The Expensive Problem With the Minimum Wage
10th October 2024
Good politics leads to bad economics, which is why minarchy is the only language these sorts of people understand. Now, obviously, I would say that as some described as a “mad free marketeer” — but as was said about me on the same occasion I can spot those things that are “wrong not just ideologically but in terms of basic facts”.
The subject then was Johann Hari. The subject now is the minimum wage. The base idea of the minimum wage is that the politicians — those who kiss enough babies to have power over us — know the correct value of an hour of labour. That the value of that hour might be what someone is prepared to pay for it escapes them.
Yet the essential truth of this is obvious. As Ha Joon Chang points out, Sven gets much more for driving a bus in Stockholm than Ashraf does in Dhaka, despite the latter’s job being both more difficult and stressful. The reason is that wages in general are higher in Sweden than Bangladesh — therefore higher wages have to be offered to get the bus driven. This does not accord with political reasoning, for no one kisses babies in order to leave the world alone to get on with itself.