The Government Should Eliminate the Minimum Wage

Quick Structure NoteMy opponent was supposed to refute my original arguments from round 2 instead of defending his original arguments, which was supposed to be for this round. This round, I am going to expand on my opponent's objections to my unemployment arguments and cover as many of pro's defenses as I can in the space that I have. Voters, please do not penalize con, but I would appreciate it if he would not respond to my unemployment arguments in the next round. He is free, of course, to counter any of the claims I make against his arguments, however. Burden of ProofI think my opponent misunderstood me here. I did not mean that if I prove that the minimum wage has, at best, a net-zero effect only on employment did I meet my BoP. My point was that if I proved that the minimum wage is a net-zero or lower altogether policy should it be eliminated. There is no reason for a policy that does absolutely no good (on balance) to be enacted. Even so, I'm attempting to prove that the minimum wage is a net-loss policy anyways. Economic TheoriesI am going to cover this first as this part is going to be important when I get into discussing sources, specifically the validity of the Austrian economic view. My opponent has exclusively attacked the Austrian view, without even touching on the Chicago view, so that makes my statistics, at least, valid. I wanted to present a two-pronged approach in my argument, thus covering both methods. Conforming data to economic theories is very hard. "Contextualizing data often leads to error. .. The imperfect lens of economic theory is less than an ideal way to view the world. Thus, the output of those who see the world this way is similarly imperfect — and as we have seen, occasionally fatally so. "[1]A combination of economic theory and data produce economic models. Models are notorious for producing wildly incorrect values. This is because of the butterfly effect, a part of chaos theory. "In 1961, Lorenz was using a numerical computer model to rerun a weather prediction, when, as a shortcut on a number in the sequence, he entered the decimal .506 instead of entering the full .506127 the computer would hold. The result was a completely different weather scenario. "[2]Part of the two different results can be illustrated here. Note the very large divergence as time went on for such a small deviation: This is the inherent problem in modelling, especially in something with so many complex variables like economics. Statistics and models are definitely not an exact science in economics. Further, conforms to Popper's social science theories well. "The second way that Popper supported the Austrians was in his advocacy of situational analysis and the rationality principle for the explanation of events in the social sciences. This is practically identical to the Austrian approach, by way of praxiology, the logic of human action, with the basic principle that human beings act purposefully. Popper followed the Austrians in other ways, in methodological individualism, in the theory that most institutions arise as the unintended consequences of actions, in the uncertainty of knowledge. "[3]SourcesMy opponent misses my point. I never said that all think tank articles are unbiased and should be cited in a debate. I said that some think tank articles are reliable and should be cited. My opponent has yet to prove that every article from a think tank should be discarded as evidence by the voters. For example, I would say that this article (or book, I should say) from the von Mises institute is pretty reliable: . http://mises.org.... Some material is peer-reviewed, and not exclusively by Austrians, in the articles. As for Wiki, I do not have the space to belabour the point as much as I'd like. But, for example, their global warming article shows clear bias: . http://en.wikipedia.org.... And Wiki articles often aren't peer-reviewed or written by knowledgeable people either, so a lot of my opponent's sources fall into the same problems he points out. Finally, he claims I straw manned his "meta-analysis" argument. Sure, he cited one meta-analysis and countered one study, but by no means does this make a strong argument. For one thing, the Card-Krueger study was faulty. They used incorrect data collection methods, using telephone calls instead of payroll data. In fact, in a revision of the study using better data collection results, unemployment was found to increase unemployment. ". .. there was a significant job loss stemming from New Jersey's decision to increase the minimum wage in 1992. "[4]At this point, this debate is turning into almost a source war. This is why logical arguments are sometimes good. Statistics can rarely come to a consensus. Broken Window FallacyMy opponent makes an interesting point here. However, while he does consider some negative effects, he doesn't consider all of them. He assumes that all the rich spend is towards themselves. While that in itself helps the economy, they don't just consume. They also invest and put in capital into the economy, which is used to expand the economy and make jobs. A minimum wage takes some of this potential away. In the end, "And if we were to take into consideration what is not seen, because it is a negative factor, as well as what is seen, because it is a positive factor, we should understand that there is no benefit to industry in general or to national employment as a whole, whether windows are broken or not broken. "[5]Thought ExperimentsWhy don't firms simply give internships to everyone if MW kills jobs? Because the minimum wage doesn't allow for that either. "Condi Nast recently shut down its legendary internship program in the wake of a class-action lawsuit by two former interns who claim that the publishing giant violated the Fair Labor Standards Act by paying less than minimum wage. " These are one of the first positions to go in a minimum wage increase. [6]If the MW were abolished today, how many jobs would be created, and how much money would the state save? The minimum wage would make all contracts worth less than it illegal. "Even a low-wage job in most cases beats no job and no wages. .. Repealing the minimum wage can create permanent increases in employment and wealth. " Eliminating the minimum wage would allow for more voluntary economic interaction. [7]Labour Force ParticipationYes, the study I cited did report some uncertainty, but it is still a very viable possibility. Regardless, there is more material. "After controlling for the effects of the business cycle, per capita income, adult wage rates, and the number of teens affected by a minimum wage hike, Dr. Wessels finds that these minimum wage hikes reduced teenage labor force participation rates. These declines were statistically significant for teenagers overall, and also for whites, males, and females considered separately. Specifically, his research shows the 1978-1981 hikes reduced labor force participation by 6.85 percent (3.615 percentage points), the 1990-1991 hikes, by 4.09 percent (2.07 percentage points), and the 1996-1997 hikes, by 2.78 percent (1.31 percentage points). "[8]Gini Coefficient and Income InequalityBut what my opponent has not proved is that, assuming the minimum wage corrects some income inequality, that it would be a net benefit at that level. Then, my opponent questions my CBO study, which says that effects could be smaller or larger, and assumes they would be smaller. We can't assume that without more evidence. Further, my opponent doesn't respond well to my argument that few people who earn the minimum wage are in poverty: "As the table indicates, only 11 percent of adults living below the poverty line worked full-time year-round, and more than three-fifths did not work at all. ""The average family income for all minimum wage workers is $45,200 and their wages account for 35 percent of their total family income. " The minimum wage seems like a very ineffective way to raise the standard of living. [9][10]Unemployment StudiesMy opponent has never made much of a refutation to this point, but I will present a reliable study. "Controlling for economic performance and other unmeasured state employment trends, Sabia finds that each 10 percent increase in a state's minimum wage decreased employment for the group by 3.6 percent. And because these employment losses were not accompanied by an increase in school enrollment, they suggest that job loss caused by wage hikes is not offset by long-term productivity gains. "[11]Here is a chart descriptively showing the whole situation: The negative employment caused by the minimum wage always outweighs the positive employment and poverty effects of the minimum wage (please don't count the text). ConclusionThe minimum wage does nothing good that it doesn't cause bad. And, in the real world, the bad outweighs the good. The minimum wage is a bad policy altogether, at any level, due to the prohibitions on interactions and effectual levels, and should be eliminated. Sources[1]: . http://www.washingtonpost.com...[2]: . http://www.princeton.edu...[3]: . http://www.the-rathouse.com...[4]: . http://epionline.org...[5]: . http://www.econlib.org...[6]: . http://nypost.com...[7]: . http://www.forbes.com...[8]: . http://www.epionline.org...[9]: . http://www.heritage.org...[10]: . http://www.heritage.org...[11]: . http://epionline.org...