Introduction to Microeconomics – 6 of 14 – Government Licensing and Minimum Wage – Murray N Rothbard

INTRODUCTION TO MICROECONOMICS
Presented by Murray N. Rothbard in 1986 at New York Polytechnic University. Recorded by Hans-Hermann Hoppe.

6. Intro to Micro: Government Licensing of Industry and Minimum Wage

The peanut butter crunch was in 1980. Crop acreage and production was cut down by 45% by government price support, import quotas, and cartelizing of the industry. The price of peanuts more than tripled. Farm price supports also keep cheese prices above market levels. The minimum wage law imposes a wage above the laborer’s discounted marginal value product. The supply of labor exceeds the demand, and the unsold surplus of labor services means involuntary mass unemployment. Low paid workers are screwed by minimum wage laws.

Part 6 of 14. Presented in 1986 at New York Polytechnic University.

This lecture as a Podcast: http://enemyofthestate.podomatic.com/

Sourced from: https://mises.org/library/introduction-microeconomics

Source: Introduction to Microeconomics – 6 of 14 – Government Licensing and Minimum Wage – Murray N Rothbard – YouTube

http://www.readrothbard.com/introduction-to-microeconomics-6-of-14-government-licensing-and-minimum-wage-murray-n-rothbard

TRANSCRIPT

00:00
a little farm question and I promise to
00:03
tell you about peanut butter the this is
00:09
an article in Newsweek on early nineteen
00:12
eighty-one the big peanut butter
00:14
shortage hip the the headline was the
00:18
peanut butter crunch okay well unless a
00:22
lot of people get pay a lot of money for
00:24
thinking of a line like this anyway what
00:30
happened was that there was a big
00:31
drought in 1980s summer peanut crop
00:33
which is mostly in Georgia of course and
00:35
other parts of the South the peanut crop
00:40
was cut by forty five percent riot on
00:45
the peanut crop on down by 45 per
00:49
sandwich of course I yeah a pretty
00:50
drastic Japan agency and this of course
00:56
means that you know with price on the
00:58
y-axis quantity x axis all of a sudden
01:02
have a huge fall and a big tendency a
01:09
big increase in price of course the
01:15
midget in addition of that will supply
01:17
even cut anyway by marketing orders by
01:19
my Anchorage control all the rest of it
01:22
in other words this is a this is a big
01:23
increase in the free market price with
01:26
huge amount of Kart Eliza ng by the
01:31
government and price supports keeping it
01:34
up there all estimates there’s only had
01:35
been very high prices again with all of
01:37
a sudden have this big drop in
01:38
production the prices of the grocery
01:44
store went up by 75% even bumbling in
01:47
other words quantity went down by forty
01:50
five percent and retail price you live
01:52
from 75 or 7 100 so of course this
01:56
stimulated immediate hoarding of peanut
01:58
butter if you see the prices going up
01:59
you’re trying to grab it before it goes
02:01
up even further the wholesale prices for
02:08
top-quality peanuts which has been 1979
02:13
for two 55 hours of ton by 1980 it means
02:19
one year later I was fifteen hundred and
02:22
ten dollars a ton that’s almost tripling
02:25
more than tripling of the price of
02:27
top-quality peanuts because there’s
02:28
different grades of peanuts and actually
02:30
the top quality ones of them or the
02:33
scarcest so the big losses for peanut
02:36
farmers a big unemployment the peanut
02:40
crops that sort of thing so to keep the
02:44
price up there has been this should go
02:46
before this hit ahead Ben rigid not only
02:49
big price improtant not only big
02:51
production controls and a creation trove
02:53
but force big import quotas there’s a
02:55
lot of foreign countries produce peanuts
02:56
and so for example as a rigid maximum
03:01
import quota and 102 million pounds of
03:09
peanuts and which is really almost
03:14
nothing I don’t know what the total
03:15
production is it’s like 10 times out of
03:17
map leads so so after many months of
03:21
frantic pressure by the peanut butter
03:22
and nut processors Association mainly
03:25
Skippy and all these other people were
03:27
yes i don’t i’m not really a peanut
03:30
butter eater I knew all the brands no
03:33
you’re right after money mud service
03:36
yeah thank Jesus we can’t get any
03:38
peanuts or the paisas double and triple
03:40
on that the US the part of Agriculture
03:42
finally agreed they let in 200 million
03:46
pounds of peanuts but only temporarily
03:48
and only for you first few months not of
03:52
course permanently so the whole thing
03:53
was too little and too late to try to
03:56
sauce alleviate the peanut crisis the so
04:02
what you haven’t and the peanut peanut
04:04
business you have small plot you guys
04:06
the acreage control and production
04:08
control TK maximum acreage of 1.6
04:11
million acres marketing every every
04:14
former every individual former is a
04:15
maximum quote I can’t produce more than
04:17
X amount of pounds of peanuts and it’s
04:19
originally in force and you can do that
04:21
i guess the peanut business because it’s
04:22
fairly concentrated in georgia it’s not
04:24
like all over the country like wheat
04:25
with
04:25
we did or tomatoes or something like
04:28
that so as a result of all this you’ve
04:31
got very tight restriction of supply and
04:35
I cover that they came a drought fitly
04:38
the crop failure so so they finally
04:47
alone next season for example of the
04:49
maximum growing allotment acreage
04:51
allotment a regular one with 1.6 85
04:55
million acres other words this was the
04:57
maximum amount of acreage and no other
05:00
acres could go under to become peanut
05:02
because the usual thing is we have a big
05:03
peanut failure the next year they grow
05:04
more peanuts and you know responsibility
05:06
increased prices yeah increasing supply
05:09
year to none on couldn’t I couldn’t do
05:12
that was illegal the illegal have been
05:14
grown more than this map this number of
05:16
acres so finally Department of
05:19
Agriculture graciously allowed to have
05:20
to increase at the 1.7 million a big
05:23
deal that was their big concession
05:26
101,000 35,000 increase of acres wasn’t
05:30
even that theme was done after a lot of
05:32
pressure a lot of Astaria a part of the
05:34
peanut users so and the marketing quotas
05:37
went up by five percent the amount the
05:40
production quotas went up by five
05:42
percent the acreage Kota went up by
05:44
almost nothing may how did whatever you
05:46
see yourself less than one percent
05:49
increase so in other words even after
05:52
the big scarcity increased scarcity
05:54
shortage no less than tripling of a
05:55
price it still very very reluctant even
06:00
have a temporary increase in aqueous
06:02
urine or in production there’s also a
06:05
big cheese thing which I used to know
06:07
more about this it’s a big they’re very
06:09
strong farm price supports for butter
06:12
and cheese is enormous amount of cheese
06:14
which is store to warehouse all of a
06:16
country make millions of pounds unused
06:18
that’s there nobody uses then they can’t
06:20
sell them because it was with lower the
06:22
price so all these things these are vast
06:25
distortions in the economic historians
06:27
of resources for the benefit of a few
06:29
farmers few large farmers and warehouse
06:32
men and an apartment agriculture
06:34
bureaucracy it’s about it most of us
06:36
have to sweat
06:39
for it as I mentioned payment in kind
06:42
the pic program which is Reagan
06:45
administration contribution or less than
06:48
lately they can unload the way of
06:50
unloading some surplus me unload week
06:52
surplus or a concert buses if the
06:54
farmers agreed to cut their acreage and
06:55
a half and you give them free your
06:57
surplus then they can sell it so this is
06:59
another another crazy setup it simply
07:03
makes this thing worse then cuts
07:05
production further the here’s just the
07:15
state and concluding article on pick
07:17
which conclusion the article which says
07:19
excluding some short run gains to
07:21
foreign labor and farm operators large
07:23
landowners and US Department of
07:24
Agriculture personnel are the major
07:26
assistance of pic Laura Jeff’s
07:28
landowners will gain by the supply of
07:30
land is relatively inelastic
07:32
consequently one percent increase in
07:34
return until you know the farmland will
07:35
be matched by one percent increase in
07:37
the market price of such land because
07:39
land values will rise that more than
07:41
what it without pick because the major
07:45
winner is a USDA person now which
07:47
requires administrative staff and more
07:48
employment for agriculture your
07:51
bureaucrats anyway the form as I
07:54
mentioned when I found the farmers are
07:55
now are wheeling again because they want
07:57
to the heavy debt when during the boom
08:00
period speculating on large increase
08:02
permanent increases in their land value
08:04
and price fell since the recession came
08:08
of course this means that there have to
08:09
pay heavy devil lower price font font
08:12
products and again they’re being they
08:15
allowed by market US government why my
08:17
bankers which bail out the banks which
08:19
would turn bailing out the former but no
08:20
enormous amount of wailing about this is
08:27
the basic form question are still some
08:29
crops if you’re not under control i
08:30
think i think vegetable crops very
08:33
difficult controller all over the place
08:35
tomatoes and lettuce things like that
08:36
are relatively free market the rest of
08:39
the most of the rest of the crops are
08:41
and miserable shape and get and getting
08:44
worse for them network of competing
08:46
subsidies controlled restriction or less
08:48
of it that’s basically a far ? sioners
08:52
will not get better at
08:53
goes on and though the no political
08:54
groups needs would be willing that like
08:56
bike the bullet on the society on so and
08:58
they all this stuff and go over to free
09:00
market we now come to the next major
09:08
example of minimum price control yeah no
09:34
no no right ah I don’t see how that’s
09:44
exactly the same me yeah look because of
09:47
being a bidding up the lamb prices for
09:49
the platians of dunya and I’d be
09:51
something yeah yeah lanten yeah Aslan
09:55
get some overs lannier let’s put it this
09:57
way gland get subsidized price of the
09:59
land it’s more valuable like tobacco and
10:01
beautiful example of e everybody has to
10:03
write down the government right that
10:05
grow tobacco in your land for the right
10:06
is worth a lot why can be so like a man
10:09
acting today so as the right gets worth
10:12
more of course you’re a lot to buy into
10:14
it yeah this is by the way happens in
10:16
general monopoly return this is example
10:18
of monopoly return rights to grow
10:19
tobacco’s work a lot but four thousand
10:22
dollars an acre or something the new guy
10:23
buying tobacco laughs an old guys only
10:25
wants to sell out the new guy then this
10:28
pay so much and he doesn’t gain anything
10:30
from monopoly price yes of his danger
10:32
absorbing the Pythian Cepeda the old
10:34
bill landowner it’s very much like a
10:36
taxi medina see what happens the TAC
10:38
team again I mention attention that
10:40
anyway yeah times with taxi advantages
10:42
the first guy gets taxi licenses will
10:45
get back on this later we get the
10:46
monopoly the taxi license are used to
10:48
cost ten bucks there you go down like
10:51
most other like to go down you go to the
10:53
hack Bureau of Motor Vehicle viewing it
10:56
just you get a taxi like your poo you
10:57
and drive a car and you’re good one over
10:59
a good driver something it you buy your
11:01
car taxi and you got a tax
11:04
actually I sit for ten dollars there
11:09
were in the 1920s there were
11:11
approximately 25,000 cabs and suites in
11:15
New York then during the Depression all
11:18
business is very bad shape also the
11:20
pressure not too many people like camp
11:22
if there’s sort of a luxury item so they
11:24
just fell off quite a bit so by 1937
11:27
their 11,000 747 calves in the streets
11:31
of New York so the taxi industry goes to
11:34
the mayor time says we mean you need
11:36
temporary emergency how watch out by the
11:38
way for any any case of temporary
11:39
emergency emergency how easy becomes
11:41
very soon a permanent part of the
11:43
American heritage you never be gotten
11:45
rid of so this case I said okay we won’t
11:47
issue any more licenses for a while this
11:50
is continued from 1937 1986 until this
11:53
day or no my severe limit of eleven
11:56
thousand thousand five hundred
11:57
forty-seven campus week in New York
11:58
period and again this is symbolized by
12:01
the yellow color and the might not have
12:04
it also the medallion which is the
12:06
shield which is the which is the
12:09
licensed so that means you can’t get
12:11
anyone you can’t go down on a hack
12:13
Bureau and over and get you pay your 10
12:14
boxes and oh no new license of an issue
12:16
for 50 years if you want to buy a
12:18
license to drive a cab and you have to
12:20
have to buy it from somebody else is
12:22
willing to sell it let me get retire get
12:24
out of the business and the price of
12:26
this fluctuates like a market pricing
12:28
and monopoly monopoly many licenses
12:31
during the 30s nothing much happens the
12:33
depression then came World War two a lot
12:36
of people left etcetera after the war
12:37
starts a big boom as of course as the
12:40
increase of the man curve of inflation
12:42
when the general recovery and so forth
12:44
and so the price starts would go up
12:46
pricing medallions and it’s right now
12:47
100,000 over a hundred thousand dollars
12:49
last my career started talking about
12:53
this in the sixties when I came here is
12:54
about fifty thousand forty sevens I’m
12:56
going up to about hundred thousand so
12:58
this visa to own a cab in New York you
13:00
have to have not only have to be good
13:01
driver i only have to buy a car you
13:04
always have to show on hundred thousand
13:05
bucks so this means you have to either
13:08
go heavily in a debt or whatever so that
13:10
your the price is going way up that’s
13:13
another thing this means is this that
13:14
the rate of return this is true of most
13:18
not a industries gets back to your
13:19
question on insurance etc because most
13:22
monopoly industries wind up not getting
13:24
not doing very well and there’s an
13:26
initially big boost to the industry but
13:28
for the subsidy of the monopoly it’s
13:30
like the farmer for one time in great
13:32
shape but then you see that their course
13:34
gets bit up in this case the course of
13:36
the medallion so the people so now you
13:38
have two other words now yet when you
13:40
invest in a cab you have to get if the
13:43
your rate of return okay making ten
13:44
thousand dollars a year you now have to
13:47
consider not only what your investment
13:48
in general but the hundred thousand
13:49
dollars you have to shell out so the
13:51
rate of return Falls is pretty no
13:53
greater than anybody else the monopoly
13:55
profits did you get from the the
13:57
licenses have been absorbed has been
14:00
absorbed by a hundred thousand bucks you
14:01
have to show up the result of that as a
14:04
taxi driver hyeseon resound not making
14:06
any more money than the other industry
14:07
being at the end they feel they’re not
14:08
they’re always talking about how the
14:09
little press I can make out except and
14:12
the reason for that is that the money
14:13
has a show out them to buy the damn
14:14
license to begin with so the people
14:18
really benefit over the original guy the
14:19
guy forgot the glycine existing people
14:21
1937 I’ll hung off for a few years and
14:23
then when the price went up so laughs
14:25
especially they think they got monopoly
14:29
gaining from ten dollars for 100,000
14:31
over or what other words they get the
14:32
benefit the people buy in later get
14:35
washed out on the other hand even though
14:39
they’re not making any monopoly benefits
14:40
now their fight like tigers to keep all
14:42
of it because if there’s free entry
14:44
another taxi business they lose the
14:45
whole hundred thousand bucks and it’s
14:46
good like that because I’m then on we
14:48
could just go and get a pretend bucking
14:50
and a license so even though they’re not
14:52
there’s no extra benefit any more than
14:53
fight like tigers like like ferociously
14:56
it keeps up to keep the lights on and
14:57
not allow any expansion from the limp
14:59
times the morning 47 as a result of that
15:01
everybody loses and nobody really gained
15:03
by the whole rotten system the consumers
15:05
lose we’re pain we restrict an entry
15:09
which would have been let’s say over
15:10
here quick center need a much higher
15:13
price and the taxi if he won’t even gain
15:16
and then other people lose the people
15:18
would have been taxi owners if they had
15:20
only allows free entry you like to be
15:21
taxi or can’t do it have to be packed
15:23
the employees looks saying can’t
15:25
understand but this is us at the Shah
15:27
$100,000 so it’s a system which nobody’s
15:29
benefits and you
15:30
but the people hold on we’ll have the
15:33
license now a fight like tigers that
15:34
keep us as I said last time I think
15:36
mayor Koch is a pretty ingenious plan to
15:38
get around the taxi lobby which is very
15:40
powerful so she says the absolute boss
15:42
of the blocks democracies family three
15:43
min of these the taxi owners lobbyists
15:46
New York begin around a Conchie offer to
15:50
give each every taxi owner one free
15:51
medallion give it to him freeze like
15:53
giving him everybody hundred thousand
15:54
dollars providers they use it or
15:56
somebody else’s user they saw that
15:58
somebody who’ll use it within a year in
16:00
other words tumbling us apply to 20 25
16:03
which we can certainly absorb since
16:05
image material scandal let’s see that we
16:07
have half a number less than half a
16:08
number of calves ahead in 1920s the much
16:12
bigger population boom boom panel
16:14
Elizabeth sure they were double the
16:18
amount so the pipes of each Oh Danny
16:20
went for but cool a pickup you know they
16:22
have free medallions it was too scared
16:24
to do it too afraid of any any any
16:25
relaxation of this of a Swanton system
16:29
to accept it and they fought against
16:32
that they defeated it how shadow wood or
16:33
even conscious powerful he is clinically
16:35
headed withdraw this suggestion so what
16:38
that building built up over the years of
16:40
course in a series of illegal caps now
16:43
quasi illegal the whole structure of
16:46
cabs because of the shortage now because
16:48
of the shortage impose those fantastic
16:50
scarcity means the cam drop have owners
16:53
or cab drivers like what any other can
16:54
price controls and maximum prices rose
16:56
they’re in the driver’s seat on
16:58
prohibition that’s why I can drive is
17:01
somewhat come and noses that everybody
17:02
looks like and what stock drizzling a
17:04
little bit over something off duty signs
17:06
don’t want I know camp can’t get any CAD
17:08
where he can’t go to can’t go to
17:10
Brooklyn up here Manhattan and go to
17:11
Bronx I got a northern Manhattan take go
17:14
anywhere no we’re sorry where we’re
17:16
going we’re going into the garage is the
17:19
kind of excuse so they stay ruling the
17:22
roost and as a matter of fact somebody
17:24
said the North you to go from and
17:26
abruptly have to stand on the curve
17:27
weaving a dolla bill it as a symbol not
17:31
not that simple of what they get any
17:33
accent some of what they gonna shell out
17:35
of these guys in black market payments
17:38
illegal payments this be so the cab
17:41
drivers in the lows and of course the
17:43
safe and range those are the throw
17:44
showery can’t find anybody so if they’re
17:47
free of the free entry at camp does this
17:49
why should you punch it why should it
17:50
can only be a full content why should
17:52
only be yellow why shouldn’t you be able
17:53
to take a car out and then rush hours on
17:55
the rain they’ve been to the situation
17:56
starting to pick up some extra change by
17:58
ferrying people around obviously that’s
18:01
what would happen in a free entry
18:02
situation so there’s always the growing
18:06
up with a so-called gypsy cab business
18:09
which you originally were illegal and
18:12
and the organized pack the official
18:16
medallion drivers are very bitter about
18:17
they used to beat up that gypsy cab
18:18
drivers and stuff like that they finally
18:20
achieve an arrangement a few years ago
18:22
the gypsy cab drivers retain quasi-legal
18:24
came legalized and the arrangement was
18:27
as gypsies could well they couldn’t they
18:29
could I think they can cruise around it
18:32
basically in Brooklyn and Queens mostly
18:34
brought some mostly gypsy it’s sort of
18:36
legal layer and a Manhattan they could
18:39
can’t Cruise they can’t pick out people
18:40
that can be called up and which you
18:42
can’t became allegedly can’t pick up
18:44
people on the street or sometimes they
18:45
do it with us I mean you see a crown on
18:48
they also the only reason why the tiny
18:51
official taxi people finally allowed us
18:53
as a youngster can’t cut the price and
18:54
was a meteor advise the price is
18:56
regulated by government city government
18:58
and as long as the gypsies can’t cut
18:59
price these a non-gypsy don’t mind too
19:01
much the price becoming a key thing
19:03
you’re going to fix this man then there
19:07
also of course some jip jip sea gypsies
19:09
or the goo cut-price much more
19:13
informally sort of the others you can’t
19:15
tell them for the same taxi on the
19:16
outside or further so all this is a
19:18
result of this nonsense of attacking
19:22
monopoly the some wing of economist
19:27
claim what we should do is to compensate
19:28
the tax just pay them walk an order bad
19:30
they will have a free free entry in the
19:32
taxi business as you can see the Koch
19:34
plan is something like that and they and
19:35
they wouldn’t do it excuse it go along
19:38
with it as in the same process works of
19:41
tobacco farmers with oil import quotas
19:44
and days when there were such and with
19:45
the GALEX of slavery which is very
19:46
interesting economically under slavery
19:50
the slave master gets in other words
19:56
this is a
19:57
the marginal product later wages tend to
19:59
equal with the workers marginal product
20:01
so the marginal polises twenty thousand
20:03
dollars a year and subsistence and save
20:06
eight thousand under slavery of slave
20:09
master pays off the phase of the slave
20:12
only has subsistence enough to reproduce
20:14
and so forth and then pockets the rest
20:16
of the money it was 12,000 you think of
20:17
the slave master is getting a huge
20:19
profit rate in practice how are they
20:21
really don’t they have to buy slaves and
20:23
purchases the slave the price of the
20:25
size of norbs much like the medallion
20:27
the monopoly slave profits you wind up
20:30
after you know some decades of this you
20:32
wind up with a slave masters not making
20:34
any more money on the other business and
20:36
yet finding like hella keep slavery
20:38
because when they lose their investment
20:39
on the slave it was a capital investment
20:41
and so the slave master for support
20:43
Allah from the end to keep it even
20:45
though they weren’t getting an extra
20:46
profit out of it hold it’s a bizarre
20:47
system it’s very similar even though
20:50
obviously the content is different from
20:51
literally van young license taxi
20:54
licences okay so that’s the anyway I
20:58
guess that’s again a similar system of
21:00
how the market absorbs knobbly prices in
21:05
hopping the turns in different forms if
21:09
the return is attached to the asset like
21:12
a slave or anomaly what our own
21:14
medallion so anyway so you wind up if
21:18
you have it you have a monopoly
21:19
subsidies let’s say the railroads first
21:22
I’m making heavy profits then after a
21:23
while of course the railroads go up the
21:26
land costs go up you wind up with a rate
21:28
of return no no bigger than a if I
21:31
usually lower because they’re
21:32
inefficient by the phone haven’t been
21:33
able to meet competition and they start
21:35
going bankrupt this is basically about
21:37
handily Airlines way airlines are
21:39
heavily subsidized competition is kept
21:40
out or rates were pushed up but then
21:43
they got so inefficient and the salaries
21:45
of pilots and them sewers as stewardess
21:47
and sceptre went up so much they started
21:49
losing money anyway they went along with
21:51
the regulation is forgiven that could be
21:53
worse than this so in the long run the
21:55
monopolist don’t really benefit by the
21:57
first of all I takes a long time and all
21:58
sorts of problems in meantime ok so
22:02
that’s the farm question if anybody any
22:05
other questions on the farm laughs I
22:06
will have questioned those term as a
22:08
whole certainly Tuesday maybe maybe
22:11
today some time we now get to the next
22:14
the other major case of minimum price
22:17
control which is minimum wage laws labor
22:20
market here we have the wage rates and
22:27
quantity this case quantity of factor is
22:30
hired on with quantity of Labor hired or
22:32
labor hours and supply of workers and
22:39
demand curve for labor this then becomes
22:42
of course different workers will get
22:43
different ways rights in accordance with
22:45
our productivity as we’ll see later on
22:46
but the point is this the whole labor
22:48
market is interrelated but the minimum
22:51
wage law says no one shall be paid below
22:56
a certain rate illegal an example
23:01
minimum price control illegal to pay
23:04
something less than whatever it is a
23:05
thicker what’s in that be 25 an hour or
23:07
something huh 335 an hour I keeps going
23:11
up ah so it’s illegal to make less plan
23:15
how to pay something less than that so
23:18
one again what happens is you’re pushing
23:20
the wage rate over the free market level
23:22
this means that at this rate the man for
23:26
labor we left those supply of labor and
23:28
the migas unsold surplus to this case of
23:30
workers in other words on a point what
23:32
we call unemployment I’m so surplus of
23:35
flavor known as unemployment and the
23:40
unemployment will be the moment
23:42
employment will be permanent since the
23:44
unless there’s a black market of course
23:46
if there is this is a black market which
23:48
pushes the wage rate down on the market
23:50
clearing and a level or supplying a man
23:53
or equal well there’s not where there’s
23:54
full employment wasn’t anybody wants to
23:56
work at that wage will get a job you
23:59
push the wage right above that you wind
24:01
up with permanent peace when I’m plan
24:04
our permanent I’m so surplus of Labor
24:06
and a higher the rate compared to the
24:08
free market level the more the worst the
24:10
unemployment and it’s exactly the same
24:14
principles as the the foreign price
24:15
afford program so nobody buys labor
24:17
laborers and stores up they just remain
24:19
unemployed fortunately I’m store under
24:23
slavery I guess they would store them
24:25
put them in a warehouse any rate so this
24:27
is the again this is part of the hisses
24:31
you see this is directly follows from
24:33
the keeping the way to rage right above
24:37
the free market level in many cases are
24:38
black market like Marcus and labor for
24:42
example undocumented aliens or a legal
24:44
aliens don’t I’m with you don’t there
24:47
they work off the books as coal hole Oh
24:49
a new york is a whole tradition working
24:51
off the books it means you don’t have to
24:55
worry about minimum wage why not to
24:56
worry about social security tax so both
24:59
the employer and the employee benefits
25:00
you have to make up a forms or the junk
25:02
ah and as any come you have to make out
25:06
the income tax on basis as I say a whole
25:08
is it all only really doesn’t be done
25:10
with small businesses what big
25:12
businesses are on the public eye the IBM
25:13
can’t do it there’s nothing under
25:14
inspection but a small business can nip
25:17
in and out of the market can do it one
25:19
of the advantages of working for a small
25:20
firm a mom-and-pop furnace cool so of
25:27
course those who receive tips waitresses
25:30
and people like that waiters and
25:31
waitresses are often don’t report the
25:33
tips and so they get you know they get
25:35
such that you’re getting around a
25:36
minimum wage roll that way although the
25:39
IRS are trying to crack down on waiters
25:41
and waitresses never have to stop Oh
25:43
inspection Flying Squad to inspect yes
25:50
so now this the proponents of minimum
25:55
wage role they always say that there’s
25:57
no relationship this is all nonsense no
26:00
relationship with minimum wage go on
26:01
unemployment and the interesting thing
26:03
is if this is really true and if it’s
26:05
really true that the minimum wage will
26:08
only helps them also called marginal
26:09
workers notice by the way who is
26:11
unemployed by this is the marginal
26:12
workers if those who were who would be
26:14
getting between two dollars and 335 an
26:18
hour whatever it’s not the hype a
26:19
workaround suffer from this it’s a low
26:21
paid workers the ones who are precise
26:22
supposed to be helped by my own Rachel
26:24
these are the very people who are
26:25
screwed by it interesting situation here
26:27
the the skill Masoner skilled carpenter
26:31
getting ten dollars an hour whatever 20
26:33
oz I nothing he doesn’t care about
26:34
mapping benefits it will see his
26:36
competition being shoved out of the
26:38
market
26:39
if the people who are lower pay workers
26:40
who would have been getting this without
26:42
this employed by the system the
26:47
proponents of minimum wage laws claim
26:48
has no effect at all ridiculous moon
26:50
leaves law does not cause any
26:52
unemployment whatsoever if this were
26:53
really true why do they stop a335 an
26:55
hour why they pikers the advocates the
26:58
AF of l-cio is other liberals who
27:00
advocate my own way you wonder why and
27:01
what if it’s really true has no ill
27:03
effects why not go for broke here why
27:05
stop at three thirty five an hour of
27:07
dollars yeah $10 one hundred dollars an
27:09
hour a thousand dollars an hour one up
27:10
yeah the law and the government passing
27:15
alloys or state or federal huh well if
27:18
that’s the point of getting thurs yeah
27:20
how do they county they come up with it
27:22
I’m trying to say is if they simply say
27:25
okay let’s let’s benefit every mouth may
27:26
get a minimum wager a thousand dollars
27:28
an hour something like that the result
27:30
would be ninety-nine point nine percent
27:31
on employment would all be unemployed
27:33
right in other words you can manufacture
27:34
as much or employment as you want I
27:36
simply jacking up the minimum wage law
27:38
but Polly they pass another way both
27:41
safe I said nobody can get less than a
27:43
million dollars a year we all 40 on boy
27:44
the whole gang here so so the question
27:49
you you’re asked a very good question
27:51
back in the room there what determines
27:53
how they decide where to put it well it
27:55
seems to me that if I were to put the
27:56
way they do it is it dis employed just
27:59
the people I don’t like they raise it
28:00
enough to this employed competitors they
28:02
don’t like marginal workers in other
28:03
words those are getting on the marginal
28:05
level okay or generally non-union or
28:10
what no seniority unions who are usually
28:12
blacks and teenagers thanks women and
28:14
teenagers are usually come in the
28:15
marginal area the people they don’t they
28:19
don’t push it up high enough hour
28:20
however this employed to dis employ
28:22
union workers with white union work as a
28:24
seniority you never push it up to fifty
28:26
dollars an hour of thousand dollars in
28:27
Agra but this is where everybody they
28:29
make it the AF of l-cio makes it they’re
28:31
usually the main lobbyists for those
28:32
make it so that the people they don’t
28:34
like to get shafted and the other one
28:36
for competing the marginal workers of
28:38
repeating with a higher skilled workers
28:40
and work as a seniority so there’s a
28:43
method to the madness here’s what I’m
28:44
saying it’s not random it’s not an
28:47
accident and the only the only make of
28:49
the minimum wage high enough to
28:51
disappoint of people
28:52
don’t really care about I never push it
28:54
up so high they really started employing
28:56
union workers of seniority and mine
28:59
workers of Teamsters who wants her stuff
29:01
yeah but goes up for inflation so you
29:08
keep pushing it up yeah but then that
29:11
was jealous Athena not too long ago
29:13
about 20 years ago but it keeps me keeps
29:16
increasing in distance yeah right that’s
29:22
right absolutely er that’s exactly what
29:23
happens and then along gotta have some
29:25
figures on this for us about nervously
29:27
what happened on the point of fact
29:29
decreasing because the as inflation
29:31
proceeds the minimum wage becomes less
29:33
awesome port then they jack up again
29:35
make sure the same is unemployment level
29:38
goes up again it’s amazing so that’s one
29:42
so the citizens it can’t be an action
29:44
this is exactly where the afl-cio people
29:46
put it if you argue with these people to
29:49
argue with AF of l-cio utana mess or
29:51
left-wing liberal economist so finally
29:54
admit it I’ll say there honestly nothing
29:56
I don’t want a minute before Congress
29:57
let’s go admit it yes yes I’ll say it’s
30:00
better for these people not to be
30:01
employed a rule for paying jobs better
30:03
than to be on welfare may be employing a
30:05
low-paying jobs interesting statement
30:07
purposes and not making a decision up to
30:09
the individual worker and making a
30:11
decision for them yeah yeah exactly
30:17
precisely it’s see teenagers always have
30:19
a almost always have a lower
30:21
productivities we’ll see you later an
30:23
adult workers they have the experience
30:24
so so entry level is its coal workers
30:27
teenagers usually Starla lower lower
30:29
wage rates and adults okay so they lot
30:33
but it often make it such a way that
30:34
this employed a lot of teenagers and
30:36
then the only thing with your help of
30:38
teenagers but cut the way she’s normal
30:39
wage law that’s a very sensible I would
30:41
favor getting rid of the whole thing
30:42
it’s a very sensible first step and they
30:45
fight like hack against it because they
30:47
don’t want teenagers teenagers competing
30:49
with adult workers you know what you’re
30:50
getting rid of a competition as well see
30:52
when we get the labor market later on
30:53
the course of the whole labor lowest
30:56
system of the system by which one group
30:58
of Labor’s tryna shaft the other group
31:00
you’re a competitive the immigration
31:01
restrictions would fight like that
31:02
immigration restriction will put in my
31:04
FFL see
31:05
19 20 24 if I think stop the flow of
31:08
foreign workers coming into them
31:10
domestic worker wage rate to go up and
31:12
the pure cutthroat situation but of
31:15
course none of the main labor solidarity
31:17
little bit they don’t say if they know
31:19
that although those days are franker
31:20
about it they’re much more frankly a
31:23
napolis thing and racist okay we’re
31:25
gonna get the labor market later on a
31:27
course we go into that now for us racism
31:30
is not is not consider a respectable you
31:31
know the owners turn that’s basically
31:33
what it is so another thing it happens
31:38
is you see what see dramatic instances
31:41
of this working usually then the old
31:44
ladies to exempt a lot of occupations
31:47
from minimum wage law some of them are
31:49
still exam a Grigori workers or oil for
31:51
exempt restaurant workers or exam these
31:53
are lowest paid jobs they’re trying to
31:54
impose you know twenty dollars an hour
31:56
rush or I wouldn’t have any restaurants
31:58
left and there’s obviously they couldn’t
31:59
do that how to do be careful huh yeah
32:03
very very yak more of that wreck eat
32:06
more automats they so so happy very
32:11
careful with that but anytime in many
32:12
cases they extend it in other words of
32:14
about twenty years ago they suddenly
32:16
extended the minimum wage law to
32:18
agriculture they have been exempt before
32:20
and a southern cotton fields and so
32:24
dramatic i changed even New York Times
32:25
realize and even the reporters regular
32:27
court of sciences this is what happened
32:29
it’s suddenly extended nothing over the
32:30
head that no minimum wage will apply to
32:32
Southern taught all of a sudden that’s
32:34
applied to advise goes wait the wage
32:36
rate goes way up all of a sudden a
32:37
hundred thousand people aren’t employed
32:38
in southern cotton fields so romantic
32:41
obvious illustration of effect of a
32:44
minimum wage role that we usually have
32:45
as much more gradually than that’s not a
32:47
sudden application of not paying thirty
32:49
cents an hour and suddenly have to pay
32:50
three dollars an hour so it’s not that
32:52
when you have a dramatic it’s like
32:53
that’s always mass unemployment and so
32:55
then the other people realize it the
32:57
same thing happened with again about 20
32:59
years ago in North Carolina cramp
33:01
packing plant which usually exempt
33:03
really extended as a cramp packing plant
33:05
or a lot of marginal crab packing plants
33:08
on the coast of North you thing about
33:10
North Carolina is a very strange state
33:12
because there’s oh no rivers uses rivers
33:15
in South Carolina and Georgia the rivers
33:18
big rivers going up to
33:19
big ports North Carolina is no real
33:21
River so it’s difficult like bring the
33:23
crabs from the coastline of the interior
33:27
pieces high transportation course so
33:29
what happens is no minimum wage a whole
33:32
area and suddenly it supplied it like
33:33
that thing up the crab packing and
33:36
they’re also out of workman was a hold
33:37
of massive this employment unemployment
33:40
in here and plus bankruptcies of the
33:41
firm it just couldn’t hack it they had
33:44
to pay these high course it couldn’t
33:45
transport the stuff anymore and whole
33:47
thing is so so there was mass on a point
33:49
of mass bankruptcy so dramatic cases
33:51
like that you can see it in most cases
33:52
have it very gradually it somebody said
33:54
he had jack up the minimum wage law at
33:56
ten cents an hour every two years you
33:58
don’t see it it’s not as visible another
34:02
case like that was during the Depression
34:03
when the minimum wage war first came in
34:05
was forty cents an hour because it seems
34:07
incredible now we have to remember Lee
34:09
the dollar is now worth by one-tenth of
34:11
what I was then says it’s a couple in
34:13
like four dollars an hour now something
34:14
like that we 20 an hour so this is about
34:17
comparable forty cents an hour when they
34:19
impose the 47 our rate a lot of people
34:22
making thirty cents an hour the crud
34:24
wasn’t my scene now for example
34:26
mexican-american crab clam diggers
34:29
California the whole group the whole
34:31
family would go out and dig clams mother
34:33
father of six kids and go out in the
34:35
client each one beginning thirty cents
34:36
an hour the whole family income was
34:38
pretty good that clamming a lot let me
34:43
impose when they oppose forty cents an
34:45
hour the whole gang was come out of
34:47
working it was was the paint money can
34:48
i’ll make sure looked for the employers
34:49
and then to pay forty cents an hour for
34:51
clamming crimes digging olivia de pretty
34:53
move you to your client and there’s a
34:56
massive unemployment among the clan
34:57
people i think cannery row john
35:00
steinbeck novel about the depression in
35:02
Monterey California especially about the
35:05
unemployment the clam industry course he
35:07
doesn’t pinpoint a cause of it isn’t
35:08
safe an unwavering very few writers
35:10
understand economics anyway so that’s
35:12
but he talks about the devastating
35:15
effects of this so so say it happens a
35:19
dramatically like that we subtly impose
35:20
something there could be a lot of people
35:23
working a lot of cody legal a lot of
35:26
retired people like to like to work
35:27
part-time and a lot of below the minimum
35:29
wage if they get above employer
35:32
can afford to pay them in and wait for
35:34
things like that like I don’t ladies
35:35
room in 10 minutes or what I have some
35:36
big burger brothers I can’t afford it so
35:40
this doesn’t get done and I think if the
35:43
government allowed part-time work for a
35:47
little moon wage everybody was benefit
35:48
the consumer would benefit the employer
35:49
would benefit on them and the worker
35:50
would benefit instead of that the
35:52
government says no it’s the illegal at
35:53
the end of it is another it’s a more
35:57
sinister element here oh this is
36:00
sinister element what happens is because
36:02
there are regional differences in wage
36:04
rates if you have a federal minimum wage
36:08
and act like a protective tariff for
36:09
example the north is up until recently
36:18
yes and I think that’s fixing it up it’s
36:29
sort of like that northeast of a Teresa
36:32
a northeast as much more heavily
36:33
industrialized on the sound still is
36:35
actually leaning out the southwest there
36:37
so the Northeast are having more capital
36:39
per worker these the wage rates are high
36:42
well get to the lady market later later
36:44
but I mean point is you can see right
36:45
away the man curve for labor goes up in
36:48
the north this tends to increase wage
36:51
rates so means that wage rates in the
36:54
North tend to be higher than wage
36:55
raising the South particularly forces
36:58
the prices of course living is higher
37:00
position that really covers up that much
37:03
higher but often more inflation saying
37:05
New York their lives in North Carolina
37:07
and so and money terms of even bigger
37:10
difference any rate so workers tend to
37:13
migrate in the south of the North a big
37:14
advantage of the higher wage rates a
37:16
capital test to migrate from North or
37:18
the South take advantage of lower wage
37:20
costs the long run Tennessee’s for
37:23
equality and there was the long run
37:24
Tennessee’s very long run it felt like a
37:26
day to day equilibrium all on
37:27
Tennessee’s equalized wage rates in the
37:29
north and south so this means that newer
37:34
firms will tended the be in the south
37:37
what kind of outcompete especially
37:39
inefficient industries here in the north
37:41
so particular you have industries in New
37:44
York and the wing one like
37:46
clothing manufacturing and printing and
37:48
things like that which were inefficient
37:49
you see any printing planners of
37:52
clothing plant and going New England for
37:53
example old decaying factories why was
37:56
the equipment and the new plan for the
37:58
south wall fourth brand new equipment so
38:00
the tennis events for the fur for
38:03
bankruptcy separately and the north and
38:05
the move the northern firm northern
38:07
capital moved in the south on Floyd
38:08
southern flavor so the northern
38:12
industrial SR northern firms and
38:14
backward industries like textiles and
38:16
clothing and printing would like to be
38:18
able have a protective tap that keep out
38:19
all cheap southern labor so to speak a
38:21
cheap goods are producing the Safa as I
38:24
have a protective tariffs on goods from
38:25
Japan or Europe or whatever they can’t
38:28
do it it’s unconstitutional even now the
38:29
Constitution’s almost a dead letter it’s
38:32
unconstitutional place a protective
38:33
tariffs on goods coming from the south
38:35
of the mason-dixon line so the federal
38:37
minimum wage laws are the weight is get
38:39
around it a way to have a hidden
38:40
protective tariff because other words if
38:42
you have a improvement of federal law in
38:46
another state law you have a labor
38:49
market and wage rate and you impose a
38:56
protective tariffs I mean a cinnamon way
38:58
say here whatever it is sweet 35 or
39:00
something if you’re doing in most of
39:01
these marginal workers will be southern
39:03
workers because a wage level of South
39:04
has to be lower than the north so what
39:07
you’re doing is then you’re imposing the
39:09
northern firms are imposing especially
39:12
high costs in the southern farms a bank
39:13
from bankers are bankrupting them and
39:15
cause the unemployment crippling their
39:17
competition goes away by having a
39:19
barrier on the mason-dixon line
39:21
preventing goods or making higher costs
39:23
good coming forth from the north senator
39:26
jeff former senator Javits on the 1966
39:29
minimum wage fight in Congress was
39:32
arguing for an increasing my goal made
39:34
that very point if I actually put it
39:35
that way so we’re we being out to PETA
39:37
here in the New York buying are further
39:39
beyond happy to buy cheaper southern
39:41
labor and you have to keep you have to
39:42
impose higher course and southern front
39:44
really saying the same thing so this is
39:47
one way of doing it’s one way of a
39:48
hidden protective target kind of shaft
39:50
your competitors and other and southern
39:52
states and of course opposing
39:53
unemployment on them of one so on so in
39:58
other words what you’re doing is here
39:59
the
40:00
ocio and although the higher pay workers
40:02
are imposing unemployment or crippling
40:05
Italy the competition of marginal
40:07
workers women blacks and teenagers and
40:09
also in particular northern from
40:11
industrialist and workers are opposing
40:13
extra costs on southern firms and
40:16
unemployment on southern workers so it’s
40:17
the combination of two yeah i would take
40:24
long madison for everybody except the
40:25
higher paid more than workers and Lee I
40:35
wouldn’t say maybe decrease that
40:37
certainly treat very little only those
40:39
are directly competing marginal workers
40:43
other words the same construction field
40:46
if marginal workers are fizza there’s a
40:51
minimum wage in my some marginal workers
40:53
of dis employed they’ll be competing
40:54
with higher paid workers in that area
40:56
that doesn’t mean all higher pay people
40:58
those are particularly in that air and
41:00
the area that defeating rep right and by
41:03
the way the AF of l-cio people would
41:04
make that argument I said what’s reason
41:06
they’re against they say the reason
41:07
they’re against the minimum a lower
41:09
minimum wage with teenagers there yes
41:10
it’ll hurt some adult on adult
41:12
employment both worker who might have to
41:13
suffer but some of them might be very
41:15
small amount the direct competition with
41:18
marginal workers sure now the and I need
41:21
everybody benefits really are just a
41:22
long-run thing worthy the Holy gonna
41:25
meet benefits from from economic freedom
41:27
that’s the obvious lean in Pacific
41:30
situations monopolist benefit people
41:34
screw that competitors benefit just in a
41:36
long run very long money they lose that
41:37
too that’s the that’s a more vigor
41:40
propositioned they might not care about
41:42
the long run we care back we live in the
41:44
home front okay give me an idea there’s
41:47
a striking example of i’ll do that next
41:50
time we’re gonna striking example of how
41:52
like a teenage on appointments create
41:54
caused by increasing the minimum wage
41:56
war like I take a 10-minute break here
42:00
we have a fascinating bit of statistics
42:02
here these are male teenagers it’s also
42:06
female works the same way somewhere
42:10
first of all I want to play my
42:12
unemployment rate there’s a there’s a
42:19
set important statistic Shh that’s not
42:23
it’s the Civil unemployment rate
42:25
unemployment rate it’s a fine as number
42:34
of them unemployed divided by the number
42:42
of them employed plus number of
42:47
unemployed now this this the total of a
42:54
number of employed plus number of
42:55
unemployed for the labor force in other
43:02
words the population hot guys United
43:04
States is now something like 225 million
43:07
these are not all the labor force
43:09
obviously in other words not all of
43:10
these people are either working or
43:12
seeking work quiet between the ages of 0
43:20
and 10 dueling in and out we’re not in
43:21
the labor force they require the not in
43:24
labor force perhaps although they can
43:25
come back with a pack of enough offer
43:29
the old days women were not in the labor
43:31
force now many of them are cookware and
43:32
so on the number of people number of
43:34
population in the labor force fluctuates
43:36
I don’t know how many there are not say
43:38
a husband 60 million are less than that
43:42
20 million subway labor force then the
43:46
number so you have a number of employed
43:48
/ another of them employed plus unemploy
43:51
how do you define number of people
43:52
unemployed a defined by as those seeking
43:56
work of can’t find it this is a this so
44:03
if the if this number let’s say the
44:05
hotter than 20 million and if the 12
44:11
million are unemployed then the total
44:15
attempt the unemployment rate is ten
44:16
percent if six men your unemployment and
44:19
the total losers there are six percent
44:21
high percent all right
44:24
so in other words what you have is the
44:26
number of unemployed / and / employ pus
44:29
unemployed the unemployment rate if
44:32
first of all how do you funny know who’s
44:33
on a planet you find this out well done
44:35
by sampling techniques use about your
44:37
partner labor and it’s done by
44:41
interviewing either prominently wages
44:44
going to interview people at random
44:45
random sample and they ask questions now
44:49
there’s you define as unemployed
44:51
pressure no one was employ it’s fairly
44:53
easy oh but what do you do about
44:53
part-time employment also tricky so
44:57
those the unemployment statistics always
44:58
in a very weak shape for that reason you
45:01
ask them are you unemployed right now
45:04
and they say yes have you been seeking
45:06
work I think a definition you have to
45:08
have an unemployment seeking work for
45:09
four weeks other words of you just you
45:12
just fire let’s say a week ago you’re
45:14
not just employees never be you have to
45:16
be unemployed for certain a length of
45:18
time and argument have you been seeking
45:22
work well if you ask if an end of your
45:24
ask somebody have you been seeking where
45:25
you almost always say yes I can say no
45:26
I’m a bomb on some lying here you know
45:29
kind of playing my neighbor for six
45:30
months see you tend to have a higher
45:33
degree of unemployment than actually
45:35
this in other words the people will kind
45:38
of answer tell the interviewers what
45:40
they think the interviewers would like
45:41
to hear and especially they think
45:43
interviewer can somehow connect to the
45:45
rest of the government for the IRS or
45:46
whatever it is so they this has to be an
45:50
inflation and number of unemployed
45:52
compared to those are really not seeking
45:54
work if you’re not seeking work then you
45:55
consider not problem labor force your
45:57
sort of voluntarily retired or something
45:59
so on the one hand the unemployment the
46:01
official statistics over overweight
46:03
overestimate a number of a amount of
46:06
unemployment of those who are seeking
46:07
work the other hand they also
46:09
underestimate their also people really
46:10
have been seeking work and get to
46:12
discourage them may what kind of a job
46:14
at six months and sort of quit they’re
46:16
not really is still really part of the
46:17
labor force and they’re not counted as
46:19
unemployed you have two things going off
46:21
of the direction on the one hand you
46:23
overestimate the amount of unemployment
46:25
because you overestimate people are
46:27
really seeking work not just sort of
46:29
lazy in the other hand you
46:30
underestimated so call discouraged
46:32
workers who would be actively seeking
46:34
work they really thought they could find
46:35
something how do you figure out he’s no
46:36
really way to scientifically decide
46:38
between these two things usually
46:41
liberals claim it as an underestimate of
46:43
unemployment service time is an over
46:44
estimate it can work either way it’s all
46:46
I can say the another problem is
46:51
unemployed seeking work at what level
46:54
and usually the way for example the
46:56
unemployment insurance is given to
46:59
people who are seeking work who will
47:02
have to accept jobs are offered to them
47:04
I owned by the unemployment of
47:05
Employment Bureau which is totally
47:08
comparable job so what they what they
47:11
acquit now that’s the partner of many
47:14
problems of this comfortable employment
47:16
supposing you’re you’re working as a
47:19
McHale killing machine business the old
47:21
calculating machines before calculators
47:23
came in obviously there’s no jobs now at
47:25
calculating machines suppose you say I’m
47:27
I insist on a job which is the calcaneus
47:29
when I know and that’s like what I
47:30
refused to retrain the other thing there
47:34
is no comparable work from million
47:35
ication Hosley you can get on employment
47:37
shirts are up to your life obviously
47:39
doesn’t work that way but the question
47:41
that is what is comparable in other
47:43
words what’s a comparable job should you
47:48
insist on the same pay usually under
47:51
2,000 usually if the you’re gonna sit at
47:53
employ you don’t have to take a job and
47:55
not get on appointment shorts if the job
47:58
is a lower payment when you have well
48:00
why should you always have the same
48:01
thing what what is there the guarantee
48:02
forever you always have the same job I’m
48:04
going to pay forever if you have to
48:06
shift for example from calculating
48:07
machines which are now obsolete the
48:09
calculators you might be you might have
48:11
to have a lower giant a prejudice jar
48:13
might not know about calculator might
48:14
have a purse start at a lower level pay
48:16
and seems to me together to be costs
48:19
that we call unemployed on quote quote
48:21
unquote you’re really not if you refuse
48:23
to take a job which is which is offered
48:25
to you which is in the you know like the
48:28
new calculator business so the whole
48:30
question here about what kind of job you
48:32
have to take be considered what kind of
48:36
drafting refuses will be cool all
48:37
employed again it’s a subjective
48:38
estimate you have to take any job
48:42
whatsoever will be and then be
48:45
considered on point we don’t take it or
48:48
what and again it’s a very elastic
48:50
situation
48:51
there used to be a cart to comic strip a
48:53
little Abner with and where the design
48:56
bulk patch which is mythical town
48:57
somewhere Ozarks and I had never worked
49:00
at all um is there something lying
49:01
around wallet on an oil patch on a tree
49:03
and the laminar says you’re a bum once
49:06
you want to work in I’ve never gonna
49:07
work no no he says I want to work it but
49:09
I just only a few jobs i want stuff like
49:11
keeping anything else is not my I’m not
49:12
refused to take and it presented I’m
49:15
holding out for president Harvard I’ll
49:17
take no job less than president harbor
49:19
questions he never been a high school
49:20
much left college the chance of them
49:22
getting it was small best so question is
49:27
is he then unemployed or is he still in
49:29
labor force or not obviously and we
49:31
obviously isn’t and some elastic
49:33
definitions you could say it was he was
49:36
calling aphro for a job she thinks he’s
49:38
qualify for namely president of Harvard
49:40
or professor at nuclear physics is Cal
49:42
Tech or whatever so obviously and some
49:46
definitions you can get if you can put
49:47
your Sequoia self unemployed and get
49:49
unemployment insurance forever because
49:51
you can say well I’m I wouldn’t work
49:52
except I like so something had an IBM or
49:54
whatever so obviously these people not
49:57
really unemployed any in a correct sense
50:00
okay anyway you establish some kind of
50:02
unemployment rate and the main thing
50:05
that is once it’s established regardless
50:07
what the definition is to stick to a
50:08
consistent life you can if the rate goes
50:11
up or advantis Arab League if they won’t
50:12
does mean something even though the the
50:14
actual definition might be pretty shaky
50:16
six of the same definition as a doubling
50:18
Iraq clean half of the rate it does mean
50:20
is something important okay so usually
50:23
and the old days full employment meant
50:32
an unemployment rate between two and
50:34
three percent it can’t be 0 for one
50:37
thing people move around people quit one
50:39
job and movement and go somewhere else
50:41
or they move from New York California
50:43
from Illinois to Texas and something in
50:46
the process of moving there obviously
50:48
unemployed for a few weeks six weeks or
50:49
whatever so this is called frictional
50:51
unemployment and the question of
50:54
mobility in the old days in anyone for
50:58
example people mostly don’t move at all
51:00
I stay in the same little County all
51:02
that life the full employment rate was
51:04
like
51:04
one percenter even will about less i
51:06
think it’s switzerland I’m talking about
51:07
is almost zero but then I stated it was
51:11
considered classically about two to
51:12
three percent of the finest opal full
51:14
employment during recessions
51:19
unemployment would go up to about six
51:22
percent and very a major major
51:26
depression in the up to 10 and during
51:30
the mighty 1929 1930 30s depression was
51:34
twenty-five percent 20 to 25 I gives you
51:37
some kind of range of what the
51:39
unemployment rate means otherwise would
51:43
be meaningless number right now the
51:46
unemployment is going up this is a macro
51:48
theme so I’m not gonna go into this and
51:49
any depth but the poem point is the
51:52
redefined as unemployment more heavy
51:54
heavier now that was saying the 1950s
51:56
unemployment around to the three percent
51:59
most of the time now the minimum six
52:02
percent and goes up to that age so on a
52:05
full employment has been redefined it to
52:07
be about five six percent just like that
52:09
one way of achieving full employment
52:10
that we define it yes just call it home
52:13
of line is is great when it was stolen
52:14
from employment this we’ve up the user
52:17
definition so a recession Rachel now
52:20
about 9 15 nine and eleven percent there
52:26
is no depression anymore to outlaw the
52:27
term depression never used you have a
52:31
mild recession of severe recession
52:32
during the last recession 1981 83 for
52:36
example an appointed raised about eleven
52:37
percent it’s now down about eight it’s
52:38
the surgery or 7i guess those point we
52:41
now define as in full employment okay so
52:43
this is for this year’s you an idea of
52:46
what’s going on law final numbers go
52:48
okay now we come to this our statistic
52:55
teenage unemployment has always been
52:57
higher for obvious reasons teenagers go
53:00
in and out of the labor market pretty
53:02
quickly so they they they have a major
53:05
burden of mobility so to speak so in
53:08
1948 we have mail teenage unemployment
53:15
rate
53:17
a white rate white and black
53:29
unemployment rates a white rate was
53:31
eight percent by Clay was a presenter an
53:35
interesting thing about this is that the
53:39
adult rate was something like creepers
53:40
something like that so there’s now a
53:43
Miss in the United States of the sort of
53:44
an automatic white black on appointment
53:46
gap in this cool other words the blacks
53:48
always have three times the unemployment
53:49
rate as whites it wasn’t true a nineteen
53:51
forty eight though kemp the difference
53:56
can’t be do the discrimination of a
53:57
probably less discrimination out i was
53:59
nineteen forty eight so what’s happening
54:02
here what’s obviously something screwy
54:03
here to say this is part of a structural
54:05
thing and marketing economy doesn’t
54:07
exist the 1948 1949 federal minimum wage
54:13
went up from forty cents an hour to
54:14
seventy-five cents an hour he has this
54:17
is a federal minimum wage and was forty
54:23
cents an hour from the 30s on until
54:26
nineteen forty nine of course as
54:28
inflation preceded the 45 meant less and
54:30
less obviously no was a Tennessee as
54:32
with inflation this is a minimum wage
54:34
law wage rate one of these you dis
54:41
employ a whole bunch of people f of them
54:42
if there’s inflation the man curves go
54:44
up a little place you tend to wipe out
54:46
unemployment at somebody said here the
54:48
minimum wage rate becomes unaffected
54:50
because right now for example is the
54:52
minimum wage law forty cents an hour
54:54
have no effect did not mean a thing when
54:56
the pre-market wager is going way up
54:58
especially with inflation so 1949 goes
55:02
up to 75 cents an hour from 40 and
55:09
immediately the white unemployment
55:10
teenage rate goes up to eleven percent
55:12
which is a recession level and then
55:15
blank rate goes up to fourteen percent
55:17
beginning the first sign of the gap the
55:20
famous black white unemployment gap the
55:22
jacking up of the minimum wage rule it
55:25
happens in a few months then comes the
55:28
Korean War boom as a play sherry boom
55:31
and the lady from 1950 51 to 53 and the
55:38
gap disappears in other words the
55:40
unemployment rate goes down factious to
55:43
about eight seven eight that virtually
55:46
disappear in other words essentially the
55:48
unemployment rate goes back down on the
55:49
pre Korean War boom the pre 1948 level
55:52
well korean war is over 1953 and the
55:55
normality being to assert itself the gap
55:57
pops up again in other words 1954-55 the
56:03
white rate is up to 10 of the black rate
56:05
is up to 13 the adult rates are lower
56:08
courts verbally major gap appears in the
56:12
teenage so again the gap pops up again
56:16
against reappearing appear for the first
56:19
time 1949 a 1956 the federal government
56:23
jacks up the wage rate once awards the
56:25
title a dollar an hour and immediately
56:30
again within a six-month period of song
56:31
see what happens here the white rate
56:34
goes up to thirteen percent the black
56:35
rate goes up to twenty four percent this
56:38
is 1929 depression levels other words 99
56:41
depression the maximum unemployment rate
56:44
overall the whole economy of 25%
56:46
considered catastrophic a blank on a
56:49
point right that goes up first time
56:51
black teenager on point right goes up at
56:52
twenty-four percent and keeps going up
56:54
by the way this is the beginning of the
56:55
big Yap a bubbling situation starts with
56:58
the 1956 minimum wage law in 1958 and
57:02
then what happens almost diabolical what
57:04
happens after that r the rate begins to
57:08
fall black unemployment rate forth about
57:10
twenty two percent and they jack up the
57:13
minimum wages are 15 an hour i goes back
57:15
up to 24 keeps happening like that every
57:18
time a teenager on point way for black
57:19
right for who but they jack up an
57:21
illegal of another ten cent goes back up
57:23
again all most amazing the chart it I
57:26
1966 with row about twenty four percent
57:30
and the big discussion is should they
57:33
increase the minimum wage now at the
57:34
last 60 an hour it’s been up there going
57:36
up about doll 25 should I go up to
57:39
dollar sixty 1966
57:41
and various free market economists us to
57:45
fight before Congress they said look you
57:47
if you increase in the way you are 60
57:49
black unemployment rate will go up
57:50
teenagers like on a point where r go up
57:52
to thirty three percent I said you’re
57:54
crazier nothing to do other structural
57:56
and nothing to with a minimum wage law
57:57
sure enough of course they pass it and
57:59
sure enough it up in a six months or a
58:01
year going up to thirty four percent it
58:03
has remained even higher from then on it
58:05
was the whole story and then I was a
58:06
repeat of the story the bygone implant
58:10
right now very teenage rates between
58:12
fifty and sixty percent in most most
58:15
areas of course this is this is super
58:18
countess dropping these worse much worse
58:20
than the 99 depression levels and a
58:23
blanket and a black areas and he’s
58:26
pretty obvious what the solute what the
58:28
cause of the problem is what the
58:29
solution is even the liberals of people
58:32
acknowledge that even even this to cut
58:34
the minimum wage bites to Tina you like
58:35
10,000 hours up yeah what is it now I
58:41
mean right now it’s about I’m not sure
58:45
it’s about 18 or something like that
58:46
yeah something like that so any rate
58:55
this the on it’s obvious what the causes
58:58
tremendous social problem say the least
59:00
and and and sees the obvious or the
59:02
solution is not it’s not more on poverty
59:06
or increase in poverty bureaucracy which
59:07
is a lot of warm probably using amounts
59:09
to the Johnson war on poverty the famous
59:13
joke is which was first correct the only
59:16
poverty it was relieved by the war on
59:17
poverty was the poverty of the social
59:19
workers on running the program they were
59:20
there in great shape they’re getting
59:21
happy at the South prophase now which is
59:24
usually what happens these things so
59:30
anyways this a again an idea when one
59:32
way to look at it see nobody has
59:33
guaranteed a job if you outlaw working
59:36
below 30 and 35 cents an hour nobody
59:38
says gonna get a job at speaker these
59:40
funds if you can’t get a job for less
59:41
than that that’s the only thing that the
59:43
government says thou shalt not get a job
59:45
if you go you buy the now and that’s it
59:47
and so I can see what the result of that
59:50
should be pretty clear
59:54
and once again the rate is minimal is
59:59
not pushed out high enough to really
60:00
just to start this employing union
60:02
worker with seniority yeah oh they all
60:08
have China’s now also the same thing I
60:10
used to be in a small minority I’m and
60:12
now this is my would say the majority
60:13
economist just the famous politically
60:16
and possible to put this before the
60:18
Union Reagan administration committed a
60:20
lot of Union especially Teamsters Union
60:22
much beloved now much beloved unions and
60:27
even more gangster arisen and most other
60:29
unions and so wasn’t the so I can’t they
60:33
just feel like politically they can’t do
60:35
it but the problem you have now is the
60:37
ice when I was teaching you stuff 20
60:38
years ago classes students would say if
60:42
you’re so right how come nobody else
60:43
agrees with you well now this is not a
60:45
question most autonomous with realist
60:46
everything most other than the saying
60:47
here just doesn’t they say well
60:48
politically it can’t be proven press
60:51
won’t like a unions won’t like it
60:52
whatever and so the city’s won’t like a
60:55
farmer’s won’t like it and this two
60:57
haven’t got the guts to try to change it
60:58
politically but among economist was
61:01
pretty well accepted so that’s a hopeful
61:04
sign spinner fight yeah absolutely more
61:12
yet 1256 sorry I 9056 it went up to
61:17
dollar an hour that was a few years
61:19
after three years after korean war is
61:22
over that’s that caused all of the whole
61:24
problem here with twenty twenty four
61:26
percent my gun employment right after
61:29
the cornea will korea was no increase in
61:31
other words what happen ask right
61:33
afterwards it just went back to the 49
61:35
level I think things went back to the
61:37
nineteen forty nine eleven with post
61:39
seventy-five cents an hour and pre and
61:41
then after the Korean War boomers going
61:45
away and so you’re back a sort of normal
61:47
now pre boom normal and then they go
61:49
back to here then they’ve done a 56
61:52
minimum wage or there’s a big increases
61:53
this creates the whole twenty-four
61:55
percent range this creates the whole
61:58
twenty-four percent thing this creates
62:01
the whole twenty-four percent range

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