In honor of the recent International Women’s Day have a look at these fine blogs: Pandagon, Feministing, Feministe, and Alas! A Blog.
Here is a (by no means representative) selection of their recent posts:
- I Like My Sexism Like I Like My Hardwood Floors: Deeply Ingrained
- Hi, I’m Jill, and scummy law school sleazebags have gone after me, too.
- Nothing says ‘empowered’ like a trimmed labia
- Largo, Florida Fires City Manager For Being Transsexual
- Children do better when Dad stays at home
While writing the previous post about libertarianism I stumbled across a very different take on International Women’s Day on another blog. An exchange of ideas between the authors and readers of the blogs above and the blog I discuss below would be a good idea.
Way back in the 1970’s, a time when I thought of myself as a libertarian, I became aware of feminism and immediately added that to my self-description: libertarian and feminist (and a few other things as I was wont to enumerate labels back then). I thought any libertarian would do the same. After all, libertarianism is all about reason and rational thought — at least on their PR material — and what’s more rational than accepting women as equal in all important respects to men?
Today I’m still a feminist but no longer a libertarian. In part, here’s why:
Feminism is defined as belief in the economic, social and political equality of the sexes. Yet if one sex has babies, and the other one doesn’t, how can one meaningfully say they are equal? If there are two classes of human being, and one typically spends 40 years in the workforce, and the other typically takes off 6 to 15 years to look after children, how can we say they are equal? If women have to have a raft of unequal rights, such as maternity leave, to try to put them on the same footing they would have been on if they weren’t women, then how can we say the sexes are equal? What is it supposed to mean?
That is from a post on the “Official blog of the Australian Libertarian Society” written by a woman, Justin Jefferson. In her profile for the older version of that blog Justin writes quite clearly about her libertarian values or, to use her word, dreams:
- …a revival of the value of liberty in Australia, restricting government to its core functions of protecting life, liberty and property.
- …the collectivists who love to dream up new punishments and persecutions for their fellow man, will learn to give up their coercion fetish, and instead learn to raise funds voluntarily and support voluntarily the activities they want.
- …restrained only by a general ban on force or fraud, people in general, and I in particular, may enjoy the good and free life in a good and free society.
[update: Justin informs me his profile incorrectly identifies him as a woman.]
(For the uninitiated, you can instantly identify the unique libertarian language by the use of the words collectivists and coercion. Another word in the libertarian dialect is statism. When you have been using your own terminology for well over 50 years and no one else picks it up, you know you are in a small, isolated community. Good marketing would say it was high time to reframe and find some new labels, and most libertarian politicians do so when speaking publicly.)
I don’t find it shocking that on International Women’s Day a woman would write something that appears to me to be drastically anti-feminist — for that I can turn to religious fundamentalists. I’m shocked that it comes from a libertarian. Let’s take a look at Justin’s thinking:
Yet if one sex has babies, and the other one doesn’t, how can one meaningfully say they are equal?
We do that by understanding equality is a different concept than identity or sameness. No one claims men and women are identical, the words are not synonyms. Equality between men and women has to do with moral, political, and social worth. To put it in libertarian language, equality is a “a natural right.” (Some libertarians will of course say, “but not one of ours.)
If there are two classes of human being, and one typically spends 40 years in the workforce, and the other typically takes off 6 to 15 years to look after children, how can we say they are equal?
Why stop at two classes? There are so many dimensions we can use to carve out any number of classes of human beings: hair color, weight, height, ancestry, sexual preference, skin color, ethnic group, sports preferences, musical ability… . The list is endless.
As for taking off 6 or 15 years, when did all women do that? And by the way when have men not taken time off or switch jobs? What about families where the man looks after the children? And what does this have to do with equality?
If women have to have a raft of unequal rights, such as maternity leave, to try to put them on the same footing they would have been on if they weren’t women, then how can we say the sexes are equal? What is it supposed to mean?
If by maternity leave you mean a week or two recover from the physical experience of childbirth, denying that would be just meanness. If you mean a longer period of six, twelve, or more months to care for a newborn while still receiving some income, why isn’t this right given to men as well? Sweden, Norway, and Canada are a few of the countries which provide extended parental leave some of which is available to both parents. See this chart.
But of course Justin’s argument comes from the purest form of libertarianism. Any government regulation of business — even an anti-discrimination law — is undue and unnecessary interference in economic and personal freedom. It would be rectified over time by nondiscriminatory businesses out performing the others. In her words:
…the employer who discriminated against women would be imposing a competitive disadvantage on his own business. Other things being equal, he would lose money. The way would be clear for other businesses to out-compete such businesses by employing women on equal terms with men.
As an American all I can say is the descendants of slaves in my country are still waiting for that to occur with respect to discrimination based merely on the color of one’s skin. Perhaps slavery appalls Justin. I wonder what she thinks about indentured servitude?
One last quote from Justin’s post:
That is why I suspect that the nostrum of the equality of the sexes is, in fact, false, for obvious reasons. Most women have children. Children cost money and time. Women typically try to get other people, especially men, to pay money or value to them to help raise their children.
I won’t bother to remark on those words except to say beliefs like those inspired me to write this post in honor of International Women’s Day. Everyone needs to speak up when others would deny women basic human rights in order to protect their “freedom.”
(Take a look also at Growth is Madness! where John has a two part series in which he talks about how women’s rights are bound together with the issues of population pressure, consumption growth, and sustainability.)
final thoughts
I’ve never been to Australia but have worked with many fine people from Oz. Justin’s thoughts help me understand the comment an Australian once made when I was complaining about the treatment of women we had both witnessed while working together in two different parts of Europe. He said, “If you think this is bad, don’t go to Australia.” Tellingly, when he and his wife left the country. That’s the sort of personal exercise of freedom any libertarian can appreciate.
up next
I have one more post in the works on libertarianism and the usual themes of this blog. In the that one I’ll return to seeking connect to the positive aspects of libertarian thought.
As David pointed out on the ALS blog “Justin Jefferson” is not a woman.
Yes, Trin, I’m a bloke. I forget why I clicked the female gender box. Oh that’s right. It’s because I’m only a male as to biological *sex*. As to social *gender* , I’m female. That’s why they put ‘gender’ there instead of ’sex’, right – to allow for inclusion of expressions of gender identity like mine? Didn’t confuse you with bullshit did it? Good.
Trin, you need to decide whether you think women and men are equal in worth. If they are, there is no reason why anyone should be compelled to pay extra to women to fund their differences, since they are of equal worth. And if there’s no compulsion involved, fine, but that must of course rule out any question of penalties, fines, or imprisonment.
You also need to decide whether or not you think violence or the threat of violence to make use of someone’s personal services against their will is okay.
Mere personal argument is irrelevant, off-topic, and tends to confirm the suspicion you don’t have any answer to the substantive issues.
Yeah. But as to social gender, he’s female.
- —
Huh?!
– — He’s here! ! !
I was merely responding to what Terje said. See: we posted at approximately the same time.
Yes, LOL, I saw that. ‘Now I’m totally confused.’
Justin,
Wow, talk about a way to dash some of the superficial appeal of my post! Disagreeing with a man who wants to push back on women’s rights is less interesting than what I thought I was doing. Why don’t you fix your blogger profile? Or consider a sex change.
About the substantive issues:
I don’t think my post was so nuanced that you could not follow the reasoning. So I wonder why, rather than point out some flaw in my thinking, you are merely repeating the material from your post?
I prefer to use language in a way that makes the converstation transparent to a general audience and will not cooperate in using the term violence in the specialized sense only found in the libertarian dialect.
So, rephrasing, you are saying I need to decide whether or not a government elected by the people of a representative democrary can pass laws requiring all employers to treat everyone fairly. Again, since I’m sure understand my point of view, why you are telling me this? Can you point to some flaw in my reasoning or offer something more than what you said in your original post?
I certainly invite you to contribute to the discussion and comment here however much you may disagree with my views. That’s why there is a comment feature. I only ask that you contribute — not merely repeat or distract in an unconstructive way.
In fact, I will be pleased and impressed if some libertarians find their way here and enter into such a discussion. One of the reasons I left the fold long ago had to do with my perception that too many libertarians preferred sitting on the sidelines while cherry picking data to support their views, merely talking amongst themselves while passing around well-worn copies of Atlas Shrugged and Fountainhead, instead of engaging in the important issues of the day. Perhaps my experience was not representive; even if it was things may have changed in the intervening decades. I hope they have and would love to see evidence of it.
The word feminism carries a lot of baggage (as does the term libertarian) and means different things to different people. For many it is representative of the worst excesses of left wing legislative activism whilst for others it merely refers to the process of cultural leveling.
Trinifar brought up the issue of racial discrimination and the legacy of slavery in the USA. I recently finished an excellent book by Thomas Sowell in which he pointed out that in the 1950s young black males in the USA had the same rate of unemployment as young white males. Since the widespread introduction of minimum wage laws the unemployment rate amoungst young black males is now far higher than for young white males. In short a law intended to correct perceptions of inequity (wage inequity) has created a far more serious form of depravation. The situation in Australia with relation to the aboriginal population is very similar (including timeframes) although the consequences have perhaps been more dire. Whether the original underlying cause of wage disparity was caused by differences in skills or an underlying racial prejudice the consequence of the law has still been extremely negative. Especially once the compounded social effect of unemployment is included in the calculation.
In Australia the job market is quite different to the USA. Over 50% of Australians work for a company that employs less than 25 people. As such decisions about employment are much more frequently a personal decision more akin to inviting somebody into your house. So there has been less political prospect of imposing legislative experiments such as employment quotas. However there has certainly been legislative activism. And yet as Justin points out in his ALS article 30 years of activism in the legislature has amounted to no significant change in wage disparity. And as I pointed out in responce to Justins article this is because the wage disparity reflects differences in experience levels between men and women. Once you adjust the data to take account of differences in qualification and job experience men and women come in even on the wage front. This suggests that employers are already largely recognising and making use of the economic worth of women.
The reason I align myself with the Libertarian label is certainly philosophical in origin. However the weight of evidence that large government (in fiscal or regulatory terms) does not measure up to the high ideals of it’s proponents and in fact causes significant hardship and disadvantage within society is what keeps me pushing the message. It sounds nice to be able to wish away the troubles of our society by passing a law or creating a new fund. However whilst ever government seeks to fulfill the unmet needs of society it merely opens up problems of a different nature. And far too often it does not even address the original problem either.
Men and women should most definitely be considered as equal before the law. However equal before the law does not mean that men and women are “the same”. To be sure the differences between individual men and individual women is frequently far smaller than the differences between the statistical aggregations of the group called men and the group called women. However we should not allow differences of outcome cloud our judgement regarding procedural fairness. We should not assume an injustice when less passionate explainations can readily explain the observation. For instance it would be naive to claim that employers value men less than women on account of higher rates of workplace death and injury for men.
What Terje said.
[I seemed to have stumbled on a bug in the comment system. Apologies in advance if this is a duplicate.]
Terje, thanks for taking the time to leave a thoughtful comment. I’ll do my best to respond in kind.
First, a note about Thomas Sowell. While he does have good academic credentials (PhD Chicago) and did teach for a little while, for the last 25 years he’s been at a conservative thinktank and is primarily known in the USA as a rightwing shill (by the left) or a great intellectual (by the right). The people in the middle — which would be most people — seem to ignore him. This doesn’t make him wrong, but, since he is paid to write from a particular point of view, we should be aware that citing him is not like citing someone who publishes in a peer reviewed journal and/or has a less vested interest in one paradigm.
Let’s assume he’s right “that in the 1950s young black males in the USA had the same rate of unemployment as young white males.” That doesn’t really get to the point, does it? Bigots are happy to employ those they are bigotted against. The issue is equal pay for equal work and equal opportunity in being hired (given equal skills) regardless of skin color. No one would say black people in 1950’s America had anything like equal opportunity relative to white people with respect to jobs, especially good jobs, or education (or housing, eating in a restaurant, using a public toilet or water fountain, sitting in the front of a bus,…).
“Since the widespread introduction of minimum wage laws the unemployment rate amoungst young black males is now far higher than for young white males. In short a law intended to correct perceptions of inequity (wage inequity) has created a far more serious form of depravation.”
I don’t see how you make that leap. One could as easily say the cause was the increasing use of fluoride in our drinking water. Correlation is not causation. Seems to me far less of a reach to claim discrimination in housing, education, and employment (all widely reported and acknowledged) were the cause — along with lack of mentors. Need it be said that there was a disparity between white and black kids when it came to having a powerful block of wealthy and influencial people to help them along? There has been clear progress but that disparity remains today albeit to a lesser extent.
“In Australia the job market is quite different to the USA. Over 50% of Australians work for a company that employs less than 25 people.”
Just for comparison, in the USA about 50% of the population works for businesses than employ less than 500 people and something like 25% for business with less than 25. In absolute terms 25% of all employees is 28 million people.
“As such decisions about employment are much more frequently a personal decision more akin to inviting somebody into your house.”
I don’t think that is relevant — although I wish all people could be treated in with the same respect and courtesy extended to house guests. That strikes me as common decency.
“…30 years of activism in the legislature has amounted to no significant change in wage disparity. … Once you adjust the data to take account of differences in qualification and job experience men and women come in even on the wage front.”
I hope that is true but it goes against all experience in the USA. Probably no surprise that I can find lots of relevant on-line data about the USA but comparatively little on Oz. From a paper written in 2000:
As for reasons to be a libertarian or not, I too have difficulty with large government in both fiscal and regulatory terms and as noted above have been a libertarian in the past. The sins of governments are known far and wide. (You may have heard of the current fiasco making the news in the USA with the poor treatment provided by the military to many seriously wounded soldiers.)
What is less widely mentioned are the things some governments have done and continue to do well. See the teaser at the end of my previous post for examples. (That post, by the way, was inspired by one of yours.) Failures of free market solutions are also frequently overlooked. For example, it appears that the privatization of some functions at a major military hospital was responsible for a “cost cutting” move which so reduced support personnel it was one direct cause of the poor treatment of soldiers mentioned in the previous paragraph.
Those are the issues I’ve chosen to take up in my next post on libertarianism, population pressure, and the environment.
Trinifar: “I don’t think that is relevant — although I wish all people could be treated in with the same respect and courtesy extended to house guests. That strikes me as common decency.”
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Only a short remark (and with reference to your article on the growth of the prison population): common decency no longer seems to have a place in the society of modern humans. In the surveillance society of our times, every individual person is effectively treated as a potential criminal, and not as a possible friend. This control culture comes with a side-effect. When people receive unfriendly treatment, they actually become unfriendly, too.
When you expect to be treated as someone who is not to be trusted, you will instinctively start to treat all others like people who trust that you’re not trustworthy.
You won’t trust them.
I have real difficulty in seeing fluoride leading to higher unemployment amoungst one group in society over an above another. I suspect that you are not being entirely genuine. However lets assume you are and spell out some more the impact of wage regulations.
Assume that a group of employers requires people that can move dirt. Assume that the hourly rate paid to people is based approximately on the number of buckets of dirt they can move in an hour. So if you can do 50 per hour then you are paid $5.00 per hour and if you can do only 30 per hour then you get paid $3.00 per hour. In essence you have in place a form of merit based wage discrimination. Now lets say that a government now insists that nobody should be paid below $4.00 per hour. Now we might expect that the employer will only employ people that can move 40 buckets per hour or more. One group of people how has a higher rate of unemployment.
Of course this is a simplification because there will also be secondary effects as employers seek to find other ways to move the same amount of dirt. However it is not unreasonable to suggest that when all the secondary effects come into play there will still be a marginal group of people at the bottom that are now left without employment.
In the real world such discrimination is not so clearly based on merit. An employee can be worth less or more for a complex number of reasons. Perhaps a retail assistant that is female and pretty causes more customers to buy lipstick than an assistant that is male and frumpy. Perhaps customers in a given suburb prefer their burgers served by somebody of a given height and racial background. Or maybe a workshop attendant that talks less than most aggrevates the boss less. Even if we can regulate some of the decisions employers make we generally don’t regulate consumer prejudice.
Returning to the dirt example for a moment. Lets say that all the employees in the first instance have equal merit and can move 40 buckets per hour. And lets say that the minimum wage is lifted to $5 per hour. At this rate of pay none of the potential employees measure up to the bosses previous economic expectation. But dirt has to be moved so the boss finds it necessary to fork out more money to move at lease some of the dirt whilst some people will go on the unemployment queue. Now because their is an unemployment queue and all the potential employees are equal in merit the boss can be more picky about who to employ. So they may decide that they’ll only employ people of a given religion. Or else they’ll only employ people of a given gender. Or maybe they choose people that come from a certain ethnic background. Whatever latent prejudice the employer may have now becomes enabled by circumstance. And of course they will now have less exposure to those people that might assist them in losing their prejudice.
In short wage regulation enables latent prejudice amoungst employers whenever it creates a job queue. And likewise any removal or wage regulation that removes a job queue will tend to disable latent prejudice.
Now of course it may be that over the last 50 years the unemployment rate of young black males in the USA has increased relative to young white males due to fluoride in the water. However I suspect that the real reason is more to do with labour market regulation.
Terje, it’s right that intuitively there is a connection between minimum wage and unemployment, but empirically it has been shown again and again that this isn’t the case.
As a matter of fact, there are many cases where unemployement fell after minimum wages rose – not because there is any direct correlation, but because both are symptoms of a healthy economy.
Bigots are happy to employ those they are bigotted against. The issue is equal pay for equal work and equal opportunity in being hired (given equal skills) regardless of skin color. No one would say black people in 1950’s America had anything like equal opportunity relative to white people with respect to jobs, especially good jobs, or education (or housing, eating in a restaurant, using a public toilet or water fountain, sitting in the front of a bus,…).
This is where libertarians will always digress. As you say, bigots are happy to employ those they are bigotted against at a lower pay, but are less happy to employ them at an equal pay. So less prejudiced people become employed. This is gross injustice to the individuals involved, of course, but legislation to enforce equal pay or minimum wages will distort the process.
A similar event happened in Australia when Aboriginal stockmen went on strike over equal pay. The pastoralists were unwilling to employ them at the same wages as their white workers for a number of reasons. Racism, recession and mechanisation in the cattle industry all conspired to make Aboriginal labour redundent at the wage the government forced the pastoralists to pay. Huge numbers of Aboriginals went from paternal employment, with wages often paid in kind, to unemployment, where they were paid welfare in cash and what became known as “sit down money”.
All this is tragic, both the conditions of the Aboriginals before the strike action and government intervention to assist them, and the results afterwards. There is a valid and overwhelming argument that the Aboriginal workers were being exploited, they had little education, many had had their families torn about by well-meaning Christian missionaries, were not even considered citizens in the country they were born in until 1967. But the fact remains that the government intervention on their behalf led to a worse outcome for them, not a better one. Racism and disadvantage were entrenched by government legislation, good intentions notwithstanding.
This is not argument that social norms like racism or sexism should not change, but it is in the manner of the way that they are changed which matters. Voluntary change is so much more effective, it changes people’s belief systems, makes them able realise where they were wrong. Forced change can have positive results, an Aboriginal employed to do the same job will get the same wage as a white Australian, but the cost has been a lost generation of unemployed Aboriginals, dependent on welfare and with deeply ingrained social problems including poverty, alcoholism, substance abuse, domestic violence, sexual abuse and other violence that has seen Aboriginal life expectancy remain stagnant (even decrease) while the rest of Australia generally grows richer and lives longer, more fruitful lives.
Government intervention has not prevented this scenario, has even accelerated some of the trends. The abject state of native Australians is testement to the failure of the paternalistic welfare state in addressing the human condition.
We must read different reports. I have certainly seen reports that show that minimum wages have no effect (usually written for or by trade unions with a vested interest) but I have never seen a report that shows that minimum wages (or increases in minimum wages) do anything to boost employment.
No doubt you would accept that a minimum wage of $200 per hour would cause significant unemployment and I think there is little reason to believe that more marginal increases don’t tend towards the same impact (although obviously with reduced and sometimes undetectable magnitude).
In WA (an Australian state) one multi year study showed that relative to other states a 1% increase in the states minimum wage tended to cause a 0.15% reduction in employment. If we assume that the state has 1,000,000 workers then an increase in the minimum wage from A$13.27 to A$13.40 would notionally extend the unemployment queue by 1500 people. Whilst reducing the minimum wage to A$13.13 would reduce the queue by a similar number.
Obviously such relationships can not be easily translated to different times or places but the general principle seems robust enough.
However maybe fluoride has made me biased.
In many quarters these outcomes have increase prejudice. So the legislation has been additionally counter productive.
…So less prejudiced people become employed…
Sorry, that should read
…So, less prejudiced against people become employed…
My claim was not that an increase in minimum wage will boost employment, but that it has no significant effect on employment.
This is not a zero-sum game – there is no set amount of money that can be used on wages, which would be necessary for a correlation between raises in minimum wages and higher unemployment.
Increases in minimum wages go back into the economy (this is simple economics 101), and can actually be a way to ensure growth – thus perhaps leading to less unemployment (not a given) and in some bad cases, to higher inflation.
In the US, voters in a few states voted for raising the minimum wages, and we have yet to hear about rampant increases in unemployment in those states.
However, minimum wages are really a red herring, since few countries except the US, really have any significant amount of jobs paying minimum wages.
Kristjan,
I did mischaracterise your claim so my apology.
Your point about the amount of money not being fixed is irrelevant. The issue is not the amount of money but rather the economic value it represents. If minimum wages have no impact on employment then they are in essence fully absorbed by the employer. As such they reduce the employers spending power in other areas and reduce the amount of money circulating. Not that velocity of money is something we should focus on but if it were then you are indeed defending a zero sum game. The idea that circulation of money causes growth is the same old tax and spend, lets print money keynesian rubbish. Growth may increase the rat of money circulation but the opposite claim has no validity.
If in most countries nearly everybody earns above the minimum wage then the case for such a minimum is even weaker. Especially if unemployment prevails.
I note that the US federal minimum wage is a political football. I think the US would do well to adopt the constitutional/treat measures of other regions such as the EU and Canada where such fixed labour minimums by central government are prohibited. Australia would do well to do likewise.
Regards,
Terje.
Terje,
I was being genuine — entirely.
You wrote in your earlier comment, after noting young black and young white males had the same unemployment rate:
We could put your argument like this:
Assumptions: (1) At time t0 young black and young white males had the same unemployment rate. (2) At a later time t1 the rate for blacks was much higher than that for whites. (3) Sometime tx between t0 and t1 minimum wage laws were passed.
Conclusion: minimum wage laws caused the employment disparity at t1.
The conclusion doesn’t follow from the premises. My mention of fluoride in the drinking water was intended as an example of that; your claim is no stronger than the claim about fluoride. They are equally silly.
The conclusion doesn’t follow from the premises. My mention of fluoride in the drinking water was intended as an example of that; your claim is no stronger than the claim about fluoride. They are equally silly.
Terje has given an explanation on why many Austrian and Chicago School economists believe that minimum wage leads to reinforcement of existing prejudices and can lead to a decrease in the employment prospects of certain groups.
All you’ve done is refute the causation without any reference to statistics with a disambiguous reference to fluoride. How about addressing the actual ideas:
1. Many people are prejudiced
2. People will employ those they are prejudiced against (often at a lower wage), but not necessarily in the same jobs as they would individuals they are not prejudiced against (lower category jobs)
3. Minimum wage makes it less likely they’ll employ (or at least as many of) those they are prejudiced against because:
a) the labour is artificially over-priced, they have to get away with less labour
b) with less labour affordability, they will be more selective, especially if there is a large pool of unemployed
c) their prejudice results in less employment for those they are prejudiced against
d) the process is reinforcing, since less contact with those they are prejudiced against is not a recipe for tolerance
e) mechanisation may be accelerated due to greater competitiveness with labour, thus resulting in less jobs over all.
Point 3e) is not an argument against mechanisation, it simply recognises that if one input (such as labour) more expensive, people will look to substitute that input for another. Lard, margarine and butter are an example of this, since each is imperfectly substitutable for another, and use of one over the other is very price dependant.
Despite what you may have heard about about libertarians and your own experience, it is recognised that people aren’t wholely rational, even though the behavioural trend at a macro level tends to show rational behaviour being prevalent. Prejudice is one such irrationality. Another is that people are not inclined to like being told what to do by anyone, especially not a bureaucrat. Individuals will cut off their own nose to spite their face. So prejudice combined with wilfulness can lead to the good intentions of legislators back firing.
I’d be interested to hear an argument that refutes the above points, every day is a school day, as they say.
Trinifar – maybe fluoride is causing the grain shortage in China.
Since fluoride makes for healthier teeth, perhaps it is causing an increase in food consumption.
But I think, at least for now, I’ll stick with the quite plausible reasoning around acquifer depletion.
Brendan, I suspected that Terje had more in mind than what he wrote down, so thanks for filling in the gaps.
Still, today the USA has a vibrant economy with low unemployment and low inflation in spite of many increases in the minimum wage over the years (each one hotly debated) as well as a reduction in explicit bigotry, and all people of color are better represented in higher paying jobs than ever before.
Two things are usually noted for this improvement: The Voting Rights Act of 1965 (”generally considered the most successful piece of civil rights legislation ever adopted by the United States Congress” according to the US Dept of Justice) and Civil Rights Act of 1964 which made it unlawful to discriminate or segregate on the basis of “an individual’s race, color, religion, sex, or national origin.”
I know it is anathma to libertarian principles to coerce people into even a modicum of decency, but that is one reason I’m no longer a libertarian. Having lived through this period of American history, I can not see how we would have a better society (and economy) if we had not passed these laws. Sure there would have been change over time, but given the injustice of the situation how long should a society wait to act so the business owner can remain free to discriminate?
Trinifar,
I am not an American so I don’t wish to over extend this argument but it seems likely to me that the civil rights legislation was as much a responce to changing attitudes as a driver. I don’t agree with it or disagree with it because I am not overly familiar with the detail. It seems quite separate to the issue of regulating prices. I am certainly happy to live in a time and place where skin colour is not generally used to determine friendships, employment or respect. And I certainly think political activism was a necessary part of the transformation. In Australia there were also discriminatory laws and policies that needed to be changed (eg the white Australia policy). I am not in favour of employment quotas or the like and not in favour of anti-discrimination legislation as it applies to the private sector however I agree with the sentiment (of the latter).
I don’t intend making a mission out of converting you on this issue of price regulation. I already get my daily dose of pro-regulation rhetoric from johnquiggin.com so I’m unlikely to stick around here merely for the personal challenge. However I do find you to be a well intensioned blogger and I’m pleased to have encountered you. I suspect that the disconnect between us is more about means than ends and based on a different perspective regarding the efficacy of, and unintended consequences of government action and government mission creep.
Regards,
Terje.
Still, today the USA has a vibrant economy with low unemployment and low inflation in spite of many increases in the minimum wage over the years (each one hotly debated) as well as a reduction in explicit bigotry, and all people of color are better represented in higher paying jobs than ever before.
So there are more minorities employed because the economy is good, not because of minimum wage increases or because of equal opportunity regulations. It is amazing how a strong, growing economy will naturally overcome bigotry and racism. This sounds like an endorsement for free markets and minimum government intervention to me. Think how many more minorities would be employed with even less taxation and regulation (and more growth)?
Is it not true though that minorities are over-represented in lower paying jobs? Can an organisation meet its diversity requirements by hiring a black janitor and a hispanic mail clerk? I have no idea of the figures, but my instinct tells me that out of non-university/college educated managers, women and minorities would be extremely poorly represented (more so than amongst college educated managers). White American males with no tertiary education probably still have a much better chance of suceeding than an equivalent minority or woman from a similar socioeconomic background. There are more self-made WASPs per capita than other in other demographic groups, I would think.
What might be happening here? Are companies meeting equal opportunity obligations by only assessing women and minorities with college degrees, since they can quantitatively compare qualifications reasonably neutrally from a sex and race point of view? This is obviously good for a woman or anyone from a minority with a tertiary education, but is it a fair result for those without, when if they were white and male, they would be able to more easily compete with their educated peers on merit alone?
What I’m getting at is that legislative requirements results in regimented and bureaucratic solutions. The goal of equal opportunity is lost in the auditable, regulated response and the hype of corporate propaganda, because this is what the legislation requires! What you get is a privileged class of minority and women who are paraded out by the human resources and marketing departments to show how diverse and multicultural the company is. Sure, those who have benefited from their college education and affirmative action are equally capable at their jobs, but such a process has short-circuited a career path for those without education, because they can’t even get on the ladder in the first place.
Legislation hasn’t fixed prejudice, it has merely pasted over a inherent flaw in the market and pushed some workers out of potential career paths into lower or even minimum wage jobs (or out of employment altogether if you compare unemployment rates). It has allowed bigots to hide behind their equal opportunity programs without actuall changing their beliefs or giving all women and all minorities an equal opportunity, only those that can quantitatively demonstrate that they are equal through qualification.
You still didn’t address any of my points, do you not refute the logic of the argument that, all things being equal, minimum wages may lead to negative outcomes for minorities?
Terje,
I suspect that the disconnect between us is more about means than ends and based on a different perspective regarding the efficacy of, and unintended consequences of government action and government mission creep.
Hey, I appreciate your willingness and ability to in engage in the discussion in a thoughtful way. I’m a true believer in selling my point of view with reason and evidence rather than insult and sarcasm and appreciate anyone who tries to do the same.
Perhaps one point of connection between us is an interest in discussing hard issues with people who have a different opinion. It’s rather like a really good engineer who has just designed something new and needs to get the design reviewed. She goes looking for reviewers who are going to bring different perspectives to the task knowing that will generate more critical comments — and knows that’s the most effective way to improve her design.
Brendan,
You still didn’t address any of my points, do you not refute the logic of the argument that, all things being equal, minimum wages may lead to negative outcomes for minorities?
This seems like the question “When did you stop beating your wife?” In the USA the enactment of both minimum wage and civil rights legislation had a very clear positive effect. In spite of our foreign policy, most people find the level of wealth generation in the American economy quite appealing and, except in those countries with a bigger social welfare safety net, lots of people like the distribution of wealth here. You’re saying that would have happened — perhaps faster — without the legislation. To me, that’s over reaching.
What I’m getting at is that legislative requirements results in regimented and bureaucratic solutions.
Sometimes. Sometimes not. Vaccinations mandated by law have worked well with important consequences and low overhead. Child labor laws, something I hope no one would object to, also result in very positive outcomes with little bureaucracy. Overtime pay requlations, …. There seemed to be a lot of counterexamples.
Legislation hasn’t fixed prejudice
No, but it has given a large number of people opportunities they otherwise would not have had and in so doing has mitigated the problem of bigotry. Given attitudes still prevalent in much of the country, I just can’t imagine their being less prejudice in the absence of the legally mandated civil rights.
In the USA the enactment of both minimum wage and civil rights legislation had a very clear positive effect.
Minimum wage only helps those in employment, it discourages people from employing more people because the marginal cost of labour is an important factor employers take. The fact that employment has grown overall does not negate this, minimimum wage is like having the labour market run on V8 engine run on only 7 cylinders. The engine still has a lot of puff, but not nearly as much as it could have had. Hiding behind only the intended consequences of legislation, which are easily seen in the pay packets of those employed, hides the unintended consequences of those whose employment options have decreased through being priced out of the market.
Do people buy more fuel or less when there is a price rise? They still buy fuel because they have transport needs that must be fulfilled, but they may cut down on it, or change how they use fuel in order to need less, such as using a more efficient vehicle that they otherwise wouldn’t have considered. Businesses can pass some of these fuel costs on to their customers, but not all, as their customers only have so many resources to go around, and must choose between competing demands/options for their resources. In a growing economy, demand for fuel will increase even with fuel price increases, but fuel demand will grow less fast than other sectors of the economy.
Does this sound like a realistic scenario? Do people economise on their fuel use when the price rises? Now substitute labour for fuel and work for transport, does the same story make sense?
As for civil rights laws, is legislation not just a subsitute for enforcing pre-existing criminal and civil law? Common law has a great heritage of adapting and improving, and has the beauty of being built on actual cases, rather than the abstract ideas that legislation is framed in. The process of repealing bad law is complex and difficult, it often goes on to gain a life of its own, far beyond the law makers intentions. Whereas common law only needs to be tested in any court in the land, legislation can only only be disputed by the Supreme Court, an expensive route to justice.
Not that odd given that I’m an engineer by qualification. I take it that your background training is also from a similar sphere.
Brendan,
Minimum wage only helps those in employment, it discourages people from employing more people because the marginal cost of labour is an important factor employers take.
All evidence to the contrary: We have a minimum wage and low unemployment. The business community has not been harmed, and a whole lot of people have more money to spend on life’s necessities. It’s not like the minimum wage is a massive transfer of wealth enabling people to buy big houses and fancy cars.
As for civil rights laws, is legislation not just a subsitute for enforcing pre-existing criminal and civil law?
Short answer (because I’m not sure I understand your point): no, it’s a way of explicitly establishing law by the elected representatives of the citizenry.
Terje,
Yep. I’ve been in engineering for 30 years as hands on engineering, manager, and business developer.
All evidence to the contrary: We have a minimum wage and low unemployment.
This is like saying that during the last ice age we had low temperatures and no industrial carbon dioxide emissions. Therefore the last ice age was caused by an absence of carbon dioxide from man made greenhouse gases. They do not refute the central tenet and do not show a causation between employment
Say for instance we are in a growing economy, with growing demand for labour. With no minimum wage, as the labour demand increases and supply doesn’t grow as quickly, wages will rise naturally because of labour scarcity, as employers compete for workers. Even with a minimum wage, real wage growth at the lower end of the labour market outstrips minimum wage growth through government intervention.
So you might argue that a minimum wage is doing no harm by such evidence, since all minimum wage is doing is providing a safety net to protect workers. What are you protecting workers against? A downturn in their industry? Nasty exploititive employers?
Well in the second case, employers unwilling to pay above minimum wage in a growing economy are unlikely to keep their workers for very long. Employers trying to pay below minimum wage find themselves on the end of union initiated lawsuites, journalists and fall fowl of the law for emplying illegal immigrants. In fact minimum wage laws encourage some unscrupulous employers in to hiring illegal workers because they have less avenues for protest. Illegal workers notwithstanding, such employers face high staff turnover and must bear the cost that this entails in recruitment and training. Some employers will try to do this, and they will eventually go out of business, but they will be replaced by a new generation of employers who think they can buck the system and pay peanuts without incurring any costs. This is the nature of humanity.
In the first case, a downturn in the industry, with demand for labour decreasing and if wages can’t drop naturally, then employers will be faced with having to employ less people because they have less work, perhaps even less than he would have employed had wages been able to drop. So in bad times, minimum wage will lead to less emplopyment. In addition, because the workforce is lower, recovery from the downturn when the going gets better will be slower, since new workers will need to be employed and trained.
I don’t doubt your observations that employment is high and there is minimum wage legislation, but I will vehemently dispute any claim that minimum wage leads to higher employment for the reasons I have previously outlined or that it doesn’t have unseen costs that affect the economy and overall employment. My viewpoint is backed up by many economists, but you are free to disagree. This is why I am opposed to social liberals attaining political power, the conviction is that intervention is always an attractive solution, even when the problem is not fully understood.
Seems we’ve got a engineering convention going on here, as I am also in engineering. How did you gain an interest in economics, my path was sealed by frustration with the nanny state and questioning the value of government intervention in people’s personal lives. This brought me to questioning government intervention across all facets of human interaction, which led me down the path of classical liberalism/libertarianism. I wanted to understand the interactions between people, and economics has some very useful ways of describing and analysing people’s behaviour.
Brendan,
I don’t doubt your observations that employment is high and there is minimum wage legislation, but I will vehemently dispute any claim that minimum wage leads to higher employment for the reasons…
Just to be clear: I don’t claim minimum wage leads to higher employment, only that it is not a drag on employment and does protect not just workers but society as a whole by insisting on a minimum value for a human being’s time. To me it is an element of civil rights.
How did you gain an interest in economics,…
When I was a teenager I read everything Ayn Rand wrote (really, even went to the library’s microfilm to read her newspaper articles). I read Thoreau and Emerson and loved their ideas of self-reliance. I subscribed to Reason magazine. Like you, I saw government intervention as causing more problems that it fixed. At university I took what was called a concentration in economics while taking degrees in philosophy and science.
At the same time I was reading a lot of eastern philosophy/religiion, especially Buddhism, and working with the mentally retarded and writing engineering software to support myself as a student. Buddhism emphasizes freedom and finding out things for yourself; it also, like modern biology, points to interconnectedness of all living things. You can’t hang out with the mentally retarded without wondering what would become of them if the government (that is, the citizens benefiting from the economy and protections they provide themselves through government) didn’t play a large role in their care. Software engineering, particularly developing the kind of simulations of physical systems I was doing, also led me to think about systems and how their components interact.
All that led me away from my “pure” libertarian views.
Presumably society would care for them if the government didn’t.
Yes, but would you put your hope in “presumably”?
In the past many families have “taken care of their own” as the saying goes, but many have not. The whole notion of the villiage idiot comes from failure of “society” to treat the unfortunate well.
Then there are the people on the margins. Folks who are not retarded but are nowhere near average intelligence. Snake oil salesmen, used car dealers, employers, and politicians have traditionally take advantage of them. It’s just plain wrong (no need for any intellectual argument in this case as far as I’m concerned) and a decent society needs to take collective measures to ensure care and prevent exploitation for the same reasons we protect children.
Just to be clear: I don’t claim minimum wage leads to higher employment, only that it is not a drag on employment
So you arguing that labour demand is price inelastic? What would happen if you raised the minimum wage by 20%? Would you still argue that it is not a drag/ Why does the value of the minimum wage and the rate at which it increases matter when economists and policy makers set the minimum wage?
and does protect not just workers
How does it protect non-workers? Are these people not worthy of protection?
but society as a whole by insisting on a minimum value for a human being’s time. To me it is an element of civil rights.
From each according to his ability, to each according to his need, eh? We know how well this works.
Minimum wage does not protect society, it simply means that those whose time and labour is economically worth less than the minimum wage unemployable and prevents them from access to employment experience to make their time and labour worth more. The only way to protect them from absolute poverty (and society from the effects of a extremely poor underclass) is welfare. So we pay twice to protect society through higher labour costs and taxation to fund welfare, meanwhile condemning the lowest wrung of society to life as welfare recipients. Nice.
So you [are] arguing that labour demand is price inelastic? What would happen if you raised the minimum wage by 20%?
That’s been done time and again in the USA — no bad effects yet. Apparently there is a threshold below which labor is price-inelastic. Look at the fast food industry where the labor for which is almost entirely minimum wage compensated. It’s doing well here in the States. No one has been harmed, many have been helped. What’s not to like about that?
From each according to his ability, to each according to his need, eh? We know how well this works.
That’s a far too simplistic attitude. The choice is not — and never has been — between pure capitalism and pure Marxism. It’s a trivial exercise to list the historical excesses and disasters related to each extreme. The evidence we have in abundance is actual, working, mixed economies in the USA, EU, and other “developed” nations which are able to produce vast wealth in a distribution that provides a reasonable minimun to nearly everyone. Going the last mile to take care of the small minority who don’t get the “reasonable minimum” is not onerous.
Unemployment statistics in most countries are based on surveys of how many people are seeking work. However if your skills are worth $3 per hour and the minimum is $5 per hour your likely to be discouraged quite quickly and as such you won’t register on the official statistics. Your plight essentially disappears from the unemployment data. Those that show up in unemployment figures are typically those that have skills that the market will buy at or above the minimum wage but not in sufficient quantity to clear the market.
In short the fact that the unemployment queue hits zero does not mean there is no misery created. Underemployment and discouraged job seekers may still be a problem.
Both the EU and Canada essentially prohibit central wage fixing and do it at a regional level. In an economy as large and diverse as the USA you would be better off making minimum wages a state issue and keeping the federal government out of the mix.
Some states and even some cities have passed their own minimum wage laws since it has been so long since the federal minimum wage has been raised.
My personal position is there should be a job available at the minimum wage for any person who wants to work and can not find a “normal” job — even if it’s just cleaning up public spaces. (But why couldn’t it be doing something even more useful?) Sure beats sitting on your ass and collecting unemployment or food stamps or a housing allowance. It’s not like the minimum is so high that people are comfortable at that level or that government supplied jobs at the minumum wage would compete with private businesses.
My personal position is there should be a job available at the minimum wage for any person who wants to work and can not find a “normal” job — even if it’s just cleaning up public spaces.
There is no fixed amount of work in the world, you don’t have to create work for people, but merely allow the market to determine the value of the work. Tax or public debt spent on employment does not have the same effect on the economy as a voluntary transaction between an employer and an employee.
I might recommend Economics in One Lesson by Henry Hazlitt as a good introduction to economics that can expound on many of the ideas we’ve been talking about. It is very well written with quite intuitive analysis and real world application.
You might still disagree with the political philosopy of libertarianism, but knowing the economic impact of your social policies is always valuable.
Economics in One Lesson by Henry Hazlitt is available on-line here and as a 7MB PDF at mises.org here. It’s a very short book and a quick read. Thanks for making me aware of it.
Having read Ayn Rand (Hazlitt was part of her inner circle) and a lot of libertarnian material, I didn’t see anything new in Hazlitt’s work. I don’t mean to insult you, but it seems trite — exactly the sort of cherry picking of examples, over-simplification, and lack of depth that drove me away from libertarianism in the first place.
Still, on the topic of minimun wage laws Hazlitt says something I agree with:
Our minimum wage laws, at least in USA, have been and are extremely modest. Currently it is $5.15/hour and does not cover all employees. It’s quite a challenge to live on $10,000/year in this country, $200/week (and have to pay for your own health insurance). Those figures only apply if you are able to work 40 hr/wk year round. And, again, we have low unemployment so it hasn’t harmed business.
The policy position of the LDP in Australia is to abolish minimum wages and introduce a negative income tax. I think that is a far more effective and efficient way to address any concerns about the income level of marginal workers. It means that workers can always get a job at the price that suits their skill set. However it also means that they get an income supplement if the resulting income is below some benchmark.
The point is to separate out the issue of wages and income. Wages are what workers cost an employer. Income is what a person has to live on.
That’s quite interesting. I’m not sure you can really separate wages from income even with such a scheme. Wouldn’t employers then have more reason to lower their entry level wages?
I don’t mean to insult you, but it seems trite — exactly the sort of cherry picking of examples, over-simplification, and lack of depth that drove me away from libertarianism in the first place.
Economics is about how simple principles can used to explain complex relationships. Cherry picking examples is merely a way to introduce the principles in a way that can be understood by a lay man.
You have in no way shown that minimum wage laws have increased the welfare of American workers, only pointed to the fact that those in employment have increased and that those looking for work have remained low. This is not a refutation of the posit that minimum wages are ineffectual in actually raising the welfare of workers and non-workers alike.
You’ve already stated:
Our minimum wage laws, at least in USA, have been and are extremely modest. Currently it is $5.15/hour and does not cover all employees. It’s quite a challenge to live on $10,000/year in this country, $200/week (and have to pay for your own health insurance). Those figures only apply if you are able to work 40 hr/wk year round. And, again, we have low unemployment so it hasn’t harmed business.
So if minimum wage isn’t working to raise people’s living conditions and isn’t hurting business, then why have it at all? Surely no harm could come, since employment is high, there will be no motivation to bid down on wages, because there will always be other employers to offer more.
Or are you worried about the welfare of people who aren’t working and have no income of their own? If they have no income, wouldn’t any employment be better than none?
You have in no way addressed those that are no longer lookng for work because the value of their labour is below that which employers are legally able to pay. These people move onto long term welfare dependancy or turn to the black market/cash economy, or both. In the black market they have little protection from unscrupulous employers.
Minimum wage laws probably drive illegal immigration as well, since employers who can’t or won’t pay minimum wage will turn to those that will work no matter what. Minimum wage laws do not protect people who are prepared to flout the law anyway.
Simply pointing to employment figures does not disprove the arguments against minimum wage law. You aren’t addressing the qualitative issues that cannot be quantitatively addressed easily. Focussing on those that are looking for work forgets the unseen people who could work and aren’t, and therefore don’t show up in the official unemployment rate.
I feel I am wasting my time though, since by some magic, the government can solve all employment concerns by simply creating work for people cleaning parks, hey? Maybe they can print some money to pay for these work for the dole recipients. Or maybe they can tax everyone a little bit more and set up a donate your big screen TV to a family that can’t afford one scheme to beat poverty.
I love the non sequitur by the way, not meaning to insult me and all. Hazlitt has a much bigger audience than the Randroids you seem to dislike so much, not to mention a significant body of economic thought and literature to support his ideas. You describing his ideas as trite are not going to be enough to discredit the work of the Austrian School of Economics. Much of the economic growth that overcomes the handbrake of minimum wage and hides its impact over the last 20 odd years has come from policy makers applying parts of their theory and the theory of the similarly minded Chicago School. Without this influence, social welfare policies may have done even greater harm.
Brendan,
I feel I am wasting my time though, since by some magic, the government can solve all employment concerns by simply creating work for people cleaning parks, hey? Maybe they can print some money to pay for these work for the dole recipients. Or maybe they can tax everyone a little bit more and set up a donate your big screen TV to a family that can’t afford one scheme to beat poverty.
I really don’t understand your laser-like focus on the minimum wage. The US economy is booming and while the percentage of the poor is nontivial, it’s not like Nigeria’s (which has no minimum wage BTW). To me, the minimum wage is not an issue except for the the relatively small number of people who actually benefit by taking home a little more each week. It certainly can’t be shown to have ruined the economy.
Hazlitt has a much bigger audience than the Randroids you seem to dislike so much, not to mention a significant body of economic thought and literature to support his ideas.
I’m sure you’ll agree that the quality of one’s thinking is not reflected in the size of one’s audience. How many people have read Einstein’s three seminal papers of 1905?
Minimum wage laws probably drive illegal immigration as well, since employers who can’t or won’t pay minimum wage will turn to those that will work no matter what.
That doesn’t explain the case of the Arizona lettuce farmer who had to watch most of his crop rot in the fields because he couldn’t get enough people to work even at $10 an hour, twice the minimum. Same thing happened to a peach farmer in California. Not all the ills in the world can be traced to the minimum wage — not even one.
BTW, the Chicago School is not without its detractors:
I really don’t understand your laser-like focus on the minimum wage.
Because it is an easy first step since it is clearly not needed because of your farmer:
That doesn’t explain the case of the Arizona lettuce farmer who had to watch most of his crop rot in the fields because he couldn’t get enough people to work even at $10 an hour, twice the minimum.
I would like to see the role back of the state now, but starting with the superfluous parts first gets people accustomed to not looking to the state first rather than last to solve their problems.
Your lack of labour for the farmer may be partly down to concentrating the unmployed in housing estates in cities, another great state initiative. Flood areas with an abundent source of under and un-employed people, thus ensuring that low wages will remain through cheap government housing, meanwhile places where there is work can’t attract the workers because of lack of labour mobility.
So, I try to convince people that rolling back regulation where it clearly isn’t needed, and hope that this gets them on the path of thinking about other areas where state regulation exists that also isn’t needed.
Hazlitt is Austrian School, but their ideas are reasonably aligned with the Chicago School. I fully repudiate Pinochet and his regime, Friedman was wrong to embrace a dictator.
The problems faced by Chile are an example of why economic freedom is not wholely independent of individual liberty, but since 1989, the democratic government of Chile have moved forward to address inequity without turning their backs on market liberalisation. However, you are overly pessimistic about Chile’s prospects, as this World Bank report indicates, Chile is experiencing 5% growth at the moment. And the OECD thinks so too. Interestingly, the OECD article does indicate that reform is needed of their minimum wage, noting that it had grown faster than real wage growth for both skilled and unskilled workers. Reform of the minimum wage is better than unhindered growth, even to someone like me who can’t see the need for it at all.
As for right wing members of the Nobel Prize board, the Nobel Prize is completely discredited when it goes to people like Yasser Arafat (terrorist), and Henry Kissinger (supporter of dictators). Kissinger won his for ending a war that hadn’t stopped and Arafat won his for bringing peace to the Middle East. You don’t have to tell that the Nobel Prize is a gyp.
[...] Feministing: Children Benefit When Dads Take Time Off From Work A report published today by the Equal Opportunities Commission and based on research tracking 19,000 children born in 2000 and 2001 found emotional and behavioural problems were more common by the time youngsters reached the age of three if their fathers had not taken time off work when they were born, or had not used flexible working to have a more positive role in their upbringing. [Curtsy: Trinifar] [...]
The damage done to business is not what concerns me about unemployment. It is the damage done to the unemployed individuals and their communities. Minimum wage laws are a blight on our respective societies. The fact that the reality is veiled from so many is half the tradgedy. The fact that politicians willingly exploit such ignorance cements the deal.
But again, all evidence seems to go the other way.
Trinifar – We can play a game of does, doesn’t but it might be more useful if you present the evidence that you think supports the counter argument. Or else we can just agree to disagree.
I am surrounded by the evidence, Terje, and bet you are too. From the introduction of the minimum wage until today, the USA has enjoyed phenomenal economic growth — economic engine of the world and all that. You can find studies that say it actually stimulates the economy as well as ones that say the opposite, but the end result is we still have managed to generate enormous wealth in traditional terms.
Similarly with the welfare state bashing that some are so fond of. Sure EU nations and Canada have their issues, but they’ve experienced tremendous economic growth while providing a safety net and universal health care. They have longer life expectancy and lower infant mortality than the freer-market USA.
A business that pays less than a living wage is relying on government-supplied social welfare to make up the difference (or is willing let people starve or go homeless).
Similarly with the welfare state bashing that some are so fond of. Sure EU nations and Canada have their issues, but they’ve experienced tremendous economic growth while providing a safety net and universal health care. They have longer life expectancy and lower infant mortality than the freer-market USA.
Much of Europe is facing severe fiscal problems in funding their social welfare problems, particularly their pension schemes, as the workforce grows older and there are less workers through lower population growth. Europe’s population may be growing, but it is largely growing through people living longer, not through people having children. If there are less than 2.1-2.3 children per women, then you are not even replacing the existing population’s workers and immigration is the only solution. However Europe has significant cultural barriers to immigration, racism is deeply seated in many of the progressive welfare countries you speak of, and parts of the continent are becoming ghettoised, particularly France. With high costs of employment and strict laws associated with dismissing workers, Europe doesn’t even have jobs for the few youth that it does have and the masses of immigrants it attracts, some of which can be attributed to the very social welfare programs that you find attractive.
Would you be surprised to hear that there are some banlieues of Paris in which the gendarmes do not like to enter and when they do it makes world headlines? Germany has similar problems with Turkish immigrants. Europe is not a non-workers paradise.
The European social democracies may well become economic backwaters without some serious market liberalisation. They are seriously in danger of killing the pig.
Just like Marx thought capitalism would fall of its own weight, I’ve been hearing dire predictions of Europe’s downfall due to its welfare programs for my entire, rather long, life.
Talk to cops in any large American city and they will be the first to tell you the parts of their city they don’t like to police. Typically the parts with the highest crime rates get the least police protection and the longest response times. We used to call them ghettos but the word has fallen out of use.
Just like Marx thought capitalism would fall of its own weight, I’ve been hearing dire predictions of Europe’s downfall due to its welfare programs for my entire, rather long, life.
Seriously, Trinifar, with all due respect, you are but one person and have but one lifetime. Problems with pension schemes are inter-generational, there impacts take decades to make themselves felt.
So you remember the French riots of 2006? These riots were due to employment law reforms which would enable French employers to hire young workers under 26 years of age on 2 year temporary contracts, basically the equivalent of a 2 year probabtion period during which the employer can dismiss the employee at any time. This was in response to unemployment rates amongst under 26 year olds of around 23% and to address the problems of France’s dismissal laws that make it just about impossible for a worker to be fired once they have secured a job.
The thinking on this goes that if an employer cannot have a trial period to see whether a new employee is really suited to a job or not, then they are going to a lot more cautious in hiring people and will likely hire less people, because a mistake at the recruitment stage could still be costing you 40 years later. Whereas under a probationary employment contract, both the employer and employee have more flexibility, because if for whatever reason a job does not work out, the employer can terminate the contract and if the employee is disatisfied with the job, they can also leave to pursue other opportunities. Employees are less likely to leave a bad job when unemployment is 23% than they are when unemployment is 5%, since obviously there are more job opportunities available. This gives young workers an opportunity to find what it is they want to do with the rest of their lives.
Unfortunately the French students saw the reforms as an attack on their right to a job for life, and riots were the result.
http://en.wikinews.org/wiki/Riots_greet_French_government’s_labor_reform
Anyway, the reforms were also enacted to reduce the welfare budget and increase the tax revenue to pay for the rest of the great French social welfare system.
Talk to cops in any large American city and they will be the first to tell you the parts of their city they don’t like to police. Typically the parts with the highest crime rates get the least police protection and the longest response times. We used to call them ghettos but the word has fallen out of use.
Which is exactly my point. If cities in America have ghettos with only modest social welfare and cities in Europe have ghettos with massive social welfare, then does social welfare lead to a increase or a decrease in poor urban people? The difference in America is probably that your ghettos are full of the working poor, whereas in France they are full of the non-working poor. Which group have a better chance of escaping poverty?
Trinifar – as an aside you may be interested to know about the Australian superannuation system. I think it is similar to what gets called privatised social security in the US political lexicon.
http://en.wikipedia.org/wiki/Superannuation_in_Australia
Brendan,
I agree with you that the French have a problem in their economy with respect to their employment laws. Apparently it is quite different in other parts of Europe (most of my experience their was in the UK which, like America, has its share of Auzzies floating around). In the US an employer can layoff employees (i.e. make them redundant) at will.
Still, the French economy is a powerhouse, and they live well.
Terje,
Your superannuation system sounds a lot like our 401(k) program which that same Wikipedia article links to.
Further back in this discussion I mentioned a negative income tax in conjunction with a minimum wage of zero. Trinifar you are right that this would lead to a reduction in some wages. They would drop to the market clearing rate. In addition however there would be more jobs created for the low skilled. And the income level of workers is topped up with what is effectively a social wage. The burden falls across the breadth of the tax base rather than falling narrowly on the unemployed and those that employ (or would employ) low skill workers.
Still, the French economy is a powerhouse, and they live well.
The 23% of unemployed French below the age of 26 don’t live so well.
The UK has approximately 300,000 French citizens living within its borders, predominantly in London. Even the French presidential candidate Sarkozy felt it necessary to campaign in London last January, stating that London was one the great French cities.
In recent years approximately 15,000 French citizens have been coming to the UK’s capital to pursue a more laissez faire dream. Even the French property market is being driven from English wealth, with many villages of Franch becoming dominated by English holiday home owners and retirees. France’s lifestyle is attractive, but the French are increasingly unable to afford it.
France may well be a large economy, but it is excluding much of its population, driving some of them into ghettos and others overseas, and taxing many to the point that they can’t afford the lifestyle that France is famous for.