“[T]here is always a well-known solution to every human problem — neat, plausible, and wrong.”
– H.L. Mencken
A growing movement in the United States seeks to dramatically increase unemployment by imposing ever higher price floors on salaries. The recent conversion in the US of millions of full time jobs to part time to evade new health insurance requirements for full time employees was apparently an insufficient increase in human misery – the elimination of most entry level work on even a part time basis is now also apparently a goal.
For example, see this New York Times article reporting on a recent on fast food workers strike”one day strike by workers at fast food restaurants.
Now, to be fair, most of the people clamoring for new impositions on employers like health insurance and increased minimum wages are in fact unaware that their efforts will simply throw people out of work rather than helping them. Their goal, and I take them at their word, is to attempt to help the poor, not to destroy all hope they have for the future. The fact that their proposals (and sadly, in many cases, actual laws) do exactly the opposite of what they intend is difficult to convey to them.
This seems to be for two reasons. The first is that they are often completely unacquainted with economic thinking, and are unashamed of it or at least believe this ignorance to be irrelevant as economics is not needed (in their view) to analyze their proposals. Second, and worse, they completely focus on their desires over the likely real world effects of what they propose.
Attempts to point out the actual effects of a proposal (and how they are the opposite of what was intended) are often met with one of two responses, and sadly sometimes both. The first is blind repetition of the original rationale (e.g., “but poor people can’t afford to raise their families on what they earn at a fast food restaurant!”) without any attempt to address the question of whether the proposed remedy will in any way fix the original problem. The second is the demand “well, what would you propose doing?”
(As an aside, I will describe one my more vicious tactics, which I’m mildly ashamed of and invoke only when particularly frustrated by combined cases of “well what do you propose?” and “but there is a problem!”
I sometimes mention that my father has been dead for years and I miss him terribly. When I propose to sacrifice the children of the minimum-wage advocate to Baal to propitiate the god and ensure my father’s resurrection, and mention that, if they don’t like the proposal they should give me an alternative, frequently they decline to offer one. Sadly, they rarely see the parallels to their own suggested fixes for the problems of the poor either.)
The desire to help by destroying extends everywhere these days — one can barely open a newspaper without encountering it. For example, there is now a “labor activist” jihad against unpaid internships, which has, sadly, seen some considerable success in US courts and regulatory agencies.
The result is already predictable. Internships are starting disappear entirely. People clamored for such internships not because they enjoyed working for free but because they desperately wanted to get real-world job experience onto their résumés so they could get a paying job later. Legions of college students, deeply in debt from loans pushed on them by the state and having majored in utterly useless topics like “Communications”, will soon find themselves unable repair the damage their education has done to them even by offering to work for free in exchange for experience, and will be even less employable. Victory for the self-proclaimed “advocates”, misery for the putative objects of their “assistance”.
A sort of minor victory for the market appears to be brewing, however.
It will not, sadly, provide jobs for the poor and unskilled. Jobs can only be provided by an employer who stands to make more by employing an individual than that individual costs to employ, and, in the case of workers at the bottom of the skills ladder, paying an employee less than they cost has been made illegal by the state.
These new developments will, however, at least lower the cost of goods that are sold to everyone, including the poor, and they may keep the economy from contracting under the dead weight of yet more labor regulation.
I am speaking, of course, of automation. More and more companies, faced by the “helpful people destroying others lives” lobby, are figuring out ways to replace their employees with machines.
I opened by mentioning the recent fast food restaurant strikes. Should the various “labor organizers” succeed at increasing the cost of restaurant labor, one result may be that such jobs could vanish altogether. A startup called Momentum Machines is already working on fast food restaurants with completely automated kitchens. They claim that they will be able to produce a better, tastier and more consistent product as well. Whether this particular firm succeeds or not is almost irrelevant — if they do not, the idea is out there, and others will follow in their footsteps.
Similarly, faced with increasing pressure to improve pay and benefits for semi-skilled assembly line workers, Foxconn, the Chinese contract electronics manufacturing giant, has decided to replace almost all of those workers with robots. Whether this was entirely because of the helpful assistance of “activists”, including some who simply made up stories about the company for lack of real problems to discuss, or is simply because the time is ripe, I cannot say. Regardless, Foxconn has already deployed its first 20,000 robots.
I find it hopeful that, even if we cannot prevent the legions of well-meaning destroyers from wreaking additional havoc on the lives of others, we can at least bypass their more egregiously foolish ideas. They may be able to eliminate jobs for millions, but they will not be able to eliminate the industries they target, which will simply operate without human employees.
It is not about actually helping people, it is about feeling good about Doing Something and it hardly matters what the actually effects are.
You are correct that is is hard, verging on impossible, to actually convince people that what they are suggesting will have, at best, no effect… and more likely, the opposite effect.
I rarely even try and instead think it is a better use of resources to just make sure the blame gets assigned to the guilty parties and to encourage people who suffer from these policies to despise people who advocate them.
The Nature of the Firm Ronald Coase-1937
When internal transaction costs are increased (such as by minimum-wage laws applied to organizations of production) the Firm will downsize, or reduce activities.
This is the converse of reduction of transaction costs by organizing production as the internal activities of the Firm.
It’s real complicated isn’t it?
As a corollary to Warren Buffett’s theorem to the effect that there is no limit to the amount that one may lose by continually investing in businesses that one does not understand:
There is no limit to the amount of damage that some may do by continuous intervention into transactions that they do not understand.
PdH scripsit: “You are correct that is is hard, verging on impossible, to actually convince people that what they are suggesting will have, at best, no effect… and more likely, the opposite effect”
It is hard, but clearly not impossible. Most libertarians I know originally had different views, which they eventually became convinced to change through interaction with people who disputed those views. Thus we know that at least some very small fraction of the time the ideas take root. (I am not an exception — my views when I was young were unspeakably statist, and I was disabused of them only because of the efforts of a colleague at my first job out of college.)
Naturally, since most people are not libertarians, we know, if only operationally, that most people will not be convinced, or at least will not be convinced by the methods we currently use. On the other hand, it seems from what I can tell that there are now more libertarians about than ever before and that the ranks are growing very steadily, so the effort has not been entirely useless.
Quoth RRS: “There is no limit to the amount of damage that some may do by continuous intervention into transactions that they do not understand.”
Violently agreed.
Perry just said almost the exact thought that has been in my head. The way I’ve been thinking it, “You don’t care about the poor, you care about caring about the poor. Big difference.”
These people who care about caring about the poor, first (unlike people who genuinely care about the poor) need a continuing supply of poor people otherwise the opportunity to care about them goes away. They are sacrificing the wellbeing of others for their own pleasant feelings of righteous do-goodingness. Their motivation is not the feelings and wellbeing of others, it is their own feelings.
The context in which I usually have this argument is child* labor in third world countries. They want it banned. I ask them why they want families in poor countries to starve. Is this part of their Malthusian plan to decrease world population? They are generally incoherently offended at this point.
People with good intentions who are causing harm get one do-over after someone has made an effort to show them the real harm they are causing. If they insist on continuing that same harmful activity, they have demonstrated themselves to be violent, self absorbed and immoral people. Calling them such to their face and pointing out that it is really their own pleasure they are seeking at the expense of others will usually at least jostle their cocoon if they have any moral fiber. If nothing else, maybe some bystanders will be quietly enlightened.
*With the US now having pushed the definition of ‘child’ up to 26 years old for medical insurance purposes, I suspect most of the third world children are economically and morally wiser and more mature than their self appointed advocates.
This has the makings of a comedy of errors. Which Perry? Perry deH or Perry M? 😀
Ah, I see that I am on Perrylous ground.
I am referring to PdH’s:
Once understood, this truth explains an awful lot. Or a lot of awfulness as the case may be.
Does it? I’m willing to bet that most middle class Americans know someone who is in that middle ground of not being able to afford healthcare or medicine but are too well off to be eligible for public assistance. It’s too easy to dismiss people who want a change in the system as being just in love with the idea of wanting to help more than wanting to help. I don’t want more government intervention (if for no other reason than government intervention is a lot of the reason the system is so flawed now), but I also don’t enjoy watching my mother suffer from an orphan disease and the one drug her doctors want her insurance refuses to pay for because it isn’t in their rulebook and is far too expensive to pay for out of pocket.
For myself, I decided long ago that it was best to take my ideological enemies at their word when they claim to have a particular concern.
Although they might be lying, perhaps even to themselves, it rarely seems fruitful to explore that. For one thing, it has no impact on whether their public claims are true or false — we may (indeed, must) analyze those without any resort to ad hominem analysis of the speaker. For another, I myself resent it when my enemies claim that I actually truly want the poor to starve in the streets (or something similar) and am only professing concern — I see no reason not to grant them what I ask them to grant me, which is to say, the benefit of the doubt as to the sincerity of my motivations.
Once one goes down the path of debating “true intentions” instead of arguing the substantive points, one gets into endless cycles of meta-analysis, distraction, and attempts at impossible feats of remote psychoanalysis.
I prefer to simply stipulate, even if I cannot possibly conceive of how my opponent could not have evil motives, that if he says his motive is to help people that for purposes of the conversation we will assume that this is his motivation.
So, for myself, I just act as though they’re telling the truth about what they want and show that their proposals will do something entirely different, if not something entirely in opposition to their stated desires. That is enough to demonstrate their program is bad. If their actual concerns are elsewhere, I happily wait for them to tell me and begin anew — the results are rarely different anyway.
Perry (M this time!), if someone’s actions clearly are causing harm, and they persist, then questioning their reasons is not just permissible, it is obligatory. I have been on the receiving end of too many claims of “good intentions” to ignore the harm of leaving it go unchallenged.
Yes. I do the same thing. It is what happens next that determines whether they are a good person or not. That is what I was referring to when I said “People with good intentions who are causing harm get one do-over after someone has made an effort to show them the real harm they are causing.” To grant moral absolution for any deed qualified by “I meant well” is to grant license to any ethically challenged predator willing to lie. Regardless of whether any particular person is stupid or evil, allowing repeated use of that defense is systemic suicide.
“To grant moral absolution for any deed qualified by “I meant well”[…]” — I am neither a deity nor a priest. I have no power to grant moral absolution to anyone. When I’m discussing topics like minimum wage laws, my goal is only to show to the other party and anyone listening in that the idea is harmful and should be opposed. I am not qualified to do more than that.
It has nothing to do with religion. The idea that only religious people can have morals is itself repugnant.
Absolve.
In any discussion with someone who is persisting in harming others in defiance of evidence of harm, failing to hold them accountable is absolving them. Your are doing no favors or courtesy to either them or their victims. You are, however, opening an avenue for willful liars to manipulate and plunder. It might help to remember that minimum wage laws were original created to drive blacks out of railroad jobs so white union members could have them.
Steven R:
Would it be correct to summarize your position as “Many people, including my mother, are in a crappy situation, caused by government’s stifling of competition between insurance companies and the FDA’s making it ungodly expensive to sell a drug to willing and informed buyers, so while I do not “want” more gov’t intervention, I want the gov’t to intervene”?
So your answer to your problem is “make somebody else pay for it”. And what were you willing to sacrifice before you arrived at that solution. And you do realize that people with even fewer resources will be helping you pay, correct?
No, my position is I don’t have an answer and neither does anyone else. I don’t like the system as it exists now, but I like my mother constantly in pain because some bureaucrat’s rulebook even less.
For all the e-bloviating about market reforms and economic theories and supply & demand charts and proper role of government, there is no easy answer to fix the problem. The e-libertarian position of getting government out of the picture, hoping Wall Street is somewhat moral, and letting everyone else die in the street if they can’t find the money sounds great on paper, but how many are willing to tell their family members they are going to die because daddy just can’t pay for the medicine, but yay! capitalism? How many are going to tell their kid they could walk if daddy could afford the leg braces, but someone’s stock return is more important? How many people are going to tell their parents to just suck it up and die quietly because government shouldn’t be in healthcare at all and the available government healthcare system is an unconscionable evil just in its existence?
Even if their ideas would work in the real world and not just on paper, there is no way to sell those ideas to people that are watching people they know suffering with some disease or disorder or lack of medicine. If the free market can’t (or won’t) fix the problems they make, it shouldn’t be a big shock when people turn to government hoping it will fix the problem. That it never does is beside the point. People just see the problems never going away and the Pfizers and Bristol-Meyers Squibbs of the world raking in the dough while their grandmothers can’t afford medicine. It’s ugly.
Spreadsheets are nice, but gets trumped by compassion every single time, for good or bad. But worse than that, the logic of our positions becomes uncertain when our family members are concerned.
To be fair, it’s understandable why there’s been discomfort over internships.
At one time low or non-wage employment to gain work experience was common. I, myself, started a career in the City on not much more than the travelling expense plus pocket money. And in very short time was doing the same job a conventionally employed co-worker was making 5 times as much to do. It was a way parents, who could afford it, started their offspring in the world of work. Subsidised their employment. Wasn’t just white collar jobs, either. The print was the same, for a start. Why print jobs were almost hereditary employment. The relatively highly paid printers could afford to subsidise their lads through the apprenticeships.
Minimum wage & employment laws were supposed to stop this & level the playing field.
But now we have ‘internships’. And lets not kid ourselves. You only have to look at the job requirements to see these aren’t just ‘work experience’. They’re fully productive positions. Relative of mine is typical. Three of his daughters have been through ‘internships’. Far as they were concerned they were just unpaid jobs, with all the otherwise usual responsibilities & expectations. Cost him the equivalent of at least the average wage, each time, because he’s funded the girls to a reasonable lifestyle. Free of tax, of course, because they don’t pay any.
So we’re right back where we started, aren’t we? With the well off being able to buy advantage. And what irks is the sectors that use interns the most. Political parties, media, charities, advertising etc etc. Seem to be the same people who were most in favour of the minimum wage for everyone else.
We’re getting into Judge Dredd’s world in a hurry! That place had riots because people were bored, because robots had taken all the jobs! These minimum wage maniacs (miniacs?) are bringing it closer and closer!
Steven R.
Just wait until obama’care’ is fully implemented – you’ll see a LOT of people denied drugs, treatment etc. based on cost – it will NEVER be stated that way but that will be the reason. It won’t be capitalism – it’ll be our wonderful benevolent and generous government saying ‘so sorry, NEXT’ !!
The fact that gov’t never solves anything SHOULD NOT be ‘beside the point’ – it should BE the point until enough people understand that running to government to ‘fix’ everything simply does not and never will work.
You want cheaper drugs ?
Abolish the FDA.
Reduce the 800 million to 1 BILLION dollars it costs today to bring a drug to market. The cost is mostly because of the incredible amount of testing that has to be done for side effects. This testing is necessary because if aunt Bessie gets a case of flatulence after taking Zippledorf for her bunions then ‘Slick the ambulance chaser’ shows up Pfizer or Merck or whomever is now out a gazillion dollars because, according to Slick,
the drug is faulty
it wasn’t tested enough
it wasn’t tested long enough
the testing pool was too small
on and on
Get the lawyers out of it and stop stupid ideas like
I’m sorry, but we can’t give morphine to the terminal cancer patient because they might become addicted !!!!!
Steven R, you obviously know nothing of capitalism. If only there was some resource available, easily accessible…oh wait, there is.
But Perry, what about Australia? They have a minimum wage which is twice ours, and there is minimal employment. Among white folks, anyway. There’s twice as much unemployment among the Aboriginals, but let’s not talk about them, shall we?
Steven,
I’m sorry to hear about your mother.
I think the accusation of wishing to be seen to do something, rather than wanting to help, is primarily focused on the activist class. Politicians, journalists etc. No doubt there are genuinely well meaning people but I doubt many of these are politicians.
The most generous thing you can say about the activists is that they are all heart and no brain. Unfortunately this is far from the truth and it is in fact about power. Compassion has very little to do with it.
Nobody is claiming that a libertarian society would be paradise on earth for everybody. There would still be poor, ill and hungry people. But I firmly believe it would be a better place to live for most people, for many of the reasons already mentioned by others.
I suspect that the government (or the key people in it – and the intellectuals who support them) is quite happy that more and more full time employed people are being turned into part time employed people.
Happy because now more people will be dependent on government benefits – indeed I believe this was the intention behind the various policies that have been followed.
Already about half of all American households have someone dependent on the government in them. And it is much the same in most of Europe.
It is later than most people think.
Indeed, I believe, it is already too late.
Russ, the commodities boom allowed us Australians to coast on high wages, but it is now slowing down, and minimum wage laws will impede our recovery from now on. You should always take context into account. Australia will have a harder time now, whoever wins the election.