For your consideration:
I submit that Hillary Clinton lost because she did not make even a minimal effort to make herself palatable to people like me — people who care primarily about economic growth, fiscal responsibility, limited government, individual freedom and respect for voluntary arrangements.
Because I care about those things (and for a number of other good and sufficient reasons), there was never a chance I would vote for Donald Trump. I gave money to Jeb Bush. Then I gave money to Ted Cruz. Then I gave money to the “Never Trump” movement that was trying to foment a revolt at the convention. Then I gave money to pro-growth Senate candidates. For me, the only remaining choice was between voting for Clinton and not voting for Clinton. (I also considered sending her money.)
I knew that if I voted for her, I’d never feel good about it. That was too much to ask. But I’d still have voted for her, if only she hadn’t gone out of her way to make me feel awful about it. And that she just would not or could not stop doing.
Every time I listened to her recite the litany of reasons not to vote for Trump, I cheered her on. But she seemed incapable of getting through a speech without veering off into the loony-land of free college and unfree trade. Most disturbingly — partly because it was most disturbing and partly because she harped on it so often — was the glee with which she looked forward to rewriting other people’s labor contracts and vetoing their voluntary arrangements. Do you want to accept a wage of less than $12 an hour in exchange for, say, more on-the-job training or more flexible work hours? Hillary says no. Do you want to forgo parental leave in exchange for, say, a higher salary? Hillary says no. And on and on.
(You could, of course, say that Clinton wants you to have both the parental leave and the higher salary. Unfortunately, while I believe that Donald Trump is dumb enough to believe that’s possible, it is not plausible to me that Hillary Clinton is dumb enough — or uneducated enough — to believe it’s possible. Workers are, after all, paid their marginal products, and if you force firms to pay them more than their marginal products, the difference comes out of the return to capital, which means nobody will invest in those firms and the firms won’t exist anymore. That, as Paul Krugman so loves to say, is Economics 101. So either she’s an unrepentant demagogue catering to supporters she hopes are that dumb, or she really does want you to have the parental leave in lieu of the higher salary, just because that’s what she chose for you, your own preferences being quite irrelevant.)
I could have voted for her despite all of that if she had just done two things. First, make some kind of argument for these policies — some argument based on some kind of market failure — some argument based on exeternalities or asymmetric information or some other reason why the usual market forces might not do their usual good job of bringing forth optimal labor contracts. I’m not sure what that argument would be, but if you’ve got one, I’ll listen. Even if it strikes me as a bad argument, I can still vote for you (given the alternative) as long as you show me you’re at least capable of thinking about this stuff. Otherwise, as far as I can tell, you’re utterly unconstrained by reason, in which case you’re likely to try to implement whatever bad idea pops into your head the next time you wake up in the morning.
And second, at least acknowledge that there is something troubling about telling other people what they’re allowed to negotiate. Go ahead and argue that although the heavyhandedness troubles you, you still, with some reluctance, think the heavyhandedness is justified because of X,Y and Z. Again, I don’t have to agree with X,Y and Z. I just have to have some indication that you’re not an insane power-crazed robot who just loves telling other people what they can and can’t do, in pretty much random ways, and without a shred of hesitation.
Give me that straw to grasp and I can vote for you. I literally yelled this at the TV screen more than once. But she offered no hope. She seemed not even to realize that anyone might be desperately seeking that kind of hope. So I, and I’m sure others like me, didn’t vote for her (despite listening to her speeches, right up to the end, hoping she’d hand me some thin reason I could take into the voting both).
It wouldn’t have taken many of us to make the difference.
Don’t you think she saw a tradeoff, though, between appealing to people like you and appealing to Bernie Sanders supporters?
David Henderson:
Don’t you think she saw a tradeoff, though, between appealing to people like you and appealing to Bernie Sanders supporters?
But how real is that tradeoff? Do Sanders supporters (or a substantial number of them) really feel gleeful about overturning voluntary arrangements just for the sake of overturning them? Or would they have been as happy as I’d have been to hear Clinton say that she’d given these matters some thought, that there’s a lot to be said for respecting voluntary agreements in general, but in these cases and for such-and-such reasons, there are compelling arguments to overturn them? I’d like to think that Sanders supporters would respond well to that — that they’d set a lower bar for overturning agreements than I would, but that they’d at least agree that there ought to be a bar, and we ought to think about where to set it. That’s all I needed to hear.
Steve,
A few years ago you made a persuasive case that you should only donate to one charity, unless your donation budget was large in relation to the charities’ endowments.
It seems unlikely that the organization that would do the most good is a political campaign in a first world country. So why donate to any candidate?
@ Steve. Seen this https://www.youtube.com/watch?v=GLG9g7BcjKs ?
Steve, why is it impossible for the government to force an employer to both increase an employee’s salary and give the employee parental leave? I can understand if you said it’s undesirable, but are you really saying that it is physically impossible for a government official to put a gun to an employer’s head and threaten to kill him if he does not do both of those things? I’m quite sure that you’re not saying that, but I don’t quite see what point you are making.
For the parental leave thing, one possibility is that parents are less productive, and thus employers make deals more unfavourable to future parents in order to keep them away (they can’t tell directly who will be a parent in the future).
In that case, the effect of the policy might be something like:
1. A utility gain for parents due to having parental leave close to what they would have bargained for if the employers hadn’t been worried about adverse selection
plus
2. A wealth transfer from non-parents to parents due to the employers having to split the wage reduction between both groups since they don’t know who will be a parent in the future
plus
3. Some extra random noise for employers concerning which hires are profitable and which unprofitable for them.
It’s not too hard to imagine that it might be possible that the gains from effect 1 will outweigh the net losses from effects 2 and 3. I don’t know if the necessary assumptions for this to work out are true or not.
Whilst your appeal for rationality is laudable, and I certainly second the sentiment, given the result I do not think it would have been a successful election strategy – at least this year. The answer was to appeal to emotions, and Trump did that better. Clinton should have kept up with the “Trump is crazy” theme. As soon as she goes in to reasoned argument it might persuade a few like you, but masses of people apparently think that is more of the same establishment bullshit that they are fed up with and switch off, preferring to be told that they can have it all simply by wishing it so.
Harold, my memory of the results I saw post-election suggested that if Clinton had managed to snag one-third of the Libertarian vote, she’d have won easily. I don’t know that Steve’s approach above was the best way to get them, but at least it would have been an attempt.
As it was, her message was “Trump is so terrible you should throw away your convictions and vote for me.” I think “Trump is so terrible that I am willing to compromise with you to stop him” would have been a much stronger approach.
Having gone through the same stages as our gracious host, ending up at buttonholing random passers-bys and beseeching them not to vote, but if they have to vote, vote for anybody but Trump.
Such efforts may have had some effect in traditionally conservative, high-wealth, high-education counties (Loudon and Fairfax here in Virginia, some Dallas suburbs, Orange in California, Salt Lake in Utah, etc.) which showed the biggest anti-Trump swings in the country.
In the end of course, none of that mattered. Trump, embued with the Devil’s luck, gleefully shed millions of votes in California, Texas, and New York for a few tens of thousands in Michigan, Wisconsin, and Pennsylvania.
Sol, you may be right, but she had to keep all the votes she did get whilst adding the libertarians. If she started actually explaining stuff she might have lost more votes than she gained.
@Harold
Some naive number crunching suggests that Hillary could have won substantially more votes on the Johnson/McMullin/Trump margin than she’d have lost on the Stein margin by marginally shifting into a slightly more moderate direction. Given the extreme closeness of the decisive states, this could easily have won her the election.
Why didn’t she? Because she–like I–thought she didn’t have to.
I notice that you chose to attack Clinton in particular on the proposals that the Sanders team inserted in the Democratic platform. This is fair game, since technically Hillary is required to run on the Democratic platform. But I am not sure it is fair game to make her the sole person responsible for defending it. If so, then it should also be fair game to insist that Trump defend the far-right proposals in the 2016 Republican platform (such as ending environmental regulation, ending consumer protection at banks, legalizing anti-LGBT discrimination, making Christianity the national religion, subsidizing fracking, repealing certain taxes on the rich, requiring Bible study in public schools, etc… etc… etc…).
More to the point, the other proposals in Hillary’s economic package actually are supported by a great many economists. Although some economists believe her proposal to gradually raise the minimum wage to $15/hour would cost jobs, the verdict is still out. Most economists believe the effect on jobs would be minimal either way. Outside the Mises Institute, few believe that her support for collective bargaining would harm American competitiveness. Her tax proposals on short term capital gains would be subject to a spirited debate in the House and Senate, but most economists believe the downside of increasing taxes would be offset by the upside of starting to combat “quarterly capitalism.”
None of her other proposals are so extreme that your characterization is completely fair. Family medical leave is not some sort of wild-eyed extremist idea that is only practiced in Communist Cuba, and neither is her expanded childcare plan. Even if you added up her early education plan, IDEA funding increase, her energy plan, and her expansion of the affordable care act, all together they are less than 1/10 the proposed cost of Trump’s wall alone. Her infrastructure plan is less than ½ the cost of Trump’s, and her tax cut plan is less than 1/100 the cost of the one Trump proposed in many of his speeches. (In each case depending on which Trump you believe.)
In short, each of her proposals was economically defensible. Not perfect, but clearly a foundation for a spirited disagreement. There are people like you and Robert Samuelson who claim that her numbers do not add up, but that is a topic for debate, not a statement of objective fact. I would argue that the Clinton economic plan (like her moral and ethical history) received more scrutiny than any other candidate in history. In the end, pundits resorted to nitpicking over tiny details in the Clinton plan, and ignoring the fact that Trump’s plan was such obvious hogwash that not even Trump himself defended it, much less his friends, family, or Vice President.
Her ethical history received similar treatment, if not much, much worse. We were treated to endless speculation that it was a conflict of interest because Clinton met several times with people who donated money to a charity that bore her name, (even though no one in her family drew any salary or any other benefit from the charity.) Yet today, the New York Times reports that Trump said it would be perfectly acceptable for him to use his office in the White House to continue to run his company if he so chooses, including even demanding business deals from foreign leaders who visit him at the hotels that bear his name and profit him personally. This goes so far beyond “conflict of interest” that it literally pushes up against the “gifts from a foreign government” clause in the Constitution.
Trump literally stole money from a charity that he claimed was to benefit veterans and used the money to bribe a state Attorney General. This is corruption on a scale that is not only breathtaking, but objectively worse than any other candidate in history. If Obama (or even Reagan) had been accused of stealing money from a charity, do you suppose the Congress would have shrugged it off, or do you suppose they would have impeached him? Remember this is a Congress that spent four years and six million dollars investigating Benghazi, even though Clinton was never accused of anything improper. Imagine how bad it would have been if she had actually been accused of breaking a law.
In my opinion, you are applying a different standard to Hillary Clinton because you dislike her. In my opinion, her economic policies were defended with conviction and numbers, and you ignored it the same way that CNN (and ABC and NBC and FOX) did, because it was easier to revel in Trumps daily antics than it was to talk about policy.
Well, now that particular chicken has come home to roost, and all the sudden, you want to attack Clinton for failing to defend her economic proposals. Well, too late. Clinton’s proposals are no longer on the table, and she will never have to opportunity to prove you wrong. Instead you should be using your time to try to decide if the increase in the national debt planned by Trump will cause the downfall of the American economy, or if it will simply disappear down the same memory hole as the increase in debt under Reagan, Bush, Bush, and Obama.
You will notice I left Bill Clinton off that list, because America had a budget surplus under Bill Clinton, until we decided to borrow $3 trillion for tax cuts plus another $3 trillion for a series of deadly and destructive wars. So if you think America can’t afford $46 billion for expanded child care, then I would be interested to hear your economic justification for a $6 trillion subsidy of the military-industrial complex.
Keshav Srinivasan:
Steve, why is it impossible for the government to force an employer to both increase an employee’s salary and give the employee parental leave?
Because workers are paid their marginal product. If you require firms to pay them more than their marginal product, the excess comes out of the return to capital, which means nobody will invest in that firm, which means the firm cannot continue to exist. This, as Paul Krugman likes to say, is Economics 101. I’ve slightly edited the main post to incorporate this answer, which will be obvious to economists but perhaps not to everyone.
Dave H:
In my opinion, you are applying a different standard to Hillary Clinton because you dislike her.
I do not dislike her 1/10 as much as I dislike Trump. And 90% of my dislike for her stems from her willingness to overturn other people’s voluntary agreements, apparently without compunction. I think I apply that standard pretty consistently.
Steve, first of all, what if you believe that workers are not being paid their marginal product? I think if you asked advocates of raising the minimum wage, they would say precisely that.
Second of all, why would reducing a firm’s return on capital mean that no one will invest in the firm? I can understand if reducing the return on capital to 0 led to no one investing it, but I don’t see how just reducing it somewhat would have that effect. Is it because people would invest in other firms with a higher return on capital? But then what if all firms’ return on capital are reduced by an equal amount?
Keshav: You are suggesting that the market for labor is not competitive. How many different employers of essentially the same sort of labor can you identify within, say, a 10 mile distance of your home?
It appears to me that Clinton did target your vote. You do not agree with any of her policies, and you do not even like her. Your only interest in her is that you have some sort of adverse emotional reaction to Trump.
So Clinton’s main campaign strategy in the final stretch was to talk about what a jerk Trump is. She kept attacking him for some rude comments he made in private many years ago, for criticizing a beauty queen in the 1990s for getting fat, and for criticizing a Moslem immigration lawyer who gave an anti-Trump speech.
What is the purpose of all this, except to pick up voters with an emotional dislike of Trump?
She got out-voted by those who saw larger issues at stake.
Hmmmmm …. What does Ctrl-F “immigr” turn up? …. Uhhhh … nothing. Not one mention of immigration.
Therefore, not a serious analysis.
Steve, what if someone believed that theoretically in a perfectly competitive market, workers are paid their marginal product, but they didn’t believe the real world approaches those conditions? What if they thought, for instance, that employers tend to collude with one another to keep wages low? Or what if they thought each employer is thinking “If I increase my wages, everyone will increase their wages to compensate, and then I won’t be any better off than I was before?”
And can you answer my question about how reducing all firms’ return on capital by an equal amount would lead to a situation where no one invests in those firms?
Hillary ran a campaign centered on issues like the heinousness of trying to get an overweight beauty queen to lose weight.
Such a campaign is not interested in fine points such as economic tradeoffs. Such a campaign is simply telling people they can have lots of free stuff like maternity leave and free college tuition without any cost to anyone. Little children are never concerned about the cost of candy. For them, it just leaps out of their parent’s pockets.
@Prof. Keshav
What you are proposing here is generally labeled the monopsonistic labor market hypothesis. And there is no theoretical reason why it could not possibly be true in some logically-consistent world.
But it is so vastly contrary to everything we actually know about the market for unskilled labor in this universe, that citing it is more of a theoretical fig leaf than a plausible explanation.
Anti-trust lawyers and economists have a fair amount of experience of what conditions it takes to make a market become sufficiently competitive as to achieve price outcomes within a narrow band around the theoretical perfectly competitive market. Among the most important criteria are number of independent competitors, the differentiability of the product, the ease of entry into the market, and the lack of competitive transparency.
By any of these criteria, you’d predict the market for unskilled labor to be very close to perfectly competitive. The product (here, unskilled labor) is very undifferentiated. There are within easy commuting distance from almost every unskilled worker, dozens or even hundreds of potential employers. Entering the market (e.g., opening a fast food franchise) is among the easier ways to start or expand a business. Finally, unskilled labor wages are not centrally reported, leaving every employer in some doubt about the conduct of others.
If despite all of these factors, the unskilled labor market was still non-competitive, you might as well give up on markets entirely. Surely there is no labor market which is more competitive. Surely, lawyers, bankers, and economists face a much less competitive market for their services and must hence be vastly more undercompensated than unskilled workers.
But before you accept that conclusion, just put into mind what the unskilled labor employment monopsony thesis implies. Under it, every single employer could increase their own profits by covertly paying additional salary or benefits to unskilled labor, but all refrain from solidarity with a hard-to-monitor conspiracy of thousands of other such employers!
And what loyalty! Apparently even franchisees under threat of going out of business refrain from resorting to the easy money-making opportunity of increasing wages (as posited by the monopsony hypothesis) just so that they’d avoid nasty looks at the next local Chamber of Commerce meeting. Do failing fast food franchisees really tell themselves that this would be a worse fate than losing their business? It seems fantastical, but if you accept (a) the unskilled labor employer monopsony hypothesis and (b) that some of these regularly go out of business, then you must also accept this fantastical conclusion.
@7 Harold,
An appeal to reason is NEVER an ineffective strategy to an appeal to the unreasonable.
ALL she had to do, was to be transparent, honest, and show a little brevity with her reasoning. That’s it; that’s all it takes.
An appeal to emotion is never going to be as successful as an appeal to emotion as long as you are upfront and honest with your reasoning. As the saying goes, the only thing we have to fear is fear itself.
Two parties with two different viewpoints, but the same goals, should always come to an agreement in an argument. The only way this will occur is if they are open and honest with each other. People cannot assume preconceived viewpoints of “the other side”; only state your own viewpoint in an honest and open fashion. Unfortunately Hillary (AND Trump) didn’t do this.
Ultimately the person, or people, who choose not to be open and honest in favor of emotion, hyperbole, and assuming what you cannot assume from “the other side” simply looks bad – i.e. both Donald Trump and Hillary. Thus is the poignant nature of this election (no-one wanted to vote for either party; only against one).
@12 Dave H,
I encourage you to look into National Bureau of Economic Research (NBER) on their current understanding of the effects of Minimum Wage – it’s not pretty. Yes as minimum wage stands now, it is effectively useless (it does not do anything productive, but is not particularly harmful either). Yet this still does not stand to reason that an increase will not lead to more structural unemployment – which is the current standing of NBER.
Then look at the history of South America. Protectionist policies + growing minimum wages leads to a sour cocktail.
Steve has bolded his complaint that she wouldn’t acknowledge that imposing the trade-off on others is a problem. I suggest this is related to David R Henderson’s question in 1. To acknowledge what Steve asks her to acknowledge is to forfeit a great deal of support. It matters to people that they think they are doing the right thing, and a very large segment of the democrat base really truly believes imposing their preferences on others, even absent cogent arguments, is the right, moral, just thing.
@Sub Specie Æternitatis First of all, I’m not a professor (yet). In any case, I merely mentioned collusion as one possibility. (And anyway collusion need not be motivated by solidarity.) I also suggested the possibility that employers are thinking ahead and realizing that if they try to increase wages, then everyone will increase wages to compensate and then they’ll be no better off. There are many other ways in which the real world could fail to model perfect competition.
In any case, even if you were to persuade me that the real world does approach perfect competition and workers are paid their marginal product, it is certainly not an obvious fact, so I hope you’d agree with me that Steve is unjustified in calling people who don’t think that workers are paid their marginal product dumb.
By the way, can you please explain to me how reducing the return on capital for all firms by the same amount will lead to no one investing in any firms?
In some sense, Steve is correct that the one minor point he focuses on is “why she lost” because when an election is this close, many things could have changed the outcome. But then, a lot of minor things might also be “why she lost”.
For instance, if she had apologized to Officer Wilson, she would have gotten my vote and many millions of others. Being the cop-killer queen lost her a lot of votes. But the anti-cop narrative is so embedded that she would have have lost a lot of low-information voters who read only the New York Times, The New Yorker, or listen to NPR.
@Keshav I am sorry. I thought you were this guy: https://en.wikipedia.org/wiki/Srinivasan_Keshav That type certainly would not look amiss here. But to our Keshav, good luck on becoming a professor!
As to the substance, forgive me for being unclear. The idea that some market participants, either by themselves (as monopolists/monopsonists) or in groups (as cartels, etc.) can have market power (i.e., the power to affect price) is perhaps one of the most studied problems in basic microeconomics.
And while there is a great deal of dispute about how common that phenomenon is in practice, or what counter-measures are justified by it, there is pretty wide agreement on exactly what conditions make it more likely and how it would work.
And under that general agreement among economists, market power is probably least likely to arise in the market for unskilled labor.
can you please explain to me how reducing the return on capital for all firms by the same amount will lead to no one investing in any firms?
This is a complicated issue, but in a simple general equilibrium view, you can’t reduce the going-forward return on capital for just one firm or one industry. If the rational expectation of the return of any one company or industry fell below the economy-wide figure, investment in that company/industry would just decrease until equilibrium is restored. That may or may not occur at a level where that company or industry still exists.
Re 25
I do not agree that workers are paid their marginal product. In most businesses there are co-workers, some of whom are much more or less productive than others, yet paid about the same. This is notably the case in my industry, and from my experience of professors, in Steve’s too. I do not think my retired father is paid his marginal product, and would be interested in knowing if less valuable employees die younger to rectify the calculations. But it might be that the average or median worker in an industry or business is paid the average or median marginal product of the relevant workforce. That might suffice for Steve’s argument, since the costs would be applied to all workers. It might depend on the spread.
@Teddi, I have read the studies published by NBER, and I find them unconvincing. For nearly ten years, the NBER has restricted publication on the subject of minimum wage to either David Neumark or Jeffrey Clemens, both of which use similar methodology to argue that higher minimum wages will result only in disemployment.
The research by David Lee at Princeton and Emmanuel Saez at UC-Berkeley has been almost completely ignored in the mix. Lee and Saez argue that the disemployment effect will be more pronounced in certain markets (such as low-wage markets), and for certain groups, such as teens. Both of these arguments stand to reason, and suggest that a national minimum-wage policy could be tweaked to avoid some of the worst side-effects.
More to the point, the research by Lee and Saez coexists with Clemens quite easily on several issues. Both seem to indicate a choice between 12 million people making $8 per hour, vs 11 million people making $12 per hour, (and 1 million making zero). This choice is not as clear-cut as it seems. At $8 per hour, nearly everyone would be drawing public assistance, and would have a much harder time taking pride in their work. Before we freak out about the million people left unemployed, we should remember that the economic models actually show that they would be better off, since public assistance would not be stretched as thin, and they would not have to go through the sham of a dead-end job to go get job training.
At any rate, I disagree that Hillary’s minimum-wage proposal is a one-way path to economic ruin. (If it were, then please explain Canada, Germany, the Netherlands, and so on.) Worst case scenario: The $16 minimum wage of Australia has not turned them into a dystopian third-world nightmare. And it is not about to either.
@Dave H.
Sometimes I agree that opposition to the minimum wage is overplayed among free-market economists. You are right that even a $15 minimum wage probably would not ruin the US, what with there being much ruin in a nation. You are also right that at some levels the minimum-wage, like any anti-competitive policy, can yield net-benefits for the favored group (even as there is a net social loss).
One should be careful not to deny these facts.
But most minimum-wage advocates make such blatantly economically indefensible arguments (“No, no, nobody will lose their job due to the minimum wage! A lot more people will work for $15! And we’ll all be richer!! Except maybe those nasty corporations nobody decent cares about anyway!”) that it is almost irresistible for the economically literate to try to set them straight.
If there were mass demonstrations all over the country declaring that pi equals exactly 22/7, you’d get a similar response from the mathematically literate, even if in the end no great harm would result from the lunacy.
@29 Dave,
Well personally, I’m not one to believe in only economic ruin if the minimum wage increases. I’m a person who thinks it with either do absolutely nothing or in the worst case scenario cause some economic damage. As almost always is the case with active governmental policy making, it is a short-run solution to a long-term issue.
You are suggesting NBER is not a credible source, and I completely disagree. I think people need to temper their skepticism when it comes to “new” information regarding an old topic. In other words, I’m on the side of NBER on this one.
People can absolutely say, “look at these handful of countries, see how they are preforming well” but I personally don’t think this is wise road to go down, as another person could simply say, “well look at THESE handful of countries and see how they are preforming EVEN BETTER THAN the ones you propose, or WORSE THAN what you propose.” It needs to be a sufficiently broad study to understand trends in behavior. And so far on the broadest scale, as we have seen things, high minimum wage isn’t very appealing.
I posted a study here recently on minimum wage workers in London. The authors found no measurable effect on employment, nor an increase in firm closures nor a rise in prices following an increase in minimum wage. Where did the money come from? SL’s analysis suggests that marginal firms would close, but they apparently did not.
One study does not make the case, but it is consistent with and adds some validity to Keshav’s concerns.
It was interesting that the Conservative Party in the UK stood on a platform of increasing the minimum wage more than the Labour Party in the last election. They estimated it would cost 60,000 jobs if memory serves. This was accompanied by a reduction in working age welfare benefits, so transferring responsibility from the State to employers, something I think SL argued exactly against recently.
Teddi, I think your comment requires some editing, but I think I get gist
“An appeal to emotion is never going to be as successful as an appeal to emotion as long as you are upfront and honest with your reasoning.”
I am guessing that second emotion should read reason? I would love to agree (if that was your point), but I fear it is not so. Whilst there is something in the “fear itself” quote, it is not the whole truth. We should fear genuine dangers apart from fear.
“Two parties with two different viewpoints, but the same goals, should always come to an agreement in an argument.”
Indeed they should, but how often do both parties have the same goals? Even in educated and refined fora (such as this) we sometimes find one party apparently not interested in truth seeking but in winning a point. Even if they do have the same goals, that “should” does not always translate into reality – people do not seem to be capable of it.
There is quite a lot of study into this area. I think the conclusion is that reason and evidence has surprising little effect on opinion.
@DaveH
No Australia is not a dystopian third-world nightmare, but its relatively high minimum wage has had ill effects. There is almost certainly higher unemployment than would exist otherwise and employers who want to employ unskilled labour often seek to circumvent the regulation. For example a Seven Eleven franchisee was recently accused of requiring staff to reimburse them for some of the wages paid. The minimum wage is often paid at the expense of less pleasant working conditions. The unemployment benefit is in part a cost of compensating workers the value of whose marginal product is less than the wage that employers are allowed to pay.
Harold:
I posted a study here recently on minimum wage workers in London. The authors found no measurable effect on employment, nor an increase in firm closures nor a rise in prices following an increase in minimum wage. Where did the money come from? SL’s analysis suggests that marginal firms would close, but they apparently did not.
If you read a study saying that the laws of arithmetic are invalid, then no matter how carefully the study seems to have been conducted, you should be asking where the error is, not asking why people continue to believe in arithmetic.
Matt (#2):
A few years ago you made a persuasive case that you should only donate to one charity, unless your donation budget was large in relation to the charities’ endowments.
It seems unlikely that the organization that would do the most good is a political campaign in a first world country. So why donate to any candidate?
First: Great comment.
Now: What I actually said was that *if your motivation is entirely charitable* you should not (or will not) diversify your charitable contributions, and that those who do diversify are clearly not motivated by purely charitable impulses. (With exceptions for small charities, etc.)
I’ve also said that if your motivation stems entirely from a sense of civic duty, you should not (and will not) vote, because it is virtually certain that you can do a lot more good spending fifteen minutes picking up trash in the park than you can do by spending fifteen minutes at the polling place.
In this post, I admitted to voting, and to not diversifying my contributions. You may conclude that my motives are impure, and that to some extent I did these things to feel good about myself (or for some other less-than-noble reason).
It doesn’t actually feel that way. The contributions I made this year, and the time I sacrificed to voting, felt like selfless acts. But logic tells me they can’t have been. If anyone else had behaved as I had, I’d draw a harsh conclusion. I don’t think I can escape drawing the same conclusion about myself.
I agree. Clinton spoke endlessly on why not to vote for Trump, but rarely on why we should vote for her. I did not need to be convinced not to vote for Trump.
Putting together a coalition that was pro-Clinton rather than anti-Trump would not have been easy, but that is what great politicians do. Reagan is a shining example. Clinton didn’t even try.
#35 is exactly why I continue to follow Landsburg years after being a student- he will gladly hold himself to the same standard he holds others. I strive to teach my employees to do the same.
Steve #35
Spot on.
It is astonishing how hard it is to be coldly rational about social actions, even something as simple as voting. The math and the logic are simple, obvious, and overwhelming. And yet …, and yet ….
SL, Indeed, such a case arose recently with the faster than light neutrinos. First look for the error, which was duly found. But are you suggesting that assumption that employers cannot have market power, or there is some other market failure, is as strong a law of nature as arithmetic? That sounds something of a stretch. There are many places the money could have come from that only require a small inefficiency in the market to start with.
@Harold Sure, employers could theoretically have market power (though that is unlikely in the market for unskilled labor). But that London example claims that *nobody* (not even the employers, as implied by the lack of closure of marginal employers) paid for the pay rise for minimum-wage employees. That would indeed violate the laws of arithmetic.
@Teddi,
I wasn’t meaning to attack NBER as a source, and I apologize if it came off that way. Even though I disagree with Jeffrey Clemens, his methodology is principled and his numbers are sound. What I am disagreeing with is the conclusion that 2% decrease in low-wage employment is such a terrible outcome that it justifies voting against a 28% increase in the minimum wage. In fact, I would argue that if we were to complete our homework, the opposite might be true.
The numbers get murky, of course, because we are talking about 2% of a large population that includes teens, trainees, and even the developmentally disabled, many of whom might be making well above the minimum. It is hard to weigh that number against a 25% raise for the portion of that population that earns exactly the minimum wage and not a penny more. But unless we complete the assignment, then we don’t really have an answer.
In addition, I am throwing in a completely emotional argument that $7.25 per hour is so low that most people won’t be all that upset to lose that job. The federal minimum wage for full-time work is $15,080 or about $1256 per month. I live in Orlando where the average apartment costs $1300 per month, so the average housekeeper in the hotels here is behind by $44 before even trying to pay for food, clothes, school supplies, transportation, or insurance.
The hotels keep making the argument that if we raise the minimum wage, they will have to lay off housekeepers, which is an obvious lie. What are they going to do, send those jobs to China? Computerize housekeeping? Make the current employees work even faster? They already run from room to room like Usain Bolt on steroids.
The fast food restaurants argue that they will replace their staff with computerized ordering kiosks. Have you tried using one of those? Try it some time, and try to place a special order. Because the one here has driven away so many customers that it practically paid for the real-life employees at the restaurant next door. (The restaurant next door, by the way, pays their employees well above minimum wage. Their argument is that if your business model depends on employees making sub-poverty wages, then maybe your business should fail.)
No, if the minimum wage increases here, all it will do is take a few dollars out of the pockets of the billionaires who own hotel chains, and help feed the families of the people who work two (and sometimes three) part-time jobs so the owners can avoid paying their health insurance. And it will decrease the number of people on government assistance. And it will make employment more attractive than “welfare”. And it will give people a reason to be proud of working. These are emotional arguments, but that doesn’t mean they are wrong.
SSA and SL, it does happen that I miss something or misunderstand, but can you explain this to me please?
Why could the firms (in principle) not have been making excess profits and the money came out of this? They simply reduce profits and nobody goes out of business. Why could they not in principle have been induced to make efficiency savings? Their costs go down and nobody goes out of business. Why could there have been a reduction in staff turnover and recruitment costs? It seems to me that these would not show in either loss of jobs, company closures or price rises which are the things I said did not show a change. You may consider these unlikely, but surely not in the same league as the laws of arithmetic. It seems there are many ways to pay for this within the limitations I described that do not require changing the laws of arithmetic, but I am happy to get an explanation why I am wrong.
@Pat,
In spite of the problems, Australia still provides a great example of the benefits and costs of gradually increasing the minimum wage. Their minimum wage (depending on how you count taxes) is over twice that of the United States, yet a certain percentage of employers simply comply with it and survive. Others trimmed their workforce, but it is notable that even companies that trimmed their workforce usually trimmed by less than the cost increase, meaning that the net benefit to the low income members of society may still be positive.
Other companies chose to work around the law using various means (and differing levels of mean-spiritedness). Even the Mises Institute admits though, that businesses only avoid the law to the extent that the cost of avoidance is less than the cost of compliance. So even in cases of avoidance (or evasion) of the law, the employees are still no worse off than they would be with a legal minimum wage of $7.50.
@ Teddi,
People claim that I am picking and choosing my examples, so pick any examples you wish. The highest minimum wages in the world are Australia, Luxembourg, Belgium, Ireland, France, the Netherlands, New Zealand, Germany, Canada and the U.K. To find countries where the high minimum wage has hurt the economy, you would have to go down to Greece (at about $5.60 US) or Argentina (about $4.80 US) Even in those cases, I feel we could make an argument that the high minimum wage is not their biggest issue.
On the other end of the spectrum, I would argue that countries with low minimums have clearly suffered as a result. Bangladesh has gradually raised its minimum wage to about 20 cents per hour, and has seen economic progress each time. Other countries have no minimum wage at all, but require collective bargaining, which is situational, but works.
The idea that the government should step in to enforce sub-minimum wages just because the employees were forced to sign contracts is abusive. The employee had no collective bargaining, and no real negotiating power. I have met these people: They accepted the job without even asking about the salary. They were starving. Their salary negotiation was like the Apple Terms of Service contract was for me: Either you sign it, or you do without.
In my case, I could have gone and bought a competing phone, but in their case, every other game in town is playing by the same rules.
From an economics point of view, Steve’s original argument that Hillary is trying to override employment contracts that were negotiated at arm’s length seems disingenuous.
SL:
“she did not make even a minimal effort to make
herself palatable to people like me… limited
government, individual freedom and respect for voluntary
arrangements.”
hmmm… your argument is, that an overt appeal to
libertarian principles, would have won over the marginal
number of libertarians who voted Gary Johnson, or who
sat out the election.
OK, Trump picked up several states by a 2% margin, and
the segment which you claim to represent, could make
that difference.
But your thesis has a huge hole: the overwhelming losses she’d suffer. USA has been, for a long time, practically
european in its ideology, i.e. statist. Trump and Billary
competed in a race to bankruptcy, pushing Big Brother as
is Santa Claus, handing out toys to all the good children.
Imagine Her Majesty declaiming: “All right kids, time
for a dose of reality, there ain’t no free lunch!
Cleveland, you want your pot holes filled? Hartford, you
want the nature conservation center? U.Cal, you want
a new voodoo studies major? Pay your own bills! New
Orleans, you want to live below sea level? Pump your
own bilges! Everybody, you want pork? Raise your own
hogs!
Because history and human nature tells that when
people pay from their own pockets, waste and abuse
magically disappear, real jobs instead of make-work gov’t jobs produce real prosperity.
Bonus: where there’s no influence, there’s no
influence peddling.”
Lady Macbeth & consultants considered this tack… for
about six microseconds… them looked at their polls, and
trash binned it without further thought.
There were plenty of good and sufficient reasons to rationalize not having voted for her opponent. But surely wanting to meaningfully lower & simplify taxes and regulations has to rank higher on the criteria you specify. In my book a balanced budget comprised of higher taxes and spending is not even necessarily more “fiscally responsible”.
Steve #35
Fair enough. We’re all allowed some impure motives.
It is possible that voting might be worth it, since the stakes in an election might be so high as to outweigh the infinitesimal chance of one vote swinging the election. That’s my excuse for voting, although to be honest its not my real psychological motivation.
Outside of the voting booth, I’ve mostly let your argument guide my charitable giving. I’m really surprised that the one-charity idea isn’t more widely known. From what I can tell, the Effective Altruism movement hasn’t heard of it.
#41. “I am throwing in a completely emotional argument that $7.25 per hour is so low that most people won’t be all that upset to lose that job. The federal minimum wage for full-time work is $15,080 or about $1256 per month. I live in Orlando where the average apartment costs $1300 per month, so the average housekeeper in the hotels here is behind by $44 before even trying to pay for food, clothes, school supplies, transportation, or insurance.”
Can someone please explain to me why there should be ANY discussion of a single minimum wage at a national level? We are a country of 300+ million people, each with different “wants,” as well as a country with diverse geography, disparate economic conditions, and distinct local amenities.
It seems to me that $7.25/hr. in a Dalhart, Texas, feed store may be quite sufficient income for some, while the same MW in Orlando, Florida, may clearly be insufficient to retain valuable employees & therefore most Orlando employers would be paying in excess of MW.
Why not let states or local jurisdictions set MW (if, indeed, it’s deemed desirable/necessary at all), based on local conditions?
Steve 35 – I suppose next you’ll tell us you actually pick up money found in the street
Actually I expected the answer would involve govt being more than — or not even primarily — a vehicle for charity. E.g. provider of essential public goods and protector of liberties; you know, things we *cannot* do (not just might choose not to do) on our own. Would that they exited the charity business entirely.
Matt 3 – meant to say before this was a clever comment tho
ColoComment 47 – of course
keshav and subspecie
It seems to me that if employers were universally forced to provide maternity leave as well as higher wages, there might be two negative effects. Risk-adjusted returns on equity for firms would fall relative to those on alternative investments such as, say, Treasury bonds. This distortion is a cost because some investors, at the margin, would now find Treasuries more appealing than stocks and change their behavior by selling stocks and buying Treasuries. Also, it seems to me that returns to labor-intensive firms would fall relative to those of capital-intensive firms. Another costly distortion.
I think the title is not quite right. These are the reasons she lost you. The reasons she lost the election? I think the root cause is an extension of her hubris and her lack of human empathy but practically speaking I think she lost the election because she didn’t go to Michigan and Pennsylvania and talk about water, she didn’t go to Florida and talk about Medicare, and she didn’t go to Wisconsin to talk about anything. Your primary concerns may be personal liberty and big picture economics (as I understand them to be,) but there is a good reason people often repeat: All politics is local. She doesn’t seem to get that, and her acolytes & advisors are a reflection of her. Sad, really.
I voted for her, and it was physically difficult to do. I did it because my priorities are environmental, international, and free-willy-ness. Very little that Trump has done since the results came in has surprised me. He can be trusted to make the worst decision possible in almost every case, and is guaranteed to fail to stand up properly to Vladimir Putin. I had no hope that she would be good, but I opted for least horrible. The Jesuits would likely not be proud of me, but I am imperfect.
What, basically, is Steve’s complaint in the main post? That Clinton couldn’t be bothered to even pretend to show respect for “people like me”.
And he’s right: she didn’t.
And he’s right that her contempt is why she lost the election.
He’s just wrong about the people she showed her contempt for: it’s a LOT more than people like Steve, and it includes a lot of people NOT like Steve.
“Do Sanders supporters (or a substantial number of them) really feel gleeful about overturning voluntary arrangements just for the sake of overturning them?”
Have you seen Sanders supporters? They were on TV at some point, defecating on police cars. You think they would not feel gleeful about imposing their point on view on other people? Hmm.
@Harold,
Getting back on Hillary vs Trump topic:
Ultimately what I think happened during the election was Hillary decided to argue with an idiot (Donald), he brought her down to his level, and then beat her with experience at being an idiot.
“I would love to agree (if that was your point), but I fear it is not so. Whilst there is something in the “fear itself” quote, it is not the whole truth. We should fear genuine dangers apart from fear.”
Absolutely not. The person who is honest in their analysis and moral compass is not going to have problems. You can clearly see these qualities in notable research papers (academic, in general business, or otherwise), and I don’t see why we shouldn’t expect the same discourse from other sources in our lives. In other words, I refuse to change the phrase to, “The only thing we should fear, is fear itself. Except for spiders and the opposite of spiders which is bats – they’re scary.”
“Indeed they should, but how often do both parties have the same goals?”
It’s pretty evidently clear that people commonly DON’T have the same aligned goals in mind. This is all the more reason why the person who is upfront, and clear about what they are wholly presenting, are to be looked at favorably. A person might not completely relate to their interests, but if a person is ACTUALLY looking to convince others not in their camp otherwise, this is definitely the best way to go about changing their minds.
I admit we live in a world where opinions and beliefs are cheap. As Steven has so evidently put it: It’s not important to get many things in life right, but don’t start thinking the accelerator stops your car – its important to get THAT right. It doesn’t help we have social communication which restricts thought to instant reactions in a 140 character limit. There is nothing wrong with this communication, but it’s a hopeless to think society is going to get anything productive done.
Those who preform not-so-honest tactics are only re-affirming preconceived biases in their population base. They are speaking to the choir, so to speak. Those who agree with them, have not changed their minds. They are just reinforcing their beliefs – they already “won” as you so put it. They are not convincing anyone outside of their closed-nit circle otherwise.
@David,
Unfortunately the idea that businesses under tight competition are just being evil, money-grubbing jerks is just as ridiculous as when other people try to blame immigration for the woes in our country.
The reality is all people face scarcity. Unfortunately some people face more scarcity than others, depending on how productive they are as people. The question should be about how we can help those less fortunate into reaching the fullest potential they have to offer. You are only hurting your argument by framing it in such a way as some devil out there to jump the average joe. It is no different or ridiculous than the xenophobic bigotry that is expressed towards other nations, and racial backgrounds.
Look, I get it. Everyone “knows” the free market is the best choice of action. Yet when people are impoverished, they tend to not like the fact that their economic well-being will be closely tied to the economic health of another entity. Next, in some cases, is the issue of protectionist policies that the big guys have already. How is anyone supposed to compete with that, if they are not following the same rules? Moreover, protectionist policies always look attractive even just for the short-run. If you’re starving today, and you can get just that one windfall, you might have the hope that you will be able to get more in the future. Yet it always ends up being an unstable mess.
Ultimately we need to look to try and give these people having a tough time better tools to make sure they are reaching their fullest potential. Not create mythical spaghetti monsters to try and explain why life sucks for a group of people.
@David,
I would also like to restate clearly the point I’m trying to get across, and I think the point Steven is trying to get across (though I don’t want to speak for him), is the framing of these debates is all wrong.
I would like to re-state: I personally don’t mind if we choose to increase the federal minimum wage or not. Though we shouldn’t phrase the debate from an immature viewpoint of basically George Bush saying, “evil do-er’s doing what evil do-er’s do.”
Instead, we should be framing the debate on recognizing the costs and benefits of increasing the minimum wage, then comparing them to other alternative policy measures. Put in another way, if increasing the minimum wage is the best way for us to help the less fortunate, then I’m all for it. However people need to recognize the real costs and benefits of these policies.
It is unfortunate that Hillary and Trump continued to go with the George Bush approach, rather than a more reasonable one. One where we present the positives and negatives in a reasonably accurate representation and compare them to other alternatives.
In short, Hillary decided to argue with an idiot, and he beat her with experience at being an idiot.
Could an argument for family leave act be: If a few people ask for it they look like bad employees, so though everyone would like it but no one wants to go first.
I really wish I could edit this, but David, regarding this comment:
“People claim that I am picking and choosing my examples, so pick any examples you wish. The highest minimum wages in the world are Australia, Luxembourg, Belgium, Ireland, France, the Netherlands, New Zealand, Germany, Canada and the U.K. ”
In Australia, overall reports show a negative relationship between minimum wages and employment within young people – which is consistent with the theoretical view – but the work done in Australia should be treated with a skeptical lens, as the numbers seem to be off. They report large negative correlations, but report that only 4 percent of workers were affected by the changes in minimum wage. Another study reports similar negative figures, but relies solely on employer responses regarding employment changes due to minimum wages.
In New Zealand, in general and similar to Australia, the research done in New Zealand shows skeptical data in the sense that there seems to be not enough data. Yet from the reliable data that we do have, it shows a negative relationship between minimum wage and employment rates.
In France, even when the common consensus of the young population being unemployed is due to the high minimum wage, the evidence is mixed. Even so, the overall research ultimately suggests a disemployment effect. The evidence is mixed because France may have a combination of labor market institutions which softens the negative disemployment effects of minimum wage. This might be a somewhat similar situation you were describing with the study you particularly found interesting.
In the Netherlands, studies were done between an economic recession and boom, which might skew the data. Also their minimum wage affects benefits (unemployment benefits) which makes it hard to isolate the effects of minimum wage in this country. Yet overall outcomes still remain consistent with economic theory.
In the UK, which is often seen as the pinnacle of the argument in advocacy for minimum wage, the data (similar to Netherlands) in favor of minimum wage should be treated skeptically. While it is true in the UK the research done on the effects of minimum wage isn’t as negative as the research done in the United States, the reports solely on the Wages Council era (which shows zero or positive benefits from minimum wage) should be treated with high degree of skepticism because the research is on narrow industries and is prone to endogenous bias. Committees of workers and owners may boost the minimum wage when the economy is healthy and reduce those wages when the economy is trying to recover, thus creating a positive bias. What we DO know is when the Wages Council was abolished, employment rates increased among youth – which is what the theoretical model predicts. Finally, little work has been done on the long-term effects of the minimum wage, which is arguably more important than the short-run research that we currently have.
Overall some common occurrences arise with regards to studies (at least in the US) showing zero to positive benefits of minimum wage. They’re done over short time-frame case studies, and are on state specific changes to the minimum wage in a particular industry.
In this 2006 paper which tries to summarize and tackle the reliable data on this subject (similar to the attempt done via consensus that was reached in the 80’s), http://www.nber.org/papers/w12663.pdf, out of 102 studies nearly 2/3rds of them give a negative relationship between minimum wage and employment. Only 8 of them give a positive relationship. Out of 33 of these studies, which particularly stand out as the most credible evidence, 28 of them point to negative employment effects (or 85 percent).
In other words, when trying to understand minimum wage as broadly as possible, the data seems to reflect the theory – there is a negative relationship between minimum wage and employment.
I believe quite firmly that she never held those views, but just moved left to appease the Sander’s supporters who live in the fantasy land of free college and maternity care. I think college should be *less* accessible because of the signaling effect/ arms race that college degrees have created in the labor market. The rent seeking behavior in labor markets is also problematic.