No you don’t get to get away with that. You don’t get to advocate policies which allow you to use force to deprive people of their jobs and their opportunities and then claim that those who would have provided the jobs are the heartless ones.
You don’t get to trot out the insipid, mindless, tendentious talking points about how you are morally or intellectually superior when every “solution” you proffer is destructive and is based upon forcing others to do your bidding. You don’t get to decide whose job is worth preserving and whose isn’t and still claim the moral high ground.
You have to own this. You have to accept responsibility for the suffering your ignorance has caused and you have to understand that there is no way forward as long as you remain ignorant. Until you can begin to think rationally instead of being so full of hate that you think the best solution to every problem is to use force against those you disagree with then you can’t be accepted into the company of decent people and will always be seen as supporting those who would oppress us because that is exactly what you are doing.
– Pseudonymous commenter BenFranklin2 delivering a mighty and artful kick to the bollocks on someone else defending state imposed minimum wages, which are leading to restaurants closing in Seattle. Scroll down from main article as the link to the comment itself does not seem to work.
h/t Natalie Solent for finding this article.
Well, I don’t think he should shilly-shally around like that. *sniff*
I don’t know, they get a very strange clientele of commenters over there. I saw two by somebody calling himself “evilhippo” (I’d swear that does seem vaguely familiar, but….) And then another by a “Kim of the Roof,” very strange moniker but the comment was certainly pertinent.
Anyway, if anybody runs across an Evil Hippo (though I don’t really recommend it), tell him I applaud his remarks.
I must say Mr. Franklin seems to have found a highly appreciative audience.
Indeed, Natalie, thanks for the find, and to Perry, for posting.
By the way, one commenter remarked how they were discussing things at Cafe Hayek and Boudreaux was pointing out that because employers of low-wage workers often give them what amounts to additional pay in the form of flex-time arrangements, or hours off, or other non-financial goodies, increased minimum wage is hard on low-wage labor: these perks are harder for the employer to afford. Interestingly, the young lady who periodically shears my woolly locks told me that she hoped the minimum-wage hike would fail, for precisely those reasons. Hair Cuttery would no longer be able to send her to workshops in NY for further training, so forth. She said several of the girls were quite upset about it.
I guess you don’t absolutely have to have a postdoc in econ to figure out the deal.
The core element of the piece is this one:
Based upon a 4% margin and a typical yearly profit of $28,000 – where is this going to come from other than reducing headcount, reducing quality or reducing hours. I also suspect that the reason that many restaurant businesses are not commenting on the up coming minimum wage increases (over the next 3 – 7 years) is that they want to sell their existing businesses while they can.
“I’m from the government and I’m here to help” as Ronald Reagan used to point out, the most feared words in the language – it doesn’t matter that this is very localised. These are real businesses and real jobs that are being destroyed.
You’re right JG.
But I’d add owning and running a restaurant is (a) capital intensive for set-up and therefore risky and (b) bloody hard work. Now who is going to want to do that for $28,000 p/a?
Things started going south here in Colorado when the Dem Cong took control of the state house and senate, and the governor’s office, some years ago. They raised the minimum wage, prices jumped overnight at local eateries. The local Subway sandwich shop raised their prices to what I consider to be unacceptable–they periodically carry a pastrami sandwich, which cost $8.75 for a foot long the last time I looked. That’s crazy. Hell, I went to Burger King recently, it cost me over $9 for a meal. I don’t eat out much anymore.
Part of the problem is that if you say “prices will rise” in a place like Samizdata most readers will understand that the implication is falling demand and that therefore the number or size of businesses supplying that demand has to drop — along with the employment they provide, obviously. But when you say “prices will rise” to a lot of people their reaction will be, “But the average customer makes more money than the workers in the restaurant, so that’s okay.” They don’t connect the dots.
Darrell, there’s plenty of overpriced fast food out there. My local cafe, as a counterpoint, does a good quality full english breakfast with a latte for £5.80 (approx $9)
Tedd has it exactly correct.
I’m not sure “prices will rise” is an absolute truth in this circumstance.
Certainly costs will rise as wages are a cost and legally enforced minimum wages doubly so. If there were decent margins in retail food then it wouldn’t be so much of a problem, but single digit margins don’t allow a whole lot of room for manoeuvre.
Sure, it’s easy to say that this is a supply / demand scenario and that very low margins are a sign that there is an oversupply, but it is also true that very low margins are a sign that competition is healthy.
Not sure any of this will be helpful to anyone, overall I suspect that the number of people employed in the retail food sector will decrease in Seattle over the next 3 – 7 year as marginal businesses go bust and those that remain raise prices to stay afloat.
Not sure how that helps anyone apart from the few employees that manage to keep their jobs and I suspect they will be worked a lot harder to earn that $15 / hour than they would really like, but since so many restaurants will have closed the job opportunities won’t be there any more.
Whose betting that the restaurants revise their tips / tronc rules to ensure more of it gets shared by non-front of house staff – or even taken entirely to ensure that the $15 / hour gets properly accounted for including tips.
I suspect that Seattle waiters will eventually regret the unintended consequences of all this.
The waiters, yes, but not the people voting or pushing for this… the people who make the rules are rarely the people suffering the consequences, rarely the ones who will loose their jobs.
And a great many people vote to make themselves feel good, even if it fucks up the lives of others they are ‘helping’ ostensibly in reality (the leftie arsehat in that thread is a perfect example). Indeed people often vote certain ways even if it messes their own lives up, just as long as it only does it indirectly (that way someone else can be blamed).
See, for example, Fair(sic)trade.
I wonder if they have taken inflation into account? After all, $15 may not be enough to buy an apple in seven years time…
I guess nobody reads Connecticut Yankee in King Arthur’s Court anymore. Nice discussion of wage control flaws in there, but hey, it’s AT LEAST 100 years old by now, so what does it matter?
and it was nice to see that Mr. Kim of The Roof is still around to annoy the right people…
Fred the Fourth: I read it recently, as a matter of fact. It can be a bit patchy but yes, that part stuck out.
Quite so Perry.
“BenFranklin2” is correct.
The leftists in Seattle (and in San Francisco and….) have got what they wanted.
Now they consequences, the unemployment and homelessness, must be draped around their necks.
No bullshitting, no blaming of unemployment and homelessness on “the rich” of “big business”, should be tolerated.
The leftist activists should be told clearly and loudly….
“See that person in the cardboard box without a job or a home – what has happened to them is YOUR FAULT, you did it to them, you are responsible.”
Politicians get away with this because people don’t identify where cost increases come from. Perhaps all meals and menues should have a list of all the taxes that go into the price of every meal, so people blame the legislators instead of assuming that the proprietors just raised prices for no reason.
If petrol stations did that the tax and duty would have come down years ago.
Well, that’s the way the phone bills look, taxes, fees, surcharges broken out and itemized, and I haven’t seen anybody giving up his telephone lately. (Although as I understand it, more of what are effectively taxes are included in some of those Fees and Surcharges.)
Fah! Worrywarts, if restaurants reduce quality we will just make more laws and send round more inspectors to ensure those not complying are forced to with fines and restrictions on trade. Therefore your alleged “reduction in quality” cant happen because we have banned it.
And if they arent willing to comply with our new expanded regulation then they can just close, its not like “I’d” eat there at such a pleb joint anyway.
Oh and your rates and charges just went up to pay for the new inspectors as well, but its for your own good you know. After all if we didnt hire one uni educated inspector on $100,000 a year then we couldnt regulate 100 $20,000 a year jobs out of existence.
I have a small fast food business, its still small because council regulations mean I cant use the other 1/2 of the building for anything.. Statist freaks.
Q. How do you end up with a small fortune?
A. Start off with a large fortune!
People are becoming much more conscious of what they eat. The current gluten free phenomenon is part of this. I’m part due to being diagnosed with type 2 Diabetes in Sept 2012. I stopped eating wheat and have dropped 50 lbs in weight and the diabetes is in full remission. I am now making many meals from scratch and eating at home and consequently less restaurant visits. Seattle will be a leader in food changes. Look at MacDonalds sales dropping 4% in February. Seattle’s neighbour Vancouver BC is increasing their minimum wage to $10.45 an hour in Septemeber and will change it based on CPI in BC each subsequent September.
Ah yes, connecting the dots. There’s a few dots in this thread that libertarians struggle to connect too.
….looney lefties pass arithmetically challenged rules to promote “fairness’
…generating higher prices and fewer jobs
…until even the loonies lives get affected adversely (though they don’t connect the dots to their voting habits)
…so they look for pastures new, where houses and cheaper and jobs more plentiful
…and so they move from California to Colorado, taking their nasty lefty opinions with them
…and vote the Dems into power in Colorado
…who then pass arithmetically challenged rules to promote “fairness”
…stir and repeat
Meanwhile libertarians tut from the sidelines, repeating the core mantra of the faith :
THERE ARE NEVER ANY NEGATIVE SIDE EFFECTS OF IMMIGRATION BY PEOPLE WITH AN ALIEN CULTURE
THERE ARE NEVER ANY NEGATIVE SIDE EFFECTS OF IMMIGRATION BY PEOPLE WITH AN ALIEN CULTURE
THERE ARE NEVER ANY NEGATIVE SIDE EFFECTS OF IMMIGRATION BY PEOPLE WITH AN ALIEN CULTURE
…stir and repeat
NG:
About twenty years ago a gas (petrol) station in Saskatchewan started to advertise the price of gas less taxes on the sign out front (with the full price in very small characters underneath). It was only a couple of days before the government forced them to stop. Can’t let the rubes know how the game is rigged!
Ted, Saskatchewan is in Kanadia, isn’t it? In Southern Kanadia, also known as America, they mumble about free speech a lot. So those south of the border could do what I suggest. how about it non-saskies?
@Tedd:
This is what gets me about the UK government attitude to petrol prices. UK Prime Minister David Cameron was recently chastising oil companies for not reducing prices quickly enough, but considering that about 60% of the costs of a litre of UK unleaded petrol are various duties and taxes, the UK government has more control over the price of petrol than the oil companies do.
It’s a bit like going into Waitrose for a couple of yams and then cursing the African farmer for his greed because of the price.
The collapse of big government can’t happen soon enough in my view.
Costs for a Litre of Fuel
@Tedd in Prêt-à-Manger they add a statement to receputs saying something like ‘If you eat in, we are legally obliged to add VAT at 20% to the bill. nightmare.‘ and that other Lefty hate object Starbucks shows the tax – VAT at 20% – clearly on receipts.
Our gracious host makes (tangentially) a very good point.
I would make (and win) a small wager that this measure was not supported (and was likely tacitly opposed) by people who work as wait staff. It’s been my observation that most people who work as waiters in the US make a very decent average hourly wage for what is basically low-skilled work – certainly well-above minimum wage – due to the American process of tipping.
As one of them once explained to me – do the math. Even in a budget-type ‘family’ restaurant, if you can wait on 6-8 tables an hour, each one having an average check of $20, and they tip the average of 10-15%, that’s between $12 and $24 per hour on top of your hourly rate. Even after you pay the customary cut of your tips to busboys and hostess, you can still make a very decent wage waiting tables – as much as many skilled workers with extensive training and experience. Some hours are better than others, of course, but on the average, it’s a good way to make a decent income. In a high-end restaurant – the sky’s the limit. I know a waiter at the Chop House in Ann Arbor, MI, who can easily take home $300-400 for a night’s work. That’s stripper money, as he says. Now, he has to adhere to a very strict dress code, and he’s a bloody good waiter – but still. . . . . Tending bar in a popular watering hole can be another license to print money for a person with essentially zero training and credentials.
I’ll wager that this measure was overwhelmingly supported by those who work in fast-food and food service positions where tipping is not the norm. Unskilled or semi-skilled labor and McDonalds and Burger King. And those are the people who will, overwhelmingly, feel the inevitable negative impacts that will inevitably result from this misguided regulation. In my part of the world, fast food jobs already pay more than the State and federal minimum wage – says it right on the marquee – but not almost 100% more, as this regulation requires.
I think this sort of regulation speaks to a subset of the population who tend to see wages like this as being a career thing – how can I live a decent life and raise a family on minimum wage? It ought to be higher! Most people readily grasp that minimum-wage jobs tend to be transitory and/or a stepping stone to something better – as McDonalds regularly proves, by trotting out vast cohorts of managers and franchise owners who started out working the lowest-wage jobs under the arches. But some people see jobs like this as being as far as they can go – they can’t ever progress beyond flipping burgers or hauling trash – and so they tend to think that if that’s the only career arc they can achieve, that it ‘ought’ to pay as well as many other career arcs. The votes and political support of such people are easy to win. Naturally, when the chickens come home to roost, the politicians who were elected on this platform will have moved on – and if they haven’t, well, of course, it’s easy to blame the failure of the policy on the ‘greed’ of the employers.
Fast-food jobs in the shale-gas boom towns of the Dakotas pay well-above minimum wage, as do a thousand other menial and low-skilled jobs, and it’s easy to climb the wages ladder. Maybe the cure for the alleged ‘low wage’ problem in Seattle is to wallpaper the town with adverts for job openings in Minot and Williston. But something tells me that this has more to do with the progressive, ‘hipster’ ethos of Seattle than with the real-world jobs situation of its restaurant employees.
llater,
llamas
I’ve been doing that for years. Hurrah for Big Government!
If you can’t afford to pay restaurant workers a living wage perhaps you aren’t rich enough to eat out.
Drinking nice wine and eating fine food while being served by people on poverty wages isn’t a very sophisticated or civilised way to spend an evening.
“Drinking nice wine and eating fine food while being served by people on poverty wages isn’t a very sophisticated or civilised way to spend an evening.”
Thing is, it’s very unlikely that the person serving you nice wine and fine food is making ‘poverty wages’, or anything like it.
You should be directing your ire at people who eat at McDonalds and Burger King. Eating delicious burgers and drinking ice-cold Coke, all prepared by people working ‘poverty wages’, isn’t a very civilized way to eat.
But them we might consider that McDonalds and Burger King is good, nutritious food, sold for pocket-change money, and is often the least-worst food choice for many poor people.
So tell me, Pete – why do you hate poor people so much that you want to eliminate what may be one of their best, cheapest food options, by pricing it beyond their reach?
llater,
llamas
The primary folly of all interventionism is the failure to realise that prices are a reflection of reality, not reality itself. Changing prices therefore is not changing reality but denying it.
It is bad enough that interventionists suffer from this delusion privately, but unfathomably worse when they inflict it on the public.
Pete:
Please refer to my comment of March 15, 2015 at 3:24 pm, which you seem to have missed.
I am not paying restaurant workers anything. I am paying the owner of a business to make and serve me some food, and he pays his employees. And he is doing so with typically a 4-5% profit margin or thereabouts.
But you are right, restaurants should be for rich people, we must price the little people out of the market by increasing labour costs so that only restaurants catering to a wealthier clientèle who can afford to support higher rates of pay can eat out. Other people have the right to impose this by law why exactly? Because we prefer people to be unemployed and living off tax handouts I guess.
Perry,
It is not dissimilar to the UK minimum price per unit for booze. It disproportionately penalizes the poor. It has no effect on those buying a particularly cheeky Chablis.
Perry, I haven’t suggested any new laws.
All I’m saying is that it isn’t very sophisticated or civilised to eat out in a place where people are paid poverty wages.
Poverty wages shame us all, as does unemployment on poverty level benefits.
They demonstrate our inability to arrange our society so everyone has at least a basic, decent and dignified standard of living.
How longer will we pretend that a good work ethic, a determination to become educated to the best of your ability and a desire to try hard at work will ensure a decently waged job for anyone who wants one?
It’s becoming increasingly evident that this is just not true.
Indeed Nick, these are effectively Sumptuary Laws designed to keep the wrong kind of people in their place.
Then people need to stop voting for politicians who prevent all manner of wealth creation in oh so many ways.
I have yet to hear a serious libertarian say that is true in the current state regulated environments found in most of the First World these days. But I would venture it actually *is* true in Hong Kong.
@ Pete – how glad I am that you are there to tell me by what I should be ‘shamed’, and how unsophisticated and uncivilized I am when I stop and Mickey D’s for a delicious burger and fries. However did I know myself before you came along to set me straight?
Don’t get me wrong – I’m all for everybody having a ‘basic, decent and dignified standard of living.’ It’s just that I figure – based on centuries of human experience – that trying to ‘arrange’ society to achieve that outcome is quite-possibly the least-likely way to achieve it. ‘Arranging’ is just another word for ‘compelling’, and when the power to compel is deployed in the name of doing good, the original intention is inevitably hijacked – either by the ignorant (as we see in the Seattle case) or the venal (take your pick). Such efforts inevitably backfire, sooner or later, and almost-always to the detriment of those that they were intended to help.
The way to create more wealth for everybody is to create more wealth for everybody – not to compel wealth to be given to some people by taking it from others at the point of a gun – which is what minimum-wage laws all boil down to. And the only successful way that has ever been found to increase wealth for everybody is not founded on increasing compulsion, but by decreasing it, to the very lowest levels it is possible to tolerate and still secure individual safety and liberty.
If you want to increase food-service wages in Seattle, the way to do it is NOT to pass a law that says “on such-and-such a date, you shall pay your staff $15 an hour. Or else.” Such laws are intrinsically suppressive of economic activity, growth and wealth creation – the exact opposite of what you want. Far better would be to say ‘what laws, taxes and regulations could we repeal so as to make restaurants in Seattle cheaper to operate and so more-attractive to diners?” Because if you make restaurants more-attractive – then more people will come to them – and the increased demand means more demand for labor – which means higher wages. And you didn’t have to put a gun to anybody’s head to do it.
Simples, really. But, since it offers nothing to rent-seekers, vested interests or politicians, expect it to continue not to happen.
llater,
llamas
I had assumed that this was facetious but then I saw your next post.
Turns out gluten is a not a cause of poor grammar. Phew.
llamas,
“If you want to increase food-service wages in Seattle, the way to do it is NOT to pass a law that says “on such-and-such a date, you shall pay your staff $15 an hour. Or else.” Such laws are intrinsically suppressive of economic activity, growth and wealth creation – the exact opposite of what you want. Far better would be to say ‘what laws, taxes and regulations could we repeal so as to make restaurants in Seattle cheaper to operate and so more-attractive to diners?” Because if you make restaurants more-attractive – then more people will come to them – and the increased demand means more demand for labor – which means higher wages. And you didn’t have to put a gun to anybody’s head to do it.”
That is a QOTD and of course the same principle applies way beyond Seattle and way beyond food service. It is so general and (I’m not taking away anything from you here in saying this) so obvious it doesn’t occur to pols because, apart from anything, they all have to be seen to be doing something all the time.
Well that’s been tried, look at Mao’s China and the Soviet Union. Turns out you have to follow policies that involve mass starvation and mass murder, but you cannot plan an economy, or ‘arrange society’ as has been amply demonstrated. North Korea v South Korea, East Germany v West Germany. North Vietnam had to destroy South Vietnam, all because they set a tempting example to the unhappy slaves of the socialists, with which they could compare their wretchedness.
What you could do, is ensure that policies are in place to permit the rapid accumulation of capital and to allow people to own property, and then competition for labour and rising output should raise living standards. How many people working on a ‘sub-living’ wage have smartphones?
Go back 20 years and no one would have known what a smartphone was. All because businesses were left alone to develop them without being organised.
@ Mr Ed, March 16, 2015 at 5:10 pm
Tell it to the Bleeding Hearts, Cato, and people who think Zwolinski, Brennan, Tomasi, and the like are Great Philosophers.
But this, from llamas on March 16, 2015 at 1:10 pm, is just beyond the pale.
You must not have gotten the memo. Everybody knows that MickeyD’s and BK serve nothing but junk food, making their millions by causing people to become grossly overweight and diabetic.
Small piece meat, 2 small slices bread, tiny salad, 2 T milk in the cheese, and of course those dreadful French Fries, which if properly cooked absorb very little oil or fat.
Frankly, I want to wring the necks of supposedly intelligent people, like the normally sensible Tammy Bruce, who are apologetic about admitting that they do once in awhile like to indulge in such “junk food.”
Tchah.
I think it is vile processed muck actually but if people want to eat that, well fine. However I am very much of the view McD or someone of their ilk will eventually automate employees out of the serving and preparing process entirely and thus will save certain people for having to worry about the wages they pay.
This.
I’m glad to see this because in all the furore about this I haven’t really seen this point made- the people who frequent the restaurants that will be the first to go are the very people on the very low wages that this measure is (ostensibly) attempting to help. Even if they are lucky enough to keep their jobs when their employer downsizes they will have been priced out of the market for cooked food.
while I’m on the subject… I haven’t done the sums but will the restauranteur making only $28,000 a year for himself be guilty of failing to pay himself the minimum wage? Or doesn’t he count because he’s a filthy capitalist?
In fact people earning $7 an hour in the US – even if they didn’t get tips – are doing pretty well materially. Far better than their ancestors for all but the last fifty years or so, and far better than most people in the world, which explains why all those Mexicans very reasonably want to get out of Mexico and into the United States. We do not see poor Oregonians trying to sneak across the border into Mexico.
Its only because free markets work so well – even when horribly hamstrung by nutty regulations and huge taxes – that pete is in the luxurious position of imagining that $7 an hour is poverty. Try $7 a day.
The minimum wage is theft. It basically says “here are people so deficient in useful skills that they can’t command what I consider to be a decent wage, so we have to force someone to pay it anyway”. Which, stripped to its essence, is forcing the cost of welfare (and anything above market rates is welfare, nothing more) onto one small subset of people (employers) instead of spreading it around all of productive society.
Being rational about an issue just proves to a leftist that you don’t really “care” about it.
Laird:
That’s a very good point. But I do think it behooves us to ponder how people who are not able to create economic value are going to live, given that present trends suggest they will be a growing proportion of the population. I agree that a minimum wage is not a smart way to address that. But somewhere around 15 percent of the population has an IQ below 85, and it’s getting harder every year for them to compete with machines. Before long it will likely not be possible at all. But they’re not going away. And perhaps before very much longer any IQ below a hundred will have trouble competing. I’m inclined to think that’s likely to shake things up more than any of the other things I hear people fretting about.
Tedd, I remember reading books in which people were linked to computers, and the computer augmented their IQs. don’t worry, technology will enable you reach 100 soon! (IQ AND age!)
No, the minimum wage is not theft, cos you are not required to employ anyone if you don’t want to. (Yet.) But it is a restriction on your liberty and on the liberty of the people who would like to work for you at less than the minimum wage. But apart from being immoral on that score, it’s also a very bad idea economically – though a pretty popular one. Voters, like the people they elect, are generally poor at microeconomics.
But Laird is right – there are unemployables. No doubt their numbers are artificially inflated by the debilitating effects of several decades of welfare, and state education run for political rather than educational purposes, but even if you got rid of all that, the rise of the machines may well increase their numbers anyway. I’m not sure it’ll only be the 85 IQ folk who will find that the free market wage for their skills is zero (or less.) There’s no economic law that says that all humans are inevitably of economic value to their fellows. Consequently their fellows will either have to feed them, or let them starve.
Tedd, I don’t disagree with that. But it’s a societal issue, to be addressed and dealt with by society as a whole (just as with any other welfare scheme). Foisting the entire cost onto employers is morally objectionable.
Laird,
“Which, stripped to its essence, is forcing the cost of welfare (and anything above market rates is welfare, nothing more) onto one small subset of people (employers) instead of spreading it around all of productive society.”
If only it were so simple. You say “market rates” which is fine, but… What are “market rates” in a gerrymandered economy? It’s like rent controls and stuff like that. The minute there is any meddling a “true” market rate becomes impossible to determine.
What are “market rates” in a gerrymandered economy? It’s like rent controls and stuff like that. The minute there is any meddling a “true” market rate becomes impossible to determine.
Hmm. Bit of a ramble. I was glancing again, as one does, at Mises paper on the impossibility of “Economic Calculation in the Socialist Commonwealth” where he makes the same point, in reverse. His piece is about economic calculation after the Socialist Commonwealth has triumphed, ie it is about a theoretical Socialist Commonwealth. Not the real Soviet Union (circa 1920) which he explains – because it is not worldwide – is able to piggy back off the price mechanism in the remainder of the world. Soviet planners are not totally clueless about prices, because there are still free market prices being set outside the planners’ zone of control. Whereas in the Socialist Commonwealth, there wouldn’t be any external market prices to guide the planners. They would have nothing but historical information about what prices used to be in a different world, immediately before the eclipse of capitalism. Obviously the whole paper is intended to poke “scientific socialism” in the eye – ie never mind the problems of socialism in real life, it can’t possibly work even in theory.
But NickM’s reverse point – ie any hint of a government finger near the tiller, and true market prices are undiscoverable – strikes me as true, but false, if I may be allowed such an expression. If the government controls rents, say by imposing an inflation adjusted maximum rent per square foot, but that is its only intervention in the economy, and it never changes its rent policy, then wouldn’t the price system work out how to organise all the other prices in the economy, subject to that rent constraint, including (I assume) allowing everyone to maximise his own welfare, subject to that constraint. It may be that for most people that welfare is lower than what it would have been absent the government rent control, and it may be that every price in the economy is different from what it would have been absent rent control, but the market is still doing plenty of useful work. ie if we just have rent control we are still likely to be far better off than if the government regulates more widely, and fixes prices more widely.
Or rather we had better be. Because there can never be a “free market” outside the realm of theory. There will always be some government intervention, and even if a magical Perryland were to emerge, there would still be foreigners to trade with who would have government interventions screwing up “true market prices.” So “true market prices” must be as fantastical a construct as Mises’ Socialist Commonwealth.
Is not one of the main arguments advanced by free market folk that the price mechanism works in the real world not just in the fantasy world – that free-er markets are an improvement on less free markets, even if they are not, and can never be, perfectly free ?
Indeed, Lee. I often like to think of various bullies, criminals and mere meddlers (including governments) as forces of nature – at least in this context, if not in a fully real sense. Although contrary to what most would think, that does not make them inevitable or at least impossible to overcome – after all, humans have been able to overcome gravity and defend themselves from sever weather.
Exactly so, Alisa. I was going to add in an extra ramble along precisely those lines, but I felt I had rambled enough. Though if the government were merely an artificial hill, we could deal with it easily enough. Or artificial wind and rain. It’s when it decides to take an animate form – responding to our moves with its own new countermoves – that things become harder to deal with. A hill is not an opponent in game theory terms, just an obstacle. The government, alas, is an opponent.
NickM, I’m not trying to quantify “market rates”; I’m simply using the phrase as a shorthand way of saying “anything more than the employer wishes to pay and the employee is willing to accept”. There is no such thing, not even theoretically, as an absolute “market rate” for anything. In practice it doesn’t matter if the economy is otherwise “gerrymandered” (by which I presume you mean economically distorted by government); you can still have buyers and sellers agreeing on a price within that context. My point is that forcing the “buyer” (in this case, the employer) to pay a higher price than would otherwise be required by market forces constitutes theft (Lee’s objection notwithstanding).
Laird,
Point taken. And yes, I did mean the government dicking around in the market. Perhaps the difficulty with defining it as theft is that surely theft has to be quantifiable* and with a rigged market that is undoable in the sense that you’d have to try and figure what things would be like without it.
*Except I dunno. How much is a Van Gogh worth? Depends on the day at the auction – up to a point.
Yes, the reserve price of Van Gogh paintings certainly excludes me from the market for those original artworks entirely.
Nevertheless, it is to my self-interest that if someone must be excluded from that market, it should be me, and not an industrial tycoon, for if his vastly greater contribution to production did not enable him to live at a better level than I do, I would be in serious trouble!
Perry, I haven’t suggested any new laws.
All I’m saying is that it isn’t very sophisticated or civilised to eat out in a place where people are paid poverty wages.
Poverty wages shame us all, as does unemployment on poverty level benefits.
They demonstrate our inability to arrange our society so everyone has at least a basic, decent and dignified standard of living.
How longer will we pretend that a good work ethic, a determination to become educated to the best of your ability and a desire to try hard at work will ensure a decently waged job for anyone who wants one?
It’s becoming increasingly evident that this is just not true.
@Pete,
Interesting. Just out of interest – what do you propose? How can we improve the current situation?