Minimum wage and power imbalance
Purist capitalist economists make a mistake similar to purist socialist economists. Socialists assume that in the absence of other forces, humans always choose altruism over self-interest. Capitalists assume, or rather elevate, self-interest to be the greatest virtue. But humans are not one-dimensional.
With that introduction, chapter 1 of Principles bothers me. Saifedean implies that a law requiring minimum wage is evil. This is right, and also wrong.
In a capitalist system, monopolies and cartels are forbidden. The monopolist has overwhelming power relative to the neo entrepreneur. This stifles competition and always leads to a bad end.
When a boss sexually harasses their employee, they often get away with it because the employee fears loss of job and support. The employee makes the self-interested decision that submitting to the boss is more profitable than fighting them. And yet, sexual harassment is evil. Why? Because most people have empathy with the employee, and will even make (at least small) sacrifices to save the employee and punish the boss. That is altruism.
The consistent theme is that it is evil to exploit a power imbalance for self gain. No matter how self-interested humans may be, they will not stand for unfairness, i.e. exploitation of unequal power.
In negotiations between an employer and a single employee over wages, there is an obvious power imbalance. Exploiting that power, the boss can drive a person into abject poverty, even though they work 40 hour a week. Most people consider that unfair. It is unacceptable that we would allow employers to exploit their greater power in pure self-interest. A minimum wage is society’s response to this unfairness.
Now, you can argue about means. Minimum wage may not be the right solution, but the economist cannot do away with it unless they present _some_ solution to this problem. Unless and until humans devise a better response, moral imperative requires that we learn to live with minimum wage.
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