David R. Henderson  

The New York Times Wins Bryan's Challenge

Don't Let Your Boss Hold You B... Great Moments in Cost Cutting:...

Last week, co-blogger Bryan Caplan posed a challenge: "Tell me how to sell the abolition of the minimum wage to the typical Feeling American." The next day, Bryan gave what he saw as the best responses. I thank commenter Phil, by the way, for proposing my treatment of a similar issue in my book, The Joy of Freedom: An Economist's Odyssey.

I think that Celia W. Dugger, a reporter for the New York Times, is a contender. Here's the title of a 2010 news story she wrote about South Africa's minimum wage law:

Wage Laws Squeeze South Africa's Poor

And here are the first few paragraphs:

NEWCASTLE, South Africa -- The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor -- the supposed beneficiaries of the crackdown -- clambered atop cutting tables and ironing boards to raise anguished cries against it.

"Why? Why?" shouted Nokuthula Masango, 25, after the authorities carted away bolts of gaily colored fabric.

She made just $36 a week, $21 less than the minimum wage, but needed the meager pay to help support a large extended family that includes her five unemployed siblings and their children.

The women's spontaneous protest is just one sign of how acute South Africa's long-running unemployment crisis has become. With their own industry in ruinous decline, the victim of low-wage competition from China, and too few unskilled jobs being created in South Africa, the women feared being out of work more than getting stuck in poorly paid jobs.

I plead with you, Oprah. Shouldn't those women be allowed to keep those jobs?

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COMMENTS (18 to date)
Ken B writes:

"No David, the sweat shop owner should just pay them a living wage. They wouldn't treat white males in California like this."

happyjuggler0 writes:

This reminds me of a Nicholas Kristof NYT op ed from a few years back:


Brandon writes:

Oh god Ken B nailed it!

Art Carden writes:

Ken B is right. Methinks the critic would say "the problem isn't the policy; the problem is the callous employers who aren't willing to pay a living wage." See recent discussions of the disemployment effects of the Affordable Care Act for examples of this kind of reasoning: there was something in either the Chronicle of Higher Ed or Inside Higher Education earlier today that basically said this is an "excuse" to cut back on adjuncts' hours.

jc writes:

We could also link to Krugman's defense of sweatshops (low wages are better than no wages or jobs as child prostitutes or scavengers).

Or to Samoa begging Congress to not 'help them' by enforcing 'living wage/minimum wage' laws (that would result in the dynamic duo of lost incomes as jobs leave + more expensive products due to increased shipping costs, as ships that used to leave with tuna now leave empty).

But: (1) as noted above, the perceived problem here is greedy, capitalist corporations, not noble laws that should clearly still be passed and enforced, and (2) heck, other countries don't count anyways, i.e., the U.S. is a different fish and what we really care about are *U.S.* workers who deserve living wages and lives free from exploitation.

The true answer may be to simply defer these topics until personal audiences are more advanced. Over time, bring up a series of simpler, easier to understand examples where 'feelings' are on your side, in order to - inch by inch - help folks realize that there's a difference b/w 'showing you care, and feeling good' and 'actually making the world better', and that evidence showing positive real-world effects matters. Once your intended audience stops reflexively rejecting arguments along these lines, *then* one can more successfully bring up evidence w/ respect to problems like 'living wages'.

jc writes:

Btw, while this still has the potential to be dismissed due to much of its focus on the 'foreign' poor (though he does also mention America at times), Bono is an excellent example of someone who transitioned from being guided by 'heart' and 'feeling' alone to someone who now examines 'evidence' and 'real world outcomes'.

From Forbes :

Bono has learned much about music over more than three decades with U2. But alongside that has been a lifelong lesson in campaigning — the activist for poverty reduction in Africa spoke frankly on Friday about how his views about philanthropy had now stretched to include an appreciation for capitalism.
The Irish singer and co-founder of ONE, a campaigning group that fights poverty and disease in Africa, said it had been “a humbling thing for me” to realize the importance of capitalism and entrepreneurialism in philanthropy, particularly as someone who “got into this as a righteous anger activist with all the cliches.”
“Job creators and innovators are just the key, and aid is just a bridge,” he told an audience of 200 leading technology entrepreneurs and investors at the Founders tech conference in Dublin. “We see it as startup money, investment in new countries. A humbling thing was to learn the role of commerce.”
Quotes from Bono speech at Georgetown:

Choose your enemies carefully… Because they define you...
So let's pick a worthwhile enemy. How about all obstacles in the way of fulfilling human potential? Not just yours or mine but the world's potential?
I would suggest to you that the biggest obstacle in the way right now is extreme poverty.
Poverty so extreme it brutalizes, vandalizes human dignity...
Let's just acknowledge that it's brutal out there. It's brutal out there. And by "there" I mean "here," right here in America.
It's a moving story… and we are moved by such moving events… I'm probably here because of such events. But I tell you this, in The ONE Campaign, ours is not such a soft vocal lens. We try to keep our ardour cold… welcome the evidence-based activist.
Can you believe that? The dryness of that term. I'm proud of the dryness of it. Evidence-based activist. Yours truly.
I'm here to tell you your heart is not the most important thing. It helps. But your heart isn't going to solve these problems. If your heart hasn't found a rhyme with your head, we're not going to get anywhere.
Rock star preaches capitalism. Shocker. Wow. Sometimes I hear myself and I just can't believe it…
But commerce is real. That's what you're about here. It's real. Aid is just a stub cap. Commerce, entrepreneurial capitalism takes more people out of poverty than aid, of course, we know that.
Anthony writes:

I'm impressed. And I like this general idea a lot. But I like the idea of trying to persuade specific individuals of things better - it's a lot more testable. For instance, here is a recent article putting forth some ideas that economists would call terrible: http://theamericanscholar.org/money/

He says, among other things, "The jobs that are vitally important, truly dangerous or stressful, or inherently unattractive, should be the best compensated: teachers, coal-miners, emergency-room nurses and physicians, and trash collectors should all be extremely well paid. But work that deals mainly largely with intangibles, with the manipulation of words or numbers, should largely be its own reward. Corporate executives, who love to wheel and deal, ought to earn no more than poets, who love to play with language."

The author is a highly literate person who has benefited a great deal from the economic state that he's denouncing. Can anyone persuade him that he's wrong?

loveactuary writes:

beware, though, other demons lurking in the article:

"The fall of tariff barriers since 1994 has also exposed industries like garment manufacturing to low-wage competition from Asia. As Chinese-made clothing has flooded the domestic market, the number of garment workers employed in South Africa has plummeted to 60,000 from 150,000 in 1996. If the more than 300 factories violating minimum wages ultimately close down, 20,000 more jobs could vanish."

Foobarista writes:

At the end of the day, the problem is few people realize that almost all "profit" is ultimately captured by the market itself.

In other words, it isn't greedy owners who are pocketing massive profits at the expense of the workers, it is greedy customers who are pocketing the profits by paying lower prices, and profiting by these prices at the expense of the workers - and owners.

guthrie writes:

Thank you jc. Your cites are gratifying (to me anyway). I've always respected Bono for the honesty I perceive in his work, and your quotes here confirm this perception, and suggest that his honesty is growing into other areas of his thought.

I believe that at least part of the tack used to win some 'soft head, soft heart' folk will be to use the stories of those like Bono who have 'transitioned' (to use jc's phrase). As someone who is brave (or pretentious) enough to actually put his boots on the ground and get his hands dirty in Africa, his message - though it might be 'harder' - may carry a bit more weight. I'm not aware of any other examples off the top of my head, however.

David R. Henderson writes:

Thanks. You motivated me to read the whole Bono speech. It was fun. One main thing missing: any mention of substantially increasing the number of immigrants allowed in.

another bob writes:

Note what changed Bono's mind. Not argument. Experiment!

Exit > Voice

Experiment > Argument

Ghil writes:

Ken B:

"No David, the sweat shop owner should just pay them a living wage. They wouldn't treat white males in California like this."

We could address this by using another example:

Suppose a disabled person who needs carers. He is supposed to pay, say, 10 but can only afford 5.
A neighboor would gladly work for him for 5 because the work is not so difficult with lots of idle time.

Ken B writes:

@Ghil: Well the premise is appealing to a 'Feeling' soft mind/soft heart type. So you need something essentially immune to my Californian white male treatment. You are addressing that I think with your disabled person. But I think you are open to the counter, 'we should subsidize'. After all, it's a twofer: a living wage and help for the diabled. And I think THAT would appeal to the Feeling type very strongly! So I think your example even less likely to persuade the target audience.

Joe Cushing writes:

The people are just going to say that china is the culprit and not the minimum wage. They are just going to say that China should pay more. For a large part, China does pay more because they have become productive.

egd writes:

Ghil writes:

We could address this by using another example:

Suppose a disabled person who needs carers. He is supposed to pay, say, 10 but can only afford 5.
A neighboor would gladly work for him for 5 because the work is not so difficult with lots of idle time.
In addition to depriving trained, qualified, and most importantly state licensed care providers of gainful employment, this forces the disabled person to receive sub-standard care from an underpaid wage slave.

The solution in your example is for him to pay $4 and the state to subsidize the neighbor $4. The state pays $4 for a $6 service, saving $2 from the budget. The neighbor is overpaid by $3, which he is the cost to be a licensed care provider.

For its $4 investment, the state gets $5 in benefits reducing the budget by $1. The disabled person only pays $4 for a $10 service, profitting $6. The neighbor performs $5 worth of work and receives $8, for a profit of $3.

Everyone is happy. Except perhaps the taxpayers who have to subsidize this mess.

Arthur_500 writes:

Many dream of the programs that Commrade Roosevelt implemented during Prohibition as a means of bringing our economy out of the doldrums. Commrade Obama agreed and implemented a program for "shovel-ready projects." However, the program was a failure.

Today we must pay a minimum wage to employees on public projects. Often that wage is above the going rate but equivalent to Union wages. By demanding that public projects pay these higher wages we keep fewer people employed.

I use $25/hour emloyees who get paid $54 on public projects for doing the same job. Who does the minimum wage really help? Illegal immigrants.

That's another issue entirely

Ken B writes:

Almost by definition, the Feeling person is governed by What Is Seen, not What Is Unseen. The costs of minimum wage law are mostly Unseen. David's example tries to address this by citing workers actually losing their jobs -- Seen. The problem is that there are other things to be seen, like my riposte about treating white males in California. As for Ghil's other example, it too tries to trod the path of the Seen, but again there are too many other immediately visible "solutions". Now these have their own costs, unseen.

So this is one of the rare occasions where I think I agree with Bryan and not David. There will always be other visible interventions to paper over any Seen defect of minimum wage laws. The arguments against these kinds of things are always inherently abstract.

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