Milton Friedman On The Unholy Coalitions Of The Minimum Wage

Tyler Durden's picture

This week we were told that, by the magic of a non-deficit-increasing wave of our President's hand, the minimum wage should be increased to $9 (a 24% rise from the current $7.25 federal minimum wage) and anchored to inflation going forward. The rabbit-holes of whether this is a good or bad thing run deep and in very different directions. However, in three short minutes, Milton Friedman provides some critically clarifying truthiness on the unholy coalitions between 'do-gooders', 'special interests', 'trade unions', and the vicious circle that this non-market-based decision will create. "Do-Gooders believe passing a law saying nobody shall get less than [a minimum wage] is helping poor people (who need the money). You're doing nothing of the kind. What you're doing is to ensure that people whose skills do not justify that wage will be unemployed." It is no accident that youth unemployment is almost double the overall unemployment rate. We never learn... and as Friedman concludes, "it is the exact people who the do-gooders are trying to help that are hurt the most - the poorest!"

 

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Cow's picture

Clearly you are fighting reality.  Instead of having 14 people flipping burgers, they now have 12.  It's really not that hard of a concept.

Milton was a genius

 

Henry Hub's picture

I have to ask. If they could get by with 12 burger flippers why were they employing 14? The mangers should be fired. Rather I think that they will only employ what they absolutely need no matter what the wage is.

chunkylover42's picture

they will employ 12 and service will suffer as a result.

object_orient's picture

No they won't, and no it won't. McDonalds will sacrifice service, sabotage its own business, to spite the minimum wage increase? Get real. They will increase prices or their margins will shrink. Same thing when food prices increase, or gas, or utilities, or taxes. Homer is way smarter than you.

A Nanny Moose's picture

McDonalds will sacrifice service, sabotage its own business

This impacts demand adversely.

They will increase prices or their margins will shrink.

Again, this impacts demand. People will choose a competitor, which might include eating in. Utilities are a different animal, since they are government protected monopolies. Food and gas are as well, to a lesser degree.

Homer is way smarter than you.

Ad Hom. Next.

StychoKiller's picture

The fact that the minimum wage proposal isn't to raise it to $1,000/hr puts the lie to yer argument.

Check yer premises, because yer argument leads to illogical conclusions.

chunkylover42's picture

McDonald's won't intentionally sacrifice service and sabotage it's own business, they'll hire fewer flippers in order to preserve profitability and/or raise prices.  Either way they lose - poorer service or fewer customers.

keesooi's picture

"burgers will flip themselves".
Yup: http://singularityhub.com/2013/01/22/robot-serves-up-340-hamburgers-per-...
It's not called " law of supply and demand" for nothing. But hey, keep believing that raising the price of something will somehow increase its demand. Good luck with that lemonade stand, dude.
The minimum wage job is the defacto entry level job for the unskilled and inexperienced. By raising the bottom ring of the ladder, it simply means that less people will be able to grab it.
And no, if the job can't be done profitably, it won't get done, period. It usually means it will get done with fewer people, each working fewer hours.
You obviously have never run a business.

PhilofOz's picture

I love ZH but it really worries me that there are 3 times the down arrows for a comment that makes perfect logical sense.  

rguptatx's picture

Y'all are missing the point entirely. Union contracts are wwritten with reference to "minimum wage" - so if the minimum wage goes up ten percent, all union contract wages go up automatically. Hence the real motive behind this push - a payoff to the goons and thugs aka "unions".

Miffed Microbiologist's picture

Absolutely correct! This was the first thing I thought of when I read this article. This is only a union grab to demand more money. Read between the lines, especially when it's couched in the " we're doing this to help the poor" label.

Miffed ;-)

Bazza McKenzie's picture

And Belgium is a little country that is now the seat of the EU, sucking up wealth from all the rest of Europe.  It is like Washington DC on steroids, but without the blacks.

Monedas's picture

You'll sing a different tune when your country is over run by niggers and Muslims !

DJ Happy Ending's picture

That's because northern Europe doesn't have cities teeming with multi-generational welfare mothers and their bastard children who celebrate ignorance and violence.

You have a homogeneous culture which does not excuse or idolize poverty. Poor Europeans are not proud to be uneducated and worthless.

orez65's picture

You mean like in France and Spain which are totally bankrupt!!

orez65's picture

You mean European countries like France?
Which is totally and absolutely bankrupt.

yatikto's picture

Exactly, just because unions are corrupt does not mean we don't need unions.

It just means they are corrupt. 

If workers can't get together and bargain, do people really believe employers will pay them more voluntarity?!!!  Really?!!  Who is going to bargaing for them ?! The government?!

We all know who the government works for.  Thats why wages for the top go higher and for the bottom go lower.

The problem is corruption.

What can you do with a tree that is rotten. Its only fit to be burned.

FreedomGuy's picture

Minimum wage is wrong on a dozen different levels. All you minimum wage proponents are no doubt statist-collectivists. Saying your collectivism works well is like saying you have your drug addiction under control. Over time you will fail.

Here are the numerous points upon which minimum wages is wrong.

1. It is a matter of liberty and property rights. Someone owns the company and someone('s) own the labor. It is a matter of private contract as to what the business founder and owner wants to pay and what a laborer wants to sell his service for. There is no proper government role here and government does not "own" either party, at least not in a noncollectivist society. For government to intervene it asserts that it owns or controls both parties. This is the welcome mat of autocracy through central planning. Central planners do not know what the value of anything including labor is. They have to look at the private market for benchmarks.

2. To say that minimum wage does not matter is a collosal stupendous ignoring of the facts in front of your face, like not being able to see the forest because trees are in the way. If wages don't matter then there need be no tariffs, currency devaluations and you have trouble explaining why the bulk of of manufacturing has run to low cost places like China and S. Korea. At the same time you decry low minimum wages you assert the problem of low cost labor in other countries. If you believe that minimum wage doesn't matter try to run a restaurant or retail chain. Raise your labor cost 25% while customers still don't want to pay more than $7.99 for your pizza. Then vote for $100/hour minimum wages and see how much pizza you sell at $800 per pie. Go for it, geniuses. 

3. The same rules that allow goverments to control minimum wages also allow it to control maximum wages. This is done most commonly through the progressive tax rate. So, you get famous French actors leaving their countries because of income/wage controls at the same time the bottom end leaves to manufacture in China. This is the manifest brilliance of the Left.

4. Minimum wages tie into an elaborate web of union favors, currency devaluations, taxation and entitlements in complex ways that work to everyone's demise. It is why China tries to fix it's currency to the dollar. It keeps labor and products relatively cheap for export. Higher wages are a favor to unions who base their pay on some multiple of it. I will not elaborate the rest. It is too complex for simplistic leftists.

I rarely swear but God help me because I want some small fucking part of the world where we are not ruled by central planning geniuses (translated: Elitist, leftist idiots). Where I really own myself. My purpose is not to be part of the "masses" like some empty vessel waiting for a great leader to fill me with purpose, direction and meaning in life. Where I cannot steal from my neighbor and he cannot steal from me through the wonders of collectivism. Where "Do no harm to others." and protecting basic property rights are the basis of the law and everything else is left to us. A place where voluntary exchange and free markets rule...truly free markets; where you actually own the fruits of your own labor, whether it is tens of dollars or tens of millions.  Where integrity is reflected in your currency. You know, free people actually love people and each other and share a bond that crosses races and religions and needs no affirmative action. Even the cantankerous free ones leave you alone at least.

America used to be that place before it's gradual corruption into a thoroughly collectivist state. It is why the whole world, especially the nonprivelaged world tried to move here. I just want something the size of one state or a small country is Central America to try this novel idea of libertarian type freedom: Where Hayek, Friedman, Bastiat, Browne, Rand and other philosophies rule. The rest of you can live in your collectivist paradises. If we fail, you can laugh at us. However, deep down you know it will succeed wildly and put the rest to shame. You will have to put up walls...physical walls, economic walls, regulatory walls, all the walls leftisit states put up to corral their people and commerce.

In this video, Friedman is right but only on the shallowest of levels. He just scratched the surface.

the grateful unemployed's picture

do-gooders as opposed to what, do-badders?

malek's picture

I'd say well meant as opposed to well done.

the grateful unemployed's picture

"it is the exact people who the do-gooders are trying to help that are hurt the most - the poorest!"

so "it is the exact people the DO-BADDERS are trying to HURT who are HELPED the most - the RICHEST!"

 

i get it

Motorhead's picture

Anything not driven by market forces (to include wages) is artificial (not counting charity), either by government mandate or taxation/redistribution of wealth (more government mandate).

The minimum wage must go!

LetThemEatRand's picture

A truly free market with zero regulation would permit and indeed encourage slavery and other forms of indentured servitude for most forms of untrained labor.  Those who worship at the altar of the pure free market ignore history or have no humanity.

ATM's picture

It is those who worship at the altar of central planning who practice gencide.

I'll choose the free marketeers rather than the murderers.

LetThemEatRand's picture

It is not a black and white equation or an either/or proposition, contrary to the propaganda of the pure free market crowd.

A Nanny Moose's picture

You mean gray areas like the idea that the initiation of force is wrong. Unless of course you happen to be wearing a particular costume, and/or possess a tin trinket? Unless you were appointed by a majority for exactly the purpose of initiating force against everybody? Those kinds of gray areas?

Gray areas are futile attempts at evading reality.

alien-IQ's picture

And are you in some way suggesting that the stock market and those who benefit from it are not the recipients of a Central Plan designed to enrich them while robbing the nation?

tmosley's picture

Are you in some way suggesting that the existance of a stock market implies the existance of a free market?

You do know that there was a stock market in Nazi Germany, right?  There are also stock markets in many socialist countries around the world.

Why are you throwing out purposefully falacious arguments?  Is it sarcasm, or something more sinister?

alien-IQ's picture

I was responding to a guy that has been singing the praises of the "free market" and it's efficiencies as if we actually had a free market in the US.

Motorhead's picture

Much better than yours, that's for damn sure.

tmosley's picture

How do you figure?  The period from the end of Reconstruction to 1913 in the US featured the freest market the world has ever known, and the things you describe didn't happen, or if they did, they were so rare that they have been lost to history.

But hey, I guess you get to dictate what happened in history to fit your arguments.  

I mean, for fucks sake, what the fuck do you think the word "free" even means?  You just redefine words to fit your agenda.  No wonder you hate Rand so much.  She pulled back the veil you use to hide behind while you kill and impoverish the world.

Matt's picture

Do you suppose sustained exponential growth in energy consumption may have helped during that period? Plus the acquisition and development of a massive amount of land by violently removing the people previously occupying that land? An Empire isn't a free market.

LawsofPhysics's picture

Right, because that centrally planned "market" where connected corporations and people get bailouts on the backs of everyone else is working out so well.  Go fuck yourself.

A Nanny Moose's picture

A truly free market with zero regulation would permit and indeed encourage slavery and other forms of indentured servitude for most forms of untrained labor.

You are arguing that worst outcome of the free market, that you can imagine, would be to end up exactly where we are right now. I simply ask, "When do we get started trying freedom on for size?"

How does slavery exist under system which universally enforces private property, and in which all associations are voluntary? Remind me again?

Those who worship at the altar of the pure free market ignore history

How can you point to the history of that which has never existed, and subsequently blame that which has never existed, for the failure good intentions enabled by those in postitions of authority?

or have no humanity.

Define humanity please? What is human about ceorcing others to abide by your master plan? I have no problem with your master plan, as long as it is not forced upon me.

orez65's picture

According to your logic in a free market it would be legal for me to hire someone to kill your sorry ass.
You are confusing free markets with philosophy.

yatikto's picture

I like the point that some have made that economy is not a science.  And the trouble with science and math is that its black and white.  So interpreting a free market in that way would correlate to law of the jungle.

What free market proponents argue is limiting role of government so that it doesn't pick winners and losers in an economy.

But why pick on minimum wage?!  The real moocher class of this country and the wealthy who skim off the cream of the produce and have the gaul to whine about unions and minimum wage.

Protect the weak, orphans and widows. That is a noble cause.

 

 

FreedomGuy's picture

That is such a stupid statement. Did you miss the "Free" part of free markets? Slavery has no freedom, moron. Slavery is a forced labor market. In a "free" market you are free to sell your labor. In slavery only your owner is free to sell you and the labor he can force out of you...which is always lower. It is why N. Korea, the old Soviets and others end up turning their whole country into prisons and forced labor camps. The abject stupidity of your statement is apparent to anyone who does not worship at the elitist central planning alter. When you talk about free markets you are talking about freedom for all, not some. It starts at the bottom with you selling your labor and ideas not at the top as you suppose.

You should name yourself, "LetUsEatMarx/Mao/Castro, etc"

alien-IQ's picture

Oh PLEASE. If business in America were truly driven by "market forces" every big bank in the fucking nation would be closed, and rightly so. But that's not how this country operates is it? Meanwhile, the rich are getting their welfare checks in the form of an artificially propped up market and artificially low interest rates thanks to the Fed while the poor get fucked in the ass because they don't have the money to employ lobbyists to bribe politicians to pass laws that benefit them. To see people bitch and moan about a minimum wage being increased to a level that is, adjusted for inflation, below what wages were in 1969 is disgusting. But I guess it's easier to beat up on the little guys huh?

working class dog's picture

We saw Milton Friedmans handy work in Argentina, and Peru, he was a  NEO NAZI, and Hitler would have appointed him to be in charge of the Economy in Nazi Germany. Why, because the only way this pimp of the elite's policies were ever put into practise was the full force of the military junta's death squads in Peru and Argentina courtesy of the CIA. The only way his economic policies ever worked was by using the dark hand of the CIA and the SS style secret police to enforce his economic punitive system. Check out the heckler when this pimp got the NOBEL Peace PRICE I mean prize, on  you tube. Friedman should have been made to live in the festering feces, his policies left in Peru and Argentina. Friedman getting the peace price, I mean prize,  means about as much as Obama getting a nobel price ( Obama paid for his award thru the american people via the Bankstas!).

Please!! listening to Freidman is about as useful as listening to Greenspan on CNBC.

malek's picture

Propaganda 101: if you cannot refute the argument, attack the person.

LetThemEatRand's picture

Pointing out the disasters that followed implementation of his policies is not attacking the person but his message.  You are in fact turning that logic on its head by attacking the poster and accusing him falsely of simply attacking Friedman as a person.

ATM's picture

"he was a  NEO NAZI, and Hitler would have appointed him to be in charge of the Economy in Nazi Germany"

AD HOMINEM.

NOW FUCK OFF.

LetThemEatRand's picture

Ironic, but your small mind does not see it (see the embedded ad hominem in there?  never mind).

tmosley's picture

Hitler was a vegitarian, therefore vegetarianism caused the Holocaust.

That is the exact argument that has been made here.

Motorhead's picture

Hitler war ein armes Schwein.

Er hatte keinen Führerschein.

Monedas's picture

Hitler wasn't a Vegan .... he liked his BUTTERBROT  (bread and butter) with his tea on the terrace with Eva Braun !