Friday, July 09, 2004

The Sin of Wages - The real reason to oppose the minimum wage. By Steven E. Landsburg: "The Earned Icome Tax Credit...accomplishes pretty much the same goals as the minimum wage but without concentrating the burden on a tiny minority. For that matter, the EITC also does a better job of helping the people you'd really want to help, as opposed to, say, middle-class teenagers working summer jobs. It's pretty hard to argue that a minimum-wage increase beats an EITC increase by any criterion.

The minimum wage is nothing but a huge off-the-books tax paid by a small group of people, with all the proceeds paid out as the equivalent of welfare to a different small group of people."

The core doctrine of conservatives is not laissez faire but the conviction that virtually any institution will do better at any job than government. Conservatives recognize that a variety of jobs need to be done: wars have to be fought and children have to be educated. They even understand that access to health care and a minimially decent standard of life is important. But they are convinced that the government, to the extent that it has to be involved in these projects, should outsource

All other things being equal, outsourcing is inefficient. It introduces additional layers of administrators that have to be paid, time-consuming negotiations and an element of uncertaintly that makes it more difficult to plan ahead. Conservatives however seem convinced that the government is so bad at doing anything that even with the additional costs, private contractors will still do better. Private contractors will do better at providing catering services for the military than grunts on KP peeling potatoes and dishing out Spam, charter shools will do better than conventional public schools at educating children, a patchwork of HMOs and private insurance schemes will deliver healthcare more effectively than a single payer system, private charities and "faith-based initiatives" will be more effective in providing social services and firms, compelled to pay workers minimum wage, will go a better job of maintaining a minimally decent standard of living for citizens than givernment programs like a souped up earned income tax credit.

This is the consequentialist argument for conservative policies--and it seems to be questionable on empirical grounds. Charter schools don't do better, according to test scores, the current healthcare scheme is more expensive and less comprehensive than a single payer system would be and minimum wage both imposes extensive burdens on a small group on employers and fails to benefit all and only the needy.

But maybe conservatives are not consequentialists. Maybe the idea is that government programs are inherently wicked and that outsourcing to the private sector is good regardless the consequences.

2 comments:

Matt Zwolinski said...

Woo-hoo, the first comment!

The "all else being equal" in your fourth paragraph seems to carry a pretty heavy load. The primary benefit of outsourcing, I suppose, is the introduction of competition. The closer we can make government provision a service resemble the output of market competition, the better.

Of course, some methods of outsourcing are better at introducing market-like competition than others -- just ask Dick Cheney. The current method of health care provision, for instance, is about as much like a market as George Bush is a free-trader. Charter schools come closer, but as far as I can tell, the data on their performance does not unambiguously support the negative conclusion you draw.

Trying to make government work like a market is a tricky business. Most of the nasty things in this world are the result of a collusion between business and politics. And efforts to introduce market-mechanisms into government provision can often bring out the worst in both systems. But that's not a problem with government or the market, as such.

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