I’ve been attacked by Michael Lind! Woot!
Let’s focus, instead, on Worstall’s factual claim: “Those at or near the minimum wage … are generally the consumers of things made by other low-paid, minimum-wage workers.”
Is this true, as a matter of fact? A century ago, the term “Fordism” referred to the system in which Henry Ford’s auto-manufacturing employees and other industrial workers could afford to buy the products they made. Most jobs today in contemporary developed economies like the United States and Britain are in the service sector, not in the factory sector. Do we really live in a system of service-sector Fordism, as Worstall claims? Is it really the case that most of the consumers of goods and services produced by low-income workers are other low-income workers?
Well, no. Fordism isn’t that, Fordism is mass manufacturing using interchangeable/standardised parts etc. Plus, Ford’s workers being able to afford Ford’s cars – that’s getting dangerously close to the stupidity of thinking he raised wages to $5 a day so that they could. A stupidity first really pointed out by, umm, me.
Had Worstall, a senior fellow at the London-based Adam Smith Institute, ,…….Year after year, decade after decade, generation after generation, libertarian pseudo-scholars in pseudo-think tanks and pseudo-academic programs are paid by rich donors to repeat the same trite talking points that have changed little since the days of Friedrich von Hayek, Ayn Rand, and Milton Friedman. At the same time, there is little or no funding for scholars on left, right, or center who can refute the pseudo-scholarship of the well-funded libertarian propaganda apparatus. I wonder why.
Of course, the ASI is an unpaid position. Lind is a well paid professor:
He is currently a professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.
Etc, etc. But then Paul Krugman had Lind down decades back:
One of America’s new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an article in Harper’s about international trade, which contained the following remarkable passage:
“Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs — an abundance of the sort created by the globalization of the labor pool for US-based corporations.” (Lind 1994: )
What is so remarkable about this passage? It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue.
As to the original claim, the low paid are generally consumers of things made by the low paid. So, wages are higher at Whole Foods than they are at Dollar Tree. The poor and low paid are shopping at Whole Foods or Dollar Tree? At Maccie Ds or that chi chi organic burger joint? Wages are higher in the Target clothing section or Nordstrom?
So, Lind again:
If Worstall is correct, then “the consumers of things made by other low-paid, minimum-wage workers” must be “at or near the minimum wage.” If this were true, then most of the customers who are checked out in stores by cashiers would make no more than the cashier on average. Most janitors and building cleaners would be paid more or less the same as all of the office workers in buildings which they clean. And if service-sector Fordism were real, then maids on their salaries could afford maids for their own homes, in an economy in which workers literally did one another’s laundry.
Which is, as you can see, entire bollocks. I stated that the low paid – for convenience let us say those on min wage – are generally consumers of things made by other low wage people. I did not say that things made by low wage workers are generally consumed by low wage people which is the twist Lind tries to apply. Given that min wage workers are 2% or so of the entire US workforce Lind’s version would be tough. Mine is easy.
Still, P Krug seems to have got him right those decades back, no?
This kind of brazen promulgation of an obvious falsehood is typical of libertarian propaganda, which is a mishmash of dubious assertions and outright lies: