It sounds like your usual Bill Maher complaint that some of you may be quick to dismiss, and ultimately I don't know if I entirely agree with it either. But there's more to it than first meets the eye, and it hinges on questions of wage bargaining, monopsony, etc. in a lot of ways.
So what is the economic science behind intuition like this? What's your take on it?
Posts
Well, saying that "Uncle Sam will have to" presupposes an ethical framework where the government is obligated to support those who cannot support themselves. If you're for cutting handouts, it's likely that you don't share that mindset to begin with, and so what Maher is saying here poses no problem.
ReplyDeleteOf course, from a practical standpoint, welfare and Medicaid and such aren't going to be dismantled anytime soon. But intellectually I don't think this is the slam dunk that Maher is likely convinced it is.
"Well, saying that "Uncle Sam will have to" presupposes an ethical framework where the government is obligated to support those who cannot support themselves. If you're for cutting handouts, it's likely that you don't share that mindset to begin with, and so what Maher is saying here poses no problem."
DeleteWell, on the one hand, this is certainly true; you probably won't give much weight to a debate over policy means if you don't support the ends.
But I want to note the irony of talking about "those who cannot support themselves" when we're discussing the minimum wage, a government program whose benefits redound 100%, with no exception whatsoever, to those who are working, and whose benefits increase the more one works.
If we had no minimum wage, and somebody who worked 80 hours a week every week without any break or vacation at $3/hr complained about being unable to make ends meet at $12,480/yr, would you say they were among "those who cannot support themselves?" If there were no minimum wage, what obligation would "Uncle Sam" have to low-skilled Stakhanovites? What if this person is married to a similarly hard-working but low-paid individual? Who should watch their children while they work 11.5-hour days, 365 days a year? How are they supposed to build wealth?
The economic intuition is simple - "regulation" and "tax-and-transfer" are two different methods by which a government can accomplish a policy goal, each with different kinds of costs and benefits. If a government is committed to a goal - in this case, ensuring that every member of society has a floor on the share of social output which they are entitled to claim - then it will always use some mix of "regulation" and "tax-and-transfer" to meet that goal. The optimum balance of methods is case-dependent, but rarely is is 100% one or the other. This is why a carbon tax does not totally supersede all the need for regulation of carbon emissions, though it does supersede some of that need. And it is why a purely tax-and-transfer approach to anti-poverty is impoverished without some regulatory approach as well. For any given policy mix, at the margins there may be less deadweight loss to increasing the minimum wage vs. the EITC, and for others the reverse is true.
ReplyDelete1. A society has a moral obligation to take all reasonable actions to prevent its members from starving to death.
ReplyDelete2. If a given person wishes to contribute to their own non-starvation, they ought to be able to, regardless of how small such a contribution is.
Under anything remotely resembling a liberal political framework, (2) flows naturally from (1). Without trying to Sumner/Boettke my opponents too much (which I know you hate, sorry), I genuinely believe that there are large chunks of people on the left (Maher included, but by no means exclusive to him) that do not so much agree with (1) as much as they want to see the super rich and corporations get hurt by something and they think that a higher minimum wage is a good way to hurt them. Therefore they support it, regardless of its effects on anyone else - even when the economic consensus was that higher minimum wages caused significant dis-employment, these same people still supported it.
"A society has a moral obligation to take all reasonable actions to prevent its members from starving to death."
DeleteWhy?
Society gives modern people huge opportunities compared to almost any era of the past. Some people don't take those opportunities up. In my view, that's their problem not anyone else's. If they starve to death I don't care. "Society" isn't killing them, in fact society is helping them by giving them opportunities that they wouldn't have otherwise if they lived in a natural environment for humans.
Think about what will happen to society if we bail everyone who's in trouble out. The consequences should be obvious.
Of course they want it both ways. They want to convert government to welfare, then cut welfare in the name of charity, then cut charity in the name of 'true charity'. 'Are there no workhouses? Let them die and decrease the surplus population. ' They may not believe in evolution, but are whole hearted supporters of social darwinism. They will deny it every step of the way while declaring it not only ethical but the only ethical path, even noble, consecrating their own desires as what should be, must be.
ReplyDeleteThis seems pretty nonsensical. The only way this makes sense is if those employees would not take those jobs at the current wages if it wasn't for welfare. (Since the job wouldn't be enough to live on and if you're going to starve and be homeless, you might as well not spend your time behind a McDonald's counter.) So cut welfare and the employers of unskilled labor will have to raise wages so they can hire people. No need for the minimum wage.
ReplyDeleteI am fascinated with how this discussion has gone.
ReplyDeleteI think the political economy of the statement is interesting but personally I think it's a little off. I would rather have our poverty fighting on budget if we're going to be doing poverty fighting collectively.
But that's a side issue. What I was interested in this quote was the issue of bargaining over a surplus vs. reducing labor demand. The sort of raw market power monopsony model (the monopoly model flipped upside down) suggests that there is surplus to fight over. Even search and matching models that are generally preferred nowadays have a Nash wage bargain. The whole idea of the minimum wage as enabling low income workers to make Colonel Sanders pay them more kind of harps on those wage bargaining themes.
Isn't it generally accepted that there is a surplus and that the minimum wage would allow some workers to claim a bigger chunk of it? I'm not sure how it relates to the Maher quote. Care to elaborate?
DeleteThe idea that Col. Sanders is "paying" for it. I am almost certainly importing an economist's significance into what Maher meant literally. But the very idea that this is a question of bargaining or power between workers and employers is only allowed by a search model or an old school monopsony model, and not a classic competitive markets model.
DeleteThis starts out with a pretty shaky premise. What "lady behind the counter" is he talking about, because when I go into KFC it's almost always a kid working. If it's someone who strikes me as supporting his/her living, they typically have a badge that says "assistant manager". Interestingly, the one I went to the most went out of business. I knew they were in trouble when they were running without AC last summer in 100 degree weather. That makes me wonder how many are barely profitable the way it is.
ReplyDeleteDK wrote: "I would rather have our poverty fighting on budget if we're going to be doing poverty fighting collectively." I agree.
Overall, I have a real concern that increasing the minimum wage to late 1960s levels is basically a handout to children of rich families, while simultaneously pushing low skilled workers out of a job.
We children of rich families don't go work at KFC. It's not as thought there is much to be learned at such a job compared to the many better opportunities which can open up if your parents have money.
DeleteYa I found this interesting too. We frequent KFC... the only people that I ever see working there are adults and I don't think they're rich.
DeleteThat's not to say that kids don't staff minimum wage positions - of course they do. And a share of them are rich. But I think there's a lot more to this than it being just a handout to rich families.
Interesting. It could be sampling bias. There are only two I go to and one closed down. Also, the economy is not as bad in KC as most of the nation.
DeleteSorry for the confusion. When I said "rich kids" I was actually picturing middle class. I was picturing those headed to college.
"We children of rich families don't go work at KFC. It's not as thought there is much to be learned at such a job compared to the many better opportunities which can open up if your parents have money."
Sorry for the confusion. When I said "rich kids" I was actually picturing middle class. I was picturing those headed to college. I agree that for those headed to college, such a job has minor value in future career opportunities. For those not headed to college it is a crucial first step in your career path. At the same time, everyone I know who makes 50k + per year had a minimum wage job in the past. I think those jobs are very important and I worry there will be fewer of them with a higher minimum wage.
"That's not to say that kids don't staff minimum wage positions - of course they do. And a share of them are rich. But I think there's a lot more to this than it being just a handout to rich families."
It bothers me to expect fast food to take on the role as provider of "living wage jobs", even though I used a minimum wage job as a living.
I worked within 10% of minimum wage for 7 years of my life. I worked 32 hours a week in high school at a gas station to have spending money and save for college. Then the job helped me raise my family, while completing college. It was low pay, but flexibility was very important with me going to school.
I was always conscious of the fact that by keeping that job I was keeping some high school kid from getting their first job. I thought about that fact every time someone brought in an application. I think that causes me to look at this issue a bit differently.
The entire statement is complete nonsense.
ReplyDeleteFirst, Yes, you can have a smaller government with no minimum wage at all. That was the condition of the US from its inception until 190x, depending on where you lived. Does Bill, do any of you, believe that the bottom 5% of wage earners from 1700 to 1900 died of starvation or exposure every single year? We indeed did have both of the allegedly utterly incompatible conditions, for something like 200 years.
So the crux of his statement "you cannot have both" is demonstrably false.
Secondly, why should one expect to be able to live independently, or support a family of any size, on a near zero skill job?
Thirdly, on what basis does Bill claim that KFC is "highly profitable"? KFC has ~18,000 stores, and did ~$15,000,000,000 in revenue last year, or about $833,333 per year per store. Not profit. Revenue. All year. Bill Freaking Maher makes more than that per year, and he is complaining about KFC being a fat cat?
Bill is first and foremost an entertainer, much like Rush Limbaugh, and they both say things like this that get people to say, "Yeah, right!?" but when you unpack what either one of them say its bullshit.