Here’s another letter to Scott Rose:
I am indeed serious when I write that politicians and pundits who truly believe that large numbers of Americans are underpaid – that is, paid wages below the value of what they produce for their employers – should stop preaching about this problem and instead do something about it by launching their own private firms. Underpaid workers are underpriced assets that creative, profit-seeking entrepreneurs can bid for. If America really is swollen with legions of such workers, these entrepreneurs will earn profits by productively employing these workers while these workers will enjoy higher wages.
But you protest my “superficial advice.” You assert that “its hard to start businesses from scratch which will hire enough workers to make a difference.”
According to the Census bureau, in 2015-2017 the number of new businesses – ones projected to have payrolls – that formed each quarter in the U.S. was about 75,000. (And in 2015, for example, startup firms created 2.5 million jobs.) Surely individuals who are clever enough to win high political office or to launch thinktanks and write papers on market failure are at least as smart as are any of the tens of thousands of people who routinely launch new businesses.
But if, as you suggest, these politicians and pundits are not up to the task regularly performed by hordes of other men and women – if they’re unable peacefully even to persuade more-competent persons to act on their profit-promising information about the availability of underpaid workers – we should fear government policy designed to implement their ideas coercively.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030