EA: The Human Story

[Chaerophon]

Artificially increasing the cost of the labor force will artificially decrease the demand for it ... an economy that is allowed to work itself out (be it through unions or just people/companies working together more or whatever) is much more effective at raising wages.

Keep believing in that myth. Economic science is like physics, except that in economics, you can never account for all of the variables. Given that the first law on which your little soundbyte depends is that 'there be no monopolies', I would say that if we applied your theory in practice, we would see the Wal-Mart's of the world driving wages to obscene new lows. Economic theory argues that monopolies cannot exist under laissez-faire because a competitor willing to lower profit margins in the interest of increased market share will always break them up. Economic practice demonstrates otherwise. Because of their dominant market share, refusal to allow workers to unionize and wholesale purchasing, they can lower prices to sub-cost levels for months at a time, driving competitors out of business. Once you're the only game in town, wage levels are whatever you want them to be. Take it or leave it. Hell, they'll employ debt-contracted Guatemalan slave labour (not wage-slavery, SLAVE LABOUR) in Mexico if they can get away with it. Not a myth, it is well-documented from academic sources. It's nice for legislation to fall on the side of the worker once in a while.

Minimum wage laws are a relatively small input as far as causes unemployment go. Those pushing to eliminate the minimum wage are not in it for the good of all - wages lower than the minimum are generally not enough to survive on, and if they really cared, they'd probably be paying a fair wage in the first place. Profit-margins among major corporations since the '70's have increased dramatically while average wage levels have actually fallen in real terms. Monopoly control allows firms to act as price setters on labour rather than price takers, and that is not what economic theory argues should be the case. The best economists, just like the best political scientists and philosophers, are the ones that realize the differences between theory and practice (James Tobin comes to mind). As the famous quote says (or something like this): "There has never once been an economist who had to worry about where he was going to get his next meal."