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An History Lesson on Wages
N/A ^ | 3/27/2021 | econjack

Posted on 03/27/2021 1:51:33 PM PDT by econjack

The Democrats and many "Progressives" promise to increase the minimum wage to $15/hr. A recent street survey of some (really stupid) people suggests there are some out there who think $50/hr would be a "good" minimum wage.

Really?

Back in 1972 George McGovern was running for President. He had a photo op with Cesar Chevez, who was trying to get a wage increases for the lettuce pickers. McGovern voewed not to eat another salad until Chevez won his wage increase. A Sociology prof I worked with came in and told me what a great idea McGovern's boycott was.

Stupid...

The conversation went like this:

Her: "That will teach the farm owner to pay a decent wage!"

Me: "If McGovern's boycot is successful, what will happen to the demand for lettuce?"

Her: "It will go down."

Me: "And if demand goes down, what will happen to the price of lettuce?"

Her: "The price will fall."

Me: "And, at that lower price, what happens to the ability of the farm owner to grant a wage increase?"

Her: Gulp..."It goes down."

Me: "Now, suppose McGovern had said that he and everyone else in the US should eat 5 salads a day. What would happen to demand?"

Her: "It would go up."

Me: "And since the supply of lettuce is fixed in the short run, what would happen to prices?"

Her: "They would go up."

Me: "And because of the rising price, what happens to the willingness and ability of the farm owner to give a wage increase?"

Her: "It would rise."

Me: "So, can you see that McGovern did exactly the opposite of what he should have done to help the workers?"

Her: "That may be, but I don't believe it!"

Whereupon she stomped out of my office. Liberals don't want to know the truth. Instead, the try to sell the shallow understanding of the issues at hand. All the current pressure to increase the minimum wage will do for the people who used to have a job is to now say: "If I had my old job, I'd be making $15/hr." More stupidity...


TOPICS: Business/Economy; Miscellaneous
KEYWORDS: freemarkets; minimumwages
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To: monkeyshine

An effective boycott does not raise the price of lettuce. The opposite is what would be conducive to a wage increase.


21 posted on 03/27/2021 6:58:37 PM PDT by econjack
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To: KarlInOhio

True, but he still would be in a better position to pay the wage increase in the absence of a boycott, with a “run” on lettuce.


22 posted on 03/27/2021 7:00:19 PM PDT by econjack
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To: econjack

Agreed. A totally effective boycott results in zero income for everyone involved. A partially effective boycott results in an increase of supply which (usually) results in a reduction in price especially for goods like lettuce which have a short self life.

Honestly I don’t have a ready answer for how to address the cost of labor other than to say it’s also a question of supply and demand. I was watching a documentary about laborers in central/south America who grow cocoa leaves. They make next to nothing, relatively speaking in gringo money. Add some alcohol or ammonia, press it in a hand-press, and move it on up the distribution chain. But the end product gets $10,000+ a pound in the USA.


23 posted on 03/27/2021 7:12:35 PM PDT by monkeyshine (live and let live is dead)
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To: econjack

“I told them all you had to do was gather up everyone who made $9600 or less and shoot them.”

Who came first with the use of the outlandish example - you or Dr. Walter Williams? I always enjoyed his stories when he subbed for Rush back in the day. I would have relished having an entire semester of class with him.


24 posted on 03/27/2021 7:27:40 PM PDT by T-Bird45 (It feels like the seventies, and it shouldn't.)
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To: econjack

Inflation is great for richer people. We own homes. We get to pay them off cheaper. The poorer people will always struggle as home prices rise beyond their wages. They’re idiots for wanting inflation.


25 posted on 03/27/2021 7:30:27 PM PDT by CodeToad (Arm Up! They Have!)
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To: libertylover

The DNC and their operatives tell any lie to get a sound bite.

Because they know that limited, stupid, brief, oft-repeated sound bites work on the stupid. And frightfully-well, I might add.


26 posted on 03/27/2021 11:02:37 PM PDT by SaveFerris (Luke 17:28 ... as it was in the days of Lot; they did eat, they drank, they bought, they sold ......)
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To: T-Bird45

I think most teachers realize this. I doubt that I was first, although I started teaching Econ over 50 years ago.


27 posted on 03/28/2021 7:43:00 AM PDT by econjack
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