Newsflash: The Market Can’t “Decide” People’s Wages Because the Market Is Not a Sentient Being

Yesterday, Mark Perry wrote for conservative think-tank AEI that minimum wage laws are as ridiculous as laws that try to control the temperature. Because you can’t control the weather, right? Right. (Well, except through years of unregulated environmental destruction, but I’m sure that’s something else Perry and I disagree on.) Anyway, here’s his point:

Bottom Line: If the proposed Minimum/Maximum Temperature Laws seem ridiculous, that’s because they are totally ridiculous. And so is the Minimum Wage Law.Unfair Government Mandate Preventing Thousands of Unskilled Workers from Finding a Job. Forcing employers to pay an unskilled worker $10.10 per hour (or $12 as proposed by Hillary Clinton and $15 an hour as is currently being proposed by Bernie Sanders and the NY Times, among others) won’t change the reality that many of those workers are actually only worth $7 or $8 per hour in the labor market. The artificially high minimum wage causes distortions and inefficiencies in the unskilled labor market because the minimum wage does not accurately and truthfully reflect many workers’ true productivity, and it’s like creating a government-mandated fantasy world (or government censorship and lies, according to Don above). A disconnect is created between the true measure (e.g. $7 per hour) and an artificial, government-mandated measure ($10.10, $12 or $15 an hour), of a worker’s value or productivity.

As much as I hate to say it, I believe this paragraph contains the real reason why Mark Perry and I will never see eye to eye. In his mind, the economy is a natural law like the weather, and the minimum wage is an artificial way to control that law. If you think the economy just happens spontaneously and does whatever it would do regardless of human interaction, any attempts to guide the economy in a direction that the economy does not “want” to go in would end in a disaster.

But the economy isn’t a natural law. Perry argues that minimum wage laws are “artificial,” but by that same definition, the entire economy is “artificial.” The economy doesn’t just happen spontaneously. If there were no humans, there would be no economy. Humans have existed without an economy like the one that we have in America. The economy isn’t gravity, or the weather. It can’t “decide” what people are worth because it’s not a sentient being. This is a huge blind spot that causes thinkers like Perry to get lost.

Undoubtedly, Perry would respond to this claim by saying something about how obviously he doesn’t think the market is a sentient being—maybe he’d talk about balance or something like that—but the fact is that his rhetoric says otherwise. He talks about what workers are “actually…worth,” and the “true measure” of what people earn, as though there’s some sort of a ruler out there incontrovertibly proving what everyone should earn at any given moment. The economy doesn’t want certain people to make $7 or $8 an hour (or less, as Perry so menacingly leaves unspoken in his piece.) Perry probably also argues that CEO pay, undoubtedly, is exactly where it should be now, and it was absolutely meant to rise 90 percent faster than the pay of the typical American worker, because that’s just what the market wants. It’s certainly not caused by the greed of the people in charge of making salary decisions. At all. Nope. That would be silly.

As Nick Hanauer says, “Economics is mostly how humans rationalize who gets what and why. It’s how we instantiate our preferences about status, privileges, and power.” Economics is the story we tell ourselves, and for the last forty years or so we’ve been telling ourselves the flawed trickle-down narrative, which says that rich people deserve the money because they’re job creators. The truth is that the middle class are the true job creators; when people who work in restaurants have enough money to eat in restaurants, more money circulates and the economy grows.

And as opposed to the trickle down narrative, in which people like Mark Perry translate the market’s supposed needs and wants into English, inclusive economics and the raising of the minimum wage is supported by actual facts. So let’s stop pretending that the market decides the worth of human beings and start spreading the truth: when more people have more money, we all do better.

Paul Constant

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