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Sunday, July 02, 2017

Leonard, Illiberal Reformers

A lot of moralizing about how anti-individualist, socially-controlling, and eugenically-motivated the Progressives were (all of which I agree with, but reading the same indictments over and over doesn't make me agree more), but very interesting account of Progressive economic theories, which I didn't know existed.

For example, the theory underlying the minimum wage goes something like: wages are the cost of living for the worker and his family (Aside: isn't this also what Smith thought wages were? Leonard makes it sound like the family wage is a unique delusion of the Progressives.) Immigrants and women and various other "defectives" who are willing to live on less (in wretched squalor) bid down wages by entering the labor market and "accepting" a lower wage for the same work. Therefore, to keep wages sufficiently high for the workingman of good stock, we institute a minimum wage that is expressly designed to result in these defectives losing their jobs, since their work is not valuable enough to merit the minimum legislated wage. We thereby forcibly idle the degenerate workers and improve the lives (and reproductive potentials) of the good workers.

This is interesting because it not only recognizes what modern minimum wage proponents claim is not the case - that raising the minimum wage eliminates low-paid jobs - but takes this elimination to be the point, or at least half the point, of the policy. What is strange about it though is that you'd think that there would be massive opposition to this wage theory, not just by employers who don't want to lose workers or pay them more, but theoretically by anyone with a background in neoclassical economics (everyone?). Wouldn't they object that obviously no one "accepts" a lower wage due to their low cultural or racial standards when they could get a higher one just by asking for it? That the reason that wages go down in an industry when a lot of immigrants or women or anyone enters it is simply a matter of increased supply? Leonard does mention that John Bates Clark developed the marginal productivity theory of wages in this period (and was also a Progressive, maybe, that part is unclear), but this apparently posed no obstacle to the Progressive movement because no one believed him.

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