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Raising the Price of Milk: A Minimum Wage Metaphor

in Communicating Liberty, Economics, Liberator Online Archives, Libertarian Answers on Issues, Libertarian Stances on Issues by Sharon Harris Comments are off

(From the One-Minute Liberty Tip section in Volume 19, No. 15 of the Liberator Online. Subscribe here!)

First, the bad news.

A strong majority of Americans favor increasing the minimum wage. A recent Reason-Rope poll asked Raising the Price of Milk1,003 American adults this question: “The federal minimum wage is $7.25 per hour. Do you favor or oppose raising the minimum wage to $10.10 per hour?”

Fully 67 percent supported raising the minimum wage.

But there’s more.

When the poll further asked: “What about if raising the minimum wage caused some employers to lay off workers or hire fewer workers? Would you favor or oppose raising the minimum wage?” the response changed dramatically. 58 percent opposed raising the minimum wage, and only 39 percent favored it.

And when asked: “What about if raising the minimum wage caused some employers to raise prices? Would you favor or oppose raising the minimum wage?” the vote was split almost evenly.

And that’s the good news. We can change minds and win the majority to our side on this issue — if we help people understand the true, terrible consequences of minimum wage laws.

How can we do that? It’s not easy. To many people, a higher minimum wage seems compassionate. It even seems to make economic sense. As one state representative said earlier this year: “Raising the minimum is a win-win. If you put an extra $700 or $800 in a worker’s pocket, that money is going to be spent. Everybody will benefit.”

One problem is that most people aren’t employers; they don’t “buy” labor. They don’t think in those terms.

But most people do buy milk. And that suggests a simple analogy that can cut through foggy thinking and help people understand why the minimum wage produces such bad results.

Ask your listeners: What if the government decided to mandate an increase in the retail price of milk? Suppose the price of a gallon of milk was doubled?

Would that help farmers, dairies, and grocery stores? Would it mean more money for them? After all, it would only be a small increase for most milk buyers, just a few dollars per week.

Ask your listener what they think would happen if the cost of milk doubled.

How would people react? Would people buy more milk, or less?

For some people, the price increase wouldn’t matter. They’d just keep on buying milk.

But for many consumers, the price increase would make a big difference. Struggling families would be hit especially hard.

Many people would start exploring milk substitutes. Instead of buying whole milk, they might switch to cheaper soy or almond or rice milk.

Others would simply cut back on the amount of milk they consume.

Still others might water down their milk after purchasing it, to make it stretch further.

Further, the cost of items that used milk — cheese, ice cream, butter, etc. — would also rise. Consumers would buy less of those items, too. And manufacturers, just like consumers, would switch to milk substitutes whenever possible, in order to keep the prices of their products as low as possible.

The bottom line? Consumers would buy less milk. And, ironically, many farmers — the very people the increase was supposed to help — would lose money or even go out of business.

Which brings us to the minimum wage.

Employers buy labor, not milk. But if you increase the cost of labor, employers will act in much the same way that our imaginary milk consumers did.

Some employers will no longer be able to afford to buy labor at the price mandated by the new minimum wage. As a result, some jobs will shrink (fewer bag boys, fewer check-out counters, fewer waiters, fewer warehouse workers, etc.). Some jobs will disappear altogether. (Remember movie ushers, and car attendants who pumped your gas and checked your oil for you?)

Further, as the price for labor is incorporated into the price of goods, prices will go up for some products, and others may simply disappear from store shelves.

Some employers will look for labor substitutes, just like our consumers above looked for milk substitutes. They will use technology. Check-yourself-out counters. Automation. Robots. When labor reaches a high enough price, substitutes suddenly become cost-effective. Even moving to a new country with cheaper labor costs may be feasible.

Still others will “water down” the work. They will hire fewer people, or fewer full time employees, and stretch the work out between them.

Most people understand that if you forcibly increase the cost of milk, less milk will be sold, and ultimately both consumers and farmers will be harmed.

This simple metaphor lets them see the same is true of labor, too. A mandated increase in the price of labor, via the minimum wage, brings fewer jobs, higher prices for goods and services, harder work loads, and other negative consequences.

That’s not what people want. When they learn such these things are consequences of the minimum wage, they will no longer support it.

(To learn more arguments against the minimum wage, see “Minimum Wage Maximum Damage” by economist Jim Cox, published by the Advocates. This short easy-to-understand booklet devastates every argument for the minimum wage.)

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Washington Post: Year 2013 Proved “Paranoids” Were… Right

in Liberator Online Archives by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 1 of the Liberator Online. Subscribe here!)

“2013 is the year that proved your ‘paranoid’ friend right.” That’s the title of a funny, but alarming, end-of-year column by Washington Post technology policy reporter Andrea Peterson.

“Most people involved in the tech scene have at least one friend who has been warning everyone they know about protecting their digital trail for years — and have watched that friend get accused of being a tinfoil-hat-wearing conspiracy theorist. But 2013 is the year that proved your ‘paranoid’ friend right,” Peterson’s column begins.

“It’s now a matter of public record that the NSA collects and stores the calling records of domestic phone calls, tracks the location of millions of mobile devices worldwide, infiltrates the data links between the data centers of tech companies used by millions of Americans, piggybacks onto commercial tracking mechanisms, collected potentially sensitive online metadata for years and actively worked to undermine the privacy and security measures that underpin the Internet. And considering the purported size of the Snowden cache, that could be the tip of the metaphorical iceberg.”

The NSA story alone confirms those who suspected the government of monstrous deeds, Peterson says. But there is so much more.

“For instance, the ACLU released a cache of documents showing that police around the country are collecting license plate scanner information [from people who are completely innocent] that could be used to track physical locations of many Americans… when you pool together huge databases of this type of location information, it can create incredibly intimate portraits of how individuals live their lives — including where they work, which friends they visit and what doctors they see.”

And how’s this for sheer B-movie uber-creepiness:

“Someone might be watching you through your laptop’s webcam — without even activating the warning light. Reports say the FBI has had this capability for several years, and researchers at John’s Hopkins were able to demonstrate how to covertly spy via webcams in MacBooks. Good thing you can cover up your webcam. Too bad there’s not a similarly easy solution for stopping hackers from listening in on your laptop’s built-in microphone.”

Check Peterson’s excellent article — complete with extensive links — for more disturbing examples and information.

And we suppose she ran out of room, because there is much more surveillance-state stuff she could have mentioned: public spy cameras, the huge federalarsenal of malware, US surveillance of Cloud computing… not to mention secret laws approved in secret courts, presidents who can start wars on their say-so and kill civilians without warrants or trial… but don’t get us started.

Peterson’s conclusion: “…you owe your paranoid friend a beer.”