There has been much written recently in the blogosphere about the minimum wage given President Obama's call to raise the federal minimum from $7.25 an hour to $9.00. This follows the President's call for federal funding for universal preschool programs in the United States, supposedly because we "know" that such programs produce beneficial outcomes in kids who are in the programs versus kids who were never enrolled. Never mind that the evidence shows no such thing -- all we know is that a few, well-funded and unique preschool programs have been able to help a select group of kids -- no massive federal program has ever been shown to do the same.
Likewise, when it comes to the minimum wage, for some reason politicians, writers for magazines like The American
Conservative Liberal, and even some economists insist on arguing for a minium wage even when both theory and evidence repeatedlty demonstrate that raising the wage will only hurt the employment prospects (and earnings potential) of teenagers and the low-skilled in general.
Now, all of this is amusing given the Left's so-called committment to "empirical evidence" and "science" and "just doing whatever works." In point of fact, Head Start doesn't work -- did President Obama propose to end it during his State of the Union speech? In point of fact, raising the minimum wage doesn't work to help teenage or low-skilled workers -- so why are Leftists pretending it does?
Finally, I thought I might use this post to answer one of our frequent critics/commenters who recently asked Paul in a comment:
"Indeed, only yesterday I read Krugman arguing for minimum wage increase on precisely this ground that people are not commodities that we simply apply supply and demand to them and their labor. I did think that there was weight in his argument. But on the Right, Krugman is routinely derided. So would you apply your own insight to the issue political economy of minimum wage?"
I will not pretend to speak for Paul, so do not take this post as anything other than my thoughts on this matter and my thoughts alone. However, I think many of us on the Right refuse to take Krugman the columnist seriously because he regularly uses his column to promote a tendentious understanding of basic economic and public policy ideas and he fails to treat his opponments with respect.
As for whether or not "people are commodities" -- of course I reject that characterization -- but that doesn't mean I don't believe there isn't a market for people's labor (i.e. the laws of supply and demand don't magically go away when we are talking about the market for labor). However, I acknowledge that there may be a prudential role for the government to get involved in this market to promote the common good, if it can do so without doing more harm than good.
BUT, the central libertarian critique of government intervention in markets is persuasive to me NOT due to their ideology, which I reject, but because they are so convincing when it comes down to the question of prudence -- the libertarians are usually right when it comes to the evidence about the efficacy of government action, or even worse, rhetoric about a problem versus market actors leff on their own (with only the most basic regulations in place to govern their transactions). So to answer you question, no I give no weight to the argument and think minimum wage laws are foolish and attack a problem that does not exist.
Any other questions?