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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css1971's picture

Mexico's booming.

The flow of people is going to be the other way.

the grateful unemployed's picture

300-400 million americanos, (most of them pissed off about taxes, government intrusion, and poltiical correctness) and less than 100 million mexicans, now which way is the immigration problem again. (where did we get Texas and California?)

ZH11's picture

"But if the workers could live on air, it would not be possible to buy them at any price. This zero cost of labour is therefore a limit in a mathematical sense, always beyond reach, although we can always approximate more and more nearly to it. The constant tendency of capital is to force the cost of labour back towards this absolute zero."

"In reality the individual consumption of the worker is unproductive even from his own point of view, for it simply reproduces the needy individual; it is productive to the capitalist and to the state, since it is the production of a force which produces wealth for other people" 



AchtungAffen's picture

Oh Milton, you may say what you want, but you propped up dictators and empoverished nations who only chose the path of development, emancipation and independence, some of whom had the biggest middle classes in their regions (until of course, you got to put your fingers over there...). You're so full of bullshit.

Oldrepublic's picture

The Chicago Boys as Milton's students were called, were very influential in Chile, now a near rich nation

rsnoble's picture

"skills that don't justify" $9hr.  Race to the bottom enroute.

Maybe we will end up cashless like StarTrek.  Eventually the world's brightest won't be worth $9hr.  Oh wait, that would be a big pay increase in India.

hairball48's picture

Governments should not have any say over wage rates. Period. The market will decide what wages should be.

Henry Hub's picture

***The market will decide what wages should be***


Without government mandated minimum wages you are left with the "Iron Law of Wages"  It is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker.

In other words you can reduce wages to sustenance level. But the worker can not work for less that what he needs to buy food. Luckily for the major corporations in this country we have food stamps. Let's grind the poor bastards some more.


Edmon Plume's picture

So what you are saying is if we let a free market decide, we'll end up with the same system we have now, only with less government intrusion.

BTW, you perhaps don't know so I'll tell you:  econ is NOT a science.  It's magic combined with a lot of rubbish.

FreedomGuy's picture

Your Iron Law of Wages is a leftist nonlaw and stupid with a bit of basic reasoning. Labor is a commodity like anything else, e.g. gold, oil, air, etc. When you have labor or skill set shortages wages must rise as you are in competition with others for that labor. Even in a monopoly you are in competition from other things that person might do. If you have labor excesses then labor prices are lower. This applies to specific professions as well as the overall market. During the housing boom, housebuilding skills including electricians and plumbers were in short supply. Demand skyrocketed, pay rose and the signal for more people to move into the professions worked. When the market crashed the opposite happens. BTW, the boom and crash were caused by central planning forces.

If what you said it true, then where does it stop, with line laborers, their foremen, the white collar, up to the execs? Running this malthusian theory to it's logical end proves it's own fallacy.

Matt's picture

I will agree with this, only if the market also determines what money is, and what form payment should take. And if there are no subsidies anywhere in the world for anything, and all laws are equally enforced.

kchrisc's picture

Government always accomplishes the opposite of the STATED goal.

Could have something to do with being a con and criminal organization.


Yellowhoard's picture

Minimum wage is for teenagers and losers.

Show me an adult making minimum wage and I'll show you a person that did not take full advantage of their free education and is probably lazy as well.

Go ahead and raise the minimum wage to 'a living wage', why not $30 an hour? Then let's see how many jobs we can automate into extinction.

ATM's picture

Make it $100/hr. Why not. If $9 is good $100 is better right?

Alpha Monkey's picture

Fuck it, get rid of the minimum wage all together and then we can stop shipping jobs over to china!  Full employment at just above a slaves wages!! Let's create a permenant pauper class with no ability to advance... we should probably take away their voting rights first though... fuck it, who needs democracy, let the aristocracy, oh excuse me, I mean "job creators" decide everything... they know best right?

My favorite part will come when the peasants revolt again and start taking some heads off.

robertocarlos's picture

Why can't you see the big picture?

toys for tits's picture

He's standing too close to the painting.



And he's an idiot.

Edmon Plume's picture

It's hard to scare people when your description of what things will become under the system you don't want matches the way things are under the system you do.

bunnyswanson's picture

Minimum wage is a base.  As one acquires more experience, their pay advances.  Human Resources will tell you then can only give you a certain percentage more than the income you had at your last job.  If you have no experience in this position or are new to the work force in blue collar jobs (waitresses, hotel maids, office  clerical staff, customer service reps), you start at minimum wage.

but having been married to a business man, I know that when rates of pay went up, he passed the cost on to his customers by raising the cost of his product accordingly.  One McDonald's Big Mac will be about 15.00 I predict.

Henry Hub's picture

I have a better idea. Let's cut the minimum wage to three dollars an hour. According to Friedman the job market should boom and we'll have full employment. Yah right!



dick cheneys ghost's picture

Instead of $9 fiat dollars per hour , How about paying people in Silver or Gold. Lets debate that.



Piranhanoia's picture

We haven't stolen enough yet, we can't allow a minimum wage to keep up with inflation because it would harm our need to take everything.   Purile vomitus from another empy suit that bult a career telling people greed is good.  I guess one of these days, every recognizable talking head is going to disapppear behind the moat.

Payable on Death's picture

Minimum wage is, er, the least of it. The whole liberal meme of caring is BS. 80 years after the New Deal and 50 years after the Great Society we know with certainty that liberal help doesn't. Welfare and all of the give-aways create dependency. Liberals exact a high price for their help--a vote. Making someone dependent in order to monitize their vote is enslavement.

Forget about the money. Look what liberal help has done to the lives of this young black woman and man (boy?).

dogbreath's picture

that clown in the video is so fucked up on coke.  money from taxpayers to buy smokes and booze and coke and cable tv and doritos and drive around in a car ....................

look what socialism has done to society.  I feel sick.

Phoenix_Rising's picture

The minute you make poverty's over

robertocarlos's picture

That was awesome. Judge Judy is logical. Those two standing before her are beyond stupid. 70k down the tubes indeed and another 100 years of fraud to boot. 

Payable on Death's picture

That's my first reaction--about the money. I came to see the human tragedy. "Me being me." "I'm 21. She's 30. Come on." His conversation is her compensation, that and his "business". The inner city economy is funded by welfare flowing through unmarried, usually unemployed mothers--with the men travelling amongst them for shelter and food.

Liberal help has laid waste to the black community. Now, Hispanic leaders are striving to set up their own plantations.

I am on to you's picture

Milton,there is nothing wrong with charity???NO,thats excatly whats wrong,charity meens,somebody is poor,and that what is wrong:

And yes,on continental Europe,minimum vage meens,that you have enogh to have a desent life,or shall we say ment,cause due to the faboules Union,no not the union of worker,the other one,the Union of slavelabour,Technocratium,destroyed this,with the free labour moving around,working for slavevage.

Rich people always have gooood feelings for the pooor,the let then stay poor,so they, CAN give Charity,just ask the king, The Pope along with UN,they are always busy saving the poor,since 000 something, they been on to this!

And two dollars dont give any sence!Thats 10 DK,cant even pay the buss to go to work, for that! smart man,let everybody have same vage,poof no charity!


alien-IQ's picture

"When you give food to the poor, they call you a saint.
When you ask why the poor have no food, they call you a communist."
Archbishop Helder Camara

Edmon Plume's picture

When you give your own food to the poor, you are a saint.

When you eliminate hunger by eliminating the hungry, you are a communist.

-Edmon Plume

Chris88's picture

Yeah, we all know that Europe's house of cards is really holding up well.

the grateful unemployed's picture

charity for banks maybe. i always remember Reagan chiding those 'welfare queens in cadillacs' while he doled out corporate welfare to  (phony) defense projects. (phony defense spending is what sent Duke Cunningham to jail and a trillion dollars in deficit spending into offshore banks)

earleflorida's picture

yeah! from here hence, y`awe smitten'd... traverse back to the arbitrary masochistic comfort of yee`company store?

milton was a sadist, period!

his analysis negates all empirical statistics for why ump was on the 'always... the past-tense of an uppity timeline via de`flation'-- were it not for juicing the economy, alone?-- this subtle indiscriminate passe Qe, mask'd as a  'govern`mental' handout... from the treasury/fed with love-- was, but a soulless scheme of grandiose altruism divvied-up by sir`faustian and friedman himself? 


Ps    could never stand listening to that arrogant bastard and his, 'holier-than-thou', 'CBS' gibberish... 

earleflorida's picture

btw... sooner, rather that later, when all the lonely broke and fleeced sheeple are in a funky amorous and 'hip-hip-hooray' cheeky, albeit... fait`accompli agreement, that raising the minimum wage was a great-mistake?... being inconsequential to their somnambulism zombie well-being! thusly the cause and effect of all their predisposed-caustic misery-- then, and only then, this so called grandiose illusion begins to manifest... this litany of freebies ie., "SNAP" cards, iPhone's, home-rent subsidies, student-loans, unlimited unemployment tenure, et.el., will confiscation begin... and, in earnest!... snatch'd away for their own good, and that of their freedom loving, 'country...`living quarter-masters'!

thankyou Tyler

Seasmoke's picture

It's just like the counterfeit markets. The only reason they exist is because the name brand are way overpriced and the counterfeiters are able to find a sweet spot. Same will happen with minimum wage.

Chris88's picture

Minimum wage = claiming that supply/demand don't apply to labor because of government's magical scarcity abolishing wand.  

forrestdweller's picture

is he sanying that if there is a minimum wage, the jobs will move overseas?


Monedas's picture

We have exhaustively tried every variant of Socialism with out success .... couldn't one fucking country give Capitalism a run for it's money .... maybe North Korea could redeem itself .... by volunteering as the world's laboratory .... for unabashed Capitalism .... it couldn't be worse than what they got !

israhole's picture

I agree with Milt on the minimum wage.  I also think that letting Jews control the printing presses is a sure way to poverty and dispossesion.

Radical Marijuana's picture

This Friedman stuff is classically stupid and superficial "economics."

Money is backed by murder. What has actually happened is that the power of each individual to rob and to kill has been assembled and channelled through governments, which have been taken over by the smallest groups that were the best at being dishonest and violent.

The masses of Zombie Sheeple do NOT use their own political power, because they do not understand it, and have been brainwashed to not want to understand that. What the masses of people lack the most, and have the least skill at, are being competent citizens, that control the social money/murder systems, that are operated in their name, but which are more and more being used against their interests.

"Minimum wage laws" are a tempest in a teapot. The big social storms are the corporations controlling governments, with the banks' privatized power over the social money supply being the central feature of the social hurricane that is still building and building its overall organized systems of legalized lies, backed by legalized violence.

Minimum wage laws are just another goofy wrinkle in a shrivelling system of sovereignty that is more and more sequestered.

Minimum wage laws are going to becoming increasingly insane as the technological power of computer/machine entities increases!

Indeed, our whole social system is based on a money/murder system which is able to lie about itself to the maximum possible extent. Since that is the case, we get an endless parade of bullshit solutions to problems, which deliberately ignore what the real problems should be, namely radically different death controls.

The current minimum wage laws WILL do what Friedman says. However, what is being done to some human beings today will more and more be done to all other human beings in the foreseeable future. Sooner or later, in one way or another, we should make our political economy catch up to our other sciences. However, at present, old-fashioned goof balls, like Friedman, will continue to be respected for relatively revealing some "truth" that some other people can understand.

However, it is the truth that almost nobody understands which is what we actually need much more!

WmMcK's picture

This Friedman stuff is classically stupid  --

Yes, wasn't this was recorded when minimum wage was $2.85/hour?

Monedas's picture

Like that reality show where they make over someones house .... the whole world could observe the Capitalist make over of North Korea .... except, who would do the make over .... we've lost credibility .... look at some of Socialist cunts that post here ?

robertocarlos's picture

Milton is correct. After getting rid of min wage the govt would have to remove itself from all programs which create artificial values. And while people think that programs benefit the poor the truth is that the programs benefit the rich the most. Rents would be lower without social housing. Medical care would be cheaper. The defence budget would be lower, sorry we can only pay you 5 bucks an hour to stand in the way of the bullets. There would be no Federal Reserve iether. The only thing the govt should keep is a tax on land and resource royalties.

Stuck on Zero's picture

Obama never explained why a rise in the minimum wage is necessary.  Because of inflation caused by the government, that's why.


deerhunter's picture

We picked fruit with the migrant workers in Michigan when I was in my teens and no one held a gun to my head. I bought my first shotgun from my earnings. I guess that would be child abuse today!

Catullus's picture

It's very simple. The minimum wage doesn't create jobs. It only makes it illegal to pay labor under a certain rate. That can only result in fewer people being employed. Net net, the minimum wage causes more unemployment.

which way western man's picture

ergo more communist (nee demokrat) slaves (nee voters)

Dre4dwolf's picture

Raising the min wage has the following impact

Those who have a job, might make a little more (probably not), but as a result if they do... they will pay higher taxes.


Those who don't have a job, will probably find it harder to find a job because they just became more expensive to employ (23% more expensive).


Those who have jobs, run the risk of loosing their job because of the forced raise in their wage, so they will be under more stress to perform.



The govt just wants everyone to earn as much "income" as definable by the fraudulent income tax laws, so that it can be garnished in taxes, (they want to push people into higher tax brackets with inflation.


Inflation in wages causes direct and real inflation in prices, makes it harder for the poor to buy crap.


Everything they do is fueling dependency on govt.



If they wanted to actually help the US economy.

1) Huge Import Taxes, Tax everything that comes in from overseas by 50%.(protectionism).


2) Abolish income taxes for anyone earning under 2 Million Dollars a year. (Promote Savings)


3) Stop taxing cap gains, that (promote investing).


4) Stop printing money to pay for promises that should of never been made.


If people are poor they will move to where they can succeed, you don't fucking pay them to sit there and stay in poverty. Survivalism works because people are motivated by their stomachs.


5) Stop bailing out corrupt and fraudulent banks.


6) Liquidate all debt from 1980 to 2013, just force all the banks to write it off and give them a tax break in return for the next 5 years (stop foreclosing on collateral so the economy can grow, because banks suck at managing REAL CAPITAL (REAL ASSETS) they are only good at buffing numbers.


7) The last step should be to abolish or lower the min wage to like 5$ an hour (because the economy will be soo good that 5$ will afford a family of 5 a full meal), right now Pizza is almost 20$ and people are protesting on bridges blocking traffic because the tolls are 40$ just to cross 20 miles of "toll road".




devo's picture

Okay Peter Schiff/Henry Hazlitt.

I read Economics in One Lesson, too.