The problem with the argument is that their basic claim, at bottom of all of it, is, "Governments cannot make economic policy because it's immoral for them to do so. Any economic outcome produced by a government action is incorrect; any economic outcome produced by a 'free market' (and no, I can't point to a completely free market, it's a spectrum) is right. Thus, all positive aspects of actually-existing economies are thanks to the free market, and all negative aspects I can blame on the government."
It's a completely typical example of utopian-totalitarian argumentation. We always apparently need one less marginal unit of government action, no matter how much we actually have at the moment, at least until real life looks like a Neal Stephenson novel.
For a last point, if we really want to evaluate laissez-faire versus social democracy without resorting to moralization, we can. We simply have to agree on what desirable versus undesirable outcomes look like ahead of time, and then look at the various natural experiments (or even near-controlled experiments, as when Canada or Australia do one thing and the USA does another). We can argue about the quality of the experiments, but in the end, results will out.
You still aren't criticizing the argument. You're criticizing the motivations of the people who wrote it. Even if you're correct, even if the people who wrote it are against government action in every form (and they aren't, by the way!), the fact remains that I find their criticism of this particular government intervention persuasive.
I find the argument persuasive. I'm absolutely not kidding about that. If you demonstrate the argument is invalid, you will change my mind. But since it's the argument, not the authors I find persuasive, it doesn't particularly matter why they believe it. I happen to think they're honest, but who knows? Maybe they're crazy or demon-possessed. I don't know. All I know is, what they said makes sense to me.
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The argument, in a nutshell, is that minimum wage increases unemployment because some people are less productive than that. Some people are only making $8/hr worth of stuff, so requiring that they paid $9/hr is tantamount to making it illegal for them to work. Hence, unemployment.
The data shows that there is a correlation between the minimum wage level and unemployment among lower-educated workers. That doesn't prove that the theory is correct, but it supports it pretty well.
Those are the things you have to criticize if you want to change my mind (or persuade the folks reading along).
You still aren't criticizing the argument. You're criticizing the motivations of the people who wrote it.
Yes, I am. The flaw in the argument is a basic type-error: Type MORAL does not match type FACTUAL. You cannot use a moral claim (government is evil, taxation is theft, minimum wage is interference in free contract) to justify a factual claim (minimum wage increases unemployment).
The data shows that there is a correlation between the minimum wage level and unemployment among lower-educated workers. That doesn't prove that the theory is correct, but it supports it pretty well.
First of all, which data? Second, most major studies have found that minimum wage has little to no relation to total unemployment, particularly not once we factor out cyclical trends. Unemployment is mainly governed by the cyclical and structural trends of the economy as a whole.
Now, at the margin, does the minimum wage disemploy some people? Probably, same as the 40-hour work-week does. However, I've got two counterarguments here:
A) Any wage below a living wage (enough for the worker to support themselves on the wage alone, not necessarily anyone else) is either slowly murdering the employee (who cares, we're not moralizing, right?) or taking an implicit subsidy in the form of government top-ups to that employee's income (what actually happens). This leads right into:
B) The wage-level that a given business can support at a given level of worker skills is determined by many different variables about capital investment. For example, today's roboticized factories have a very hard time employing low-skilled and mid-skilled labor, while yesteryear's assembly lines had an easy time of it. At the very bottom, you need some capital-intensivity to support anything about subsistence farming, but there's loads of what are basically "user interface issues" determining how much capital-intensivity you can support for how little user skill. This is something us technologists can Work On.
This leads to related point:
C) Implicit subsidies for the kind of capital-unintensive, unproductive, sub-poverty-wage work being done in sectors like retail distort the market, both by suppressing the natural organization of labor (collective bargaining was the original response to sub-poverty wages when there was no minimum wage) and by padding the profit margins of businesses that use labor to substitute for capital investment (ie: in a market without income top-offs, I believe Amazon would more quickly eat Wal-Mart's lunch, precisely because it has automated away more of the retail process).
D) Many companies pay more than $9 or $10 per-hour for low-skilled labor while their competitors pay less, so what's stopping everyone from doing so?
So the total conclusion is that while the minimum wage should theoretically have some disemploying effect, and some studies have found a weak relationship when zooming in on the lowest-skill workers, these effects appear to largely "wash out" of the economy as a whole due to other factors that affect things more strongly: overall demand, overall demand for labor, labor organization, ordinary business cycles and capital-intensivity at set skill levels.
Which I did. You saw what I said: the theoretical - and, in practice, relatively small - disemploying effects of a minimum wage wash out against all the other variables affecting employment.
The flaw in the argument is a basic type-error: Type MORAL does not match type FACTUAL.
I . . . think you must be thinking of someone else. I didn't make a moral argument. (Well, okay, I've made lots of moral arguments, but I haven't made a moral argument with you, in this thread. Yet. At the very least, the argument we're supposedly discussing isn't a moral one.)
First of all, which data?
The data we're supposedly talking about. My second link, like five posts ago. The one you criticized for having the word "Liberty" in the URL. ;)
Now, at the margin, does the minimum wage disemploy some people? Probably
Oh, so we actually agree. That's actually what I think, too: minimum-wage increases measurably increase unemployment among low-skilled people, but in the economy as a whole, the effect is lost in the underflow. I suspect it's still there, but . . . you're right, lots of variables.
Sorry for simplifying. I didn't mean to be misleading.
The reason I care about that particular unemployment effect is that minimum wage is supposed to help the people at the bottom. But if it causes unemployment for them, then I don't think it's really helping them. In fact, it's probably hurting some of them a lot. The fact that it doesn't affect the rest of the economy that much either way . . . I don't really care about that.
So, if we agree about that, you think we should have a minimum wage anyway because . . .
A) Any wage below a living wage is either slowly murdering the employee or taking an implicit subsidy
I disagree. Not every job is permanent, and not every job-seeker is independent. Some people don't need a living wage: teenagers, retirees, spouses, students. Some jobs aren't for income, but for reputation, experience, or skill-building. Some jobs are side jobs: supplemental income.
Low-paying jobs shouldn't be permanent, and they generally aren't. People move on (or get raises/promotions) as soon as they can do better.
And anyway, how is destroying the job a reasonable response? The person who took it clearly thinks it's his best option.
B) The wage-level that a given business can support at a given level of worker skills is determined by many different variables
Sure. I definitely agree with that. I don't see why you think it's a reason the minimum wage is a good idea, though.
Implicit subsidies for [low-skilled manual labor] distort the market, both by suppressing the natural organization of labor and by padding the profit margins of businesses that use labor to substitute for capital investment
I . . . can't really make sense if that sentence. I'm serious, I've been trying for like five minutes.
At a best guess, I think you're trying to say that eliminating low-skilled manual labor would force those sectors to replace the work with automation, which would make the world a better place for everyone. Maybe? I have no idea what you're saying about subsidies and unions, or how that ties in.
Regardless, that doesn't sound like a good idea to me. The minimum wage destroys jobs indiscriminately, and some things are easier to automate than others. Some businesses would adjust. Others would disappear.
And anyway, I think if your goal is to automate things, there are better ways. If you want the government to invest in infrastructure, for example, you won't get much argument from me. Or maybe start a business yourself and do it better? Surely there's a better way than hurting the poorest people in society.
