This week’s “Daily Journal” guest columnist is George Leef, Vice President for Research at the John W. Pope Center for Higher Education Policy.
Recently, proponents of an increase in the federal minimum wage sought to boost their case by releasing a letter signed by 659 economists in support of the increase. The minimum wage enthusiasts thought they had scored a big plus for their side, since opponents of the minimum wage usually refer to the harmful economic effects that this (and any other form of price control) has.
One economist who did not sign is Professor Daniel Klein of George Mason University. After reading the letter, he contacted all the signatories to inquire as to their reasons for advocating the minimum wage increase. Klein also asked another question: Did the individual regard the minimum wage law as coercive? Ninety-five of the economists replied to Klein, and more than half of them stated that they did not see the minimum wage law as coercive “in any significant sense” (Klein’s wording). Maybe it isn’t “significant” to those economists because they don’t employ workers at all and therefore aren’t affected by the law. In any event, Klein was prompted to write an essay titled “Economics and the Distinction between Voluntary and Coercive Action.”
Klein contends that the minimum wage law is coercive, writing “the minimum wage law (and concomitant enforcement) threatens the initiation of physical aggression against employers who pay less than the minimum wage. It threatens physical aggression against people just for engaging in certain kinds of voluntary exchange.” When a minimum wage law is enacted or the level of the wage increased, the government is ordering all employers either to pay all of their employees at least the minimum or else to discharge workers whom they can’t or won’t pay that amount; act otherwise and they’re subject to legal prosecution and punishment. That certainly seems to fit the definition of coercion. My dictionary defines coercion as “restraint, hindrance, especially by legal authority; compulsion; force.” And yet, a majority of the pro-minimum wage economists in Klein’s sample think that the minimum wage is not coercive, at least in any “significant sense.” They’re certainly familiar with the meaning of the word, so what’s the explanation?
Klein says that pro-minimum wage people are apt to conceal the coerciveness of the minimum wage (as well as many other mandates and prohibitions they favor) by adopting a worldview with the central idea that “the polity is one large voluntary organization, and its rules are entered into by consent. No one is forcing you to stay. Thus, when the government imposes a minimum wage law, it is not treading on your property or freedom, it is merely rearranging the rights that define your property.” So because the employer supposedly consents to the state by not leaving, he isn’t really suffering any coercion when the state orders him to pay workers more.
This idea that since we are all part of “society” and therefore need to obey its rules is crucial to the response essay to Klein, written by Professor Liam Murphy, available here. Murphy, whose adoration of the state and indifference to private property is plain in his book The Myth of Ownership (co-authored with Thomas Nagel), attempts to turn the tables on Klein, contending that coercion is a very “indeterminate” concept making it impossible to say whether a contract freely entered into is or is not coercive. He writes, “It could be argued that any contract of labor that pays less than a certain socially recognized minimum is coercive because uncoerced exchange occurs only when people have a range of options consistent with some standard of minimally fair social interaction.”
Thus, enacting a minimum wage law does not entail coercion against those who employ workers; in fact, it is necessary to prevent the “coercion” that happens when a worker has to take employment in a market that isn’t regulated in such a way as to ensure that everyone benefits from “minimally fair social interaction.” Coercion no longer depends on one person using force against another, but whether a large number of other people approve of a transaction.
So when Big Company makes Joe Smith an offer to work for it for $5 per hour and Smith accepts because that’s his best current option, according to Murphy, that’s coercion. There has been no force or threat of force, but nevertheless, it’s coercion because the transaction involves payment below a “socially recognized minimum.” When a sufficient number of politicians decide to heed the demand of the electorate for “minimally fair standards” and enact a minimum wage law, that law isn’t coercive, despite the fact that it entails threatening people with harm. As Orwell pointed out, the manipulation of language is very important to those who want to control others.
There’s a lot wrong with Murphy’s notion on public choice grounds. Politicians don’t know what “society” thinks and are prone to doing whatever vocal and well-financed interest groups want them to do. The main point I want to make, however, is that this idea, so redolent of Rousseau’s belief that people need to be “forced to be free” by living in accordance with the “General Will,” is playing with fire. If it’s right for the state to force employers to obey a minimum wage law because most people in society supposedly disapprove of lower wages as “unfair,” then it’s also right for the state to impose any other law that compels obedience to any other supposed societal norm. If “society” believes that it’s harmful for people to make or consume alcoholic beverages, the state should then prohibit alcoholic beverages. The advocates of prohibition could look to Professor Murphy to support their argument that no coercion (at least no “significant” coercion) is involved.
All right – we’ve already done that, and it didn’t work out very well. How about this: Let’s suppose that “society” comes to believe that potato chips (with or without trans-fats) are just too much of a health risk to allow people to eat them. They contribute to obesity, are not necessary in any way, and since people with weak wills have a hard time resisting them, offering them for sale “coerces” people into buying them. A law banning potato chips would just be a means of ending that coercion and making companies behave responsibly in accordance with society’s standards. The potato chip makers who are forced to close down have not been coerced, of course.
Now suppose that a wave of anti-intellectualism sweeps through society. Most people come to believe that our way of life is being ruined by “perfessers and their damned books” because they lead young people astray. Obedient to the desires of society, politicians enact laws that close down universities and forbid former professors from teaching or writing. Is this coercive? No, the state is just acting to protect society’s standards! At this point, Murphy and the economists (most of whom probably are professors somewhere) might feel coerced when their offices are padlocked and their paychecks cease. They shouldn’t feel that way, though. The state is merely instructing them to do something else that doesn’t conflict with society’s standards. Murphy and the others might object that their books and teaching are none of anyone else’s business, but that can be said just as well about employment contracts between employers and employees.
Let’s go back to the meaning of the word. Using or threatening to use force against someone is coercion. It may or may not be justified. When a rapist is sent to prison coercion is involved, and scarcely anyone other than the rapist thinks it is unjustified. When the government threatens punitive action against an employer for not giving workers a raise, that’s coercion. In my view, it is unjustified, morally wrong, and will have bad consequences – not the least of them that coercive laws tend to beget more coercive laws. Others will disagree and contend that a minimum wage law is justified.
That’s all right, but let’s not destroy the meaning of a very important word in the process. If you tell people that there is no coercion going on where there plainly is, that shifts the debate in favor of coercive policies. Even if there isn’t a societal norm against such legerdemain, there should be one among scholars.