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January 12, 2014

Economic Theory vs. Economic Reality

Good video on how minimum wage laws make inexperienced and unskilled workers less employable:


Possibly related - over at The Atlantic Anne-Marie Slaughter complains that the US economy doesn't value caregivers enough:

An America that puts an equal emphasis on care and competition would be a very different place. We would invest in a national infrastructure of care in the same way that we invest in the infrastructure of capitalism. We would institute:

•High-quality and affordable child care and elder care facilities
•Higher wages and training for paid caregivers
•Support structures to allow elders to live at home longer
•Paid family and medical leave for women and men

Flexible work arrangements and career life cycles to give breadwinners who are also caregivers equal opportunity to advance over the course of their careers:

•Financial and social support for single parents
•Far greater social esteem for the “caring” professions

Not being cared for is just as much a marker of inequality as being discriminated against.

In short, we would build a social infrastructure that allows people to care for one another, in the same way we provide the basic physical infrastructure that allows them to compete.

The blog princess is always somewhat mystified at demands that people value some-thing-or-other more than they already do. For what little this may be worth, she actually agrees that the world would be a far better place if people valued caregiving more.

But the progressive answer to the valuation question always seems to require the use of government force (laws requiring employers to act in ways that are often inconsistent with staying in business, or laws that further disadvantage already-disadvantaged workers) combined with the forcible confiscation of income required to bridge the yawning gap between abstract theories of what people should want and how they should behave and the demonstrable ways they DO think and behave.

With an aging population and a growing number of mothers choosing to work, the caregiver field is likely to be a growth industry over the next decade or so. But the ugly truth here is that few skilled workers want to be caregivers (we'll skip the Princess's favorite rant about "Why don't more men rescue underachieving boys by going into teaching"). The pay is low because for the most part, only the least skilled workers are willing to take such jobs.

There is no "Department of Valuation" that decides these things - wages result from the individual cost/benefit calculations of millions of employers and employees.

Thinking that somehow, wishful thinking will cancel out all the very real considerations that go into these calculations is just delusional. But when logic is in short supply, there's always coercion.

Posted by Cassandra at January 12, 2014 03:39 PM

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Gov't meddling in markets *always* causes a net reduction in supply, which results in price increases and/or shortages.

Posted by: CAPT Mike at January 12, 2014 06:21 PM

But surely you're familiar with the hundreds of thousands of caring progressives who offer to pay quadruple the going rate, out of their own pockets, for the people who babysit their kids and care for their elderly, incapacitated parents while they pursue the dream of journalism and academia?

Odd how "society should value this work more highly" never seems to translate into "I should pay more for this." It's the same for food: the sainted farmers should be paid higher prices, but the food should be cheap at the grocery store, a miracle that typically is to be achieved by "eliminating the middle man"--that useless entity who has something to do with making the food appear on the corner so we don't have to go harvest it straight out of the field and keep it fresh all the way to our front door.

If all else fails, everything is made both cheaper and more profitable for everyone simultaneously by converting all operations to "non-profit."

If you're Scott Walker, you make both ends of the belt reach without either laying off workers or raising taxes, just by eliminating mandatory union dues and public-employee collective bargaining. I actually like that one, so I've been doing some soul-searching about how it can be distinguished.

Posted by: Texan99 at January 18, 2014 12:17 PM

Odd how "society should value this work more highly" never seems to translate into "I should pay more for this."

BINGO. And how "the rich should pay more taxes than everyone else" is a philosophy that never seems to make its way into the tax returns of folks like Warren Buffett (who takes every.single.deduction he can to reduce his tax bill and then whines that his secretary is paying a higher rate!) or John Kerry (who moored his gazillion dollar yacht in a different state to bilk his home state of the taxes on the boat).

Posted by: Cassandra at January 19, 2014 10:24 AM