature. Now he won’t have to. He can still get workers to work for him. Even more cruelly, the minimum wage encourages workers to exploit themselves. They work harder and put up with more abuse from the boss because the minimum wage reduces the alternatives that are available." --Russ Roberts

9 comments:

Daniel said...

I think Murray Rothbard framed the problem of the minimum wage best: "In truth, there is only one way to regard a minimum-wage law: it is compulsory unemployment, period...Remember that the minimum-wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result."

JOR said...

Maybe not so unintended.

shemsky said...

Right on, JOR. Better to have lots of people drawing welfare benefits then to have them working for their daily needs. That way they'll be sure to submit to the state when they are called on to do so.

Sheldon Richman said...

JOR, that's why I added the question mark. I'm sure for some, that effect is not unintended.

Daniel said...

Shemsky: I hope you realize that the intentional maintenance of the reserve army of labor created by the minimum wage serves the interests of both the state and monopoly capital. It's not only about submitting to the state, it's about submitting to the demands of those who own the means of production who, through the labor market, force others to meet their demands.

Monopoly capital and corporate capitalists benefit just as much as the state from compulsory unemployment. Their interests are inextricable.

shemsky said...

Of course I agree with you, Daniel.

JOR said...

Sheldon: You're right of course, and I see you linked to an article I was thinking of in your TGIF article.

Daniel: I agree, to the point of suspecting it's a mistake to think of them as separate things. Elite capitalists are a branch of the state, and the state is just another private institution.

Daniel said...

JOR: While I would agree that the state and capitalist privilege are inseparable, I would not conflate the two or even necessarily describe the state as "private." It would be just as accurate, after all, to describe the state as a branch - or at least an instrument - of capital. There has never been a strict separation of "private" and "public" sectors, which is the central error of most anarcho-capitalists (but not necessarily all market anarchists), i.e. the belief that there can be either without the other.

JOR said...

I'd be perfectly fine with describing the state as a branch or instrument of capital. Of course it's a mistake to think it's all One Big Monolith. It's not, much as many of the big players would like it to be. But there are at least many competing interests within both "government" and "capital" as between them. The division of "capital" and "government" are even less meaningful than the division of "left" from "right". Understanding is better served by attention to the particulars of various conflicts of interests within the ruling class.

I would describe the state as private, simply because all interests are inescapably private. A government is only public in the same way that any corporation is public.