Friday, May 27, 2016

Minimum Wage Laws, Unions and a Certain Famous 'Road' That's Always Paved with Good Intentions

There is a famous 'road' that we all know is paved with good intentions.

But what we often don't know about that road is that sometimes even the intentions, although represented as being good by all supporters, aren't that at all when the special interests of unions are at stake.

Minimum wage laws, well intentioned sponsors and their allied labor union officials provide a solid illustration of the foregoing.

A timeless 1975 quote by the Nobel Prize winning economist Milton Friedman says the following -- 'One of the great mistakes is to judge policies and programs by their intentions rather than their results:'

"One of the great mistakes is to judge policies and programs by their intentions rather than their results. We all know a famous road that is paved with good intentions. The people who go around talking about their soft heart . . . I admire them for the softness of their heart, but unfortunately it very often extends to their head as well. Because the fact is that the programs that are labeled as being for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors intend them to have. . . .

Take the minimum-wage law. Its well-meaning sponsors—there are always in these cases two groups of sponsors, there are the well-meaning sponsors, and there are the special interests, who are using the well-meaning sponsors as frontmen. You almost always, when you have bad programs, have an unholy coalition of the do-gooders on the one hand, and the special interests. The minimum-wage law is as clear a case as you could want. The special interests are of course the trade unions. The monopolistic craft trade unions in particular. The do-gooders believe that by passing a law saying that nobody shall get less than two dollars an hour, or $2.50 an hour, or whatever the minimum wage is, you are helping poor people who need the money. You are doing nothing of the kind. What you are doing is to assure that people whose skills are not sufficient to justify that kind of a wage will be unemployed. It is no accident that the teenage unemployment rate—the unemployment rate among teenagers in this country—is over twice as high as the overall unemployment rate."

Summing Up

Friedman said that in 1975.

The more things change, it seems to me, the more they stay the same.

That's my take.

Thanks. Bob.

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