As readers of this blog know, I often respond to pro-mimimim-wage arguments by advising those who make such arguments to put their money where their mouths are. Specifically, whenever I encounter the assertion that minimum-wage legislation is justified because employers of low-skilled workers allegedly possess monopsony power, I point out to those who assert the existence in reality of monopsony power as a reason to impose a minimum wage that their assertion implies the existence of profit opportunities for anyone who enters the market to hire away these allegedly underpaid workers. So I ask those who assert that monopsony power is real and relevant to start their own businesses to give solid evidence of the strength of their belief.
The typical response to my suggestion is hostile. “Oh that’s silly! I’m a college professor / graduate student / newspaper pundit,” the typical such minimum-wage proponent retorts. “I have no special ability to launch a real-world business.”
Well I’ve solved the problem for those professors and pundits who believe that monopsony power exists but who also are too inept to undertake the challenging tasks of operating real-world businesses. I know a very successful and savvy businessman in California, Mike Long – a man of enormous integrity and experience – who stands ready to share with you his time, expertise, and counsel in order to guide you in starting and operating your own businesses. All you need do is to supply some of your own seed capital – say, a minimum of $25,000 – and Mike will help guide you to launch and run your business in order to take advantage of the profit opportunity that your identification of monopsony power implies is available for the taking. Mike can even share with you his knowledge of how to get from the capital markets any additional financing you might need.
So I challenge Paul Krugman, Daniel Kuehn, Alan Manning, Aaron the Aaron, and any other person who believes that monopsony power is real and relevant enough to justify minimum-wage legislation to now act on his or her stated belief about the real world. No longer do these minimum-wage proponents have the excuse that their inexperience prevents them from acting on their unique insights into prevailing market conditions. Mike Long will guide them, including guiding them to find skilled and experienced executives to do the day-to-day operations of their business. All they need to do is to supply three things – (1) that which they already insist that they possess, namely, the ability to identify the existence in reality of real and relevant monopsony power, (2) a substantial-enough sum of money to seed the company that they’ll launch to seize the available profits, and (3) some of their time talking with Mike to get their profit-bound ship to actually set sail on the market’s waters.
I’m serious. To any business-inept scholar who nevertheless believes himself or herself sufficiently expert to have identified profit opportunities that other skilled business people continue to overlook I say: contact me with your interest and I’ll put you in touch with Mike Long. If you are correct about the reality of monopsony power, you’ll become richer at the same time that you help to bid up the wages of workers who you believe are currently underpaid.
Of course, though, if you refuse to put your money where your mouth is, please stop proposing that government interventions that put the livelihoods of innocent people at risk based upon your beliefs that you refuse to back with something of substance of your own.