Fringe Thinking

by Don Boudreaux on June 19, 2010

in Nanny State, Prices, Reality Is Not Optional, Regulation, Standard of Living, Work

Here’s a letter to the Boston Globe:

Derrick Jackson wants government to mandate paid maternity and paternity leave for workers (“A gift that pays off for new dads,” June 19).  He writes as if the costs of mandated paid leave will be fully absorbed by employers: workers will get an additional valuable fringe benefit at the expense of employers and, hence, employees will suffer no downside.

What a strange notion.  To see why, suppose that Mr. Jackson weren’t an opinion writer but, instead, a food critic for your paper.  He would observe that some restaurant diners order and very much enjoy vintage Veuve Clicquot Ponsardin champagne with their meals, but that not all diners order this pricey bubbly.  He also would (correctly) infer that many diners who never order this champagne would do so if they didn’t have to pay for it.

But would Mr. Jackson then conclude that government should mandate that all restaurants give a bottle of Veuve Clicquot Ponsardin free of charge with every meal?  Surely not.  He’d understand that such a mandate would bankrupt some restaurants, and cause those that remain in business to raise the prices they charge for food and other menu items.  And Mr. Jackson would understand also that these higher prices would be paid even by diners who don’t drink.  In short, he would understand that, as desirable as Veuve Clicquot is, mandating its provision would make restaurant diners worse off.

So I scratch my head wondering why Mr. Jackson thinks that government should mandate paid leave.  Does he not see that other terms of employment contracts will be adjusted to compensate – for example, that wages would fall, or that employers would contribute less to employees’ pension funds?  Does he not recognize that some employers, unable to compensate for this higher cost, will be bankrupted?

Sincerely,
Donald J. Boudreaux

I could also have mentioned that the Scandinavian countries that Mr. Jackson so admires are poorer than is America.

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