Economic Nonsense: UVA Student on a Hunger Strike for Higher Minimum Wages for University Janitors

Anyone who’s tried to pay a heating bill, fill a prescription, or simply buy groceries knows all too well that the current minimum wage does not cut the mustard.–Sherrod Brown

At the current $5.15 an hour, the federal minimum wage has become a poverty wage. A full-time worker with one child lives below the official poverty line.–Bernie Sanders

Nonsense

The article below has numerous fallacies. How many can you find?

http://www.washingtonpost.com/blogs/cavaliers-journal/post/virginia-football-player-joseph-williams-on-hunger-strike/2012/02/24/gIQA3berXR_blog.html

http://www.livingwageatuva.org/

What exactly are the UVA students demanding and what are the implications?  What economic laws are being ignored?  If YOU directly wanted to help these janitors but you were a broke student, what would you suggest your group do?

What can people do to raise all wages without coercion? What exactly is a minimum wage and what are the consequences of the students’ demands. Are there any unintended effects? If the students were not violating any economic laws what wage rate should they demand?

What motivates the students’ actions? Are they stupid, ignorant, noble or viscious?

If you need help analyzing this then go to Economics in One Lesson by Henry Hazlitt and read the chapter on minimum wage laws or view the video here:

http://www.youtube.com/watch?v=VD28vNVovow and go to 2 hours and 36 minute mark–interview with George Reisman.

If you want to see a commentary on the above article, read this: http://cafehayek.com/2012/02/hungry-for-attention.html

7 responses to “Economic Nonsense: UVA Student on a Hunger Strike for Higher Minimum Wages for University Janitors

  1. The wage a worker is paid with no minumum wage around is the market price for the labur he is performing. With minimum wage being a minimum price. This causes a decrease in demanded quantity and a lower number of workers in equilibrium, so you have higher wage for some and zero wage unemployed workers that would otherwise have a job.

    Second, increasing the price of labour increases the price of the product, making the bread and butter those workers purchase more expensive, and reducing the US’s ability to compete in a global marketplace. It seems minimum wage will cause only native products to be more expensive, so the same workers who is making 10$ now will probably spend it on imported products, which are cheaper.

    Third, as with almost any price control, minimum wage can cause a black market phenomenon. people who can’t find jobs because they’re not worth 10$ an hour, but just 5$. These people need money, so they will seek work at other ventures, such as stealing radio sets.

    Price controls bring nothing new and don’t create anything. all limitations take us further away from equilibrium.

    Raising wage

    • Dear Arden:

      I won’t discuss your economic arguments other than to say read, Capitalism by Reisman (in Value Vault) pages 895 to 920. If the exchange value of money is not decreasing then rising wages would hurt profits or increase a desire to substitute tools for labor, but not necessarily raise the price of goods. Yes, labor has an effect on prices but indirectly. Prices are determined by the subjective preferences of the consumer.

      However, what struck me about the students’ demands is the following:

      How is it moral to force one group–taxpayers–to pay a third group, Janitors, because of the demands of a second group, the students. Isn’t that coersion, theft and quasi-slavery? If I put a gun in your face and demanded $100 dollars from you to give to my friend over there, would it be considered theft? What do YOU think?

      Why don’t the students pledge THEIR future earnings in an indenture, bond or pool for the payment of higher wages for the janitors. When the students graduate from school and have jobs, then they can pledge in perpetuity a portion of their wages for the Janitors–now that is putting YOUR money where your mouth is.

      If raising wages by law worked then why not demand $1,000 dollars an hour for everyone, then all could be rich! Absurd. No one learns the lesson of economics and history so the SAME mistakes are repeated endlessly. I guess that is why it is WORTH learning economics–human action or how the world works.

  2. Dear John,

    I’ve read what you suggested, thanks.

    You are right about exchanging tools for labour. I should have thought of it since I know (and invest) in a company in france, and since the french limit their workers to working no more than 35 hours a week, the effect is pretty similar to a rise in minimum wage and its the plants in france are some of the most automated plants in the world.

    Regarding the students- I respectfully disagree that the students are stealing from the taxpayers, or that they are supporting slavery in any way.
    What they’re doing is just exercising freedom of speech, stopping them from doing so would be much more akin to slavery than what they’re themselves supporting. it’s not like they threatened to burn down the building.

    What the students are protesting for is more equality, and there is, I think, more than enough counterweight that supports inequality, and lawmakers are more than a little biased towards high inequality, since they themselves are mostly wealthy.

    How is this protest different from a rally opposing whale hunting in Japan? or a protest against wearing leather? this isn’t coercion or theft, it’s freedom, and the institutes in question have the freedom to respond to this as they wish. freedom doesn’t mean no interaction between groups, it means free interaction.

  3. I too am going to go on a hunger strike. My demand: Fire a bunch of janitors at UVA, marginally increase pay for the ones who did not get fired. Noble, right?

    No? That’s exactly what these students are doing.

  4. What law is there against being immoral or ignoble? Who are you to judge their morality?

    Or maybe you think we should force feed them to stop them from manipulating the fragile mind of our glorious nation?

    Freedom is the most important principle, you have the freedom not to eat, and the freedom to criticize them for not eating. Enjoy it.

  5. Dear Arden:

    I stand corrected. Yes, the students are exercising their right to free speech which I support. I believe in a society of non-coercion EXCEPT in enforcing property rights and the contracts of others and for national self-defense. I made the mistake of imputing that the students were forcing people to give up their property to another while instead they were expressing their desire for the government to do that.

    Therefore, this is what should happen to me: http://www.youtube.com/watch?v=6eXFxttxeaA

  6. Hey John,
    You’re pretty honest and freely admit mistakes, and I truly admire that.
    You in no way deserve to be treated like private pile! (hell, I wouldn’t want to be responsible for the bloody aftermath 🙂 ).

    Besides, if you and Charlene go berserk, I would have a hard time finding such a great source of knowledge, And I’m saying that after visiting and at time following more than a hundred different value oriented blogs, but true quality is hard to find even among the very intelligent group called value investors.

    I believe I’ve still got a lot to learn from you John, so don’t be so modest just yet 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.