Minimum Wage, Freedom, and Externalities
Andrew Olmsted outlines his “number one objection to a minimum wage” succinctly:
[W]hat gives the government (and particularly the federal government) the power to interfere with freedom of contract? If I’m willing to work for $5 an hour, why should the government be allowed to step in and say ‘No, you either work for $5.15 an hour or not at all’? Am I the only one who thinks that’s a bit insane? You have someone willing to work and someone willing to pay, but we need a bureaucracy that can prevent that transaction from occurring?
This is why I tend to chuckle when people on the left say they’re about personal freedom. They’re really no different from those on the right: they’re willing to support the freedoms they think we should have, but they’re quite willing to suppress the freedoms they think are bad for us. Sure, the freedoms the left and right want to protect and suppress vary a bit, but in the end, we end up in the same place whichever of them is in charge: only as free as our overlords are willing to allow.
By definition, using the government to limit activity between consenting adults diminishes freedom. In some cases, there is at least the “externalities” argument to fall back on. That is, there may be harm done to those who do not consent to the activity.
For example, if people are allowed to use heroine, some of them will get drive under the influence and kill innocents, some will overdose and leave their families without support, leaving the taxpayer to pick up the burden, and so forth. (Of course, we have that problem even though drugs are illegal. Arguably, at least, we’d have it in greater scope if more people felt free to experiment.)
It’s less clear what the externalities are in the case of people agreeing to work for, say $4 an hour doing manual labor. They might impose a greater burden on the social welfare system, presuming their job doesn’t come with health benefits or they need public assistance to pay for food and housing. But those externalities are voluntarily accepted by a society that restricts freedom by adopting redistributionist policies. And the burdens are certainly less than would exist if the person were making $0 an hour and are only marginally greater than if they made $5.35.