Lind’s misleading language about wages.
To follow what I’m about to say, it’s best to start with Michael Lind’s recent article titled “Libertarians’ Big Lie on Wages,” Compact, May 9, 2023, and then read Don Boudreaux’s critique of it.
Don’s critique is quite good. I noticed a few things, though, that he didn’t comment on.
It’s clear from context that Lind is discussing the minimum wage and so that’s the issue Don addresses. But what I noticed is that Lind subtly biases the case against libertarians by claiming that they are against higher wages for workers. Lind starts with:
Are higher wages bad for low-wage workers? One of the most common arguments against higher wages and better benefits for low-income workers is the assertion that, while higher wages might make some workers better off, by making the goods and services that workers provide more expensive, those higher wages will make other low-wage workers worse off as consumers.
Do you see the term “minimum wage” in there? Neither do I. As I said above, it’s clear that Lind is discussing the minimum wage but you wouldn’t know it from the opening paragraph. Who would be against higher wages and better benefits for workers when they result from free markets? Indeed, that is the history of the last approximately 200 years. Workers’ wages have risen, with dips during recessions and depressions. And free-market economists, many of whom could reasonably be called libertarians, have been among the most vociferous cheerleaders for these higher wages. As we have pointed out agains and again, the average worker in the United States is much better off than he/she was 40 years ago, was much better off 40 years ago than 40 years before that, etc.
But what Lind does is make the careless reader think that we are a bunch of misanthropes who want workers not to be better off.
And notice this:
This kind of brazen promulgation of an obvious falsehood is typical of libertarian propaganda, which is a mishmash of dubious assertions and outright lies: Higher wages hurt those whom they are meant to help; free trade always and everywhere benefits both sides; mass immigration has no effect on wages; high CEO salaries mysteriously don’t lead to price increases, but slightly higher wages for low-wage workers always do; and so on. (italics added)
The reason I italicized the clause above is that the part about high CEO salaries is like the issue of higher wages but is not like the issue of higher minimum wages. Free-market economists don’t generally have a problem with high CEO salaries that come about in a free market just as we don’t have a problem with, and even strongly favor, higher wages for low-wage workers that come about in a free market.
Were Lind to make his point straightforwardly so as not to mislead the reader, the italicized part would have to be “high CEO salaries dictated by law don’t lead to price increases, but slightly higher minimum wages for low-wage workers always do.” But in that case, he wouldn’t find many free-market economists holding that view. Most of us would say that a government that made CEO pay higher than the market pay would lead to price increases, however small. But then Lind’s rhetorical point would lose its power.
Lind generously throws around the word “lies” to refer to thoughts of people who disagree with him. I won’t reciprocate. But I will say that Michael Lind is very confused and that if you don’t notice his rhetorical switch, you will be too.
READER COMMENTS
MarkW
May 10 2023 at 8:25am
But what Lind does is make the careless reader think that we are a bunch of misanthropes
No surprise there — that IS the standard leftist rhetorical move against libertarians (e.g. that they are cold, selfish people who don’t care about others — even worse than Republicans!). That’s as opposed to the standard rightist rhetorical move against libertarians (that they are atheist cosmopolitan libertines — even worse than Democrats!)
robc
May 10 2023 at 10:08am
And both sides are right about us!
Except both have bad metrics to determine better or worse, so get it backwards.
Andrew_FL
May 10 2023 at 8:53am
Quoth Ludwig von Mises: “The only means to raise wage rates permanently for all those eager to earn wages is to raise the productivity of labor by increasing the per-head quota of capital invested and improving the methods of production. Hence, the liberals conclude that the economic policy best fitted to serve the interests of all strata of a nation is free trade both in domestic business and in international relations.”
robc
May 10 2023 at 10:08am
Lind’s first paragraph is a Motte and Bailey.
Thomas L Hutcheson
May 10 2023 at 1:04pm
I absolutely agree that Lind’s points are tendentious and wrong.
I think it would help avoid misunderstanding (or the pretense of misunderstanding) if people who argue against minimum wages citing the costs to workers of the lower employment entailed would point out that wage subsidies or a higher EITC could raise low wage workers incomes w/o reducing employment.
Don Boudreaux
May 10 2023 at 3:37pm
Mr. Hutcheson: What purpose would be served by pointing out that if government subsidizes something – in this case, the employment of low-skilled workers – more of that something occurs? Surely no EconLog reader needs to be informed of this reality.
The point of stating and restating the ECON 101 prediction about the employment effect of minimum-wage legislation is that most proponents of minimum wages either ignore or deny this effect. Until and unless this reality about minimum wages is understood and accepted, any further discussion about minimum wages or the market for low-skilled workers is extracurricular, and, indeed, likely to be confusing.
Further, any such discussion as you recommend implies (or strongly suggests) a concession that unsubsidized wages for low-skilled workers are too low. Yet on what basis should we believe the market here to fail? What good reason is there for the state to subsidize the employment of low-skilled workers? What prompts you to believe that the market wage for low-skilled workers is – or would, in the absence of a minimum wage, be – ‘too’ low? Do you believe that the market price of, say, bottled water is too low? The price of toothpicks? The price of a Boeing 787 jetliner? The wages of plumbers? Of cardiovascular surgeons?
If there were constant clamoring by the economically ignorant for a minimum price of toothpicks or a minimum price of 787s, and economists responded to this clamoring by noting that forcibly raising and keeping these prices above equilibrium will reduce the quantities demanded of these products, would you feel obliged to scold these economists for, at the same time, failing to point out that combining government subsidies of toothpick purchases or 787 purchases with the price floors can cause there to be no reduction in quantities demanded?
Tim Worstall
May 10 2023 at 1:25pm
I’d also mutter something about this:
“Had Worstall, a senior fellow at the London-based Adam Smith Institute” and “Year after year, decade after decade, generation after generation, libertarian pseudo-scholars in pseudo-think tanks and pseudo-academic programs are paid by rich donors to repeat the same trite talking points that have changed little since the days of Friedrich von Hayek, Ayn Rand, and Milton Friedman. At the same time, there is little or no funding for scholars on left, right, or center who can refute the pseudo-scholarship of the well-funded libertarian propaganda apparatus. I wonder why.”
Lind is a presumably well enough paid professor at UT Austin. Being a Fellow – whether Senior or not – at the ASI is an unpaid position. I make my living from freelance journalism. I do not receive a salary from anyone and in 42 years of working life I pretty much never have.
But that’s just me muttering to myself.
David Henderson
May 10 2023 at 1:50pm
Thanks, Tim. I regret that I didn’t hit this angle in my piece. I’m glad you added your important comment.
It is ridiculous to see how often Lind et al attack us for being paid for something, for two reasons. First, often we aren’t paid. Second, even if we were, that has zero to do with whether what we say is true. It’s as if Lind et al never studied material fallacies in their logic class.
Tim Worstall
May 11 2023 at 3:18am
One of the books I did read – as it was written by the President of the ASI, Madsen Pirie – was on logical fallacies. Where “poisoning the well” is a special case of the ad hominem argument. One of those rhetorical tricks that is efficacious and also false.
Richard W Fulmer
May 10 2023 at 3:08pm
Lind has been a critic of libertarianism for some time. His piece, The Question Libertarians Just Can’t Answer, appeared in Salon back in 2013. His “unanswerable” question is:
One response is that, in a world with multiple predatory nations – Russia, China, Iran, and Venezuela spring to mind – professional militaries are necessary for survival.
Another answer is that, in a world of imperfect people, no nation has ever been a perfect example of any economic system: mercantilism, capitalism, socialism, or communism. However, we do know that nations whose citizens are more free tend to be more prosperous than nations whose citizens are less free.
Lind dismisses this argument by pointing out that that not even the freest nations approach the libertarian ideal. And those that come closest tend to be city-states and small countries.
Ignoring his own dismissal of small countries as practical examples, Lind uses Mauritius – a very small island nation of less than 1.3 million people – to put the icing on his case. Even though in 2013 Mauritius ranked above the U.S. in the Heritage Index of Economic Freedom (8 vs 10), the country had a lower literacy rate (88.5% vs 99%), a higher infant mortality rate (11 deaths per 1,000 live births vs 5.9), and a higher maternal mortality rate (60 deaths per 100,000 live births vs 21). Lind charged that:
What Lind didn’t mention was that Mauritius is a very young nation. A British colony until 1968, the African country became a republic in 1992. After the country’s failed “socialist experiment” in 1982-1983, the economy was freed – not just from government regulation, but also from a sugar industry that had largely controlled both the economy and the government. The result has been called “the Mauritian Miracle.” Its median income is currently more than twice that of any Sub-Saharan African nation. Far from perfect, but hardly justifying Lind’s sneers.
David Henderson
May 10 2023 at 3:15pm
You write:
I guess Lind must think that being free for only a few decades is enough to catch up to the United States. So this makes me think that, on top of everything else, he doesn’t understand growth economics.
David Seltzer
May 10 2023 at 5:33pm
Richard,
“Why are there no libertarian countries? If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early twenty-first century is organized along libertarian lines?”
I suspect Mr. Lind either avoided discussing Hong Kong or was ignorant of her history prior to the hand over in 1997. Mainlanders fled Mao’s policies to Hong Kong in the early 1960’s. Under British rule, officials seldom interfered. There were no social programs for newly settled residents. Citizens were to rely on their skills, their families and were blessed with an international port where trade blossomed. Milton Friedman often referenced Hong Kong as one of the world’s freest cities. Prior to the handover, personal and economic freedoms were amongst the highest in the world. After the handover; by tragic contrast, the CCP soon cracked down on the liberties of HK citizens. They imposed security laws which gave them enough power to punish critics and quash free speech. While not a classic libertarian society, it was a superb model of free market enterprise. Side note. I’ve lived in HK off and on over the years from 1963 to the present. The economic engine that was HK lifted so many out of poverty and yes, Mr. Lind, produced billionaires who innovated and employed.
nobody.really
May 10 2023 at 5:00pm
An excellent–indeed, irrefutable–point. According to the Bureau of Labor Statistics, in 2021 the average worker was 41.7 years old.
(Compare: “Four times every second, somewhere in the world a woman is giving birth. This woman must be found and stopped.”)
Monte
May 10 2023 at 7:09pm
Apart from their (almost) universal opposition to the minimum wage, libertarians aren’t nearly as unequivocal in their support for free trade and open borders as Lind alleges.
Lind’s ad hominem use of the “pseudo” prefix only weakens his argument, although I do agree with his “trite talking points” comment. The problem for him is that the ideas of Hayek, Rand, and Friedman are every bit as forceful and applicable today as ever, no matter how trite they may be.
Airman Spry Shark
May 10 2023 at 9:09pm
As soon as I got to
in Lind’s screed I almost abandoned the effort of reading on; anyone who pontificates about “fair” returns (or similar) is fundamentally unserious.
Tim Worstall
May 11 2023 at 3:23am
We can also comfort ourselves with this from Paul Krugman:
“One of America’s new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an article in Harper’s about international trade, which contained the following remarkable passage:
“Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs — an abundance of the sort created by the globalization of the labor pool for US-based corporations.” (Lind 1994: )
What is so remarkable about this passage? It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue.”
That’s from 1996: https://web.mit.edu/krugman/www/ricardo.htm
Not much changes, eh?
MarkW
May 12 2023 at 10:50am
1996? I didn’t remember that Krugman had gone to the dark side that early.
Neil S
May 12 2023 at 11:51am
Krugman was still an economist in 1996. The third paragraph above is a direct quote from his essay which was directly challenging those opposed to free trade.
MarkW
May 12 2023 at 3:46pm
Ah, OK — I was under the impression he was praising Lind at that point. It wasn’t clear to me where the Krugman quote ended and Tim Worstall resumed. Apparently the whole thing is Krugman. So my apologies to the Krugman of 30 years ago.
Daniel Klein
May 11 2023 at 5:59am
Bravo to David, Don, and Tim for working to make Lind and the outlets he publishes in accountable for his words.
Knut P. Heen
May 15 2023 at 12:23pm
Walmart has 2.3 million employees. Suppose the CEO earns 23 000 times the average employee (I think the current CEO earns much less than that). Would that have a substantial impact on the cost of Walmart? It is one percent of the labor cost. Increasing the wage for everyone else by only 1 percent would have the exactly the same effect as paying the CEO 23 000 times the average employee on the cost side. The reason we don’t pay much attention to the level of CEO pay is that it is only one person and getting the right person may be important. Paying the CEO 50 percent too much is a bad business decision, paying the rest of the employees 50 percent too much is bankruptcy. Lind needs to calculate before writing. CEO pay is not a significant fraction of a corporation’s costs.
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