Labor and employment roundup

by Walter Olson on February 28, 2013

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Advice Goddess Blog
02.28.13 at 10:42 am

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1 William Nuesslein 03.02.13 at 11:21 am

The back and forth about minimum wage has fascinated me for decades. The answer to it comes from the evolution of government.

Consider a river valley with rich soils. As elevation rises on either side the soils become less productive to the level that would barely support habitation – the subsistence level. People above that level would have to raid those in the valley to keep alive. Those in the valley would have to devote resources to defense. A government could tax those in the valley, defend them from attacks, and transfer wealth to those at or above the subsistence level. (nowadays “below” subsistence applies, to increase the carry capacity of the valley.

To the extent that low wage workers will substitute employment for the doll or robbery, total productivity increases. To the extent that price discovery is impeded, productivity decreases. Thus the mixed results.

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