Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!linus!philabs!cmcl2!husc6!seismo!ll-xn!adelie!mirror!gabriel!inmet!nrh From: nrh@inmet.UUCP Newsgroups: talk.politics.misc Subject: Re: Libertarianism & selfishness Message-ID: <7802376@inmet> Date: Fri, 12-Sep-86 03:17:00 EDT Article-I.D.: inmet.7802376 Posted: Fri Sep 12 03:17:00 1986 Date-Received: Mon, 15-Sep-86 05:43:29 EDT References: <1103@princeton.UUCP> Lines: 545 Nf-ID: #R:princeton.UUCP:-110300:inmet:7802376:000:27055 Nf-From: inmet.UUCP!nrh Sep 12 03:17:00 1986 >/* Written 2:50 am Sep 7, 1986 by mangoe@umcp-cs.UUCP in inmet:net.politics */ >[When is inmet going to fix its "references" line bug?] > >>>Assuming there were jobs to be had. THe economy is quite able to function >>>at perfectly awful levels of unemployment; unemployment is therefore purely >>>a social issue, and one which libertarians can only hope will magically >>>resolve itself. > >>If you keep a bunch of people in jail, and then open the doors, is it >>"magic" that makes them leave? How about if you keep a bunch of >>people in chains? Economic chains? If you let them go, is it too >>much to hope that they can make lives for themselves? > >But the analogy is incorrect, because the analogy to the above passage is >that there were jobs which people were *prevented* from taking. That's not >what we have, however. The problem supposedly is that people refuse to take >jobs which presumably being offered to them. Oh? Try and get a job as a plumber in New York: you need to be a member of the craft union, and it's *very* hard to get in. Ditto for electricians and carpenters, taxi drivers ($100,000 medallions in NYC). Some of this stuff is quite unskilled, but you don't get to do it unless you have the contacts. >>Of course not. And yet we hear things like the above -- the notion >>that unemployment would remain solid in the face of otherwise stable, >>free, conditions, that people who are artificially prevented from >>working (those whose economic output is below the minimum wage) will >>not find employment if we get rid of the minimum wage, the income tax, >>and licensure, and that to think otherwise is to depend upon "magic". > >Well, it IS magic. It depends upon faith in the workings of a supposed >science whose appelation of "dismal" should not be applied to its outlook, >but rather to its record. Hmm... I suspect you haven't studied much economics. It's record is very solid with respect to predicting shortages when prices are artificially controlled (low), and lack of demand (gluts) when prices are pegged (artificially) too high. Certainly it is not a predictive science, but certain principles are extremely well founded, and you'd do well to pay attention to them (despite your earlier claim to a lack of faith in economics). If you examine that record (that of price fixing) you'll find, I think, that economic predictions related to market clearing in the case of artificial price controls are quite solid, if qualitative. >That the job market will clear when free of >restrictions is an assumption of economics, because the equations cannot be >worked otherwise; but the job market never clears, and the reasons for this >are hotly disputed. Huh? "the equations cannot be worked otherwise"??? Which equations are those? When Daniel Mck. allows that there would still be frictional unemployment in a free society, he didn't use the word "zero". >Given the state of economic understanding, and >considering the past performance of the economy, I cannot understand how any >conclusion at all can be justified. Quite so -- therefore we do not dare meddle, correct? We should STOP meddling -- because we might make some aspect of things infinitely worse than it would be without government interference, and given this lack of understanding, NO assertion may be made to justify ANY government intervention. >>Let me introduce one sobering fact to Charles: before minimum wage >>laws, teenage unemployment was essentially the same for black and >>white teenagers. Nowadays, it runs about 16% for white teenagers and >>about 38% for minority teenagers. > >Post hoc reasoning. This covers the same time frame as the tremendous >migration of blacks from the deep south into the north. In a period of such >radical social changes, particularly with respect to racial attitudes, there >are plenty of causes to hang this discrepancy on. Quite so -- let me support it a little more: you are a prejudiced employer. You have two possibilities for filling a position. One person is black, and willing to work for $1.00/hour. The other is white, and willing to work for $3.00/hour. Which do you hire, assuming that your greed is sufficient to make these two folks equally attractive choices at those prices? Answer: you toss a coin, and half the time the black guy wins. Now the government steps in, and, for their own good, requires employees to accept no less than $3/hour. Now the two prospects are NOT equally prejudiced: you no longer need to flip the coin -- you choose the white worker, because your greed no longer acts to counter your prejudice. Is this testable? In broad, certainly. If, as Charles suggests, the migration of blacks to the North was responsible, we would see no particular change in black unemployment in the south, right? After all, this migration would lower the number of black people, but wouldn't lower the number employed, especially as welfare benefits were (as I recall) higher in the North, and so tended to draw off the unemployed blacks. So, Charles, prove me wrong: show that black teenage unemployment went down or remained about the same as white teenage unemployment in the South, or show me the flaw in the logic. >>The unemployment of these people is, of course, only one aspect of the >>problem of unemployment, but one that may be laid solidly at the >>doorstep of the state. I find it particularly enlightening that >>this particular "progressive innovation" has been used in some places >>(such as South Africa) deliberately to exclude blacks. Where do YOU >>stand on minimum wage, Mr. Wingate, and why? > >My position is that the minimum wage exists to prevent employers from paying >people less than they can live upon. Therefore the economic goal should be >to arrange things so that this is no higher than the wage rates which clear >the labor market. > Why would anyone take a job that was less than they could live upon? It would mean certain death! Far better to become a thief! > >>Having rejected the notion that people might behave reasonably, that is, >>they would try and find jobs, and failing that appeal for help to those >>who can (legitimately) contribute to them, you then create a sort >>of "struggle of class against class" notion that appears to be based >>on the idea of a welfare cutoff tomorrow. > >You simply cannot claim that the current system is irrational and then >complain with a straight face that others are denying rationality. In point >of fact, irrational concerns are exceedingly important in economics. Perhaps another simple misunderstanding: I do not claim that the current system is irrational: I claim that it is wrong in the sense that it has been sold on the basis of incorrect arguments, and that it serves, not the people it is supposed to serve, but rather the politically astute. >>I don't propose to cut off welfare tomorrow. I propose to do it gradually. > >What makes you think that a gradual dispair is going to be any less deep >than an instant dispair? No -- I think giving people a chance to adjust to a major change is preferable to slamming it down on them all at once. If I were to pump, in one second, all the air into your lungs that you were going to inhale that day, you would die. If I simply stand aside and let you breathe it, you prosper. >>Consider for just a moment what you're saying! If your contention is >>that people who haven't held jobs can't understand what jobs are, and >>how to keep hold of them, perhaps you should consider to what extent >>this is true of people on welfare. THEY aren't holding jobs. They aren't >>building skills. In fact, if you think about it, both groups of people >>can be robbed by the criminals, but those learning something >>are working their way out of a bad situation. Those on welfare are >>not. > >THe fact remains (and it appears to be a fact) that there is a whole >subculture out there which knows nothing whatsoever of a work ethic. A >large part of the unemployment problem in urban areas is simply to get these >people to understand what employers demand, and then convince them that >fulfilling those demands is worth it to them. So? Do you understand WHY it wouldn't be worth it to them now, when minimum wage is less attractive than welfare? Is it so tough to catch on to the idea of work that you think these folks just can't do it? And if not, why should folks who CAN work subsidize this "subculture"? >>>When they find that they cannot feed themselves >>>and their children working at McDonald's, then what? Do we really need this >>>sort of underclass? > >>You have some basis for thinking that your projections (which seem to >>me to rest on static assumptions for example: that people in low-level >>entry positions don't regularly move up, and therefore that those >>workers receive no long-term benefit from working (since they are >>victimized)). > >Well, they all can't move up; there are (or should be, anyway) many more >workers than managers. And typically, the lowest paying jobs don't hold >much promise of advancement. No, they don't. But once again, you've got the "there are only so many jobs" idea in front of you. How many fast-food jobs were there in (say) 1960? How many in 1986? It seems to me that I remember the formation of Arthur Treachers's, Arbees, and a few other large chains (as well, to be sure, as the death of Royal Castle). The lowest paying jobs are platforms. From there you can jump to school, to higher seniority jobs within the joint, to manager of another franchise, to meeting someone who offers you a completely different job because he's impressed. >>As (I think it was) Tim Sevener has remarked, socialists make overly-static >>assumptions sometimes. Not to call you a socialist - I think the error holds >>true for statists of all stripes. > >Well, things start out where they are now, so first you have to explain how >economic forces are going to put things to right. No -- I don't claim that economic forces will simply "put things to right". I merely argue that the outcome will be acceptable, and ultimately superior to what we have now. I would offer, as exhibit A, the massive deregulation of England coincident with the start of the Industrial revolution. (Detractors will note that France, heir to the same technology, had nothing like the economic performance of England. Those wishing details are referred to Bastiat). >Secondly, you have >explain why they will stay there. But Charles! You've already disavowed any faith of economics as a predictive science, so there's no basis for making economic predictions! >The evidence of the past is that the >economy isn't necessarily driven away from states of economic distress, and >furthermore, that it seems to have regular tendencies to head towards such >states. Yes -- but under thoroughgoing governments as well. Remember "Stagflation"? That it could happen at all put an enormous hole in Keynesian economics. >So any politico-economic theory has to first deal with the present >situation. Okay, but in what sense? My proposal is that we start deregulating things that CLEARLY need not be regulated. For example, let's sell off free and clear rights to the EM spectrum in our neighborhood; let's allow airlines to buy and sell landing slots to each other; let's get rid of all tariffs (over a 5 year period) and do the same with farm price supports (over, say, a 10 year period). >>Another assumption in your model is that the "criminal class" members >>find themselves with no better options than remaining criminals, that is, >>that society finds no accommodation for the increase in employable >>people. Nonsense -- unless, of course, the state gets in the way again >>by doing something like artificially requiring unions. As Daniel >>Mac Kiernan (hope I've got that spelling right) remarked, there's >>no reason to think there'd be anything but frictional unemployment >>in a really free society. > >Well, Mr. Mc K. is exceedingly optimistic; one could just as easily assert >the opposite, that there's no reason to expect that things would be >different. Assuming of course, that we all agree that we've never had a >"free" society. No -- he's merely extremely well informed. Let's hear the scenario for hardcore unemployment in a free society. Remember: we aren't talking about people on charity, or who CAN'T work: we're talking about people who want to work but can't find jobs. >>>Now I'm not arguing that what we have now is in any way good or desirable. > >>Sure you are -- you've argued that it's the only thing between us and >>the formation of a unique criminal class. It's an interesting criminal >>class, too, because among its members are people supposedly too infirm >>or incompetent to be employed! > >Wrong on many counts. First of all, these are objections, not assertions. You said: > Judging from the information I have, these people will *not* go out and get > jobs, not at first anyway. They will form into a criminal class, robbing > and stealing to feed themselves. THose who do go get jobs, being confused > about what work requires, will be fired in large numbers, and will be > victimized by the others. When they find that they cannot feed themselves > and their children working at McDonald's, then what? Do we really need this > sort of underclass? If you MEANT to say "I'm AFRAID of this happening, but I'm not sure", you should (I think) have been a little more clear on that point. It's certainly sounds like a pretty definite paragraph to me, unless you agree that either your information is pretty meager or your judgement not sound. (No shame in this! I certainly don't claim to be able to predict the future!). >It is my *fear* that if welfare were eliminated, there might not be a >substantial increase in employment-- not because the welfare rolls are lined >with the infirm and incompetent, but because the economy may not need to >offer them jobs. But you've already made the point that you've no faith in economic theory! So you have no sound basis for such a fear! >What would be far more desirable is to somehow convince the economy to offer >a wage to the point where people won't want to live on welfare, and to have >an economy which wants to employ every available worker. Oh, if only this could work! But it has a built-in problem. Some time ago it was suggested that perhaps people on welfare should be issued "purina people chow", that is, some sort of extremely cheap but nutritionally adequate food. The objection was the the people eating it would be artificially separated from the rest of society. This objection will be raised, even more forcefully, if welfare were set well below the minimum wage. "How DARE they offer only this PITTANCE to those on welfare!" the reformers will thunder, as they have thundered in the past! Never mind that the welfare benefits are high by world wage standards, never mind that you need do nothing but fill out forms and satisfy bureaucrats to stay on welfare -- it will sooner or later be argued that we shouldn't have welfare so far behind minimum wage. This is the sort of thing David Friedman is talking about when he points out that political systems have a hidden dynamic, just like economic ones, that prevents "real justice" from happening. >We cannot rely >upon the economy to do this on its own at this point because economics >simply isn't well enough understood. On the other hand, there's no obvious >way to legislate this into existence. So in my view the problems are >twofold: > >(1) Try to break the welfare mentality. >(2) Figure out how to get the economy to stabilize at full employment and a >living wage. What is a living wage? >... >>>Assuming that jobs are available, we need >>>to make these people want to get off the dole, while at the same time giving >>>them the support they need to learn how to work. Seeing as how this is a >>>societal cost and a societal problem, it should be paid for through taxes, >>>but there's no reason why most of the work should not be contracted out to >>>private concerns. > >>Hah! Feeding everyone is a "societal" concern. Therefore we should >>subsidize it through taxes, right? Amusing everyone is a societal >>concern (to avoid rebellion) so the state should make sure the news >>is amusing, right? > >Do you expect the air to do it for you? So-called free market capitalism >isn't the only way to run a society, after all, and while the evidence is >that that what we are doing now is better than what many others are doing, >that contains no assurance that libertarianism or some system we haven't >thought of yet is going to be better or worse. I'd be delighted if someone came up with a better strategy for feeding people -- DO let me know when you hear of one. But merely asserting that there are others avoids the question: which one do you pick, and why? And, more important, if you and a bunch of your friends pick one, why should I be bound by the choice? >>There are a large number of low-paying entry-level occupations that >>were destroyed by the introduction of minimum wage. Just to cite >>a few examples: "shop girls" in women's clothing stores used to be >>the way in which one would learn one's way around women's clothing >>retail, Grocers had delivery boys who, given pluck and determination >>would become grocers themselves. More long-term jobs requiring >>less skill but at which one could make a (not luxurious) living >>included elevator operator, personal servants of various sorts, >>and ditchdiggers. > >>These jobs were destroyed by the imposition of the minimum wage. >>If you MUST pay each man $3.00 an hour (or whatever it is now) and >>you have a choice between $25.00/hour for one man and a backhoe or >>10 ditchdiggers at an aggregate (minimum) wage of $30.00/hour, will >>you employ one man or ten? > >Well, the author obviously lives in a different state than I do. The >grocery stores around here are full of high school kids sweeping, bagging >groceries, and loading them in cars. Some of them move on to checkers and >the like. Grocery DELIVERY boys. The author points out that you have not contradicted anything the author has said. (By the way, the extreme upper-end groceries (Bildner's in Boston) have started offering delivery service). >These economic speculations can be run the other way too. It could just as >well be argued that the minimum wage helps things by guaranteeing a certain >level of demand. If I understand you correctly, it is now time to blow my top: WHAT???? Minimum wage SUPPRESSES demand, by rendering it impossible for demands for the service at LESS than minimum wage to be satisfied. The economy wouldn't hire MORE people at minimum wage then it would at sub-minimum wage, because no employer's marginal gain IMPROVES by being forced to pay more. Minimum wage guarantees that the market segment that can afford the minimum wage will have many more people trying to get that job, but it does NOT guarantee a certain level of demand for the job! (If it COULD guarantee such a thing, we could all become wealthy beyond dreams by setting minimum wage to (say) $1,000,000,000/hour.) >And the backhoe/ditchdigger argument neglects the >situations where the number of employees is based on the task rather than >the money. If you have a situation where you have to have 5 ditchdiggers, >you aren't going to employ more merely because they are cheaper; instead, >you are going to absorb the difference for your pocket. Nope: in a situation in which you "have to have" 5 ditchdiggers, you will pay your life savings, and go deeply into hock in order to pay them. You will offer them solid gold shovels (if they want them) and ten minute working days. The problem is that very few tasks (long term) have this "have to have 5 ditchdiggers" quality. As the price of ditchdiggers goes up (artificially or otherwise) people find ways to get around using them. That skilled unions whose members are paid much more than minimum wage are among the big pushers of minimum wage is not the result of fellow-feeling on their part. It is pure self-interest. >>You may well be willing to cut people's hair for a living -- you may >>even be good at it, but unless you have a license to do it, you *can't* >>do this legally in (I think) most states. > >Big deal. The purpose of licensing in this case is merely to assure a >minimal level of competence. Judging from the number of barbershops and the >like around here, it isn't difficult in the slightest to get a license. It's not all that tough -- but if you can't read or write you won't be able to do it. If you can't leave a child at home you won't be able to do it (at least, not in Massachusetts). There are several months of schooling required, with written exams (or so my barber tells me). As for the contention that licensure is only to ensure quality... Charles: would you like to buy the Brooklyn Bridge? >>Once again, the static assumption comes to the fore. You notice that >>one of your employees, a bright young fellow, is showing up tired for >>work. Do you ignore this? Do you fire him? Neither one. You find >>out that he's working two jobs and is educated to boot. You may well >>admire his drive and offer him a somewhat better job. (at higher >>wages). Why? Because it makes sense for you to have the best, >>brightest, most driven people you can find working for you. > >It makes sense to you, but my guess is that you do not run a fast food joint. So? Do you challenge the point? On what grounds? >And what if the only job you have to offer which is better is your own >(typical in small establishments)? Then you offer to make him a junior partner! Good heavens! Have you no imagination? A friend of mine became a grocer through just that route. >>>I think it would be very difficult in this area to feed two kids if >>>mom and dad both worked at McD's, were it not for things like subsidized >>>housing. > >>Suppose you do a bit of figuring, rather than thinking. And DON'T, for >>goodness sake, assume that the people involved will remain in exactly >>the same positions for the rest of their lives. Welfare is NOT like >>McDonalds. > >But they are in those positions NOW. My figures, based on my own situation >as a grad student, is that a single person can just barely support >themselves at minimum with essentially nothing for savings. Two people >would find it very difficult to support one kid on two minimum jobs. So you take TWO jobs and work like hell. Many did more so that their kids would have a better chance. You may have heard of this little trick. It was done by many immigrants (remember those taxi drivers you seem to dislike?) willing to make new lives for themselves and their children. >>Oh heavens! The labor shortage induced by a huge increase in disposable >>income and no place to spend it! *THAT* labor shortage! The money >>once stolen by government wouldn't be *destroyed* -- it would be saved >>(in which case it would be invested -- and jobs appear) or it would >>be spent (in which case jobs appear). > >Oh, posh. We're running at a deficit, so there would be less disposable >income. Less than what? You stop taxing folks and there is MORE disposable income. >Defense contractors and consultants to the government would have a >tremendous decrease in income, and would lay off people in droves. Agreed! >SInce >the decrease in taxes would be overcompensated by a decrease in government >spending, and since the apparent increase in income would be felt most by >the rich, who have a quite different pattern of expenditures, at least >initially there would be a decrease in demand-- venture capital takes time >to affect the economy compared to layoffs. But we're talking a MAJOR change in the way business works. Suddenly a great many nonsensical projects are unfunded, and people are able to spend money on things they want. Again, I suggest Hazlitt. The layoffs of the defense contractors and such correspond to the taxpayers "firing" people who weren't doing what the taxpayers wanted them to do. The taxpayers now have a good deal of disposable income, and there is now a ready labor pool of people. Given that we don't sell ourselves back into slavery to handle the "crisis", (which, by the way, would be a likely outcome only in the event of a SUDDEN change, which I do not advocate) the taxpayers get to re-hire those people (if they choose) to do more useful (to the taxpayers) stuff. (Me? I'd probably open up shop resolving externalities on the Friedman subscription model). >Demand for capital expenditures >indirectly demanded by the government would go away. That's right -- and the defense and road externalities aside (not to ignore them, but let's discuss them elsewhere) every penny of the tax money released could be re-spent by the taxpayer to do exactly the same thing if the taxpayer wanted. If, for example, the government was subsidizing AIDS research, and took a dollar from Joe to do it, Joe is now free to spend the dollar on AIDS research (via contribution). To the extent democracy reflects fairly our corporate desires, little would change. >The classic Keynesian >cycle of the anihilation of savings might be carried out. Perhaps things >would work out, but it seems far more likely that the classic pattern for a >depression would be carried through. A depression could happen... so? No reason to suppose the dislocation is long-lived, hence no reason to suppose the depression is long-lived. > >>If you want a lengthier exposition of this principle, I suggest >>"Economics in One Lesson", by Hazlitt. > >Keynes had a classic comment on laissez-faire capitalism. He pointed out >that at the very least the government could put old bank notes in bottles >and bury them in abandoned mines. I am also puzzled how functions become >black holes for wealth when they are attached to the government, whereas >they maintain or even increase it when practiced elsewhere. It's simple enough: people spend money in ways that please them. When the government takes money by force, it is doing so because it wishes to spend money in ways that don't please people. One of the things that pleases people is making more money. If government knew any good way to do this, they could just tell us about it -- they wouldn't have to steal it from us. This is not to say government can't make money -- governments can and sometimes do. But they needn't -- and if they don't, they can still steal our money. PEOPLE who lose money have to stop spending it. They don't cause a drain on the prosperity of other people. Governments who lose money DO constitute a drain. By the way, Keynesian economics has some pretty big holes in it: stagflation, for example, was supposedly impossible.