Inspired by Hans Rosling’s marvelous book-producing washing machine and by the superb BBC special 1900 House, Steve Horwitz details how life is far better today for those of us – and especially for women – in capitalist societies than it was even in the relatively recent past. Here’s Steve’s closing paragraph:
Life has never been better and easier for humanity. Market-driven innovation has allowed machines to do our work for us and has brought us new and better products to make us cleaner and healthier, enabling humans — and particularly women — to have the time and health to do the things we love and that make us smarter and happier. Critics of capitalism too easily take that for granted. Those of us who understand this history need to continue to tell the stories that bring home the message that, thanks to the power of the market, we live in a world that our ancestors could only dream of.
Although it’s obvious to me that artificially pushing wages up through minimum-wage legislation causes some low-skilled workers to lose their jobs (or to not be hired in the first place), it’s clearly not obvious to most of my fellow Americans. So I ask, “Why not?”
One reason, I believe, is that many of the same politicians and pundits who praise the minimum wage also loudly complain about the alleged greed and profiteering of business owners. An economically uninformed voter can therefore be forgiven for supposing that a hike in the minimum wage is fully paid for out of the “excess” profits of greedy businesses.
But, notes the economist, most minimum-wage jobs are in highly competitive industries such as food service and retailing. Being under intense competitive pressures, firms in these industries don’t rake in excess profits; they earn just enough to satisfy their investors. If those profit rates fall even just a bit, investors scale back their support or even pull the plug. So, the typical employer of minimum-wage workers must find some way other than eating into profits to cover the added costs of a higher minimum wage.
One way is to reduce the number of low-skilled workers who are employed, combined with obliging those who remain employed at the higher minimum wage to work harder.