The common error behind leftist economics

last edited 2024-11-05

A common error behind the economic policies of the mainstream American "left" seems to be a failure to consider how others will react to those policies and how those reactions will undermine the goals of the policy. Examples:

Minimum wage

The goal is to force employers to pay employees more. But this can actually harm the very people it's intended to help! If I want to hire someone for $10 an hour, and the potential employee thinks this is worth it for them, but the government won't let me employ them for less than $15 an hour, I probably just won't hire that person. So the result isn't necessarily low-skill workers being paid more but low-skill workers being unable to find jobs. If the minimum wage is below the value of the job to the employer but above the worker's best option elsewhere, it does result in the worker getting paid more, but to show that this is the case more often than not would take study, not just a moral appeal.

Anti-discrimination

The Equal Pay Act

In a world with a completely free market economy, being prejudiced would be a horrible business strategy. It deprives you of potential employees and customers and vastly harms your reputation. But leftists passed The Equal Pay Act anyway. Note what this means. Paying women less than men for the same work has literally been illegal in the US for 50 years. Keep that in mind when people claim women still face that systematically - it means either they're wrong or government intervention hasn't solved the problem.

Sinisterly, discrimination being *illegal* actually discourages employers from hiring women or minorities because if they do they're at risk of being accused of paying them less and sued for it, and claims about such discrimination are often widely open to interpretation: note how the law uses language like "under similar working conditions". Who do you think's going to define what's *similar*? If I know that I could be legally punished because someone else's definition of *similar* doesn't match my own, I'm going to be afraid to take that risk.