Over at CatoUnbound, Dan Klein writes:
In 2006 there appeared a “raise the minimum wage” statement signed by 659 economists. I wanted to know why they favored the minimum wage, so I wrote up a questionnaire and sent it to them. But I also used the occasion to get their views on a very important matter: Did they view the minimum wage law as coercive?
Ninety-five graciously completed the survey. Very few of them simply accepted that the minimum wage law is coercive. More than half said the law is not coercive in any significant sense.[1]
But the minimum wage law (and concomitant enforcement) threatens the initiation of physical aggression against employers who pay less than the minimum wage. It threatens physical aggression against people for engaging in certain kinds of voluntary exchange. To me, that is coercion. Just imagine if your neighbor decided that he would impose a minimum wage law on us. Wouldn’t we all agree that he was coercing us? If it is coercion when he does it, why isn’t it coercion when the government does it?
Coercion is not always bad, all things considered, but surely Dan is correct. Ed Glaeser, Richard Epstein, and others are due to respond.
all laws are coercive.
Boy you are really scraping the bottom of the barrel.
This argument confuses legislation with enforcement. As a thought experiment, imagine that the state had the technical means at its disposal to produce “smart currency” that could prevent itself from being used in unlawful economic transactions, and as a result, it was not possible to pay an employee less than the minimum wage, at least not using currency. If the threat of armed force is removed from the equation, is the minimum wage still coercive? And if so, is the threat of force being directed against violation of the minimum wage, or simply against rebellion?
Next Up: Why the Clean Air Act should be repealed because its acronym doesn’t spell anything, and why the Endangered Species Act should be repealed based upon poor font choices by the printer.
http://maxspeak.org/mt/archives/002672.html
–this seemed like an appropriate response at the time.
I think minimum wage laws are coercive not because of the effect they have on employers, but of the effect they have on employees. The minimum wage says that a worker may not accept less compensation for doing a job than the government decrees. To use Thelonious’s example, food purity laws say that you may not sell rotten food. Would you call them coercive if they said you could not eat rotten food, even if you were starving? Laws are not coercive if they merely prevent one party from hurting the other. But when they prevent people from helping themselves even when it’s not at the expense of someone else, yeah, that’s coercive.
I think minimum wage laws are coercive not because of the effect they have on employers, but of the effect they have on employees. The minimum wage says that a worker may not accept less compensation for doing a job than the government decrees.
Yep, and real-world examples aren’t hard to come by. The Coyote Blog had a classic case:
http://www.coyoteblog.com/coyote_blog/2005/03/case_studies_on.html
But there are plenty of others, mainly involving those who are not providing most of their own support with their earned income (retirees, teenagers, ‘non-working’ spouses). Many of these people would like to accept low wages in exchange for other benefits (congenial working conditions, slow pace, convenient hours, the opportunity to develop new skills, the opportunity to support a worthy cause, and so on). These people can now work for $0/hour (as volunteers) but may not accept $4/hour as a way doing something pleasant and useful while earning some pocket change.
Preventing these people from taking these kinds of jobs is obviously coercive. A minimum wage supporter might claim that the benefits outweigh these harms, but not that the harms don’t exist.
There are no sound economic arguments for the minimum wage. However, people in support of the minimum wage base their arguments on views different in nature. I believe this to be true even of the answers given by economists in the survey published in the journal of libertarian studies (?) recently; the claims they made in support of their stance were not economic in nature and carried no such weight.
Having said that, I’m not going to defend the view that economic reasons are the only arguments important to the question of the minimun wage. I would, however, demand also some minimum level of intellectual honesty.
Okay: minimum wage laws are coercive, as are the laws preventing me from betting on sports games, and those prohibiting me from buying drugs from my local drug dealer, and those prohibiting a 17-year-old from buying alcohol.
So what, exactly, has been gained from this admission? More important, what is surprising about it?
The following was inspired by Gabriel Mihalache, and there is a good amount of stealing of his words and ideas here.
Imagine two worlds, one where the government controls all economic activity, and one which is minarchist paradise where the only laws are for enforcing commons problems, such as against predators.
Now also imagine that both of these worlds somehow managed to yield the exact same GDP in the exact same distribution. Which one would you prefer to live in? How much would you be willing to pay to live in that world?
How about a world where there is no “illegal crime”, and the only crime is committed by the highest bidders getting vouchers with the right to murder, rape, assault, steal etc. from/to anyone they want, and where a limited number of citizens can bid to buy protection from these vouchers? How much would you be willing to pay to be free from such licensees, or to have your child safe from pedophiles?
I bet in the latter twisted world everyone except some mixed up masochists would be willing to pay huge somes for freedom from predation. Why then does economics as normally taught then assign a price of zero for when government uses its coercive power to fund things beyond a minarchist minimum? Or to prevent consenting adults from engaging in free association? Or prevent adults from the “crime” of making different risk/reward choices than the nanny state thinks is wise, such as smoking pot or doing heroin, and enacts a penalty of rape (i.e. prison time in our horrific prison system) for those who prefer to choose for themselves despite this coercion?
It seems to me that by revealed preference the vast majority of people are willing to pay a lot for an increase in safety from involuntary theft and rape. For example, we buy locks for their doors (indeed they come standard) to their homes and cars, some buy alarm systems, most people who can afford to simply refuse to live in a high crime neighborhood and pay a large premium to do so (when I moved to LA from the Boston area I saw in want ads $200 per month for an apartment, naturally it was in a very dangerous neighborhood in LA. I passed and paid multiples more, as do most people who can).
With the high price we are willing to pay via revealed preference for liberty from needless coercion, we ought to mentally subtract a huge amount from the benefits from non-minarchist government spending and regulations. Only after factoring in the huge negative price for restricting our liberty can we properly assess whether “luxery” government spending and regulation are better than the minarchist alternative.
To make a long story short (I know, too late) liberty has a substantial value and the lack of that same liberty has a substantial cost. We ought not to fall into the trap of assigning it a price of zero.
Slocum, I like your case study. I have another one.
There is an organization called ACORN that fights for higher minimum wages. For other people. However, in their lawsuit “ACORN vs DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT” in 1995, they sought to have themselves exempted from the minimum wage.
From their court papers:
“… this adverse impact will be manifested in two ways: first, ACORN will be forced to hire fewer workers; second, its workers, if paid the minimum wage, will be less empathetic with ACORN’s low and moderate income constituency and will therefore be less effective advocates.”
This is the lexis/nexis link:
http://web.lexis-nexis.com/universe/document?_m=138d9cfceb9dddb6cc7f8200f2ea1cee&_docnum=3&wchp=dGLbVtz-zSkVb&_md5=70370836edbe9916e9e891e1728a2412
-dk
Freedom of speech and freedom of religion are coercive.
Discuss.
Everything is coercive. Everything. Whether you believe that the coercion is unwarranted is a matter of degree and perspective.
“So what, exactly, has been gained from this admission? More important, what is surprising about it?”
I agree, nothing is gained by the admission. What’s interesting or surprising, however, is that the economist signers wouldn’t simply concede this point.
Where’s the dishonesty in refusing a loaded question? Minimum wage laws are coercive because of the syllogism, “All laws are coercive; the minimum wage law is a law; therefore the minimum wage law is coercive.” So what’s the point of making the specific statement without that context?
Suppose you received a survey asking if you thought that many African-Americans are dishonest. Now, it would be reasonable to think that many people of all races are dishonest, and that African-Americans are probably dishonest at about the same rate, so yeah, that statement is probably true. Would you just check off “Yes” next to the question? Wouldn’t you wonder what the survey author intends to do with that answer?
Yes it’s coercive, but coercion is not limited to the law.
My employer requires that I follow instructions from my manager or I can be fired. Is that also coercive? Yes.
A better letter to those economists would have been to see if they’d take a bet that the black youth (18-25) unemployment rate would be lower (than the current 25%) after the minimum wage is increased.
Bets are a much better way of seeing if people truly believe something than statements.
Where’s the dishonesty in refusing a loaded question?
There wouldn’t be any. And that would be a good point if that’s what the economists did. But it’s not. They did NOT “refuse” the question, but gave an answer which does not seem to mesh with reality. It is dishonest to give an answer (i.e., “not coercive”) with which you disagree (if they in fact do disagree) even if you don’t agree with the setup of the question.
There is an organization called ACORN that fights for higher minimum wages. For other people. However, in their lawsuit “ACORN vs DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT” in 1995, they sought to have themselves exempted from the minimum wage.
Yes, I remember that now that you mention it, and their arguments against being subject to the minimum wage are sound arguments — and not only for ACORN.
BTW, Is anyone else sick and tired of having these blog debates about the min. wage every six months? Here we go round and round debating the efficacy and ethics of a policy tool whose effects are probably benign in the long run. The kind of political momentum necessary for enacting a substantial federal increase in the min wage is doubtful to ever come about. However, no matter how foolish, the left liberals dogmatically argue that there is no evidence of min wage increases actually causing employment losses. To them the lack of evidence of labor displacement in light of slight increases in the min wage is tantamount to a wholesale endorsement of a 15 dollar an hour living wage. Then the libertarians come swarming in arguing as though an enormous min wage increase in imminent and doing everything in their power to refute the idea that such a living wage could ever work. When in reality we will probably never get the kind of min wage increases that will create the kind of labor displacement that the models predict.
John Pertz,
I’d argue that the big unemployment jump from artificia minimum wages comes during and following recessions. During a healthy economy the government passes a minimum wage that can mostly be absorbed resulting in an effect extremely hard to seperate from noise.
But when the economy contracts and workers lose their jobs due to lessened demand from the recession and its aftermath, there are fewer jobs available that clear at the new higher minimum wage.
As it happens this is also when the poverty rate skyrockets cyclically, followed by a long slow decline in the poverty rate as the economy picks up and more and more businesses finally have enough demand to justify hiring minimum wage employees. In the meantime though there is a nasty deadweight loss where the poorest of the poor are needlessly unemployed thanks to the minimum wage.
If true, this isn’t benign.
Mike Huben, do you believe the owner of the mall and government are equivalent? If not, what differences do you see in their right to control their territories?
“My company is requiring all its employees to quit smoking by July or be fired.”
How far do you have to move to find another job? how far do you have to move to avoid paying taxes without going to jail?
Also: “If you don’t give me what I like, I won’t give you what you want” is certainly pressure, but it is not equivalent to: “If you don’t do what I like, I’ll kidnap you and take it.” Or even “If you don’t do it the way I like, you can’t do it at all (or I’ll kidnap you)”
Can you really not see the difference?
co·erce(k-ûrs)
tr.v. co·erced, co·erc·ing, co·erc·es
1. To force to act or think in a certain way by use of pressure, threats, or intimidation; compel.
2. To dominate, restrain, or control forcibly
3. To bring about by force or threat: efforts to coerce agreement.
——————————————————————————–
Of course in politics it is used in the narrower sense of use or threat of physical force.
“I don’t have to move. I can vote the taxes down. At my job, I don’t get a vote.”
Hahaha!
You seriously believe you have more control over taxes than over your employer? Have you never bargained for wages or influenced work environment? Have you never negotiated vacations or work hours? Have you never had to choose between job offers?
And you believe you can actually just vote taxes down!
Lets just put it this way: if your boss really pissed you off, could you key his car or slash his tyres? Could you do the same to pres. Bush?
“This is ridiculous. Note first that the respondents said the minimum wage is not coercive in any significant sense.”
I agree partly. In the aggregate it affects people so little that the level of coercion is insignificant. However individually, those affected, while a small %, are royally screwed. So it is marginally coercive!
(unless of course you believe that rights are indivisible, as in “prohibiting nazi free speech is not coercive in a significant sense”)
The liberty maxim holds ninety-something percent of the time, and it makes sense to use it as an analytic distinction and engine of criticism, and to develop theoretical categories in light of the possible exceptions to the maxim.
this is pretty terrible, all things considered
The minimum wage doesn’t exist. Money is just pieces of paper (or bits in computer memory, nowadays), that are an abstract representation of the exchange of goods and services in the market. Money is simply an intellectual tool that lets us do things with goods and services that we wouldn’t be able to do otherwise (for example, how would the government tax a barber if the government didn’t need haircuts… how could the barber get a morgage if the bank wasn’t interested in haircuts… how does a farmer who grows perishable goods make a living if they can’t barter with their goods year round?)
Since the value of the worker’s labor has not increased, the worker is not going to be able to demand any more goods and services than before. Or, the worker will simply be required to do more per-hour labor (They will now be required to flip 200 burgers per hour instead of 150 burgers per hour for their new increased wage). But the fundamental economic relationship has not been changed – such a thing can’t happen simply by making a law.
What is intellectually dishonest of these economists is their assertion that the government can fundamentally change the value of labor, simply by creating a money-quota system.
Geez, why doesn’t the government just make the minimum wage to be a million-trillion dollars a second, and then we can all retire in luxury? If we are going to assign imaginary god-like abilities to the government, why settle for a lousy extra $.50 an hour?
“It is more sensible to play the lotto than to vote.”
When votes are aggregated, then they can and do matter. So, if you organize yourselves with like-minded individuals and vote in blocs, then it is very sensible to vote.
But, given that you are probably a libertarian, I hope you don’t vote. Be “rational!” There is nothing I would like more than if libertarians realized how “irrational” voting is and just stopped doing it.
Viscus, getting other people to vote and voting yourself are not the same thing. The difference in totals between the top-two candidates in a high-turnout election is pretty much always going to be higher than the marginal amount of votes a normal person (you, for example) will be able to alter the election by, even if you inspire a “bloc” to vote. Even if there was such a large enough bloc, only the individual who can be credited with shifting that number of votes might be considered rational, the other members of the bloc itself can be safely labeled sheep whose actions individually made no difference and would have been better off doing something more worthwhile, like taking a nap. Given your past behavior I cannot be sure you actually read the Slate piece, and if you have not I expect this to be about as worthwhile as talking to a wall. If you have not done so, read what is being discussed and remember to do so in the future as well.
Maybe you should ask if a maximum wage law would be coercive?
“The difference is that with the government, there are avenues to influencing it. Voting, volunteering, contributing, marching. With employers, we only get whatever they choose to give us.”
No the difference is that within the market you can associate with whomever you chose. If you want total autonomy in your profession then I suggest you become an entrepenuer and go find unexploited profit oppurtunities. However, to argue that workers should be able to dictate what goes on at a business is worthless. People who argue along these lines usually assume that the firm in question has spectacular market power and is extremely profitable. However, the reality is that all firms operating within a competitive industry face intense pressure to survive. One wrong move could spell serious trouble at any moment. Therefore because owners have assumed so much risk in trying to do something profitable they have every right to dictate the terms of employment. However, this reality does not mean that the government provides more freedom than the market for laborers. Laborers are free to associate with whomever they wish and are also free to pool capital with others and try their hand in the marketplace at any time. However, when it comes to government voters are literally forced to make a choice. Its not like choosing a new profession or buying a hamburger, where if you do not like the available options you have the ability to walk away.
Yes, I believe that minimum wage laws are coercive. We, as citizens and employees, have no choice but to accept the laws of minimum wage. Everything is coercive; it is just simply a force that we don’t like. Employees do not have the choice to accept the minimum wage laws if the employer chooses to use them. The employer may offer more then minimum wage and in doing so the employee is not “forced† to accept the low paying minimum wage. I agree with the article in saying, Coercion is not always a bad thing.† With people being forced to follow the laws the world has a more chance of “equal†; same goes with all the other laws we are required to follow.
I think the blockquotes have been left on, I’ll see if this turns them off.
If you will force anybody to do something for you then you should always be prepared to get it done back to you.
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