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Samizdata quote of the day Why does Barack Obama hate black people?
Don’t get me wrong…I love the minimum wage, because I’m white. My daughter is white, and also has established plenty of work experience. She was offered jobs at more than 40K per year at the age of 20. Minimum wage legislation will ensure that we’re the last to be laid off. We got skills!!!
But does Barack Obama really hate black people? Or is he just not very smart?
– The Whited Sepulchre
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Minimum (or should that be the plural ‘minima’?) wages SOUND as though you care about wage-earners. Those who benefit are grateful, and those who are fired, or never employed to begin with because of low skills and wage costs, either don’t vote, or are too small in numbers to worry about. The Democratic party is really about masses, not minorities, so this devil’s bargain is to their liking.
We had a similar episode in Australia a while back- some kids working after school were not working long enough, and not getting enough pay, according to some minimum standards set by unions and enforced by the federal government. The kids lost their jobs, and the unions were happy, and the minister who’d stood up to these enterpreneurs to help the unions eventually became our current Prime Minister, Julia Gillard. I’m not sure what the lesson is- maybe one of those kids will later destroy all unions. We can hope.
But does Barack Obama really hate black people? Or is he just not very smart?
Not necessarily either one, though the last is certainly a possibility.
Barack Obama is a politician and so Barack Obama cares only about what benefits Barack Obama’ career.
And if minimum wage laws are perceived as being A Good Thing by a critical mass of economically unsophisticated people (i.e. most people), and thus supporting them provides a political advantage to Barack Obama… then that is the most likely reason he supports such laws. He does not ‘hate’ black people or poor people generally, he just wants their votes and as there is nothing whatsoever that he could do to lose the Black vote, he has zero reason to care if his policies actually hurt them as they will vote for him regardless. They are already in the bag no matter what.
This is the same reason Republican after Republican supports vastly expansionary statist policies even though much of the Republican grass roots wants less, not more… they will always vote Republican regardless so, to put it bluntly, the likes of George Bush or John McCain or Mitt Romney say “fuck ’em” and support bail outs and ‘Americans with Disabilities’ or RomneyCare knowing the same people would rather eat their own heads than vote for anyone else. So yeah, fuck ’em, why care what they actually want or what the real consequences of the policy are?
The only reality that matters to the vast majority of politicians anywhere in the world is political reality.
I agree with Perry’s observation, with one caveat: Obama isn’t running for anything any more, and so doesn’t personally care about anyone’s vote. He does, however, care about votes for those who will help advance his agenda (Democratic Senators and Congressmen), which is probably the principal reason for his support of increasing the minimum wage.
Obama isn’t the world-class genius the media would have you believe, but he isn’t stupid. And although his understanding of economics is abysmal I very much doubt that he doesn’t know that increasing the minimum wage harms those on the lowest rungs of the economic ladder. But those are the very people who are even more economically illiterate than he is, and who probably think it’s good for them even though they can’t find a job. The benefits of government schools.
I doubt very much that Obama thinks increasing the minimum wage is bad for the poor. In the first place it’s good for everyone who gets higher pay than he otherwise would have done. It’s only bad for those who meet both of two necessary conditions :
1) they are unemployed and wouldn’t be if there was no minimum wage
2) they would be happier being employed in a job earning less than the minimum wage than they are when they are unemployed
I’m sure there are some of these, but I doubt there are many. Of course if there was no welfare then pretty much everyone without a job would be happier with one, even at very low wages. But with welfare, not so much.
I do not wish to blaggard the poor as universally workshy. I’m sure that lots of people who are unemployed as a result of the minimum wage who would be happy to work – but only if employers offered them nicer jobs at better pay than employers are currently willing to offer. No doubt this problem could be solved by offering subsidies to employers to bridge the difference between the employer’s valuation of a low productivity potential employee, and the potential employee’s own valuation.
If it be asked “where is the money to come from ?” let it be noted that the federal government seems to have no difficulty in spending $1 trillion a year beyond its income. If one trillion, why not two ?
In keeping with my 70 mile banana theorum posited elsewhere, I’ll ask the following question:
Instantly everyone would be rich and the world turned to chocolate sunshine, no?
Even quite intelligent people find it hard to grasp the idea that a minimum wage hurts the poor. They just see that the low paid in a job get a pay rise and imagine that there is no effect on the job market. I’ve had the argument so many times I am used to the eyes glazing over as they switch from logic to emotion.
There’s even been empirical studies seeking to prove that the minimum wage has no effect on employment. The methodological difficulties with these studies are of course immense. Nevertheless they are often used by proponents of the minimum wage (“studies have shown….”). But it beggars belief that anybody would deny the basic proposition that you can’t pay somebody more than they are worth to you. If you don’t accept this then you may as well give up rational thought altogether.
I think a lot of this comes from the leftist fantasy that business owners are all evil capitalists, guffawing as they chomp on a cigar in one hand, with a glass of working class babies blood in the other. They assume that they have loads of extra cash lying around, and that they can afford any forced redistribution mandated in the name of fairness.
In the real world businesses (especially small businesses) run with very small margins.
Imagine I employ 15 people at $7.50 an hour, and after costs I am making $20 an hour profit for the whole business. Obama comes along and orders me to pay my workers $9 an hour instead, without increasing my profits in any way.
In order to return to that level of profitability (which requires a wage bill approximately of $112) I’m going to have to lay off 3 workers, and try and get 20% more work out of those who are left behind. If I do nothing my business will immediately start losing $2.50 an hour. Businesses cannot run with a 0% profit margin, which is another thing Neo-Marxists don’t get. They think the ideal is a business that meets its costs and no more, which of course begs the question of how they expect them to cope if some machinery breaks down, or there is a brief downturn in the market, or any of a million unforeseeable problems.
An extra $60 dollars a week is not going to make a huge difference to my remaining workers – they will still be poor, just slightly less so. But you can bet having $300 less a week is going to make a difference to those poor sods I had to lay off.
“It’s only bad for those who meet both of two necessary conditions”
No, it is also bad for people who get fired because their employer decides to make do with 5 people instead of 6, for example.
You’re looking at this all wrong. It doesn’t matter what real world effects raising the minimum wage will have, they tried. It doesn’t matter that every Intro to Microeconomics course since the course was first offered can show with mathemetical certainty why this will lead to higher prices and higher unemployment, they feel. It doesn’t matter that raising minimum wage has been show to drag down the middle class again and again and again because their wages don’t go up at the rame rate, government couldn’t have foreseen the outcome. It’s not about how well the law and policies actually work; it’s all about the perception. The Democrats care about the little guy, the Republicans don’t, and somehow none of this is the Democrats’ fault.
Perry : “No, it is also bad for people who get fired because their employer decides to make do with 5 people instead of 6, for example”
If such a person was unhappy about being fired, then he would seem to fall squarely into my double condition. Unemployed and unhappy about it.
Minimum wage is bad for *everyone* (except politicians, perhaps), it is just disproportionately worse for the poor.
Actually, there is another class of person for whom it would be bad. A person earning $5 an hour as a daytime burger flipper may prefer that to getting $10 an hour as a nightshift sewage stirrer in the local sewage plant. If the minimum wage goes up to $7 an hour and he’s fired from his burger flipping job, he may then take the sewage stirring job. He’s happier stirring sewage than being unemployed, but unhappier stirring sewage at $10 an hour than we was flipping burgers at $5 an hour.
Help me with some basic economics. You can buy a burger for $3, but it may be worth $7 to you, in that only if the price were to reach $7.01 would you refuse to buy it. You benefit from this $4 “consumer surplus” because there are several burger suppliers competing for your custom.
Why might not the same apply to an employer buying an employee for $3 an hour ?
Lee, the argument I’ve seen made by the guy handing out Socialist Worker is that of the “race to the bottom”, whereby without wage floors employers will start competing with one another to slash wages the fastest, and thereby maximise profits.
Because of course, everyone knows that it is in an employers interests to have emaciated staff in rags standing behind his counters, begging his customers for food and occasionally dropping teeth as scurvy sets in. Even ignoring the very obvious pressure of competition between employers driving wages up, there is a basic minimum that you can pay people.
But leftists don’t seem to think that way. They assume if given half a chance, employers will work you to death, and then just move onto someone else.
I feel so dirty for doing this, but the leftists aren’t entirely wrong. Looking back at how some employers treated their employees no better than they did a draft mule until the laws were changed to force the employers to do things like pay in cash instead of script, provide safety equipment, and not hire outside thugs to beat striking workers, it’s not entirely unreasonable to see where some of the leftists get their ideas. Just look at the West Virginia Mine Wars for textbook examples of employers savagely oppressing (deliberate use of the word oppress by the way) employees. (Look for a book called Thunder in the Mountains: The West Virginia Mine War, 1920-21 by Lon Savage at your local library or bookstore for a primer history of the conflict.)
That’s not entirely true, Steven. Certainly not in all cases.
For example, in the years before the Trade Union Act of 1871, some mill owners engaged on a bold experiment – they treated their workers well. They built high quality housing, provided medical care, and schooling for the child workers who only had to work half days and be schooled the rest of the time.
Initial results showed that these mills were significantly more productive than the brutally ran ones. However, before a wave of altruism and decency could sweep through the mill industry the above act was passed, and workers and mill owners forever became enemies because of the belligerent doctrine of Bolshivism.
Given another couple of years and I reckon the brutal mills would have gone away by themselves, without anyone needing to go to parliament for anything.
Not in all cases, no, but for every enlightened employer who felt that people should not be exploited to any end, there was at least one who looked at people as expendible resources to be used and thrown away. If lives were lost, oh well. The bottom line was the thing and the ends always justified the means. Bribed politicians, rigged elelctions, outright murder, it was all good. They could have treated their employees like humans instead of just a part, but most didn’t. Is it any wonder the employees got fed up with stuff like factory fires and chained exits, being paid in company script and not being able to leave because trains wouldn’t take script, the company store syndrome, and hired thugs beating the crap out of employees when the employees dared asked for things like safety equipment? Push and push and push and don’t be surprised when the employees finally push back and get the law on their side. The Bolsheviks gained ground because workers were tired of being treated like crap. An economics professor of mine once said that happy employees don’t form unions and it isn’t all about money.
I don’t know how stuff in England went down, but the labor history of the US is not one where it was an equitable arrangement between consenting parties. I think the unions of today are the sum of the Earth, but a century ago they were badly needed simply because of the abuses going on.
Fair enough Steven, but I don’t think there is any getting away from the fact that the specific act of setting price floors in wages is bad for the poor. The abuses we’re discussing are secondary issues which are quite capable of being dealt with through criminal law, without direct regulation of employment.
On paper, sure. But labor history shows that it took regulation imposed from government to get those secondary issues resolved and that with the right greased palms, there would be no criminal charges. There was a miner’s strike in 1912 and a train went through the striking miner’s camps at Paint Creek and Cabin Creek, West Virginia. At one of the camps, the hired thugs on the train opened fire with a machine, only killing one miner. The Sheriff of Kanawha County was onboard the train and watched the whole thing and did nothing. HE testified later he was sickened by the whole thing, but he still did nothing. When the entire state government is bought and paid for, you’re noting to get relief in the courts for outright murder, much less for any number of lesser offenses.
It’s another one of those situations where the thing looks great in theory, but in reality it doesn’t quite work as well as advertised. I agree that minimum wage laws are counterproductive, but I think it’s simply wrong to think that every single motiviation the leftists have is wrong in and of themselves. (Note: motiviation, not implimention.) There are a lot of examples throughout history where the free market did not police itself and the actors in the free market did not act anywhere close to morally or ethically (not to mention legally) and it shouldn’t be a surprise when the masses demand something be done.
Steven, how can a situation you described be called ‘free market’?
I can’t think of another term that more accurately defines virtually no government oversight of the market but is run by people who really don’t act like morals, ethics, or the law matter. Robber Baronism maybe.
Don’t get me wrong, I’m not some screaming leftist yelling for one -ism over another or that more government is the answer or that the 1% is evil because they agree with Gordon Gecko, but the free market we hope and pray for run by moral men who won’t lie, cheat, steal, and stand on a pile of corpses to get a few bucks never existed and never will. There are good men in business but there are an awful lot of horrible men in business who sleep just fine at night knowing their policies actively hurt their employees but puts a few more chinks in their pockets. The government-free market place failed to police its own and created a lot of problems that it refused to take to ownership of the problems it created and should not have been surprised when the little people finally said “enough.” Like it or not, Marx and pals offered an alternative to being killed in a mine because your job didn’t want to invest in safety equipment and then having your still-grieving widow and children kicked out of the company owned home you were required to live in an hour later.
See Walter Williams – “The State Against Blacks” (1982) specifically the chapter “Minimum Wage – Maximum Folly” “I regard the Minimum Wage law as the worst anti black law….”
By the way Walter Williams is proud of “getting my education before it became fashionable to like black people”, his academic qualifications are REAL. Unlike Barack Obama who got into Occidental, Columbia and Harvard Law by P.C. wire pulling.
What Ayn Rand called “the aristocracy of pull”.
The minimum wage hurts the poor two ways.
1/ the low skilled are unable to get employment
2/ Low priced products, such as are provided by the poor, either get dearer or become unavailable.
The senators idea that a minimum wage would remove competition from car manufacturers in his state is probably right- but as well as putting car manufacturers elsewhere out of a job, it would raise the cost of cars for everyone, which would render the poor unable to afford transport. Even those not so poor would have to divert funds from other areas of expenditure, thus hurting those they would otherwise have bought from.
the way poverty is measured in this country, a maximum wage would be more effective. No it wouldn’t put a penny in the pockets of the poor, probably the reverse, but as it would bring down the median wage it would reduce the dividing line between rich and poor to a lower figure- thus the poor family struggling on £10,000 per year would be re-defined as a not-poor family on £10,000 per year.
Speaking of Walter Williams, this is worth watching.
Steven: ‘government-free’ still does not mean ‘free’. ‘Free’ means free from violence and coercion, no matter if it comes from government (or what passes for it), or gangs, or any other group of people who operate under the ‘might makes right’ principle. What you describe (as my knowledge of history is dismal – maybe Paul can way in on that time and place) was not a free environment by any measure.
Mid,
Walter Williams is always worth watching, and those clips were very good. Thanks.
The problem is that we will always have politicians. And therefore we will always have competing sides of stupidity. I tend to agree with Friedman that we don’t need to throw the bums out, we need to make it politically profitable for our current bums to do the right thing.
Why it isn’t Necessary to “Throw the Bums Out”
Perry,
Thanks for the link, and for the traffic.
We’re trying to raise black teen unemployment to 50% in the U.S., and appreciate all of your support.
Everyone should be paid $9.00 per hour, or nothing at all!!
We can do it! We can do it! We can do it!!!
Your theoretical musings may be satisfying to you, but consider the following case study:
In 1992, the minimum wage in New Jersey increased from $4.25 to $5.05 per hour (an 18.8% increase) while the adjacent state of Pennsylvania remained at $4.25. David Card and Alan Krueger gathered information on fast food restaurants in New Jersey and eastern Pennsylvania in an attempt to see what effect this increase had on employment within New Jersey. Basic economic theory would have implied that relative employment should have decreased in New Jersey. Card and Krueger surveyed employers before the April 1992 New Jersey increase, and again in November–December 1992, asking managers for data on the full-time equivalent staff level of their restaurants both times.[64] Based on data from the employers’ responses, the authors concluded that the increase in the minimum wage increased employment in the New Jersey restaurants.[65]
Tman – there corrupt, but not in the (relatively) nice way you (and the late Milton Friedman) thought they were.
Say that Barack Obama (and co) thought that they could win elections by a landslide (and profit personally) by rolling back government.
HE WOULD NOT SUPPORT DOING SO.
Why not?
Because, in spite of he all Chicago Machine corruption, he is a man of PRINCIPLE.
You are laughing now – but he is.
All the far left are.
That is what makes them dangerious.
If they were just ordinary criminals there would be much less of a problem.
The do not undermine civil society as a unfortunate by-product of personally seeking power.
They undermine civil society ON PRINCIPLE.
The principles that (for example) dominate the education system.
As for black people – blacks are being slaughtered in L.A. (and the rest of Southern California) right now. Barack Obama does not care – because he can (at the moment) see no reason to care.
Hispanics killing blacks (or blacks killing blacks) can not be USED for the cause of the “fundemental transformation of society” (the destruction of civil society – “capitalism”).
Although he may use it as an excuse for “gun control” (which he, and other Progressives, want for totally different reasons).
Here is a “feel good about ourselves for a change” 10-minute video from some dude who used to hang around the hallowed halls of The University of Chicago. 🙂 It’s called “The Myth of the Robber Barons.” (And it’s NOT all Pollyanna.)
https://www.youtube.com/watch?v=dmzZ8lCLhlk
Presumably because businesses like to have increased costs and decreased profits?
All,
Please welcome Gary Higgs. (see above)
He’s dragging out the Kruger and Card survey, the one where they surveyed the restaurants that survived the minimum wage increase, and then determined that no harm was done.
Using the same methodology, you can prove that no one died in World War 2.
One of my favorite bullshit academic studies.
Thewhitedsepulchre – almost needless to say, the Economist magazine treats this absurd “study” as if it was an important piece of reasoning.