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Murray Rothbard vs. Paul Krugman on $9 Minimum Wage

One of the big progressive talking points coming out of the President’s recent “State of The Union” address is his proposal of once again raising the Federal minimum wage, this time to $9. The minimum wage is one of many political proposes designed specifically to make anyone that opposes it look like greedy and heartless. Why, who can argue that people should be able to make enough money to meet their needs? Why surely $9 is a reasonable amount of money to pay someone, the argument goes, and if you oppose that, well then you just must be a heartless soul who doesn’t understand the plight of the “working man”!

In defense of policies such as these, liberals will often trot out their favorite Nobel Prize Winning Economist, Paul Krugman, so they can point to him and say “Hey, Stupid! This guy won a NOBEL PRIZE! You’re just some libertarian blogger, how you gonna argue with THAT!”. And right on cue, there is a post from Paul Krugman’s blog “Conscience of a Liberal” currently being spread around the social media that deals with the minimum wage issue.

From the top Krugman takes the wrong approach, attempting to disprove simple logic through empirical studies:

So what should you know? First, as John Schmitt (pdf) documents at length, there just isn’t any evidence that raising the minimum wage near current levels would reduce employment. And this is a really solid result, because there have been a *lot* of studies. We can argue about exactly why the simple Econ 101 story doesn’t seem to work, but it clearly doesn’t — which means that the supposed cost in terms of employment from seeking to raise low-wage workers’ earnings is a myth.

As Bob Wenzel recently explained on his blog Economic Policy Journal, it is fallacious to attempt to use empirical studies to prove or disprove something that is based on irrefutable logic. Wenzel sums it up in his typical hard-hitting no-nonsense fashion:

The simple fact is that if you force people to pay more for something, they will buy less of it.

There are no empirical studies that can refute this. It is pure logic. And no empirical studies are needed to prove the argument. They can’t.

Anyone using empirical data to try and prove or disprove logic is a quack.

Not to let Wenzel take away the spotlight from the real star of this weekly feature, here is Murray Rothbard on the minimum wage from his book, Making Economic Sense:

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Granted

The minimum wage is government force, and thus immoral.

But general economic principles of free markets probably do not work in immoral mixed economies like we have anyway.

So how do we get from here to there without revolution ?

Which immoral use of force do we remove first, given that you can't remove them all peacefully at once ? Wage controls, or taxes, or government implemented monopolies, or restriction of travel.

I don't

think there's an order or a method to remove immoral governement force. As Ron Paul says, the hearts and minds of the people must change first, then the politicians will follow. You can't fool people into rejecting the State's initiation of force. Once the people understand the benefits liberty provides in creating a prosperous society, then they will reject coercive government force. Education is the key, implementation is secondary.

Incrementalism

Towards liberty requires the correct sequence.

Its nice to assume that society will have an epiphany, but that's not realistic - not anytime soon anyway. We have to live in the world we are in, and move it toward liberty the best we can. What's the point in stopping one group from using government force to their advantage while another group goes on freely using force - it gives one group an advantage.

I am

in favor of incrementalism towards liberty. When you talk about rating importance that's tough to do, because so many issues are intertwined. Anything that lessens tyranny I would be in favor. I never mentioned society having a magical epiphany. Simply stating that education, including self education, in the ideals of liberty is of the utmost importance.

I don't see how agreeing with a purely Statist tactic, like price fixing, is somehow going to advance liberty.