Some Questions about Minimum-Wage Legislation

by Don Boudreaux on October 9, 2009

in Country Problems, Prices, Seen and Unseen, Work

How many people who recognize that American firms have a more difficult time staying in business — or must reduce their costs of production — the lower are the prices charged by foreign competitors are the same people who dismiss the idea that a higher minimum-wage is a burden significant enough to cause firms to economize further on their use of low-skilled workers?

Just asking.

In a related vein, Philip Greenspun asks similar questions.

(HT Eric Hanchrow)

Comments

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{ 103 comments }

Anonymous October 9, 2009 at 4:39 pm

:) very good questionI can’t argue with the logic against the minimum wage – and it doesn’t really hold my attention either, because it affects such a small portion of the workforce (yes, ripple effect, I know). I personally see it like I see unemployment insurance. Should it increase unemployment on net? Of course. There’s no way it wouldn’t. But it provides a certain degree of dignity if remains modest… as Martin Bailey said of unemployment insurance: “there may be more unemployment as a result of unemployment insurance, but it matters less”. The more serious wage floor, I think, is the combination of sticky nominal wages and deflation. That wage floor affects all workers, and worries me a lot more than the minimum wage. As long as the minimum wage is low enough it doesn’t really impact much of the workforce, it’s going to remain for me as something that probably isn’t the greatest idea, but isn’t something I lose sleep over either.And for anyone that thinks minimum wages are absolutely beyond question – keep in mind that many of those big bad socialist European countries don’t have minimum wages.

David Shaw October 9, 2009 at 4:49 pm

You don’t need a minimum wage when you have the temerity and ability to redistribute by more direct means.

Randy October 9, 2009 at 5:27 pm

What it impacts is voting. Supporting the minimum wage is a way to buy votes at low cost. It should be seen as reprehensible by those who claim to understand and believe in democracy. Instead, they cynically and pragmatically support it with full voice.

Anonymous October 9, 2009 at 5:28 pm

Just because it only effects a small percentage of the population doesn’t say anything about how it effects them. See, this is what one gets when one violates the Kantian proscription against treating a person as if they are an object, as a means and not an end.

Anonymous October 9, 2009 at 5:40 pm

Dignity? I really like the “dignity” of imposing a burden on small business owners who take risks and have the cojones to create jobs in the first place. If “we” as a society think it is “our” duty to help low wage workers, how come we can get off by foisting “our” responsibility on a small, select and typically non-rich group?

Anonymous October 9, 2009 at 5:44 pm

Once could argue that public dollars has built up the infrastructure that small businessmen rely on, so they have an obligation to provide dignified level of compensation to employees. Now in a purely libertarian fantasy town, where private dollars built up ALL the infrastructure we could start talking.

Anonymous October 9, 2009 at 5:52 pm

“so they have an obligation”

There is no obligation without agreement.

Anonymous October 9, 2009 at 5:56 pm

I’m just playing devil’s advocate here. The problem we libertarians face is that the constant charge of greed and selfishness. We can argue till blue in the face on this forum, it doesn’t change the reality that most people think libertarians are idiots.

Anonymous October 9, 2009 at 5:54 pm

Most of the infrastructure in the U.S. was built with private dollars. Even today private financing of infrastructure absolutely dwarfs (what, 4 to 1?) what the government spends.

Anonymous October 9, 2009 at 5:55 pm

Yeah but public dollars are what build and maintain the roads and bridges.

Anonymous October 9, 2009 at 6:19 pm

ArrowSmith,

I don’t mind the argument so long as you consistently apply it. Do not big businesses that pay above minwage and the rest of us that do not choose to run businesses get even more benefit and usage from said infrastructure?

Another retort (I understand you are playing Devil’s Advocate here) would be that what about taking advantage of public infrastructure imposes additional responsibilities on people that use it. What was that infrastructure built in the name of? Furthermore, it would be hard to argue that an individual had much of a say in where and how much infrastructure got produced in his name.

Mike M. October 9, 2009 at 6:31 pm

But I (for example) didn’t ask for public dollars to be spent in the first place. So, because some bureaucrat decided to misappropriate tax dollars 50 years ago, I should have to live with the minimum wage he wants to put into place now?

Methinks October 9, 2009 at 7:21 pm

Devil’s advocate,

The businesses were already robbed by a progressive tax system to build the crumbling infrastructure. Now, the 50% of the population which pays little or no tax at all should pony up for the infrastructure they use.

I’m in quite a mood this afternoon. But I promise that at some time in the future I will work toward Wurld Piece as defined by everyone but my constituency. Where’s my Nobel?

Anonymous October 9, 2009 at 7:29 pm

Well, we do live in a democracy. It seems that always a majority is in favor of “robbing you” to pay for infrastructure you don’t deem necessary. Such is the price of living in a society. Remember, Galt’s Gulch is a fantasy.

Anonymous October 9, 2009 at 6:12 pm

This may come as a surprise to you, but tax burdens are generally understood to be passed on to consumers. I don’t see why the minimum wage is necessarily binding on small businesses any more than large businesses. If you think of the most menial, low-skill, low-productivity jobs out there a lot of them are at very large firms. For both those reasons I think the small business thing is a red herring – but it’s important to keep in mind. Like I say, I’m not a huge fan of the minimum wage. It wouldn’t bother me if we eliminated it entirely. It just doesn’t strike me as the most disconcerting price floor out there (so long as it stays relatively low).

Anonymous October 9, 2009 at 6:33 pm

“This may come as a surprise to you”

Was that necessary? Should I have my credentials stripped, and my job taken away? Just what is that supposed to convey? I was responding to Don’s question.

The economic incidence of a tax depends on the relative demand and supply elasticities in the relevant markets. It remains an empirical question as to what is passed on to whom. I also don’t quite get your assertion that “most” menial, low-skill jobs are at very large firms. The house painters, lawn guys, golf ball pickers, cleaners, etc. that make minimum wage are not at big firms. Walmart wages are by and large above the minimum. In fact, your statement is contradictory – large firms typically would have more capital available for “low-skill” workers, leading to them being more productive than a similarly situated worker at a smaller firm. Remember, we need to be making ceteris paribus comparisons, don’t we?

Furthermore, the minimum wage is not a tax – it creates more loss to society than a similar tax-transfer scheme would create. “It may come as a surprise to you” to draw a little supply and demand picture to demonstrate this. Now, you might argue that this loss is small due to the relevant elasticities, but that does not make it more desirable vis-a-vis a tax on firms.

The small business thing is not a red herring – drop the small business assumption. Where is the dignity of forcing the min wage on any business? And if dignity is so important, why are people not running around supplementing the wages of minimum wage workers themselves? Or better yet, why don’t people start businesses themselves and pay a more dignified wage? It is not very nice to stick a gun in a business owner’s face and force them to do it.

But … back to Don’s point … if you are right about pass through of higher wages to consumers, it re-emphasizes Don’s point. Paying higher wages forces higher prices, which makes it harder for these burdened firms to compete.

Anonymous October 9, 2009 at 7:02 pm

RE: “Was that necessary? Should I have my credentials stripped, and my job taken away? Just what is that supposed to convey? I was responding to Don’s question.”Probably not necessary, and if you’re offended by the jibe I apologize and take it back. I think I’ve been jaded by some of what gets said on here – I didn’t think that “you might be surprised by” would offend anyone (as an example, yesterday I was called a “socialist idiot” for saying, if I recall correctly, that libertarianism isn’t the only legitimate interpretation of classical liberalism. That is no excuse, though! I should not have been so curt.I suppose ultimately this is an empirical question. 61% of minimum wage workers work in retail. I can’t imagine a huge share of that portion alone isn’t large companies. I don’t know about house painters specifically (maybe they’re lower) – but I can tell you from experience that lawn mowers and construction workers get paid more than the minimum wage. Hell, as a kid I think I got fifteen or twenty dollars for doing a lawn that took an hour and a half. We’re really talking about burger flippers and retail salespeople here. Probably people in agriculture too – which are also often large operations.RE: “Where is the dignity of forcing the min wage on any business? And if dignity is so important, why are people not running around supplementing the wages of minimum wage workers themselves?”This might be another good time to remind you that I’m not particularly attached to the minimum wage, I agree it increases unemployment, and I’d be fine with seeing it scrapped. I’m simply explaining why it’s not especially troubling to me either, as long as it stays as low as it generally has.

John Dewey October 9, 2009 at 6:56 pm

daniel kuehn: “If you think of the most menial, low-skill, low-productivity jobs out there a lot of them are at very large firms.”

daniel, have you worked for any very large firms? Please provide some examples of the most menial, low-skill, low productivity jobs at very large firms.

Almost all large firms hire small businesses to clean workplaces and grounds. Company cafeteria workers and security guards are rarely employees of the corporation. Shuttle bus drivers at corporate campuses? Also subcontractor employees. The guy who washes all those clean FedEx trucks? Usually a subcontractor. Who paints the stripes on the company parking lot? Subcontractor.

Of course, I’m sure a man with your worldly experience is aware of employment and outsourcing practices at large corporation. So I’m probably wasting my time giving you those examples. Rather than continue to do so, I’ll stop and give you the opportunity to share more of your wisdom.

Anonymous October 9, 2009 at 7:21 pm

It’s not wisdom it’s just a hunch that’s fundamentally an empirical question. Why are you equating sub-contractors with small businesses? When I did work at a cafeteria at the minimum wage I worked for a sub-contractor that staffed and ran the cafeteria. And you know what? That sub-contractor was bigger than the organization that we had the contract with, and it operated internationally. So I’m not sure why you’re equating small business with contractors in this case. When I worked for a small construction company I got paid well over the minimum wage because construction workers – while they’re obviously not rolling in dough – actually get paid pretty decently.

Like I said to wintercow20, this is ultimately an empirical question. The firm-size wage effect is well known. I have no doubt that small firms are more likely to pay minimum wages than large firms. I simply suspect that most minimum wage earners work at large firms. I could be wrong, and honestly I’m not sure what the point is if I am, except that it would probably make you feel better.

Again, this is probably a good place to reiterate that as I said I wouldn’t mind scrapping the minimum wage at all – it just doesn’t seem like a particularly pressing problem.

Methinks October 9, 2009 at 7:36 pm

Consumers or labour? I thought it was labour – in the form of higher unemployment. Passing on the cost to consumers depends on elasticity of demand for the product the business sells. At least that’s what I remember from my pre-historic economics.

I agree that making the distinction between small and big business is largely a red herring. However, it’s also true that big, more established businesses often benefit from economies of scale and stability that small businesses don’t benefit from and can more easily absorb and adjust to the added cost. Thus, I think one can make the argument that rising labour costs impose a bigger burden on small businesses – especially start-ups. On the other hand, small businesses can pay under the table and outsource more easily than large businesses.

Anonymous October 9, 2009 at 7:46 pm

Well both, as you say depending on the elasticity of demand for the product the business sells.

Another interesting point is the situation of monopsonisitc labor markets, which also provide less of a reason to worry about a negative employment effect.

Anonymous October 9, 2009 at 5:36 pm

I’d really like to hear more from small businessmen who are affected by the minimum wage. Devil’s advocate is how does it hurt their bottom line to pay $7.50/hour instead of $4.50/hour to a 20-hour/week employee?

John Dewey October 9, 2009 at 7:32 pm

Arrowsmith,

The most injured party is the unskilled and inexperienced worker.

Small businessmen have many options for adapting to minimum wage legislation. Some small businessman will automate tasks which were previously done manually. Some will send work overseas. Some will hire 3 more productive workers to replace the 5 low productive workers now priced out of the labor market. Some small businessmen will realize they can no longer compete with the foreign firm and close shop. but every one of those adaptions means trouble for the unskilled worker.

How did the world change for the low-skilled and inexperienced worker? Before the minimum wage increase, he could find starter jobs and learn the basics of holding a job. He learned the consequences of showing up to work late. He learned what was appropriate attire for the workplace. The small businessman took a chance on him rather than hire the worker worth $8.00 because the businessman could save $4.00 an hour. As the inexperienced worker gained basic work skill and demonstrated his reliability, he eventually earned more.

But what now? If the unskilled and inexperienced worker is only really worth $4.00 an hour to the firm, he won’t be hired. His labor has been priced out of the market. He’ll have few opportunities to demonstrate his reliability, few opportunities to learn what it means to get along in the workplace. That’s exactly why unemployment levels among young, unskilled workers remain so high.

It’s the young worker who suffers, Arrowsmith. The small businessman already has the skills to adapt.

Anonymous October 9, 2009 at 7:36 pm

Good points, but the left usually maintains that the high unemployment rate is due to the economy, not high minimum wages. They say that you can’t point out a single study that proves raising the minimum wage actually cost jobs.

John Dewey October 9, 2009 at 7:40 pm

Arrowsmith: “how does it hurt their bottom line to pay $7.50/hour instead of $4.50/hour to a 20-hour/week employee?”

Here’s a direct answer from someone who owned three small businesses over the past 15 years: it did not hurt my bottom line. I simply cut back on the hours my employees worked. I demanded more from those workers in the hours I still paid them.

Very small businessmen are generally exempt from minimum wage laws. However, employees know the minimum wage, and feel cheated when they are paid less. So most owners of tiny businesses go ahead and pay it. But we demand more from the workers. I won’t go into specifics about how my businesses accomplished that. But I can assure you that the low wage workers who were allowed to keep their jobs were required to do more work.

Anonymous October 9, 2009 at 7:43 pm

You’re not exactly a mensch ya know? Taking it out on the worker isn’t the civilized thing to do.

Also you better pray that the national Democrats don’t read the comment you just made and seize upon it to pass some new legislation regulating how hard you can work your workers.

Wilson October 9, 2009 at 9:10 pm

ArrowSmith,

That’s what card check is for.

Anonymous October 9, 2009 at 5:42 pm

In a similar vein Don, what about the consistency of folks who argue that health care costs are crushing small businesses (see the Senator from LA in today’s WSJ), but that minimum wages, payroll taxes, UI taxes, licensing, worker protections, etc. do NOT harm them? You can’t have it both ways.

Anonymous October 9, 2009 at 9:15 pm

BTW, does anyone in the media ever stand up for small businesses? Ever? It makes me think of Amity Shlaes’ “The Forgotten Man”.

Anonymous October 9, 2009 at 6:00 pm

Of course slimy politicians SAY it is to help low wage workers. But the real reason can only be to:

1. create a dependent chronically unemployed voter base, or

2. keep low wage undesirables out of their communities.

Either way, minimum wage is a product of a very despicable form of elitism and inhumanity. Minimum wage advocates truly are one of the lowest forms of human life.

iamse7en October 9, 2009 at 6:13 pm

I don’t know, but whoever raises the minimum wage deserves the Nobel Peace Prize.

Name October 9, 2009 at 6:35 pm

There is no floor for revenues. Why should there be a floor for costs? If wages varied with revenues, there would be no unemployment.

Name October 9, 2009 at 6:44 pm

There is no floor for revenues, why should there be a floor for costs?

Why not have wages fluctuate with revenues?

Anonymous October 9, 2009 at 7:38 pm

The minimum wage should be called what it is: the illegalization of low-wage labor. One could even adopt the “war on drugs” nomenclature and call it the “war on low wages”. The analogy holds true to an almost frightening degree because the effect is the same. People don’t stop wanting drugs. They just have to turn to illegal and dangerous sources for their fix. The same is true of low-wage labor. Demand does not cease. Employers are simply forced to go to extra-legal means to hire those employees who are willing to work at an illegally low wage rate.

Anonymous October 9, 2009 at 10:05 pm

The left has no coherence, they claim they are not the enemy of wealth-creation, but want it more “spread out and fair”. But when you confront them with examples of how their policies just create more misery, they ignore you. Isn’t it the goal of communism to do away with wealthy people, so that we’re all miserably poor?

Anonymous October 9, 2009 at 10:23 pm

Almost all wage earners are in competition with machinery — or automation. Any increase in the minimum wage simply increases the value of the automated solutions they have to compete with. Think about ATM’s, self checkout counters, car washes, or any of the other thousands of ways machines can either replace or leverage labor. Add to those costs government mandated benefits, payroll taxes, threats from unions, employment lawsuits, and unforeseen costs — and the value of automated solutions just keeps going up.

I just looked up McD’s — the “hamburger flipper” minimum wage job. There are about 13,000 in the U.S. that require at least one hamburger flipper per shift. I would guess about three hamburger flippers scheduled per day per store. That would mean about 50,000 hamburger flipper jobs. Figure an $8 an hour full time employee costs the store about $1,500 a month, or $4,500 per store. For that $4,500 a month — the store could get a short lease for $200,000 worth of equipment, and hire a robot to make burgers. Raise the $8 to $10 and the store now has $250,000 to play with.

Anonymous October 9, 2009 at 10:32 pm

There’s probably another 50K hamburger flipper jobs at all the other chains. Also what about the poorly paid Wal Mart/Target/retail jobs where they make sure they don’t work 40 hours so as not get any health benefits AND encourage them to get food stamps!

Anonymous October 9, 2009 at 11:58 pm

There’s probably another 50K hamburger flipper jobs at all the other chains.

Or more. The money to be made today is in designing hamburger flipping machines! A few thermocouples, some experimentation … shouldn’t be too hard.

Also what about the poorly paid Wal Mart/Target/retail jobs where they make sure they don’t work 40 hours so as not get any health benefits AND encourage them to get food stamps!

I don’t know how it is where you live — but here in the Phoenix area retailers were simply experimenting in self check-out three years ago. Today, half of all checkouts are self check. There’s generally one employee monitoring eight check-outs. If they can see the hand writing on the wall, I suppose they should just quit and take a better job — or become independent!

Anonymous October 9, 2009 at 11:58 pm

There’s probably another 50K hamburger flipper jobs at all the other chains.

Or more. The money to be made today is in designing hamburger flipping machines! A few thermocouples, some experimentation … shouldn’t be too hard.

Also what about the poorly paid Wal Mart/Target/retail jobs where they make sure they don’t work 40 hours so as not get any health benefits AND encourage them to get food stamps!

I don’t know how it is where you live — but here in the Phoenix area retailers were simply experimenting in self check-out three years ago. Today, half of all checkouts are self check. There’s generally one employee monitoring eight check-outs. If they can see the hand writing on the wall, I suppose they should just quit and take a better job — or become independent!

Anonymous October 9, 2009 at 10:32 pm

There’s probably another 50K hamburger flipper jobs at all the other chains. Also what about the poorly paid Wal Mart/Target/retail jobs where they make sure they don’t work 40 hours so as not get any health benefits AND encourage them to get food stamps!

Anonymous October 9, 2009 at 10:23 pm

Almost all wage earners are in competition with machinery — or automation. Any increase in the minimum wage simply increases the value of the automated solutions they have to compete with. Think about ATM’s, self checkout counters, car washes, or any of the other thousands of ways machines can either replace or leverage labor. Add to those costs government mandated benefits, payroll taxes, threats from unions, employment lawsuits, and unforeseen costs — and the value of automated solutions just keeps going up.

I just looked up McD’s — the “hamburger flipper” minimum wage job. There are about 13,000 in the U.S. that require at least one hamburger flipper per shift. I would guess about three hamburger flippers scheduled per day per store. That would mean about 50,000 hamburger flipper jobs. Figure an $8 an hour full time employee costs the store about $1,500 a month, or $4,500 per store. For that $4,500 a month — the store could get a short lease for $200,000 worth of equipment, and hire a robot to make burgers. Raise the $8 to $10 and the store now has $250,000 to play with.

Gil October 10, 2009 at 6:29 am

Golly, employers should also railing against birth control – what right to people have to force wages high by having fewer babies? Having fewer babies mean wages are more expensive as there are fewer workers competing for the same jobs thus making products more expensive and ultimately hurting the poor the most.

Gil October 10, 2009 at 6:29 am

Golly, employers should also railing against birth control – what right to people have to force wages high by having fewer babies? Having fewer babies mean wages are more expensive as there are fewer workers competing for the same jobs thus making products more expensive and ultimately hurting the poor the most.

Jonathan Catalán October 10, 2009 at 2:34 pm

I have experience both as a minimum-wage employee and a minimum-wage employer (well, actually, an employer not restricted by the minimum-wage). In the United States, as I finish my degree, I work at Kmart for $8 (California minimum wage). Sure, I make more money with minimum wage than I would without it (my wage would probably drop rather dramatically). On the other hand, the day that I’m fired it will be that much harder for me to find a job, because the price floor has created a labor surplus. It is impossible for me to compete against more qualified individuals by decreasing my required wage.

In Spain, I am a landowner (well, through my family) and we hire people to work on our land all the time. We pay them €5 an hour (which is high; usually it’s €3 an hour in the countryside), which is below minimum wage. But, everyone who wants a job can find one in the countryside, and so it alleviates a lot of the unemployment which would have otherwise existed. If they were to impose and enforce some type of minimum wage law in the countryside there would be a massive loss in agricultural labor, as farmers were no longer able to afford higher prices for employees.

Jonathan Catalán October 10, 2009 at 2:34 pm

I have experience both as a minimum-wage employee and a minimum-wage employer (well, actually, an employer not restricted by the minimum-wage). In the United States, as I finish my degree, I work at Kmart for $8 (California minimum wage). Sure, I make more money with minimum wage than I would without it (my wage would probably drop rather dramatically). On the other hand, the day that I’m fired it will be that much harder for me to find a job, because the price floor has created a labor surplus. It is impossible for me to compete against more qualified individuals by decreasing my required wage.

In Spain, I am a landowner (well, through my family) and we hire people to work on our land all the time. We pay them €5 an hour (which is high; usually it’s €3 an hour in the countryside), which is below minimum wage. But, everyone who wants a job can find one in the countryside, and so it alleviates a lot of the unemployment which would have otherwise existed. If they were to impose and enforce some type of minimum wage law in the countryside there would be a massive loss in agricultural labor, as farmers were no longer able to afford higher prices for employees.

John Dewey October 12, 2009 at 2:30 pm

“It is impossible for me to compete against more qualified individuals by decreasing my required wage.”

I wonder why Americans have so much trouble understanding this very simple point.

“If they were to impose and enforce some type of minimum wage law in the countryside there would be a massive loss in agricultural labor, as farmers were no longer able to afford higher prices for employees.”

Do you suppose that small farmers would sell their land to large companies? or contract with large companies to farm the land on their behalf? Large agriculture companies might enjoy economies of scale which allow automation of agriculture jobs. At least, that’s what has happened in America.

Anonymous October 10, 2009 at 6:31 pm

One thing we should remember is that there all sorts of loopholes regarding the minimum wage laws, and that these loopholes encompass a large segment of the individuals who would actually be getting be getting minimum wage otherwise. So even the legal regime recognizes that the minimum wage is problematic and it carves out exceptions to deal with that. Like a lot of things, minimum wage laws can be viewed as something that amounts to window dressing meant to make good political theater.

Anonymous October 10, 2009 at 6:31 pm

One thing we should remember is that there all sorts of loopholes regarding the minimum wage laws, and that these loopholes encompass a large segment of the individuals who would actually be getting be getting minimum wage otherwise. So even the legal regime recognizes that the minimum wage is problematic and it carves out exceptions to deal with that. Like a lot of things, minimum wage laws can be viewed as something that amounts to window dressing meant to make good political theater.

Anonymous October 9, 2009 at 6:03 pm

No, user fees do. You basically pay for them when you buy gas. And of course as time goes on more and more levels of government are turning to private financing of “public” roads, airports, ports, etc.

Anonymous October 9, 2009 at 6:09 pm

If you think the argument against libertarians boils down to greed and selfishness, I’m afraid you’re not listening. Libertarians are no more greedy (and don’t advocate greed anymore than) anyone else.

Anonymous October 9, 2009 at 6:58 pm

It is an idiotic idea that a moral obligation can be placed upon me without my consent.

Anonymous October 9, 2009 at 6:11 pm

That doesn’t quite fly with me. One blog comments I get the “you libertarians are selfish” meme all the time.

Anonymous October 9, 2009 at 6:14 pm

Gas taxes are public dollars. The fact that they come in the de facto form of users fees doesn’t make them less public.

Anonymous October 9, 2009 at 6:56 pm

And don’t forget that for small residential roads, residents are typically assessed for the roads. Although often there are state subsidies involved.

Toll roads seem to me to be very effective almost wherever I have seen them. More and more they are going to automated RFID and photo systems in which you never have to stop to pay a toll. Those systems should be more widespread. My only complaint with them is that I don’t think they are managed correctly. Tolls should be higher during high traffic times to better regulate traffic and raise revenue according to user demand for lane expansion.

And unlike a gas tax, privately owned toll roads prevent the pirates from siphoning off the road money to subsidize their cronyism.

Anonymous October 9, 2009 at 6:17 pm

Really? Well I can’t argue with anecdotes, but maybe I should rephrase and just say “there are many more arguments than that and if you focus on those criticisms, you’re going to entirely miss the more substantive criticisms of the objective people that take issue with libertarianism”.

Methinks October 9, 2009 at 7:23 pm

Ask them how much charity work they do and/or how much they give to charity. One guy told me it was “childish” to expect him to spend his time and money on charities after essentially accusing anyone who is not progressive or selfishness and heartlessness.

There is no shortage of stupid in the world.

Anonymous October 9, 2009 at 6:25 pm

Actually, a user fee is really quite different (for a number of reasons) from a general tax. It is what has made US interstates as successful as they have generally been. That politicians have tried to treat like it is a general tax explains much of why the system has degraded so much since the 1980s.

John Dewey October 9, 2009 at 7:16 pm

daniel,

Where gasoline taxes differ enormously from other taxes, such as income taxes or excise taxes, is that the consumer of the public good directly pays for the public good he uses. He realizes benefits in direct proportion to the tax he pays. He can see how his tax money is being used.

User fees may be public funds, but as long as they are dedicated funding, taxpayers can impose some measure of accountability on public servants.

I’m sure you understand how dedicated taxes and general taxes differ. I’m not sure Arrowsmith does. I think your statement will only confuse him.

Anonymous October 9, 2009 at 6:38 pm

Yes, it is by definition quite different from a general tax.

It’s still public dollars. Things don’t become non-public just because the state decided to collect the dollars in an efficient and intelligent way… like a user fee.

And when politicians make stupid decisions like treating the users fee like a general tax, it doesn’t make that users fee any less of a public dollar.

Anonymous October 9, 2009 at 6:47 pm

They are private dollars used for a public good.

Do you hunt or fish much? Hunters and fishers buy licenses for public goods (namely fish in a river and deer, moose, etc. in a forest). Similarly a private car owner uses private funds to pay for a public good via a user fee.

Anonymous October 9, 2009 at 7:00 pm

What I find interesting is how common “private” roads, bridges, ports, etc. are in Europe in comparison to the U.S. I think this tradition is partly explained by the various European monarchs selling the right to have such for a cut of the profits from them. Anyway, they seem to work well enough there.

Anonymous October 9, 2009 at 7:02 pm

That’s only because you believe you live in a libertarian fantasy vacuum. The fact is you and I and everyone were born into a world with lots and lots of publicly initiated infrastructure. I bet you born into a public hospital, like I was. For you to whine and whine about how you want everything NOW to be 100% privatized smacks of the selfishness of “I’ve got mine now, screw everyone else”.

Anonymous October 9, 2009 at 7:03 pm

And don’t forget that what is one of the largest “public works” project in human history–the Chunnel–was privately funded.

Anonymous October 9, 2009 at 7:08 pm

Americans have almost a religious belief that roads need to be publicly funded. We worship our roads.

Anonymous October 9, 2009 at 7:12 pm

What??? Every public dollar comes from private funds initially. So? The point is it’s still a publicly provided good. The point is still that the state solved a coordination problem by providing highways paid for by public dollars in the form of a gas tax which is a de facto user’s fee.

Anonymous October 9, 2009 at 7:14 pm

“For you to whine and whine about how you want everything NOW to be 100% privatized”

No, I’m merely stating a fact. You can’t knit me a sweater, drop it in my lap, and then claim I owe you $20.

And it is a fact that leads to very real problems within tax-funded systems. People RIGHTLY feel that they don’t owe anybody for what is foisted upon them. What’s more, a taxpayer RIGHTLY feels he’s OWED the state services he receives. And since there was no agreement, there is no possible determination of how much he is rightly owed. Such a system creates widespread resentment as people feel they are being ripped off (and most of them truly are).

Anonymous October 9, 2009 at 7:18 pm

OTOH, we all choose to live in a community. It’s not some libertarian paradise, and never has been. I guess you could find yourself a piece of desert in Western Australia and establish your Randian utopia.

Methinks October 9, 2009 at 7:24 pm

Like what? Usually when I say I have libertarian leanings, people just shut up because they don’t know what – if anything – to attack.

Methinks October 9, 2009 at 7:26 pm

Well, actually, some of the anti-war and isolationist stuff gets attacked. But, libertarians are not of one mind on those issues.

What else, though?

Anonymous October 9, 2009 at 7:25 pm

Did you just agree with me?!?!?! :) I must be misunderstanding something.

Sure – taxes should be as transparent and accountable as possible. If we could do more through users fees that would be great. It’s only relevant for certain public goods, though, so there are limits. But just because the government does something in a smart way (ie – users fees) doesn’t make it non governmental!!! :)

Anonymous October 9, 2009 at 7:45 pm

If you go back to the debates on the funding of the interstate system you’ll see that – after the first attempt at funding the system via different scheme failed – it was understood that the user fees would get the system built and it was viewed as a form of private financing that would be funneled to the states. Once the system was built that was supposed to be the end of federal coordination. That should happened in roughly 1983. That’s of course not what happened.

Seth October 10, 2009 at 3:40 am

I wonder if Mr. Hume would have used government to sheepishly acquire the land to build roads, but let markets develop ways of funding, building, maintaining and owning the roads instead of have government do everything.

Seth October 10, 2009 at 3:40 am

I wonder if Mr. Hume would have used government to sheepishly acquire the land to build roads, but let markets develop ways of funding, building, maintaining and owning the roads instead of have government do everything.

Anonymous October 9, 2009 at 7:48 pm

It was probably “viewed as a form of private financing” because it has very similar elements to private financing. So? That’s different from being private financing.

Medicare beneficiaries pay premiums. Does that mean Medicare is privately financed? Of course not!

Methinks October 9, 2009 at 7:48 pm

We live in a republic. Supposedly. Democracy was the goal of communism.

Well, Devi’s Advocate, then you admit your argument is stupid – as most of the Devil’s arguments are. If the people you want to pay are already paying, then what are you complaining about?

I could never slog through Atlas Shrugged, so I don’t know what happened in Galt’s Gulch. All I know is that I didn’t commit to living in any society with you, DA, and I am not allowed to opt out of living in your prison camp either (just TRY to renounce your U.S. citizenship – it’s not that different from renouncing Soviet citizenship). If I voluntarily moved into your neighbourhood where I had to submit to a homeowners association, then you have a point. Merely being born or dragged into your little sphere of influence does not obligate me to anything.

You may now return to stirring the pot, you selfish libertarian.

Anonymous October 9, 2009 at 7:53 pm

Well, medicare payments are not a user fee and they really don’t pay a premium; they are just like any other general tax as best as I can tell.

Anyway, we’re just engaging in logomachy at this point. I believe we both understand why user fees differ significantly from general taxes and that is really all that is important.

Anonymous October 9, 2009 at 7:54 pm

It’s a losing battle. Human nature tends to wanting nanny-statism.

Gil October 10, 2009 at 6:14 am

As an immigrant Methinks you did make a voluntary choose the U.S. and all of its trappings and trimmings. Apparently you have ‘immigrants’ remorse’ and should have chose Hong Kong or Singapore instead.

Gil October 10, 2009 at 6:14 am

As an immigrant Methinks you did make a voluntary choose the U.S. and all of its trappings and trimmings. Apparently you have ‘immigrants’ remorse’ and should have chose Hong Kong or Singapore instead.

John Dewey October 9, 2009 at 7:55 pm

daniel kuehn: “Did you just agree with me?”

Who could possibly know? Your comments almost always come with enough qualification that you can easily agree with every subsequent point made.

,em>daniel kuehn: “But just because the government does something in a smart way (ie – users fees) doesn’t make it non governmental!”

I don’t thik anyone said that. But you seem to be just slippery enough that you’ll slide through the tiniest of openings to make some socialist point – which, of course, you’ll qualify just enough to later claim we “misunderstood” you. So when you make a statement that “user fees are public dollars”, I’m going to plug up any crack that I can.

User fees are public dollars, but they’re accountable public dollars, and that makes all the difference in the world. As I said before, I’m sure you understand the difference, though that won’t stop you from sliding under a crack at some point in the future. I just want to be certain someone less experienced, such as Arrowsmith, understands the difference.

Anonymous October 9, 2009 at 8:02 pm

Wow! Nice job turning that into a jabfest.

You were talking about the value of keeping public servants accountable, and the usefulness of user fees in doing this. You SEEMED to indicate that user fees were a smart way of doing things, and that the smartness of using user fees doesn’t detract from the fact that they’re still public dollars used by public servants on public goods.

I’m just going to say that we’re on the same page – I’m not sure what you’re afraid I’m going to “slip under a crack”. My secret anti-accountability sympathies??? I’m not sure what you’re hinting at and if it’s that crazy – that I don’t like to hold public servants accountable – then better it just gets left unsaid.

sandre October 9, 2009 at 9:34 pm

Let him have the last word on this one. It is very important to Danny. More over, comments are getting in to a very narrow space.

Anonymous October 9, 2009 at 8:26 pm

“OTOH, we all choose to live in a community”

Hardly an OH. Even if your universal feudalistic view were true, and it certainly is not, the fact that a moral obligation cannot be imposed–and all of the real life consequences for any society–remain.

“libertarian paradise”

The nice thing about me not clubbing you over the head and taking your wallet, is that it is still good for you whether just me, me and a few others, many, most, or all refrain from it.

BTW, did you learn to commit the perfect solution fallacy from Muir?

Anonymous October 9, 2009 at 8:37 pm

I’m just playing Devil’s Advocate today. The Obama clown prize has me in a tizzy.

Anonymous October 9, 2009 at 8:39 pm

“religious belief”

IOW, they have groundless emotions to support it. You are right. I do think, however, that reason is a powerful motivator and does occasionally change the world. When more people get a taste for something other than the religion of their fathers (publicly funded roads), it will be harder for them to accept the faith-based premise.

Anonymous October 9, 2009 at 9:57 pm

Of course, the worldwide information highway was not only privately funded — it was privately regulated — and required no taxes. That’s why it’s development is measured in years instead of decades.

Anonymous October 9, 2009 at 8:41 pm

“Human nature tends to wanting nanny-statism.”

Too universal a claim. Some humans tend to…

Anonymous October 9, 2009 at 8:44 pm

Sorry, I meant most humans tend to nanny-statism. This has always been the way of the world.

Anonymous October 9, 2009 at 8:47 pm

I got it. At first reading through all of your posts I thought someone had hijacked your moniker.

I must say, your Devil’s advocate is more coherent than Muir’s sincerity.

Anonymous October 9, 2009 at 8:58 pm

“Obama clown prize has me in a tizzy”

It’s almost hard to believe that there was a time when the Nobel was a badge of honor instead of a mark of shame.

John Dewey October 9, 2009 at 8:48 pm

danielkuehn: “That sub-contractor was bigger than the organization that we had the contract with, and it operated internationally. So I’m not sure why you’re equating small business with contractors in this case.”Well, it may have to do with the fact that – rather than working for one subcontractor – I have analyzed and approved contracts made by four giant corporations with hundreds of subcontractors. It might have to do with the fact that I’ve worked in management and controller positions at large corporations for 35 years. So just maybe, when I speak about direct labor hiring vs subcontract hiring by large corporations, I have some direct experience upon which to draw.

John Dewey October 9, 2009 at 8:50 pm

Your statement I objected to was:“If you think of the most menial, low-skill, low-productivity jobs out there a lot of them are at very large firms.”Now you are saying that:“I simply suspect that most minimum wage earners work at large firms. I could be wrong”I’m pretty sure you are wrong, but I’m also confident that your statement is just vague enough that you can “prove” you are not wrong. You could, for example, define “large firms” to be any firm with more than 50 employees.I’m just foolish enough to provide evidence anyway. Research by the State of Minnesota shows that only 18% of minimum wage or lower pay workers were hired by large firms Note that they use a very liberal definition of “large”.Referring to SBA data, Bruce Bartlett explained who hires low wage workers:“the Small Business Administration (SBA) looked closely at the types of businesses employing low-wage workers. Not surprisingly, the bulk of them are small businesses, not big corporations. Among all minimum wage workers, 54% work in businesses with fewer than 100 employees and two-thirds work in businesses with fewer than 500 employees. “daniel kuehn: “I’m not sure what the point is if I am”By exposing the errors of an arrogant young person, I hope to help him lose his arrogance. It doesn’t always work, but I can hope.

Anonymous October 9, 2009 at 8:51 pm

That’s because I’m sane. Muirdog couldn’t play a conservative devil’s advocate because his disgust would never allow him to even intellectualize the possibility. That’s where we have the upper hand over socialists like him, our mental flexibility.

Anonymous October 9, 2009 at 8:53 pm

RE: “So just maybe, when I speak about direct labor hiring vs subcontract hiring by large corporations, I have some direct experience upon which to draw.”

I never said you didn’t! You demanded my experience! I’m not questioning yours. I have no doubt you have good experience.

You’re still not addressing the point – contractors aren’t the same thing as small businesses. No amount of experience on your part will make them small businesses. And pointing out that a lot of minimum wage workers work for contractors says nothing about my suspicion that a lot of minimum wage workers work for large companies.

Anonymous October 9, 2009 at 8:59 pm

Even Ed Shultz of Air America admitted on his show today that this prize was mostly a “fuck you” to George W Bush. The left is so… adolescent.

Anonymous October 9, 2009 at 9:03 pm

RE: “I’m pretty sure you are wrong, but I’m also confident that your statement is just vague enough that you can “prove” you are not wrong.”

I was looking for evidence but I couldn’t find much. This isn’t exactly a question I care if I’m wrong on or not, johndewey. I said what I thought might be the case. You’re making this into a huge deal like it’s some lasting principle I’m dedicated to.

Your SBA citation seems the most relevant since it’s national. OK, 54% work in firms with a 100 or more? I don’t usually hear people talk about “small businesses” with more than 100 employees. So it’s about fifty fifty but more work in small firms. Sounds like we settled the question.

RE: “By exposing the errors of an arrogant young person, I hope to help him lose his arrogance. It doesn’t always work, but I can hope.”

Do you think anyone that gives a guess that’s different than your guess is arrogant? All I initially said was “I don’t see why a minimum wage is necessarily more binding on small firms than large firms”. I wasn’t sure why it necessarily was because I suspected otherwise – and now you found data to prove the point. Case closed. It’s not arrogant of me to raise a question that needs to be answered. It’s not arrogant of me to not want to just take wintercow20′s word for it. I wasn’t arrogant then, and if in the future something sounds like it might be wrong and nobody has furnished any evidence either way I’m going to question it again until we figure out an answer. Either way – it’s not arrogant and it’s too bad for you if you think it is.

Anonymous October 9, 2009 at 9:05 pm

And I should say, you’re the one that asked me about my experience (I answered), and then you were the one that went on and on and on about how much experience you have.Who is the arrogant one? You’re too hypersensitive, johndewey. No one can just ask a question or question an unsupported statement without you taking offense at it.

Anonymous October 9, 2009 at 9:14 pm

Didn’t card check fail to pass earlier? No worries, armed with his Nobel Clown Prize Obama will make sure it passes later this fall.

John Dewey October 9, 2009 at 9:20 pm

daniel kuehn: “I don’t usually hear people talk about “small businesses” with more than 100 employees. “

I knew you would worm out of your statement by waiting for evidence before defining your terms.

Your statement was not about small business. It was:

“I simply suspect that most minimum wage earners work at large firms”

Only a dishonest person would claim that he meant firms of 101 employees or 200 employees or even 300 employees when he used the term “large firms” in referring to U.S. business.

I have no more time to waste on this.

Anonymous October 10, 2009 at 4:13 am

Amen!

Anonymous October 10, 2009 at 4:13 am

Amen!

Anonymous October 10, 2009 at 10:36 am

You are absolutely unbelievable. I was trying to say that the data seem to suggest that you were right about small vs. large firms and minimum wage earners – my suspicion was wrong. Get a grip, johndewey.

100 employees is a fine definition. I wasn’t trying to weasel my way out of anything – I was agreeing with you.

Anonymous October 10, 2009 at 10:36 am

You are absolutely unbelievable. I was trying to say that the data seem to suggest that you were right about small vs. large firms and minimum wage earners – my suspicion was wrong. Get a grip, johndewey.

100 employees is a fine definition. I wasn’t trying to weasel my way out of anything – I was agreeing with you.

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