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Quotation of the Day…

… is from page 247 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

Third-party observers face none of the inherent constraints and trade-offs that are inescapable for both employers and employees, and therefore these third parties have nothing to force them to even think in such terms.

DBx: Quite so.  And yet in the popular mind the no-skin-in-the-game crusaders for minimum wages, for mandated family leave, and for other state-dictated terms of employment contracts are held in great esteem while the employers who must arrange for the profitable employment of workers – including arrangements to pay workers – are regarded with suspicion or even outright hostility.  As for workers, the no-skin-in-the-game crusaders inflict damage on them even though most of these worker-victims never connect the dots.

The 19-year-old inner-city single mom who can’t find a job doesn’t realize that her unemployment is the result of minimum-wage legislation.  The 30-year-old junior account executive never learns that he would have gotten a larger raise were it not for the mandated leave that the state forced into the terms of his employment contract with his employer.  The 61-year-old welder, approaching retirement and looking back on his career in the shipyard, is oblivious to the fact that his lifetime earnings would have been higher had government let competitive markets determine optimal levels of workplace safety rather than impose, as it did, safety standards arbitrarily determined by politicians and bureaucrats none of whom had sufficient knowledge of either the worker’s preferences or of the costs of the diktats.

Far too many people operate according to a screwy and uncivilized code of ethics.  Butting in to strangers’ private affairs is applauded as altruistic if done through the agency of the state, while resisting and protesting against such officiousness is portrayed in the media and in the classrooms as evidence of greed or of cruelty or of ignorance (or of some combination of the three).

Making matters much worse are the all-too-typical modern economists.  They thrill to the not-very-challenging challenge of pointing out the many ways that real-world markets ‘deviate’ from textbook models – and in particular of all the many situations in which flesh-and-blood individuals acting in markets are less than fully informed.  These economists then leap, stuffed with stupid confidence but devoid of anything at stake, to the conclusion that they – and the state officials who they imagine are eager to act on their ‘scientific’ advice – somehow know, or can make known, all that the flesh-and-blood people are presumed not to know about the details of each of these individual’s specific situations.


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