Quotation of the Day…

by Don Boudreaux on November 25, 2016

in Crony Capitalism, Seen and Unseen, Work

… is from page 9-10 of Thomas Sowell’s 1977 monograph, Minimum Wage Escalation (footnotes deleted):

mwe-smallLabor unions have their own imperatives and constraints.  For them, the minimum wage law presents the same kind of opportunity that a tariff presents to a business firm.  It is a way to price competitors out of the market.  That this is accompanied by humanitarian statements may be a matter of rhetorical, or perhaps political, interest but it changes no economic fact.  In the Union of South Africa, minimum wage laws were applied to native black Africans for the explicit purpose of stopping their competition with European workers.  In the days of the British Empire, British unions and manufacturers attempted to get minimum wages applied to India for similar reasons, though with different rhetoric.  American unions and businesses have been doing something very similar in Puerto Rico and other affiliated territories where minimum wages are set by tripartite boards of mainland Americans, often from competing firms

The point here is not to depict anyone as particularly evil.  The point is that powerful institutional incentives exist to use the minimum wage laws for purposes very different from those announced in the Fair Labor Standards Act, and that these institutional incentives are likely to persist through turnovers of personnel [in government positions] in the future as in the past.

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