Tuesday
by Jeffrey A. Tucker writing for A.I.E.R.
All this talk of a $15 national minimum wage prompted me to revisit the standard textbook on economics of the US Progressive Era. Principles of Economics, by Frank W. Taussig (1917) is a pretty interesting book overall and it does hold up in general as an elucidation of then-existing knowledge and pedagogy.
There is one section, however, where the author really goes off the rails. He is discussing labor policy and a “compulsory minimum wage rate.” There was no such national law at the time (that didn’t arrive until 1933) but Professor Taussig made the case for one.
For him, this was not about lifting up the poor or increasing wages for everyone. He saw it as a tool for including and excluding workers based on whether and to what extent the people in question should even be part of the labor pool.
As he plainly says, the purpose of the law is to “regulate the plane of competition” so that “one one could undersell the others by cutting below the established rate.” Workers whose productivity fell below the minimum would simply be excluded from the workforce: “It would be impossible to compel employers to pay the minimum to those whose services were not worth it.”
To him, this is a feature, not a bug.
Read it all HERE