14 Comments

I wish I had such excellent writing at my disposal back when I had to debate Con on minimum wage in middle school debate

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lmaooooo

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"Ultimately, the minimum wage serves as a transfer payment from low productivity workers to high productivity ones." -Wait, as a high productivity worker should I advocate for a high minimum wage?

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Of course, that's what the minimum wage was invented for in the first place, to prevent competition from lower priced workers, especially minorities and the poor.

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Do you believe this is why it was instituted in the US, though?

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Yes. It was primarily for higher-paid workers to prevent job losses to lower-wage blacks (and other "inferiors") who competed with them for work on price.

Sowell on the historical effect in the U.S.: https://www.aei.org/carpe-diem/thomas-sowell-on-the-differential-impact-of-the-minimum-wage/

It's interesting is that black employment rates in the U.S. were actually better than those of whites prior to the minimum wage.

Some relevant quotes:

"It is much better to enact a minimum-wage law even if it deprives these unfortunates of work. Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind." – Royal Meeker, Princeton scholar and labor commissioner to Woodrow Wilson, as quoted in Political Science Quarterly, Vol. 25

"If the inefficient entrepreneurs would be eliminated [by minimum wages,] so would the ineffective workers. I am not disposed to waste much sympathy upon either class. The elimination of the inefficient is in line with our traditional emphasis on free competition, and also with the spirit and trend of modern social economics. There is no panacea that can ‘save’ the incompetents except at the expense of the normal people. They are a burden on society and on the producers wherever they are." – A.B. Wolfe, American Economic Review, 1917

Henry Rogers Seager, a leading progressive economist from Columbia University, argued that worthy workers deserve protection from the “competition of the casual worker and the drifter.”

"The operation of the minimum wage requirement would merely extend the definition of defectives to embrace all individuals, who even after having received special training, remain incapable of adequate self-support…..If we are to maintain a race that is to be made up of capable, efficient and independent individuals and family groups we must courageously cut off lines of heredity that have been proved to be undesirable by isolation or sterilization . . . ." – Henry Rogers Seager, Columbia University scholar and future American Economic Association president, in 1913 (quoted from “Eugenics and Economics in the Progressive Era”)

“[Wage] competition has no respect for the superior races,” said University of Wisconsin economist John R. Commons in his 1907 book Races and Immigrants ( p. 151). “The race with lowest necessities displaces others.”

"[The minimum wage will] protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese." – Arthur Holcombe of Harvard University, a member of the Massachusetts Minimum Wage Commission, speaking approvingly of Australia’s minimum wage legislation in 1912 (quoted from “Eugenics and Economics in the Progressive Era”)

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Does anyone know why this paper hasn't been accepted for publication? I would like to be able to cite it

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Don't really know the situation but according to his website it's under revise and resubmit with the American Economic Review. http://john-joseph-horton.com/research/

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This was well written and very well explained sir maxwell

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But seriously this is an exceptional post. Great job! I do have a question though. What do you think about the use of econometric methods in economics? Should economics really more on casual historical evidence or sophisticated statistical methods?

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We should use the best tools we have available. Most of the time this means that econometrics is our best tool which is ok , I think econometrics is cool. When we have real experiments though we should defer to those.

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BuT tHe LaBoR MaRkEt iS a MoNoPsOnY

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Sometimes common sense really is the way to go. The supposed "consensus" that minimum wage hikes have zero (or even positive!) effects on workers is one of those "too good to be true"-type deals

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