Thursday, April 3, 2014

I2: Abolish the minimum wage

Despite being well paid for their labor, computer programmers compete with minimum-wage workers. So too does anyone who creates a machine that automates or partially automates a task requiring low-skill labor. For example, tractors and combines destroyed what would now otherwise be millions of low-paying, back-breaking jobs on farms, and self-checkout and online retail eliminate low-skill cashier jobs at stores.

Opponents of the minimum wage say that the minimum wage makes low-skill workers artificially expensive, thereby decreasing the number of low-skill jobs. The other way to say this is that the minimum wage makes automation artificially cheap, thereby encouraging businesses to invest in machinery to do our drudgery.

None of the four debaters in the recent Intelligence Squared debate “Abolish the Minimum Wage” addressed this relationship between wage rates and technological innovation. Instead, both sides argued the usual points we’ve all heard elsewhere. According to the for side, the minimum wage distorts markets by increasing prices and destroying jobs. According to the against side, the evidence doesn’t support the for side’s theory of markets, and morally we would be wrong to allow millions of impoverished people to sink further into poverty.

Even ignoring the technological consequences, I agree with the moral argument and believe it’s wrong to allow markets carte blanch to determine people’s material worth. However, many people believe free markets increase prosperity for everyone—eventually—and to such people the moral argument is on their side—i.e., it’s wrong to hinder markets. Economics being the modern world’s religion, neither side can disprove the other, and this stalemate makes the technological argument stronger. Absent winning arguments on either side, let’s at least invent cool new stuff.