Well, nobody’s perfect.
When it comes to skewering bad reasoning — and making the right arguments crystal clear — Don Boudreaux is usually about as close to perfect as anyone gets. But this time I believe he’s committed a gaffe of his own.
In a column on the minimum wage, Don writes:
Suppose that I invent and use a machine to steal $15,000 every year from each of 500,000 poor Americans, with the $7.5 billion being transferred into my Swiss bank account. After skimming off a few hundred million bucks to cover processing and handling expenses, I share the bulk of these proceeds with about 16.5 million friends…Am I acting immorally? Most people would answer “yes”…
By way of context, a CBO study forecasts that raising the minimum wage to $10.10 per hour will cause 500,000 workers to lose their $15,000-a-year jobs, while raising the pay of 16.5 million others.
But Don’s analogy fails, because taking someone’s $15,000-a-year job is not the same thing as taking someone’s $15,000. I think it’s a fair guess that most minimum wage workers dislike their jobs. So losing one of those jobs has an upside, which has to be weighed against the downside of not getting paid. On balance, losing that $15,000-a-year job might be no more painful than losing, say, $5000 a year.
The right version of Don’s analogy, then, goes more like this:
Suppose that I invent and use a machine to steal $5000 every year from each of 500,000 poor Americans, with the $2.5 billion being magically transformed into $7.5 billion and then transferred into my Swiss bank account. After skimming off a few hundred million bucks to cover processing and handling expenses, I share the bulk of these proceeds with about 16.5 million friends…Am I acting immorally?
This time around, I’m guessing that a whole lot of people would answer “no, you’re not acting immorally—in fact it would be immoral to pass up such a golden opportunity to make the world a richer place”.
I do not believe you can make an effective case against the minimum wage without focusing on the costs to a) business owners (mostly in the short run) and b) consumers (mostly in the long run). The costs to displaced workers just aren’t that high, because all they’re losing are jobs that pretty much suck.
Yes, some fraction of those people value those jobs very much, as stepping stones to greater things. But I think it’s extraordinarily implausible that, on average, a $15,000-a-year worker values his job at anything close to $15,000.
Come to think of it, though, isn’t it Paul Krugman, who, whenever the topic of stimulus spending comes up, tells us how devastating it is for low wage workers to be out of work, and how tremendously valuable those jobs are? It’s Paul, then, who should jumping in right about now to defend Don’s argument. If he does, it will make my day.