Wednesday, October 26, 2005

The secret history of the minimum wage :: Marginal Revolution

Lost jobs due to minimum wage? It's not a flaw, it's a feature!

Alex Tabarrok at Marginal Revolution tells us:
Progressives, including Richard Ely, Louis Brandeis, Felix Frankfurter, the Webbs in England etc., were interested not in protecting women but in protecting men and the race. Their goal was to get women back into the home, where they belonged, instead of abandoning their eugenic duties and competing with men for work.

Unlike today's progressives, the originals understood that minimum wages for women would put women out of work - that was the point and the more unemployment of women the better!
This sort of irony has me rubbing my economist hands together Mr. Burns like. Excellent!

Mahalanobis had a post in a similar vein last year. He quotes from a Journal of Economic Perspectives "Recommendations for further reading":
What distinguished supporters of minimum wages from their marginalist opponents was how they regarded minimum-wage-induced job loss. Whereas the marginalists saw disemployment as the principal cost of binding minima, indeed as the reason to oppose minimum-wage legislation, minimum-wage advocates regarded minimum-wage-induced disemployment as a social benefit—a eugenic virtue of legal minimum wages. Sidney and Beatrice Webb ([1897] 1920, 785) state it plainly: “With regard to certain sections of the population [“unemployables”], this unemployment is not a mark of social disease, but actually of social health.” [<> “Of all ways of dealing with these unfortunate parasites,” Sidney Webb (1912, 992) argues, “the most ruinous to the community is to allow them unrestrainedly to compete as wage earners.”]
Both links via this Mahalanobis post on Wal Mart's pro minimum wage stance. In addition to scoring progressive points by supporting a higher minimum wage, it would have the (surely unintended) consequence of driving some of its remaining competitors out of business. (Remember Pennington!)

Meanwhile, Wal Mart is also working on scoring points with progressives by going green - less green house gases and more renewable energy. Part the plan is to use plastics derived from corn instead of from petrochemicals. Only trouble is, gee whiz, corn is fertilizer intensive, and fertilizer comes from .... petrochemicals.



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