Butt Out

by Don Boudreaux on June 4, 2011

in Competition, Hubris and humility, Nanny State, Other People's Money, Regulation, Work

Here’s a letter to the Boston Globe:

Critical of your argument that “cigar bars should be an exception to smoking bans in public places,” Andrew Rouse writes that “The Globe ignores the fact that allowing cigar bars condones job sites where workers are expected to be exposed to carcinogens as a condition of employment. No worker should have to work in such conditions” (Letters, June 4).

News flash to Mr. Rouse: workers are intelligent beings.  The existence of cigar bars does not require that any worker must work “in such conditions.”  Persons who wish to work in cigar bars can do so, while those who do not do not.  Problem solved.

It won’t do, by the way, for Mr. Rouse to reply that some people have no real choice but to work in cigar bars.  Such a claim would imply that these workers’ skills are so specific to cigar bars that their other employment options, if any, are judged by these workers to be even worse than toiling in cigar bars.  Yet Mr. Rouse – posing as workers’ champion – wants to force them to endure options that, as they see matters, are even worse than (what Mr. Rouse assumes to be) the hell of working in cigar bars.

How, exactly, would cigar-bar workers be helped by this outcome?

Sincerely,
Donald J. Boudreaux

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{ 98 comments }

Don June 4, 2011 at 11:19 am

Don,
Now, that’s just not fair! You’re applying logic and reason to a clearly emotional argument. You should accept his arguments in the same spirit in which they were offered… without significant thought as to the consequences beyond those intended.

vikingvista June 4, 2011 at 11:37 am

DB’s logic is interfering with the base impulses of a control freak.

Russell Nelson June 4, 2011 at 12:03 pm

Every interference in the market comes with it a judgment that the market participants are making a decision which is not in their best interests, and that the legislators know better. The ultimate expression of that idea is that voters don’t know what they are doing either, and voting must not be allowed.

Thus we reinvent the Road to Serfdom.

tdp June 13, 2011 at 7:56 pm

Vote control! Just like gun control, but with votes!

Gil June 4, 2011 at 12:41 pm

Then again choosing to being exposed to carcinogens could part of any workplace should you take the job.

HaywoodU June 4, 2011 at 2:39 pm

Do you drink often? Or just when you post?

Gil June 4, 2011 at 11:42 pm

Why shouldn’t “when you take the job, you take all the risks of the job” apply to all jobs? Why should the government impose health and safety laws? Why should private operators be liable at all for any workplace injuries?

Ken June 5, 2011 at 1:02 am

Gil,

“Why shouldn’t “when you take the job, you take all the risks of the job” apply to all jobs? Why should the government impose health and safety laws?”

Exactly. Why should they?

“Why should private operators be liable at all for any workplace injuries?”

Ever heard of insurance?

And your entire comment evades the point of the post. Employees at the cigar shop CHOOSE to work there over all other employment opportunities. Are you really suggesting, as is asked in the post, that these people’s skill set is so narrow that they ONLY qualify to work at a cigar shop? Or do you think that this is an absurd statement, so can only conclude that of their own free will have chosen to work in a cigar shop over all other employment opportunities?

In other words these employees know the risks involved with working in a shop where there is second hand smoke. Second hand smoke isn’t any worse than the air in any major city, so do you suggest that cities be liable for anyone living that city who develops lung cancer?

Regards,
Ken

Gil June 5, 2011 at 2:03 am

Lung cancer incidences closely follow smoking patterns not smog.

Ken June 5, 2011 at 2:48 am

Gil,

“Lung cancer incidences closely follow smoking patterns”

I notice you didn’t say “Lung cancer incidences closely follow second hand smoking patterns”. Read closely. I said ” Second hand smoke isn’t any worse than the air in any major city”. Second hand smoke is what you are worried about when you discuss cigar shop workers.

Regards,
Ken

Gil June 4, 2011 at 11:57 pm

In other words, if there was non-recreational carcinogens existing in the workplace and there’s a high risk of exposure then the employer has to do something about or else be held liable when something goes wrong. However we now have loophole because the carcinogens are “enjoyable” therefore workers must go without rights that would be expected in other workplace. So is the cigar bar wrong or are all the other places that are openly liable if they don’t deal with carcinogenic chemicals being unfairly penalised?

Ken June 5, 2011 at 1:03 am

All the other places are unfairly penalized.

tdp June 13, 2011 at 8:00 pm

Carcinogens are an unavoidable risk in a cigar shop, while safety regulations are designed to reduce avoidable risks not necessary to the production and consumption of the goods and services the business is marketing. You would expect a soldier to accept the risk of being killed or seriously injured in combat because that is what being a soldier during wartime entails. You would not expect a worker in a steel mill to be prepared to be killed on the job because putting one’s life on the line is not necessary to the production of steel.

RC June 4, 2011 at 12:57 pm

Don,

It would fair, though, if you would respond also to this part by Rouse:

“In addition, deciding to close cigar bars is not a choice between jobs and no jobs. Whenever a cigar bar is closed, some other enterprise will eventually move into that location and provide jobs that do not poison its workers.”

Regards,
RC

Emil June 4, 2011 at 1:31 pm

yeah right, government regulation on what people are allowed to do tends to increase employment and economic activity doesn’t it? Lots of examples of that around right?

RC June 4, 2011 at 1:41 pm

Emil,

I did not say I agree with Rouse. I just suggested that Rouse has given some thought to the employment opportunities of the cigar bar workers. Perhaps his reasoning is flawed but that is a different matter.

Regards,
RC

Ken June 5, 2011 at 1:06 am

RC,

” Rouse has given some thought to the employment opportunities of the cigar bar workers. ”

Has he given thought to their liberty of contract? Has he given thought to the fact that when workers choose to work at place A it is because of all the other opportunities they have, working at A is the best choice for them? Or has Rouse merely given thought to his own biases as to what passes as acceptable employment, denying the right to work to those who don’t share his biases?

Regards,
Ken

RC June 5, 2011 at 11:51 am

Ken,

Perhaps he thinks that these workers choose to work at place A only because their employment opportunities are otherwise awful. Given the current unemployment numbers in the US, this may not be a totally ridiculous idea. (Too bad he does not point to the minimum wage as part of the problem…)
Of course, what is harder to understand is why Rouse automatically assumes that some other enterprise will come in and give all these workers a better employment opportunity.
Also, another explanation is that Rouse may think that these workers don’t know what’s best for them and that’s why the nanny state should intervene. I do not share this paternalistic view but among the left it is widespread, as you surely know.

Regards,
RC

Ken June 5, 2011 at 1:29 pm

RC,

Yeah, Don all ready covered this with his comment “Such a claim would imply that these workers’ skills are so specific to cigar bars that their other employment options, if any, are judged by these workers to be even worse than toiling in cigar bars.” In other words your argument that the cigar bar is the only employment available, even in the economy is bunk.

Regards,
Ken

RC June 5, 2011 at 4:34 pm

Ken,

It is not my argument – I’m just guessing what Rouse had in mind – so stop implying that it is. Besides, nobody knows what are these workers’ employment opportunities (except for maybe the workers themselves) and it is quite possible that for a few of them it really is either the cigar bar or unemployment.

Regards,
RC

Ken June 5, 2011 at 4:49 pm

RC,

Of course it’s your argument, so stop dissembling. It is not possible for people to have as their only employment options being working at a cigar bar or unemployment, so stop acting as if it is.

Regards,
Ken

RC June 5, 2011 at 5:11 pm

Ken,

Are you suggesting that it is impossible to have only one employment option, even when unemployment is high? (I’m not considering the underground economy, btw)

Regards,
RC

Ken June 5, 2011 at 7:16 pm

RC,

“Are you suggesting that it is impossible to have only one employment option, even when unemployment is high?”

I’m not “suggesting” anything. I’m making an obviously true statement. There is always a need for dishwashers, waiters, retailers, and all sorts of other low skilled labor. If there is opportunity at a cigar shop, a retail store that is typically located in malls, there are other similar opportunities.

I defy you to give me an example of ANYONE who has an employment opportunity in the private market, such as a cigar shop, and NO OTHER opportunities anywhere.

“I’m not considering the underground economy, btw”

Why not? Much of the underground economy consists of otherwise legal actions, but so heavily regulated that it’s cheaper to do it under the table. How many contractors do you know that charges less if you pay cash? Why do you suppose that is?

In other words, the robustness of the underground economy is a direct reflection of government idiocy.

Regards,
Ken

RC June 5, 2011 at 7:36 pm

Ken,

OK, I get your point, though I wonder, if there is always need for low skilled labor, then why is there any unemployment. After all, even welfare expires after some time.

Regards,
RC

Ken June 5, 2011 at 7:55 pm

RC,

“then why is there any unemployment”

First, people are always moving, geographically and career wise, so there will always be people who don’t have a job, but are looking. This is what’s termed the natural level of unemployment and is typically assumed to be around 5%.

There are other reasons for unemployment to increase as it has in the last few years.

Second, government. Government keeps low skilled people from finding a job, since now with SS, minimum wage laws, etc, the cost of hiring anyone is at least $9-10/hour. Many teenagers, high school dropouts, etc. simply don’t have the skill to even produce that much.

Third, government. Government currently is lawless. At the federal level, major pieces of legislation have been passed and vaguely written. In addition to this, government has decided it will not enforce certain legislation. Also, government is now handing out exemptions to their favored political friends.

Fourth, government. Government is so hostile towards business, why would businesses expand (i.e., hire new employees) and why would anyone start a business, when government has explicitly stated that if you are too successful it will confiscate all of your wealth?

Fifth, government. Government rewards the politically connected at the expense of the productive. GM is a perfect example. GM through poor management, including the inability to stand up to union thugs, ran the company into the ground. The government gave them tens of billions of dollars, then tried to scapegoat the competition, Toyota, with a phony controversy. Why be productive when it’s so lucrative to be friends with politicians?

Regards,
Ken

RC June 5, 2011 at 8:15 pm

Ken,

I fully agree with your argument that government policies can (and do) cause unemployment.
But like you mentioned – when government interventionism (like high minimum wages) cause unemployment, people are scared of losing their jobs and usually hang on to what they have. That’s why I suggested at the beginning that these cigar bar workers may not have such rosy employment opportunities, though I probably exaggerated when I hinted that the cigar bar may be their only working opportunity.

Anyway, thanks for the discussion.

Regards,
RC

kyle8 June 4, 2011 at 1:44 pm

It is a specious argument. There being a clientele for cigar bars, then it is logical to assume that anything other than a cigar bar is an imperfect substitute.

Imperfect substitutes will not have the same viability, at least with those potential costumers, and may not pay as well, or last as long.

kyle8 June 4, 2011 at 1:46 pm

Besides wich, there is a very heavy non-economic argument as well. It is called Liberty, or who the hell died and made Rouse or Bloomberg God.

vikingvista June 4, 2011 at 2:32 pm

Damn straight.

RC June 4, 2011 at 3:36 pm

Kyle8,

You have a point in both of your posts, and I’m not arguing otherwise. I was just pointing out that Rouse does not neccesarily want to condemn the cigar bar workers, even if his reasoning is mistaken.

Regards,
RC

jorod June 4, 2011 at 1:24 pm

On the wider issue of protecting us, people forget that tobacco is a cheap anti-depressant. Also 5 or 6 cigarettes a day relieves the symptoms of diseases like colitis. Of course, the drug companies benefit from elimination of tobacco. Nobody talks about that.

Gil June 4, 2011 at 11:45 pm

Not to mention cigarettes sharpens the mind and supresses the appetite so many smokers are quite active, lean and healthy until middle age.

Ken June 5, 2011 at 1:08 am

Gil,

Many smokers are healthy into old age; in fact the majority are. Have you any idea of the statistics surrounding the health hazards of smoking or do you merely think that everyone who smokes succumbs to cancer or emphysema?

Regards,
Ken

Gil June 5, 2011 at 2:07 am

Yes, some cancers and emphysema are mostly caused by smoking. There’s no reason for lung cancer to be a common form of cancer other than the fact people smoke. In fact most cancers are caused by lifestyle habits han random chemicals. In other words, if everyone lived healthily than cancer will be relatively uncommon. Then again it depends what you define as “old age”. Sixty years and on?

Ken June 5, 2011 at 2:55 am

Gil,

I was pointing out how misleading your “many smokers are quite active, lean and healthy until middle age” crack is. I’m aware that cancer rates increase for smokers, but from what to what? Are you unaware that the majority of smokers DO NOT get cancer and many of the other illnesses?

Anyone could easily and truthfully say “many non-smokers are quite active, lean and healthy until middle age”. It’s a nonsensical statement.

The statement also ignores the fact that smokers are perfectly aware of the risks associated with smoking and as free people they can make the decision to smoke or not. People take pleasure in smoking. Let them. Just as people who choose to work at cigar shops are fully aware of the (minimal) dangers associated with second hand smoke and can choose to work there or somewhere else. These people prefer to work at a cigar shop rather than the many other types of shops at which they could work.

And yes sixty and on is old age.

Regards,
Ken

rhhardin June 4, 2011 at 1:35 pm

The lefty answer of course is that cigar bar workers’ health care costs fall on the state, even if (as is obvious all over) people don’t care enough about their own health.

It’s an externalized cost of working there.

kyle8 June 4, 2011 at 1:49 pm

Also a non-argument. If such a direct causality could be established then you could also establish what the increased cost to the public would be and handle it by taxes.

Taking away the freedom of individuals before even exploring this possibility reveals the tyrannical nature of the city government.

danphillips June 4, 2011 at 4:45 pm

I’m not sure what you mean by “handle it by taxes.” In my book handling things by taxes is one of the most egregious ways to take away freedom.

Richard Stands June 4, 2011 at 1:47 pm

“A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.”

- Eric Hoffer

Nemoknada June 4, 2011 at 3:22 pm

Self-styled libertarians don’t believe in the tragedy of the commons. They believe that there should be no “commons”; that someone should OWN the commons, have a stake in protecting it, and then prohibit over-grazing to protect his position as owner. There is, after all, no difference between a park and an electric company. Both provide a utility. Why shouldn’t a private company own Central Park and charge admission for its use?

The problem with this logic is that the “commons” is a Platonic notion that is not limited to physical things that can be owned. The “market” is a commons that no one can own. Yet, it can be despoiled by the offer of crappy jobs to desperate people, as each employer who would like to pay a decent wage is compelled by competition to pay a crappy one to compete, and more and more people are obliged to take those crappy jobs because they are the only jobs available. Eventually, of course, all those people with crappy jobs are unable to patronize each others’ employers, and they all fail. The commons – the market – is destroyed, all because the people failed to outlaw the crappy jobs that started the race to the bottom.

Whether working in a carcinogenic cigar club is the sort of job that should be banned because of its effect on the commons is debatable. Perhaps not. But arguments based on freedom of choice do not resolve the issue, as they do not address the tragedy of the commons and, instead, assume that the concept has no relevance to the choice to take a crappy job.

Richard Stands June 4, 2011 at 3:39 pm

By what presumption would a third party observer be empowered to define the crappiness of a job or an employee over the voluntary participants themselves?

Nemoknada June 4, 2011 at 6:15 pm

“By what presumption would a third party observer ..?”

It’s not a matter of presumption by a third party observer. It’s a matter of voting by the people who will end up having to take those jobs if they remain legal or sell to the people who have them. It’s really very simple. You pretend you own a store that caters to working class folks, and you vote to ban any job that would leave working class people too sick or tired or poor to shop at your store.

Richard Stands June 5, 2011 at 2:54 am

Beyond the people who are actually involved in the agreement: the owner of the firm and the employee (neither having to pretend anything involving others), any other person is a third party observer.

As one of those observers, why should my imagined view of your contract with a potential employee or employer have any say at all, let alone decide whether your voluntary contract should “remain legal”?

Nemoknada June 5, 2011 at 1:35 pm

“As one of those observers, why should my imagined view of your contract..”

The factory upstream agrees with a carting company to dump its crap in the river that runs by my house. Am I a “third-party observer”? Am I “imagining” that your contract will make my land less valuable?

You really need to ask yourself what role the word “imagined” plays in your question. If it’s imagined, then, certainly, WHATEVER IT IS, it’s stupid to pay any attention to it. If it’s not imagined – if the external threat is real – then what’s left of your question?

Richard Stands June 5, 2011 at 11:23 pm

Violation of another’s property rights is not the same thing as a voluntary peaceful agreement between an employer and employee of a cigar bar.

I’d agree that prosecution of involuntary incursion and destruction of another’s property is a proper role for government.

vikingvista June 4, 2011 at 4:33 pm

“each employer who would like to pay a decent wage is compelled by competition to pay a crappy one to compete, and more and more people are obliged to take those crappy jobs because they are the only jobs available. Eventually, of course, all those people with crappy jobs are unable to patronize each others’ employers, and they all fail.”

Hey Nemoknada, Karl Marx called. He wants his economics back.

Price adjustments in a competitive free market are self-limited phenomena, as limited as resources are finite. It is the price mechanism that counteracts, if permitted, the kind of spiraling imbalance you are talking about.

In your example, the ever present fact of scarce labor supply and demand limits how low of a wage an employer can offer before falling short, just as it limits how high a wage a worker can demand before finding himself an unused surplus.

In both cases, the parties make adjustments in their own self-interests. It’s called price *discovery*, not price *race to the bottom* (it of course makes no sense to say that all prices fall–prices are ratios, and a falling price from one trader’s perspective is a rising price from another’s, in terms of goods and services).

Just as employers are “compelled” to offer a “crappy” wage to compete for customers, they are also “compelled” to offer a non-crappy wage to compete for workers. Your reasoning could just as easy be applied to say that employers must keep driving up the prices of their products, so that they can compete for workers, until everything is to expensive for anyone to buy, and everyone fails. It is exactly the same fallacious reasoning.

It isn’t market forces that are unbalanced. It is your recognition of the totality of forces present in a market that is unbalanced.

In one sense, you are correct. It is imaginable, that huge numbers of market participants would become insane, and all simultaneously decide to act voluntarily against their own self-interests. It is also imaginable that Elvis and his quintuplet brothers are all still alive, studying string theory. But it is not a position that a reasonable person could ever take seriously. Or perhaps an astroid wipes out a large part of civilization. Certainly, that would not go unnoticed in a free market. But still, not a reasonable argument to compare free markets to compulsory action.

Nemoknada June 4, 2011 at 6:22 pm

You are assuming that the labor price discovery mechanism will equilibrate at a high enough level to maintain enough demand to keep people employed. But the price may equilibrate only long enough for more vendors to go out of business because laborers can’t afford goods, creating more unemployment and lower wages. There is no NECESSARY end to the spiral above mutual poverty.

Obviously, a free labor market does not necessarily cause a downward spiral any more than it causes an upward one. But the downward spiral can be made much less likely by making demand-destroying wage levels impermissible.

Nemoknada June 4, 2011 at 6:39 pm

“Karl Marx called. He wants his economics back.”

The point of my argument couldn’t be less Marxist: it is that the petit bourgeosie DEPENDS on a workforce that is paid well enough to shop in its stores. Labor is only one input to cost; if labor costs go down, prices of goods drop, but not necessarily enough to sustain demand. Bans on poor jobs are this in the rational self-interest of the shopkeepers. That’s why they should vote for them. Would you have them do otherwise?

MT June 5, 2011 at 8:37 am

This is hilarious. Are you satirizing some progressive view of economics? Or do you view the last few hundred years, globally, as an anomoly to your theory?

Nemoknada June 5, 2011 at 1:44 pm

“..do you view the last few hundred years, globally, as an anomoly to your theory.”

What part of economic history am I viewing as an “anomoly”? The anti-trust laws? F.E.L.A.? Taft-Hartley? OSHA? The Civil Rights Act? The Clean Air Act? The Endangered Species Act? All of their foreign counterparts? Chinese pollution? China’s new-found obsession with environmental regulation? I don’t support all of the provisions of all of these laws, but they are certainly part of our economic history. And every single one of them is intended to prevent a tragedy of the commons.

Not everyone has an agenda. I could care less about progressive or libertarian economics. I’m just pointing out that the arguments here make no freakin’ sense because rational, self-interested actors will, at every opportunity, despoil a commons, and the role of government, the reason they are constituted, is to prevent those opportunities by law.

Dan June 5, 2011 at 4:22 pm

Intent? And then there are the devastating economic realities of the ‘good intentions’.

vikingvista June 5, 2011 at 4:21 pm

“The point of my argument couldn’t be less Marxist: it is that the petit bourgeosie”

You are hilarious! You got me. I took your oblivious Marxian satire seriously. Good one!

vikingvista June 5, 2011 at 4:10 pm

“You are assuming that the labor price discovery mechanism will equilibrate at a high enough level to maintain enough demand to keep people employed”

No, I’m telling you that you are ignoring the counteracting market forces. As I said, economics is not about the imaginable, but the likely. There are countless imaginable ways that people might behave which become absurd once you recognize the forces at work.

I am also telling you that the market equilibrium (the ever changing hardly realized direction of market forces) is the result of more desires, interactions, and feedbacks than you or any other central planner can ever hope to begin to identify or control. It is the unrealized curse of the central planner that the equilibrium is barely affected through the planner’s violent actions against market actors. That’s why planners never achieve their ostensible ends, but only shortages, surpluses, wealth destruction, and spiraling debt.

“But the downward spiral can be made much less likely by making demand-destroying wage levels impermissible.”

Even if “demand-destroying wage levels” made any sense, such control is a practical impossibility. All that you can hope to do is support a small group of people at the expense of others (as well as at a net loss of wealth).

Nemoknada June 6, 2011 at 9:43 am

“There are countless imaginable ways that people might behave which become absurd once you recognize the forces at work.”

Did Dickens imagine life in the factories of his times? Where were those countervailing forces?

The rather simple fact is that technology matters. For most of our history, we could not manufacture what we all needed, so our economic system parceled out what we could make to a few. Then, one day, Henry Ford showed us how to make enough stuff in enough scale to make it useful that workers be customers. So we figured out how to do that by allowing unions and imposing minimum wage and hour laws. And we got very rich.

But you feel free to enjoy your version of history and to insult anyone who does not share it.

crossofcrimson June 6, 2011 at 12:22 pm

Ford was, partially, responsible for the concept of the assembly line – not mass production. Just for edification…

vikingvista June 7, 2011 at 12:17 am

“Did Dickens imagine life in the factories of his times? Where were those countervailing forces?”

Yes. He did. You are referring to works of fiction. The reality of the factories is that they were the countervailing force to the centuries old poverty of the cottage industries. The factories provided better working conditions, and better compensation than many families had ever experienced. Starvation declined, fecundity increased, and even the best efforts of the new socialist movements to force people back into their former brutish lives, could not overcome the prosperity that capitalism had unleashed.

“So we figured out how to do that by allowing unions and imposing minimum wage and hour laws. And we got very rich.”

It is true that the great prosperity of industrialization was also a great temptation for all manner of thieves. Yes, some workers were more than happy to organize against other workers (unions), to forcefully prevent competition, and to try to keep others from travelling the same road to prosperity.

And of course even today, there is no limit to people’s cruelty–even going to far as to get governments to ban the poorest of the poor from working (minimum wage laws).

But in spite of the efforts–frequently violent–of unionization and minimum wage to prevent the most vulnerable of people from lifting themselves up, market liberalism has still managed to virtually wipe out poverty in this country.

Andrew_M_Garland June 4, 2011 at 3:26 pm

By Rouse’s reasoning, all outside sales jobs should be banned.

Driving from site to site imposes definite, measured, significant risks, resulting in increased death and disability. No one should be forced to do such dangerous work, and many ignorant people accept this type of work without fully considering the consequences.

The lack of outside sales efforts will not be missed, as other work will be organized to take its place. To paraphrase, “Other enterprises will eventually move into this niche and provide jobs that do not impose death and dismemberment on its workers.”

I might be able to imagine other sorts of work that should be banned according to this logic.

And, don’t get me started about swimming, tanning, skiing, and hiking, all known killers, and mere recreations.

kebko June 4, 2011 at 3:51 pm

I’ve always said we should ban all work in direct sunlight, too. It’s simply inexcusable.

Nemoknada June 4, 2011 at 6:24 pm

Are speed limits objectionable on the grounds that the power to impose them includes the power to impose stupid ones?

Andrew_M_Garland June 5, 2011 at 12:14 am

Government is broadly objectionable, not because it has the power to impose stupid laws, but because it so often uses that power.

MrDamage June 4, 2011 at 7:07 pm

“But the downward spiral can be made much less likely by making demand-destroying wage levels impermissible.”

If a producer of goods and services spends more producing those goods and services than the goods and services are worth, the result is not economic growth and greater wealth for all, the result is economic shrinkage and less wealth for all. If I spend $110 creating a widget that I can sell for only $100 I have destroyed $10 worth of resources which could have been used more effectively elsewhere.

Making certain wage levels impermissible causes many economic activities to become uneconomic: they destroy value instead of increasing it. The result being that no one engages in those activities. Consequently, there are fewer jobs available than would otherwise be the case and people at the bottom of the economic food chain wind up with EVEN FEWER employment options and EVEN LESS bargaining power in the labor marketplace because more people are competing for fewer positions.

If mutual poverty is the result, people will not engage in those activities. Government does not need to forbid activities which result in mutual poverty because the individuals involved are far better able to gauge the profitability of a market transaction than some elite in a far off capital. Government intervention to prevent a mythical “downward spiral” is unnecessary and contrary to the interests of the laborers that it purports to benefit.

Nemoknada June 4, 2011 at 9:18 pm

“If mutual poverty is the result, people will not engage in those activities.”

Of course they will. This is elementary game theory: some games make it in the interest of players to take action that destroys their environment. Some profitable transactions are profitable only because they overuse a commons. In such circumstances, the players’ best strategy is to vote, outside the game, to change the rules, because inside the game, they MUST behave in a way that brings the system down. In a democracy, politics provides that opportunity. Elites in far away capitals have nothing to do with it. You just made that part up.

Of course, it’s not always clear to the players what rule changes are mutually beneficial and which are not. Some speed limits save lives, some cause heart attacks. Ditto labor laws. Some support aggregate demand by assuring that workers can be customers, and some destroy it by pricing things out of people’s reach. In each case, however, only a political action can make the change, and the need for the good ones outweighs the risks of the bad ones, as any one of them can be repealed if it works out badly.

Politics is not always some guy behind the green curtain. Sometimes, it’s We the People in Congress assembled. We can’t always say which is which. If we could, there’d be no guys behind green curtains. But not being able to tell good regulation from bad is not grounds for denying that there is good regulation.

nailheadtom June 4, 2011 at 10:53 pm

Evidently, according to you, everything is “the commons” and all voluntary transactions produce negative externalities that must be regulated through democratic political action. Of course, the logical outcome of this line of thinking is more of what we have now, a nomiocracy implemented by bureaucrats that is devoted to procedure over results. http://abclocal.go.com/kgo/story?section=news/local/east_bay&id=8161285

Nemoknada June 5, 2011 at 12:14 am

“Evidently, according to you, everything… ”

I don’t see where the “everything” comes from. I’m pretty sure I said “some games” and “some profitable transactions.”

But even if I believed as you say, does that mean that there ARE no commons or that the labor market is not one of them? Neither of those conclusions follows from your allegation. Either you recognize that some waters have been overfished by free, rational actors, or you don’t. If you do recognize it, then you must believe or not believe that the self-destructive behavior called overfishing can be abstracted to a class of situations. If you believe that it can be so abstracted, you must believe that the labor market is or is not such a situation. You can jump off that logical train anywhere you want, but it does not stop at the Everything Station, because believing that everything is a commons has no place in my argument.

nailheadtom June 5, 2011 at 11:42 am

Every aspect of human existence has a connection to the “labor market”, just as it has to language, thus if it is a “commons” then for all practical purposes all human behavior must take place in a “commons”. If one looks hard enough and constructs the definition in a certain manner, negative externalities can be found in literally any human action. Suppose of two candidates for a position, A. has more usable skills than B., but lives 40 miles down the road, whereas B. can walk to the jobsite. Should the fact that A. will twice daily add to traffic congestion be an issue in his employment?

MrDamage June 5, 2011 at 5:53 am

You’ve moved from the downward spiral theory of wage movements to a discussion of externalities. What do you perceive as the externality of independent parties coming to a mutually acceptable price for labor which justifies elites in far off capitals dictating to those parties what an acceptable price is?

The downward spiral theory of wage movements pushing people out of the market for goods and services is a justification for regulation that is inimical to the interests of the people which it purports to protect by pushing them entirely OUT of the labor market. If employers are forbidden to employ people at a price that allows them to operate profitably, they’re not going to operate unprofitably, they’re either not going to operate at all or operate in markets for which the labor of the people “protected” by minimum wages is not required.

Nemoknada June 5, 2011 at 8:48 am

“You’ve moved from the downward spiral theory of wage movements to a discussion of externalities. ”

Of course. The downward spiral is a feedback loop: the reduction in wages has, as an externality, a loss of revenue for OTHER employers, which causes them to lay off more workers, which puts further downward pressure on wages.

“What do you perceive as the externality of independent parties coming to a mutually acceptable price for labor which justifies elites in far off capitals dictating to those parties what an acceptable price is?”

Nothing. You’re the one who lives where elites in far off capitals dictate stuff, so you tell me. Where I live, the people elect representatives to do their bidding, and regulating stuff like child labor and job safety is one of the things the voters bid them to do in the exercise of their self-interest. Also, here in the USA, we have airplanes and wireless communications. No capital is more than half a day away physically and half a second away electronically. How is it where you are?

“The downward spiral theory of wage movements pushing people out of the market for goods and services is a justification for regulation that is inimical to the interests of the people which it purports to protect by pushing them entirely OUT of the labor market.”

It does not purport to protect the people at the bottom. It purports to protect the vendors who would sell them stuff and the people whom they would have to fire as the spiral worsens, i.e., most of us. As I said above, you start with overfishing, and you reason to a general case, and then you apply the principles to providing crappy jobs when labor is not scarce and see if you don’t get the same bad result. Then you vote your economic interest. If bureaucrats in far-off capitals find their way into your deliberations, that’s on you.

Richard Stands June 5, 2011 at 2:15 pm

“Where I live, the people elect representatives to do their bidding”

Can those representatives do anything that is bidden? What would stop person A (and enough of his friends) from voting to control any voluntary association of persons B and C they wished? Or voting themselves the as much of fruits of person B’s life’s effort as they desire? Or voting to exterminate person B?

If the adult citizens involved in a peaceful voluntary contract aren’t the only ones defining what is “crappy” enough to be abrogated by force of law, who else gets a say? Are there any limits to that type of intrusion?

MrDamage June 5, 2011 at 4:50 pm

” you apply the principles to providing crappy jobs when labor is not scarce and see if you don’t get the same bad result. Then you vote your economic interest”

Which is what makes the idea so damned immoral. As a skilled laborer, it is in my economic interest that employers engage in activities that employ skilled labor. It is therefore in my economic interest to forbid employers to engage in activities that require unskilled labor as preventing them from employing people with whom I do not compete increases the amount of economic activity in areas which I do compete in. This increases both my chances of finding and my wage when I do find work. If I can cover my vested interest by pretending that there is a mythical downward spiral then I can appear to be acting altruistically.

And I don’t even have to appear to be dictating to other individuals what their economic interests are. I just elect the right people who dictate to them from far away. The tyranny of the majority is no less evil for being democratic.

W.E.Heasley June 4, 2011 at 8:23 pm

Mr. Rouse is a strong believer in categorical risk management. That is, absolute safety at maximum cost. No trade-offs for Mr. Rouse.

Unfortunately for Mr. Rouse, job seekers, consumers, firms, etc. use incremental risk management on a daily basis. That costs and benefits are actually weighed regarding safety and trade-offs are measured. Mr. Rouse might want to investigate a discipline known as Risk Management.

Bill Koehler June 5, 2011 at 8:27 am

Mr. Rouse obviously hates liberty. What if those who work in cigar bars want to work there? Like dwarfs who make a good income from dwarf tossing. Silly socialists should learn to mind their own business, but then they wouldn’t be socialists…

Yam Slemho June 5, 2011 at 9:15 am

I’m conflicted over this. Of course, as a (proper) Liberal I agree with the “free choice” argument, but… In the Constitution of Liberty, Hayek argues that the bedrock of a free society is that all are treated equally under the law – therefore it would surely be wrong for cigar bars to be given a special exemption from legislation to ban smoking in public places?

brotio June 5, 2011 at 7:56 pm

The only “public places” are places owned by the government. Every piece of legislation ever passed in this regard has been to ban smoking on certain private property. Why should homes be given a special exemption from legislation to ban smoking in private places?

Nemoknada June 5, 2011 at 9:20 am

“…it would surely be wrong for cigar bars to be given a special exemption from legislation to ban smoking in public places.”

All cigar stores would be treated equally. If the law banned smoking in “all public places where people do not go primarily to smoke,” would you say that an exception was being made from a general rule, or would you say that the general rule didn’t catch cigar bars in the first place?

Yam Slemho June 5, 2011 at 2:09 pm

Agreed, that makes sense.

But I’m conflicted in another way over anti-smoking legislation.

I’m an ex-smoker. At the time that the ban on smoking in public places was proposed here in the UK, I was very much opposed to it, even as I was determined to quit smoking myself. I was opposed to the ban purely on ideologically Liberal grounds – at that time, in my view, no one was forced to endure the company of smokers unless they chose to, either by patronizing or by taking a job in a bar, pub, or nightclub that permitted smoking. If people wanted to socialize in a smoke-free environment, then they could go to a bar, pub or nightclub that did not permit smoking [even though no such places actually existed]. Simple.

Anyway, despite my (largely silent) opposition, the ban got introduced, and a funny thing happened… I found that it was about 100 times easier for me to quit smoking than it had been the many times I had tried before. Why? Because whenever I socialized I wasn’t constantly passively smoking, and watching other people smoke in close proximity.

So, on the one hand, I object to the fact that the smoking ban restricted my freedom to socialize in an environment of my choice… but on the other hand, the ban helped liberate me from the very real chains of nicotine slavery.

Nemoknada June 5, 2011 at 2:49 pm

Yam, if I “may” call you that –

I think you have to separate, and then separately value, de jure freedom and de facto choice. If you like good food, and the price of enjoying it is that you must endure second-hand smoke, does the fact that you are free to choose NOT to enjoy that food a good enough reason not to want to ban smoking in licensed, public establishments inspected by a board of health whose salaries you pay? Why is it the non-smoker who has to “take one for the team”? Why can’t the smoker be “free” to choose whether to smoke or dine out, instead of you being “free” to choose whether to endure SH smoke or dine out?

I’m not sure where I come out on the smoking clubs. I could see members creating such clubs and working in them on a volunteer basis. That would leave only the issue of my interest in other people’s health. As a libertarian, I have no interest in other people’s health. But as a consumer of healthcare, I have a selfish interest in preventing exhaustion of the resources to which I may look for healthcare. I am not talking about financial resources. I am talking about the pulmonologist who is too busy to find my non-smoker’s cancer because his practice is over-run with cancerous smokers.

What libertarians tend to miss, I think, is that we have a selfish interest in regulating others’ behavior that goes beyond do-goodery. I have tried to characterize those interests as a commons, because they tend to fit that paradigm. But the point of the argument is that we each, as individuals, have an interest in what happens to things we all depend on, like air to breathe or customers to serve, and that sometimes, regulations are enacted – indeed, should probably only be enacted – to advance those selfish interests.

Stephen A. Boyko June 5, 2011 at 10:06 am

“Choice” is an enabling reflexive proposition as compared to “regulation,” which is a negatively defined operational tax—“thou shalt not, except for.” The fact that those who choose to regulate reflexively see choice as an “exception” says all you need to know. Res ipsa louitur. See “Fit Regulation to Market Reality”
http://www.sfomag.com/article.aspx?ID=1324&issueID=c

Greg Williams June 5, 2011 at 10:37 am

The problem with applying ideology to common sense, is that you end up with ideological nonsense. Markets aren’t holy icons. Capitalism and the common good can exist together without being a moron.

Nemoknada June 5, 2011 at 3:00 pm

“Can those representatives do anything that is bidden? ”

Sure. The trick is to create a political system in which they will not overstep. I keep raising the issue of speed limits, but I can’t get an answer. What is to stop Congress from imposing a national speed limit of 1 mile per hour? And yet, why do I not fear that they will do so?

Our political system requires an awful lot of agreement to get things done, and even more to get CERTAIN things done – the ones that require a Constitutional amendment.

Do bad laws get passed? Of course. Remember Prohibition? The 90% marginal income tax? Some are stll on the books, like the idiotic campaign finance restrictions that violate the First Amendment and wasting resources on John Edwards’ Pecker-dillos.

But the commons is out there, and people will despoil it unless the legislature forbids it. So it won’t do to just say that legislators are bozos or that the mob can’t be trusted. We, the People are the only game in town. We need to fight all bad laws because they are all bad laws, not because all laws are bad.

Richard Stands June 5, 2011 at 4:28 pm

I do not see your peaceful voluntary agreements with other adult citizens as commons. I see them as your property and none of my business.

Certainly, others may conclude that your every action is subject to review and approval by the vote of some number of third party observers. Perhaps you’d agree. This, of course, would be nothing like a free country. Perhaps an “anakatosocracy” (government by busybodies).

Being a “self-styled libertarian”, of course I reject that view.

vikingvista June 5, 2011 at 10:50 pm

Well said

Nemoknada June 5, 2011 at 5:02 pm

“I do not see your peaceful voluntary agreements with other adult citizens as commons. ”

If the agreement between me and a third party is to test my nuclear fission idea in the air over your house, are you a “busybody” for voting that such a contract be illegal? The “agreement” is not a commons. The air I breathe is a commons.

“others may conclude that your every action is subject to review and approval by the vote of some number of third party observers….”

Seems like a bit of an over-generalization. Only actions that despoil the commons should be regulated. And the damage needs to be severe enough for the costs of regulation, including enforcement and suppression of autonomy, to be worth paying.

Freedom, too, is a commons. The temptation to take away others can lead us to take away each other’s. We need to be careful not to set a standard under which we end up with no freedom left. So a balance needs to be struck, which is why we have politics, and why our political founders established a limited government.

So, what about overfishing? Who has the right to legislate against it? The fishermen who put themselves out of business? The fishermen who would like to observe a self-imposed limit but can’t because the others will overfish anyway? The people who depend on fish as food? No one, because the fishermen’s freedom demands that we stand idly by and let them destroy the commons?

Perhaps June 5, 2011 at 5:21 pm

You should look into the work of Elinor Ostrom.

Nemoknada June 5, 2011 at 8:42 pm

From what I can read, she and I are singing the same tune: there are games where the best strategy is to change the rules. Note, though, that I am largely concerned with commons so large and amorphous – the job-based consumer economy, say – that the most practical form of “agreement” among the users is a law passed by their common legislature. Politics, after all, is just economics continued by other means.

Richard Stands June 5, 2011 at 11:51 pm

“If the agreement between me and a third party is to test my nuclear fission idea in the air over your house, are you a “busybody” for voting that such a contract be illegal?”

Perhaps we hold different views of the phrase “third party.” In my view of your example, I would be the third party, you and the other person would have the agreement, and your agreement would initiate a forceful intrusion onto my property. The burden would be upon me to prove that intrusion and any damages.

I’ll concede that environmental law might be an expedient defense of private property (as opposed to the less-sweeping and therefore more ethical alternative of suit for damages). Environmental regulation also bears the very real liability of regulatory capture, and use by established providers to stifle competitors.

None of this, of course, has anything whatever to do with adult citizens peacefully agreeing to work with each other under whatever terms they choose.

“Freedom, too, is a commons. The temptation to take away others can lead us to take away each other’s. We need to be careful not to set a standard under which we end up with no freedom left. So a balance needs to be struck, which is why we have politics, and why our political founders established a limited government.”

I’d wholeheartedly agree to support a limited government which simply defends citizens’ negative rights to live unmolested by other citizens (though I’m harboring serious doubts that such a government can remain constrained only to that purview).

Nemoknada June 6, 2011 at 7:14 am

“Don’t need to know.”

… as far as you know.

Ignorance is bliss, but it is also ignorance.

Nemoknada June 6, 2011 at 7:22 am

“I’ll concede that environmental law might be an expedient defense of private property (as opposed to the less-sweeping and therefore more ethical alternative of suit for damages).”

I have no problem with your casting this as an assault on your private property – a claim of nuisance at common law – but structurally, we’re talking about the despoiling of a commons, the air, which, of course, matters to us only because it affects our interests in health or property. It is because it affects so many people – because it is a commons – that legislation is an expedient solution.

I don’t use “ethical” the way you do. For me, “ethical” is a conclusion, not a property. “Force” has no ethical character. Some uses of force are ethical, some are not. But it’s your word, so you can use it any way you want. I’m just saying that a lot of us won’t understand you.

“None of this, of course, has anything whatever to do with adult citizens peacefully agreeing to work with each other under whatever terms they choose.”

Of course it does, if it is part of a downward wage spiral, or even if prevents an upward one. You can say “tough darts, I don’t want to intrude on such arrangements, and I don’t want to be told what I can do,” but that doesn’t mean that you are not participating or tolerating a preventable sub-optimal outcome for yourself as a user of the common economy.

Richard Stands June 6, 2011 at 10:15 am

“None of this, of course, has anything whatever to do with adult citizens peacefully agreeing to work with each other under whatever terms they choose.”

“Of course it does, if it is part of a downward wage spiral, or even if prevents an upward one. You can say “tough darts, I don’t want to intrude on such arrangements, and I don’t want to be told what I can do,” but that doesn’t mean that you are not participating or tolerating a preventable sub-optimal outcome for yourself as a user of the common economy.”

This is probably the crux of the disagreement. While I see history as providing ample evidence that freer markets yield more prosperity, not less, I can understand a perspective which might assume the opposite. I’d assert that freedom is the natural state, and any attempts to curtail it by force of law move economics from social science into social engineering.

The problem with such engineering by force of law is that all these conclusions are subjective (just as our differing definitions of ethical might be). Why would one definition of optimal merit the use of force while another would not?

From my perspective, the most efficient and ethical (meaning avoiding force) means of achieving an optimal market or culture is to refrain from interfering in the peaceful voluntary agreements of other adults.

Nemoknada June 5, 2011 at 5:23 pm

“It is therefore in my economic interest to forbid employers to engage in activities that require unskilled labor ”

Is it? All those businesses that employ only skilled labor can’t hope to make something that will be used only by skilled laborers. How will the rest of their potential customers get the money to shop? Indeed, your vote would destroy the commons on which you depend – an economy full of potential consumers – and so would make no sense for you to support as a regulation.

And how, exactly, are you going to get the majority to vote for a law that puts the majority out of work?

The tyranny of the majority is usuall a case of stupid people killing the golden goose. It is itself, a tragedy of the commons, in every sense of the word. But weaknesses are more often than not strengths taken to excess. We don’t ban fire just because there are arsonists. Why ban regulation just because there are over-regulators?

Nemoknada June 5, 2011 at 5:25 pm

“If one looks hard enough and constructs the definition in a certain manner, negative externalities can be found in literally any human action. ”

Yes. And the purpose of politics is to sort out which ones need protection from which depredations. To say that none do, which appears to be your position, hardly follows from the claim that some don’t, but that’s all you can infer from your claim that everything affects a commons.

Jeffrey neal June 5, 2011 at 7:11 pm

Exactly. We can all hear the anti-smoking zealot complaining that a cigar bar forces someone to work in a place that would not exist if the zealot ha his way. We hear such irrational nonsequitors almost daily Charter schools divert resources from public schools and aren’t any better, eg. Ian that impossible unless we assume lots of patents CHOOSE a worse school for their child(ren)?

Just another day in the coal mines

Nemoknada June 5, 2011 at 11:30 pm

“Violation of another’s property rights is not the same thing as a voluntary peaceful agreement…”

Doing something in my neighborhood that lowers my property value is not necessarily a violation of my property rights. I’m talking about air pollution.

As I said in another post, I don’t know how I’d come out on Cigar bars. I’m just here to say that Don’s “How, exactly, would cigar-bar workers be helped by this outcome?” is a typically wrong question, because the right question is “What commons, if any, does permitting employment in cigar bars despoil, and do I believe it is good policy to restrict people’s freedom of contract – as I do, for example, when I outlaw strangers from buying insurance on my life – in order to prevent that particular threat to that particular commons. It’s a very granular inquiry that does not yield to the kind of sweeping generalizations you are bringing to it.

Richard Stands June 6, 2011 at 12:15 am

Sweeping questions can be the road to understanding one’s underlying philosophy and presumptions. Useful questions of this type: “Can people own things?”, “Should they?”, “When (if ever) is it ethical for me to force you to act or refrain from action?”, “Are you competent to forge a binding agreement with another consenting adult?”, “If you do, who else should have a say in it, and why?”

Though my answers to those questions generally paint me as a libertarian, or perhaps a classic liberal, I find myself less and less convinced that “limited” government can actually endure for any length of time. I still answer the questions the same way, but realize as I approach geezerhood that incentives for use and abuse of that power are too great for it to remain limited. Or as Milton Friedman once said:

“Concentrated power is not rendered harmless by the good intentions of those who create it.”

So my goal is to advocate limiting power, localizing it; while opposing concentration and application of new powers. Law is force. Force is unethical. Therefore, the bar to hurdle for adding new laws should be commensurately high.

What peaceful adults voluntarily choose to do in cigar bars, restaurants, whore houses, opium dens, and gambling casinos is none of my business.

Nemoknada June 6, 2011 at 12:34 am

“What peaceful adults voluntarily choose to do in cigar bars, restaurants, whore houses, opium dens, and gambling casinos is none of my business”

… as far as you know.

Dan June 6, 2011 at 12:46 am

Don’t need to know. Put nose back on thy face.

Nemoknada June 6, 2011 at 7:32 am

“Don’t need to know.”

… as far as you know.

Ignorance is bliss, but it is also ignorance.

[Sorry, I initially posted as a reply to RS above.]

Dan June 7, 2011 at 12:23 am

I Must also find out what goes on in your house, and govt should make it so that we know. Don’t want to be ignorant of your actions behind the closed door.

Nemoknada June 6, 2011 at 2:23 pm

“It won’t do, by the way, for Mr. Rouse to reply that some people have no real choice but to work in cigar bars. Such a claim would imply that these workers’ skills are so specific to cigar bars that their other employment options, if any, are judged by these workers to be even worse than toiling in cigar bars. ”

How can the claim that people have no other options imply that these people judge their other options to be inferior? What other options? With a 9% unemployment rate, SOMEONE has no choice but to take a crappy job, in the same way that a lot of people are, by the same definition, “choosing” not to take any job.

Meanwhile, what about our entrepreneur? Is his skill set so limited that he can only open a cigar bar? If he is precluded from that, won’t he just open some other business that DOESN’T kill its workers, and won’t he need employees to do that? Won’t THAT “help” our cigar store worker with the infinite skill set? Why is it assumed that the peon has a choice not to be a peon, but the poisoner who employs him has no choice not to be a killer?

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