> [...] overall it's probably much better off in the long term for the population.
[...] if a minimum wage is a good idea in the first place.
[...] if a minimum wage is a good idea in the first place.
"A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation."
http://www.reddit.com/r/dredmorbius/comments/2311mb/adam_smi...
http://www.reddit.com/r/dredmorbius/comments/1z5vfb/thoughts...
I mean, I'd be quite happy to trot out sources like Is there consensus among American labor economists? Survey results on forty propositions (Whaples, 1996) -- or another of the similarly titled papers in that series -- to illustrate there's a scientific consensus against the minimum wage, but worry that it's a mere two decades out of date. :P
Consensus amongst economists, is like saying consensus amongst weathermen. You need look no further than recent history. If the past 10 years (or longer if you please) have taught us anything, its that economists can be dangerously wrong. Especially if the issues are at all political.
But, that said, economists in general have been pretty consistent on a few basic principles. Supply and demand, the impact of price controls thereupon, et cetera. And if you think through enough of that you might begin to think that the EITC is a better vehicle to help out the working poor than a minimum wage (since it doesn't cause unemployment or promote unnecessary investment in automation to further damage employment unnecessarily...) It's been known to happen, anyway.
1. He's almost always grossly misrepresented in modern discourse, and little of that gets beyond the virtually wholly fabricated "invisible hand" metaphor.[1] As this passage shows, and the entire section (from which I've both quoted from at length and greatly condensed in my previous links) makes abundantly clear, Smith isn't the cut-throat capitalist he's made out to be.
2. Yes, the field of economics has in fact "moved on" from Smith. Though I'd argue that in only some cases has it actually improved on him. Failing to understand Smith's own arguments is a principle failing of much of economics.
3. Smith argues his points at (great) length and with ample examples. There remain some errors (I find Graeber's argument for the origins of money as credit more persuasive, for example). But the whole chapter on wages of labour contains much of value even 239 years after its writing.
________________________________
Notes:
1. Gavin Kennedy's scholarship on this topic is excellent http://econjwatch.org/articles/adam-smith-and-the-invisible-...
It's also a frequent topic at his blog, "Adam Smith's Lost Legacy" http://adamsmithslostlegacy.blogspot.com/2015/06/adam-smiths...
Much of the modern revival can be specifically pinned on Paul Samuelson, in whose landmark textbook it's prominently featured:
http://adamsmithslostlegacy.blogspot.com/2010/04/paul-samuel...
http://adamsmithslostlegacy.blogspot.com/2012/01/pay-attenti...
And, as a comment at the latter notes, the IH metaphor is explicitly called out as a description of an unknown mechansism:
[I]n The History of Astronomy (written before 1758) Smith speaks of the invisible hand,"to which ignorants refer to explain natural phenomena otherwise unexplainable:
"Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters"
Smith, A., 1980, The Glasgow edition of the Works and Correspondence of Adam Smith, 7 vol., Oxford University Press, vol. III, p. 49
2. For The How Damned Thing: https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
We're already subsidizing labour, but without consideration to net social benefit. That at least should change.
Sounds like a recipe for corruption to me.
There is no reason to support a minimum wage if you don't care about quality of life.
There are also others way to create high unemployment: making it very risky and expensive to get rid of mishires or to reduce headcount if the company isn't going so well. Making management more difficult once the headcount reaches a certain level (because of unions or the creation of employee boards mandated by law) -- that leads to companies trying to stay below such ceilings. Others would be salaries/pensions/benefits tied to how long one has worked for the same company -- which discourages moves to other companies (that might fit ones personality or talents better -- or that has better management). The housing market also has an influence: there might be opportunities in a different city but how easy is it to move? It is relatively easy if you rent your house or appartment. Not so easy if you own it, especially if selling it means you realize a loss. Lots of laws and regulations in a country influence the structure of the housing market (how liquid it is, what loan types are available, how many people rent instead of owning, etc.).
Sweden has a quite high unemloyment, especially for young people, and Sweden has no minimum wage.
No one is going to work for much less than they'll get from unemployment, and just try starting a company paying less than the union collective bargaining rates and see how long it takes before a bunch of thugs harass you out of business.