WEBVTT NOTE Labor 1 00:00:00.000 --> 00:00:04.560 Minimum wage law starts with, say, the first approximation was a good intent. 2 00:00:04.560 --> 00:00:12.480 In other words, the idea is, here are these poor people and they're making a salary below which the critic wouldn't want to live, or at which the critic wouldn't want to live, 3 00:00:12.480 --> 00:00:16.840 and too bad these people have to work for a dollar an hour or whatever the amount is, 4 00:00:16.840 --> 00:00:26.840 and therefore something should be done to help them, and the therefore consists of passing a law saying from now on nobody's allowed to work at, say, less than X amount per hour, 5 00:00:26.840 --> 00:00:29.240 $1.50 an hour, $2.00 an hour, whatever. 6 00:00:29.240 --> 00:00:32.440 There are several problems of this looked at philosophically. 7 00:00:32.440 --> 00:00:36.280 One is that if you want to help people who are making less than $1.50 an hour, 8 00:00:36.280 --> 00:00:39.080 it seems rather peculiar way of doing it to start off by saying, 9 00:00:39.080 --> 00:00:41.720 thou shalt not work at less than $1.50 an hour, 10 00:00:41.720 --> 00:00:44.760 or thou shalt not employ other people below a certain amount, 11 00:00:44.760 --> 00:00:49.080 because what happens if, assuming the law is obeyed, 12 00:00:49.080 --> 00:00:51.640 what happens if the employer takes you at your word 13 00:00:51.640 --> 00:00:53.400 and doesn't employ you at less than $1.50 an hour, 14 00:00:53.400 --> 00:00:56.440 and there you are on the beach, getting zero per hour? 15 00:00:56.440 --> 00:01:04.440 The law is a purely prohibitive law. All it says is, we make it illegal for anybody to work at or anybody to be hired at less than a certain amount. 16 00:01:04.440 --> 00:01:13.440 Okay, so what happens if you're not hired at that amount? Period. Presumably the fact that the person was working, say, at a dollar an hour meant that he preferred working at a dollar an hour because there was no income whatsoever. 17 00:01:13.440 --> 00:01:19.440 And yet he is now being deprived of this choice because now the government is saying, you cannot be hired for this amount. 18 00:01:19.440 --> 00:01:27.440 In the beneficent structure of government intervention to help all sorts of people, the consequences of many of these actions are overlooked. 19 00:01:27.440 --> 00:01:39.440 If you say, we want to help these poor people, these marginal workers, as we call them, if you outlaw their being hired at what the marginal amount, the net result might well be and will be, but they won't be hired at all. 20 00:01:39.440 --> 00:02:06.040 What you're doing in effect, you put wage rates on the y-axis, put quantity of labor hours purchased on the x-axis, which is versus our old supply-demand diagram, and you have a demand curve for labor falling, a supply curve for labor rising, the intersection point of the free market wage rate, the government puts this minimum wage law above the free market point, if it puts it below it, of course, it's simply inapplicable, it's rhetoric. 21 00:02:06.040 --> 00:02:17.040 In other words, if the government passed a law tomorrow saying it's illegal the pain of death, torture and whatever to employ anybody for less than 10 cents an hour, it's not going to have much of an impact. There's very few people being employed at 10 cents an hour. 22 00:02:17.040 --> 00:02:26.040 So we have the minimum price control line above the equilibrium point. In this case it's wage control, but the principles are the same. 23 00:02:26.040 --> 00:02:32.540 In the case of the farm prices, farm production, the set of soybean prices or wheat or whatever above the market level, 24 00:02:32.540 --> 00:02:41.040 you say nobody should be allowed to buy or sell wheat below that, you set up a situation where the supply of wheat is greater than the demand for wheat and you have an unsold surplus. 25 00:02:41.040 --> 00:02:47.040 In the case of wheat, the government buys the wheat and stores it unused in various warehouses. 26 00:02:47.040 --> 00:02:49.540 The taxpayers and consumers lose because of this. 27 00:02:49.540 --> 00:02:55.660 In the case of labor, supply of workers at the higher amount of such-and-such is the 28 00:02:55.660 --> 00:02:56.660 supply line. 29 00:02:56.660 --> 00:03:03.900 The man for labor is now lower, lower the supply, we have now a gap created by the minimum 30 00:03:03.900 --> 00:03:09.460 wage law, an unsold surplus of labor, also known as unemployment. 31 00:03:09.460 --> 00:03:13.580 When you talk about unemployment, by the way, distrust all economists, this is sort of a 32 00:03:13.580 --> 00:03:18.020 general rule, not just for wages, for anything else, distrust all economists, never talk 33 00:03:18.020 --> 00:03:22.220 Let's talk about the price system, and you find this through many establishment economists, 34 00:03:22.220 --> 00:03:26.220 Keynesian and so forth, that there were all sorts of elaborate models, but somehow the 35 00:03:26.220 --> 00:03:28.100 actual guts of the system get left out. 36 00:03:28.100 --> 00:03:29.100 Same way with unemployment. 37 00:03:29.100 --> 00:03:32.980 It's sense for us to talk about unemployment without talking about at what price, at what 38 00:03:32.980 --> 00:03:34.460 wage are you talking about. 39 00:03:34.460 --> 00:03:40.700 For example, if a businessman is selling furniture, say tables, and he says he's wailing about 40 00:03:40.700 --> 00:03:45.700 unsold surplus, he can't sell at a surplus, he's charging $10,000 for a table, the guy 41 00:03:45.700 --> 00:03:52.700 The solution then is to work with the price until they can sell the inventory. 42 00:03:52.700 --> 00:03:55.700 It's the same way here in the labor market. 43 00:03:55.700 --> 00:03:58.700 Anybody can be unemployed if you raise your wage rate high enough. 44 00:03:58.700 --> 00:04:05.700 If I let it be known to everyone in sundry that I will not work for less than a million dollars a year, I'll meet my high standards by not working at all. 45 00:04:05.700 --> 00:04:11.700 So talking about unemployment is senseless without saying unemployment at what wage rate are you talking about. 46 00:04:11.700 --> 00:04:16.580 If I brought my wage rate down considerably, I could probably be employed as I am now. 47 00:04:16.580 --> 00:04:22.060 There's a sad case of a quaint long-standing, who was a free-market economist, who writes 48 00:04:22.060 --> 00:04:26.100 about minimum wage laws quite intelligently, yet in his own personal life has applied this 49 00:04:26.100 --> 00:04:27.100 peculiar principle. 50 00:04:27.100 --> 00:04:30.500 Fifteen years ago, he decided that he was worth a certain amount. 51 00:04:30.500 --> 00:04:35.380 He would not take a job for less than that, and that was pretty high, those of us who 52 00:04:35.380 --> 00:04:39.860 knew him was considerably above his marginal productivity, as a result of which he has 53 00:04:39.860 --> 00:04:47.860 In other words, you render yourself unemployed by upping your wage rate, your minimum wage rate. 54 00:04:47.860 --> 00:04:52.860 In the case of the minimum wage law, it's the government that does it for us, or for the marginal workers. 55 00:04:52.860 --> 00:04:59.860 People who become surplus, in other words, the unemployed people who become unemployed, are the very people whom the government is supposed to be helping. 56 00:04:59.860 --> 00:05:07.860 If you jack up the minimum wage law, say to $1.60 an hour, the guys who will be unemployed will not be the $10 an hour people, they're in great shape. 57 00:05:07.860 --> 00:05:12.460 The marginal workers, the ones who are getting about, say, $1.50 an hour, will be tossed 58 00:05:12.460 --> 00:05:13.460 out of employment. 59 00:05:13.460 --> 00:05:17.060 It's a beautiful case of negative feedback. 60 00:05:17.060 --> 00:05:20.260 What happens is, of course, is the supply curve of labor being pushed to the left, in 61 00:05:20.260 --> 00:05:24.740 other words, the supply curve of labor being restricted, and people who continue working 62 00:05:24.740 --> 00:05:30.580 are really benefit from this because their competition is being excluded from the market, 63 00:05:30.580 --> 00:05:34.620 which leads us to believe that perhaps one of the reasons why organized trade union movement 64 00:05:34.620 --> 00:05:46.620 is always very much in favor of minimum wage, almost the higher the better, because if you keep jacking up the minimum wage to $1.60 an hour, $2, $2.20, $3, etc., you're kicking out marginal workers from the labor market. 65 00:05:46.620 --> 00:05:51.620 They're not available to compete with existing union members with seniority and so forth. 66 00:05:51.620 --> 00:05:58.620 As a matter of fact, much of the social legislation in the past 50 years can be looked at for 70 years as a result of this kind of pressure. 67 00:05:58.620 --> 00:06:03.500 and pressure, both for businessmen and unions, keep out competition, in the case of labor, 68 00:06:03.500 --> 00:06:06.620 it's the union movement, keeping out immigration, for example. 69 00:06:06.620 --> 00:06:12.940 AFL, which was the trade union federation in the 1920s, was the major lobbyist responsible 70 00:06:12.940 --> 00:06:17.580 for keeping out immigrants, for changing the United States from a free immigration system, 71 00:06:17.580 --> 00:06:23.100 which it was since the 1770s, to a very tightly controlled situation, a quota system and all 72 00:06:23.100 --> 00:06:24.100 the rest of it. 73 00:06:24.100 --> 00:06:29.680 This is brought about by AFL, which is a supply curve of labor to the left, raise the wage 74 00:06:29.680 --> 00:06:34.580 rates of those who were lucky enough to be emigrants before 1920. 75 00:06:34.580 --> 00:06:38.300 Just as licenses restrict people into the medical profession or to the photography business 76 00:06:38.300 --> 00:06:45.780 or whatever, immigration laws keep out foreign laborers to compete with existing residents, 77 00:06:45.780 --> 00:06:50.020 and minimum wage laws do a similar thing in an indirect way by rendering people unemployed. 78 00:06:50.020 --> 00:06:56.020 In general, I urge everybody to look at government measures, not in terms of the public welfare, the common good and all the rest of it. 79 00:06:56.020 --> 00:06:59.020 Not in terms of tragic failures to achieve this. 80 00:06:59.020 --> 00:07:01.020 Of course it is. 81 00:07:01.020 --> 00:07:05.020 The government is doing all sorts of stuff, seemingly for the public interest, the common good, the general welfare, 82 00:07:05.020 --> 00:07:08.020 all of which are usually inimical to all these things, if we can even define them. 83 00:07:08.020 --> 00:07:15.020 But to look at government in a very different light is a conscious agency for doing all sorts of monopolizing, cartelizing, restrictive things. 84 00:07:15.020 --> 00:07:17.020 In other words, the government is not that dumb. 85 00:07:17.020 --> 00:07:26.580 For example, compulsory attendance laws and keeping kids in school for umpteen years keep 86 00:07:26.580 --> 00:07:28.380 an enormous number of kids off the labor market. 87 00:07:28.380 --> 00:07:33.100 So instead of kids working, they're forced to go to public schools or high schools and 88 00:07:33.100 --> 00:07:36.900 being kept off the labor force, the quality of the education they get, as we now know, 89 00:07:36.900 --> 00:07:37.900 is pretty bad. 90 00:07:37.900 --> 00:07:41.660 So the public schools perform a custodial function of keeping kids off the labor force 91 00:07:41.660 --> 00:07:46.420 and all sorts of other measures, for example, urging everybody to get an AED, urging everybody 92 00:07:46.420 --> 00:07:47.420 and so on. 93 00:07:47.420 --> 00:08:05.220 We have this kind of deliberate restrictionist policy in the labor market, the child labor 94 00:08:05.220 --> 00:08:09.620 legislation and we look upon it in a different light, instead of being a bountiful legislation 95 00:08:09.620 --> 00:08:13.620 to help kids, what it really is is a legislation to keep kids off the labor market. 96 00:08:13.620 --> 00:08:20.620 Back in the early 19th century, it was considered a great boon for the kids to be on the labor market, because they were working instead of starving at home. 97 00:08:20.620 --> 00:08:25.620 Almost nobody felt that the kids were being exploited if they were working in a textile factory. 98 00:08:25.620 --> 00:08:32.620 It's only later on, looking at it from the point of view of a much more affluent society, when you don't have to have kids working in the factories, 99 00:08:32.620 --> 00:08:36.620 we look upon all of this with horror. But at the time, it was considered a great argument for factories. 100 00:08:36.620 --> 00:08:41.620 One argument the protectionists used, the free traders were never able to really meet. 101 00:08:41.620 --> 00:08:51.620 The protectionists say cotton factories are a great thing. We should deliberately subsidize them or restrict them in imports so that we can employ more kids in the factories. 102 00:08:51.620 --> 00:08:58.620 And the free traders never answer by saying you're a bunch of monsters and you're a favor of hiring kids. They have to concede it's a good thing that the kid's working. 103 00:08:58.620 --> 00:09:07.620 Anyway, now we have a complete reverse of this, where kids are being excluded from the labor market by all sorts of legal measures, in addition to compulsory tenants but also child labor laws. 104 00:09:07.620 --> 00:09:13.700 The true historian looks at measures of government like this. First he says qui bono, who benefits 105 00:09:13.700 --> 00:09:17.500 from government measure. You look around, you find the unions benefit from child labor 106 00:09:17.500 --> 00:09:23.020 laws or minimum wage laws or immigration restrictions. But then you don't stop there. You see, this 107 00:09:23.020 --> 00:09:28.020 is a sort of unsound conspiracy view of history. There's a rational conspiracy view of history 108 00:09:28.020 --> 00:09:34.100 as an irrational sort of sloppy conspiracy theory history. The sloppy view only says 109 00:09:34.100 --> 00:09:45.300 The true conspiracy theorist, the rational conspiracy theorist, and then he looks more 110 00:09:45.300 --> 00:09:48.740 deeply and looks at who caused these measures, who brought them about, who lobbied for them, 111 00:09:48.740 --> 00:09:52.540 who keeps lobbying for them, and by God, he finds it's the labor union. 112 00:09:52.540 --> 00:09:58.980 This confirms it, this makes him a scholar instead of a hopped up paranoid, so scholarship 113 00:09:58.980 --> 00:10:06.340 is essentially confirming your early paranoia, to a deeper factual analysis when we get to 114 00:10:06.340 --> 00:10:10.180 monopoly and so forth, the same way the Rockefellers in oil or whatever. 115 00:10:10.180 --> 00:10:13.380 It's not enough to say the Rockefellers always benefit from every government measure. 116 00:10:13.380 --> 00:10:15.940 You have to go into detail to find out if they really lobbied for it. 117 00:10:15.940 --> 00:10:19.180 You find, I guess, indeed they did, and then that wraps it up. 118 00:10:19.180 --> 00:10:23.740 You see, the thing about the minimum wage people, they resist this. 119 00:10:23.740 --> 00:10:27.980 And that is to say, all right, if you say that the minimum wage laws don't create unemployment, 120 00:10:57.980 --> 00:11:01.340 And the minimum wage people have indeed been fairly intelligent in limiting the minimum 121 00:11:01.340 --> 00:11:05.420 wage to only disemploying a certain amount instead of disemploying everybody. 122 00:11:05.420 --> 00:11:06.420 They're limiting this. 123 00:11:06.420 --> 00:11:10.100 As a matter of fact, I saw an interesting journal article a year or so ago, trying to 124 00:11:10.100 --> 00:11:15.100 analyze the minimum wage advocates, concluding that, well, what they do is they keep the 125 00:11:15.100 --> 00:11:19.580 minimum wage low enough so as not to disemploy the majority of the labor force. 126 00:11:19.580 --> 00:11:23.980 You start disemploying, say, 51% of the labor force, and it's getting kind of hairy, losing 127 00:11:23.980 --> 00:11:24.980 your constituency. 128 00:11:24.980 --> 00:11:28.580 If, on the other hand, you only disemploy 10, 20, 30, not so bad. 129 00:11:28.580 --> 00:11:33.980 So there's a certain psychological or political limit, I should say, on the minimum wage laws. 130 00:11:33.980 --> 00:11:36.980 But in theory, of course, the minimum wage advocates don't acknowledge this. 131 00:11:36.980 --> 00:11:38.980 They don't sit down and say, yeah, you're right. 132 00:11:38.980 --> 00:11:44.580 It might lead to some unemployment. They just sort of stop at $1.60, $2.20, whatever. 133 00:11:44.580 --> 00:11:48.780 Something in their gut must tell them that there's something wrong with pushing it higher. 134 00:11:48.780 --> 00:11:52.580 Of course, what's wrong is you're disemploying people, and if you're disemploying people at $10 an hour, 135 00:11:52.580 --> 00:11:57.140 and also be disappointing people with two dollars except less. What you're doing is 136 00:11:57.140 --> 00:12:02.400 the majority of labor forces oppressing the minority, the disadvantaged, the 137 00:12:02.400 --> 00:12:06.380 marginal workers, the very ones that everybody's weeping about, these are the 138 00:12:06.380 --> 00:12:09.980 people who are being put on the beach, are being disemployed by the so-called liberal 139 00:12:09.980 --> 00:12:14.660 humanitarian action, the minimum wage laws. Interestingly enough, I've had 140 00:12:14.660 --> 00:12:19.360 conversations with intelligent minimum wage advocates, you go through a 141 00:12:19.360 --> 00:12:21.420 little bit of this and they will acknowledge they're going on to a higher 142 00:12:21.420 --> 00:12:29.500 The second line of defense for minimum wage laws is, okay, you're right, they do 143 00:12:29.500 --> 00:12:34.660 disemploy people, but it's a good thing because people shouldn't be forced to, in quotes, 144 00:12:34.660 --> 00:12:35.660 work at this demeaning wage. 145 00:12:35.660 --> 00:12:39.780 It's better for them to be on welfare, it's better for them to be unemployed and living 146 00:12:39.780 --> 00:12:44.380 on welfare, and then to be working at less than $5 an hour, or whatever the rate is. 147 00:12:44.380 --> 00:12:46.340 And here we reach a kind of a moral impasse. 148 00:12:46.340 --> 00:12:47.820 What do you do with people like that? 149 00:12:47.820 --> 00:12:50.820 Well, I'll leave it to your imagination. 150 00:12:50.820 --> 00:12:56.820 In other words, really, down deep in there, exactly, we'll acknowledge this fact. We really don't care about it. We're almost in favor of it. 151 00:12:56.820 --> 00:13:04.820 There are various examples of this. Even in the George Stiegler, I think, one of his early editions of The Theory of Price, 152 00:13:04.820 --> 00:13:09.820 talks about what happened during the 1930s when the first federal minimum wage law came in. 153 00:13:09.820 --> 00:13:13.820 I think it was 40 cents an hour, and that sounds very low. But for the 1930s, it wasn't that low. 154 00:13:13.820 --> 00:13:17.820 We have to consider the prices of whatever it is, triple or something, since then. 155 00:13:17.820 --> 00:13:23.320 There were quite a few people who were making, say, $0.30 an hour, who were disemployed by the $0.40 minimum. 156 00:13:23.320 --> 00:13:31.320 And Casey Yeh was the clam diggers, this cannery road pipe, in John Steinbeck's novel, were out there clamming in California. 157 00:13:31.320 --> 00:13:37.820 And the thing is, the clambers were making $0.30 an hour, which sounds horrible, but the point was, they went out there, it was mostly Mexican-American clambers. 158 00:13:37.820 --> 00:13:43.320 Many of them had a large, I realize this is a stereotype, but still it's true, many of them had a large family. 159 00:13:43.320 --> 00:13:49.820 And so all of them went out there, the husband, the wife and the eight kids would go out in the clam boat, and they all clam for 30 cents an hour, 160 00:13:49.820 --> 00:13:53.320 the result of which was a fairly decent income for the whole family. 161 00:13:53.320 --> 00:14:01.320 The 40 cent minimum wage came in and disemployed the whole group because the 40 cents didn't pay for the canners, etc., to hire them for the clamming, 162 00:14:01.320 --> 00:14:08.320 so they all became unemployed and Steinbeck came around and wrote heart-rending stories about the unemployment and cannery row and so forth, 163 00:14:08.320 --> 00:14:13.720 Not, of course, realizing this was due not to capitalism, but to the minimum wage law, even at 40 cents. 164 00:14:13.720 --> 00:14:16.420 There are other cases of this in the minimum wage law. 165 00:14:16.420 --> 00:14:19.620 For example, the minimum wage law is often exempt various industries. 166 00:14:19.620 --> 00:14:25.020 Coverly, they exempt the low-wage industry, like restaurants, agriculture, etc., etc. 167 00:14:25.020 --> 00:14:29.020 And they do it not because of the evil political influence of the agri-business or the restaurant business, 168 00:14:29.020 --> 00:14:30.820 because they're not that powerful anyway. 169 00:14:30.820 --> 00:14:34.520 They do it because they realize deep in their gut that if they extend it as quickly to everybody, 170 00:14:34.520 --> 00:14:40.320 It'll be unemployed. You have a vast amount of unemployment in agriculture and restaurant business sector. 171 00:14:40.320 --> 00:14:42.720 They do it very gingerly and sort of step-by-step. 172 00:14:42.720 --> 00:14:46.320 In other words, just enough to disemploy a few people and not everybody. 173 00:14:46.320 --> 00:14:48.520 Disemploy a minority. 174 00:14:48.520 --> 00:14:53.120 Once in a while, you have sort of case studies and they extend minimum wage laws and suddenly everybody's out of work. 175 00:14:53.120 --> 00:14:57.320 New York Times had an article, I don't know, four or five years ago, it was about 176 00:14:57.320 --> 00:15:03.120 when minimum wage laws were finally extended to cotton plantations in, I think it was Mississippi. 177 00:15:03.120 --> 00:15:13.120 There's a whole front page article, because even the New York Times at this point can understand the relationship between minimum wages and unemployment, because it was immediate, it was clear, it was sort of immediate feedback. 178 00:15:13.120 --> 00:15:25.120 All of a sudden on January the 1st, whatever the date was, minimum wage was suddenly extended to the previously exempt industry, cotton plantations, and bingo, 10,000 cotton plantation workers are out of work. 179 00:15:25.120 --> 00:15:31.120 It was a very quick and obvious kind of situation, even in the times when they could grasp this. 180 00:15:31.120 --> 00:15:36.120 I don't think they extended it to the rest of their philosophy or anything, or even to the rest of their ideas on minimum wage laws, 181 00:15:36.120 --> 00:15:40.120 but at least for this particular point they could grasp this. 182 00:15:40.120 --> 00:15:47.120 What happens to these 10,000 people? Either they go on welfare in Mississippi or they come up to New York, go on welfare or work. 183 00:15:47.120 --> 00:15:50.120 But the point is that being unemployed from what they wanted to do, would have preferred doing, 184 00:15:50.120 --> 00:15:54.120 rather than schlep up to New York and looking for work here. 185 00:15:54.120 --> 00:15:59.120 So we have this situation constantly. The minimum wage laws are constantly causing this unemployment. 186 00:15:59.120 --> 00:16:06.120 Another case, again, this sort of exemption kind of case, where it's again very clear, it was a few years ago also, 187 00:16:06.120 --> 00:16:08.120 when minimum wage laws were extended in the crab packing industry. 188 00:16:08.120 --> 00:16:15.120 Crab packing is a situation where, particularly in North Carolina, crab packing is a marginal industry. 189 00:16:15.120 --> 00:16:18.120 Reason being, North Carolina is a very peculiar state because there's no port. 190 00:16:18.120 --> 00:16:30.120 In most southern states, for example, have a big port somewhere, Charleston or Savannah or whatever, but in North Carolina, there's no real port. All the big cities are inland. Of course, crab packing has to be done on the coast. 191 00:16:30.120 --> 00:16:37.120 So there's a high transportation cost to get the crabs, to pack the crabs and ship it to the major centers of consumption. 192 00:16:37.120 --> 00:16:43.120 Because of this, North Carolina crab packing firms are the most marginal in the whole crab packing industry. 193 00:16:43.120 --> 00:16:56.120 Well, sure enough, some few years ago, minimum wage laws were extended to the crab-packing and bingo, a whole bunch of North Carolina crab-packing firms go bankrupt and a whole bunch of North Carolina crab-packing employees are rendered unemployed. 194 00:16:56.120 --> 00:17:01.120 Tens of thousands because of this. Again, we had a kind of immediate situation, which is fairly evident. 195 00:17:01.120 --> 00:17:08.120 Talk about unemployment. Who are going to be these marginal workers? Are they going to be the least skilled workers? 196 00:17:08.120 --> 00:17:20.620 Why are they at least skilled? This is a philosophic point each economist need not get into. Less educated, maybe a less skilled period, maybe it's their culture, whatever it happens to be, at this point happen to be at least skilled. 197 00:17:20.620 --> 00:17:29.620 Teenagers, for example, are usually less skilled than adults because they're just starting out in sort of an apprentice situation. Negroes, for various reasons, are less skilled than white workers. 198 00:17:29.620 --> 00:17:38.620 So we would expect then, if a minimum wage law comes in, to disemploy more highly and more proportionately, one teenage workers and two negro workers, 199 00:17:38.620 --> 00:17:42.620 and either whites or adults, and we will see how this works in a minute. 200 00:17:42.620 --> 00:17:55.620 Before getting to the figures, I should also talk about unemployment rates. Unemployment is defined as, in a numerator, you have a number of people seeking work. 201 00:17:55.620 --> 00:18:02.460 Obviously not working at the present time, and in the denominator you have those working 202 00:18:02.460 --> 00:18:03.460 plus those seeking work. 203 00:18:03.460 --> 00:18:06.460 The denominator is called the labor force. 204 00:18:06.460 --> 00:18:10.380 The labor force, in other words, the number of people who both have jobs and are looking 205 00:18:10.380 --> 00:18:11.380 for a job. 206 00:18:11.380 --> 00:18:16.580 So this is the number of unemployed divided by the labor force, this gives you the unemployment 207 00:18:16.580 --> 00:18:20.700 percentage, which we read every month, you know, 5.5% or whatever happens to be, this 208 00:18:20.700 --> 00:18:21.700 gives you the ratio. 209 00:18:21.700 --> 00:18:23.700 How do you know who's seeking work? 210 00:18:23.700 --> 00:18:25.700 Well, that's, of course, a very difficult problem. 211 00:18:25.700 --> 00:18:29.700 It calls for all sorts of higher radiosynation, empirical investigation. 212 00:18:29.700 --> 00:18:32.700 We don't really know. It's a very tricky kind of thing. 213 00:18:32.700 --> 00:18:37.700 But at least, presumably, in looking at changes in the unemployment rate over a few years, 214 00:18:37.700 --> 00:18:40.700 you can sort of say, well, it may be fairly accurate. 215 00:18:40.700 --> 00:18:42.700 But it's a problem. No question about that. 216 00:18:42.700 --> 00:18:44.700 Statisticians are in very bad shape here. 217 00:18:44.700 --> 00:18:48.700 On one hand, it can be people who are not working who don't want to work. 218 00:18:48.700 --> 00:18:52.700 On the other hand, there are people who might not be seeking work because they're so discouraged 219 00:18:52.700 --> 00:18:56.860 The minimum wage who pays, that's the title. 220 00:18:56.860 --> 00:19:00.860 There are lots of other studies, incidentally, on minimum wages, all of which confirm the 221 00:19:00.860 --> 00:19:03.860 theory, illustrate theory, I should say. 222 00:19:03.860 --> 00:19:07.660 But the Freeman-Broser thing, I think, is the most dramatic, as far as I know. 223 00:19:07.660 --> 00:19:10.660 Nobody's really attempted to refuse it. 224 00:19:10.660 --> 00:19:16.660 It's just a very, very, very, very, very, very, very, very, very, very, very, very, 225 00:19:16.660 --> 00:19:21.660 very, very, very, very, very, very, very, very, very, very, very, very, very, very, 226 00:19:21.660 --> 00:19:49.660 The Federal Minimum Wage Law, Federal Minimum Wage Rate, The Percentage of Negro Teenage Unemployment and White Teenage Unemployment 227 00:19:51.660 --> 00:19:53.860 I should say again about unemployment rate. 228 00:19:53.860 --> 00:19:55.940 We see a lot of juggling with the rate, 229 00:19:55.940 --> 00:19:58.380 but usually it was considered full employment. 230 00:19:58.380 --> 00:20:00.220 In other words, it's a situation where you consider 231 00:20:00.220 --> 00:20:02.380 everything is sort of hunky-dory. 232 00:20:02.380 --> 00:20:05.820 Full employment used to be something like 3%. 233 00:20:05.820 --> 00:20:07.300 For one thing, you have to have a certain percentage, 234 00:20:07.300 --> 00:20:09.300 even if you have a very booming economy 235 00:20:09.300 --> 00:20:11.220 and no problem in labor, 236 00:20:11.220 --> 00:20:12.580 people, especially in the United States, 237 00:20:12.580 --> 00:20:14.780 people will be leaving work and going somewhere else, 238 00:20:14.780 --> 00:20:17.700 leaving occupations or shifting to something else. 239 00:20:17.700 --> 00:20:19.700 They move from New York to California. 240 00:20:19.700 --> 00:20:20.620 All this takes some time. 241 00:20:20.620 --> 00:20:23.200 During this time period, they're unemployed officially. 242 00:20:23.200 --> 00:20:25.240 This unemployment is called frictional unemployment. 243 00:20:25.240 --> 00:20:27.480 It means that this is part of a friction of moving 244 00:20:27.480 --> 00:20:29.280 from one place to the other. 245 00:20:29.280 --> 00:20:32.780 This frictional unemployment rate is considerably about 3%. 246 00:20:32.780 --> 00:20:34.800 In England, it's something like 1% or 2% 247 00:20:34.800 --> 00:20:37.360 because in England, first of all, people don't move very much. 248 00:20:37.360 --> 00:20:38.400 And second of all, if they have to move, 249 00:20:38.400 --> 00:20:40.440 they haven't got very far to go. 250 00:20:40.440 --> 00:20:41.280 Small country. 251 00:20:41.280 --> 00:20:44.480 In the United States, however, it's a big, huge place. 252 00:20:44.480 --> 00:20:46.400 And if you move from Massachusetts to California, 253 00:20:46.400 --> 00:20:48.240 you're, it's a long undertaking. 254 00:20:48.240 --> 00:20:54.240 and the whole, the whole frictional process of quitting and readjusting and finding another job, all that stuff. 255 00:20:54.240 --> 00:21:00.240 Three percent. Recession rate. Well, that's kind of difficult. That's what you mean by recession. 256 00:21:00.240 --> 00:21:05.240 The sort of recession rate is something like six to seven percent or five to seven or whatever. 257 00:21:05.240 --> 00:21:08.240 Let's call that a recession in employment. 258 00:21:08.240 --> 00:21:13.240 The thing is they've been redefining full employment recently because the employment rate used to be considered three percent. 259 00:21:43.240 --> 00:21:51.240 And everything is great, right? So this is one way of doing it. If you can't solve a problem, you redefine it out of existence. 260 00:21:51.240 --> 00:21:58.240 Recession rate, let's say 6-7%, a really depression rate, a really hot shot rate of, say, 10% unemployment. 261 00:21:58.240 --> 00:22:05.240 That's really a rough rate, which we might be getting to fairly soon, I think, if the government messes up the energy crisis as it has been doing. 262 00:22:05.240 --> 00:22:11.400 doing, and then you have the 1929 rate, the really super depression rate, which continued 263 00:22:11.400 --> 00:22:15.600 approximately from 1929 to approximately 1940 when the government got us out of the 264 00:22:15.600 --> 00:22:18.440 depression manufacturing a huge world war. 265 00:22:18.440 --> 00:22:23.840 In that situation, we have unemployment rates of, say, 25 percent, that's a really rough 266 00:22:23.840 --> 00:22:25.880 one, 20 to 25 percent. 267 00:22:25.880 --> 00:22:30.000 See, one way the government gets you out of unemployment through a war, if there are ten 268 00:22:30.000 --> 00:22:33.200 million unemployed, let's say, you draft the ten million to the army, then you've got no 269 00:23:03.200 --> 00:23:07.640 Minimum Wage Laws is one great way of overcoming minimum wage laws, that's inflation. 270 00:23:07.640 --> 00:23:12.120 In other words, if suddenly the government jacks up the minimum wage to $5 an hour, let's 271 00:23:12.120 --> 00:23:16.040 say, half the population might be unemployed, the way to overcome this was one way to repeal 272 00:23:16.040 --> 00:23:17.040 the law. 273 00:23:17.040 --> 00:23:20.760 A crappier way to overcome it is by inflating so much that $5 doesn't mean anything, it's 274 00:23:20.760 --> 00:23:24.760 about the equivalent of a dollar, and you wipe out unemployment that way. 275 00:23:24.760 --> 00:23:26.760 The crappier way of doing it. 276 00:23:26.760 --> 00:23:31.520 Before 1949, the Negro teenage unemployment rate was something like 8%, and the white 277 00:23:31.520 --> 00:23:38.520 The unemployment rate was 8%. Teenage unemployment rate might tend to be larger, less mobile, etc. 278 00:23:38.520 --> 00:23:43.520 You still have, 8% is fairly large already if you're looking at the sort of recession level, 279 00:23:43.520 --> 00:23:48.520 but fill-in-the-wall wasn't too drastic, and the rate was the same for Negro and whites. 280 00:23:48.520 --> 00:23:53.520 And the interesting thing there is we now talk, economists now talk about the Negro-white teenage unemployment gap 281 00:23:53.520 --> 00:23:58.520 as if it's some sort of God-given phenomenon. But before 1949 it wasn't. 282 00:23:58.520 --> 00:24:01.520 The unemployment rate was the same for whites and negro teenagers. 283 00:24:01.520 --> 00:24:08.520 Okay, then comes the first big jacking up of the minimum wage rate, 75 cents an hour, in 1949-50. 284 00:24:08.520 --> 00:24:12.520 It takes about six months for the economy to rev up and adjust to this stuff. 285 00:24:12.520 --> 00:24:18.520 Within about six months, by God, we suddenly have the white rate goes up to about 11 percent, depression level. 286 00:24:18.520 --> 00:24:22.520 The negro rate goes up to 14 percent, which is a lot higher. 287 00:24:22.520 --> 00:24:24.520 This is the beginning of the famous gap. 288 00:24:24.520 --> 00:24:31.520 The Negro-White-Teenage-Unemployment Gap is a function of Minimal Wage Law. It comes in with a 1949 change in the law. 289 00:24:31.520 --> 00:24:38.520 Then comes, unfortunately for most of us, fortunately, however, for the unemployed labor force, 290 00:24:38.520 --> 00:24:46.520 then comes the Korean War. Big boom, big draft, inflation and so forth. Korean War comes in. 291 00:24:46.520 --> 00:24:51.520 1950 to 1953, and the thing sinks back. It goes back to eight and eight. 292 00:24:51.520 --> 00:24:55.520 We're back to eight and eight. Everybody forgets about the Negro-White unemployment gap. 293 00:24:55.520 --> 00:25:00.520 And everything's hotty-totty except we're killing Koreans and they're killing us and so on and so on. 294 00:25:00.520 --> 00:25:04.520 On the minimum wage front, everything's great. 295 00:25:04.520 --> 00:25:09.520 The white rate goes up from 10% to 14%, which is bad enough. 296 00:25:09.520 --> 00:25:16.520 The Negro teenage rate, however, makes this big dramatic breakthrough leap to 24%. 297 00:25:16.520 --> 00:25:32.520 So, now we have a Negro teenage unemployment rate at 24% super depression level, 1929 depression level, which might have some correlation between that and Negro rioting going on later, certainly not implausible under that. 298 00:25:32.520 --> 00:25:41.520 You have one quarter of the teenage population seeking work and not getting it, and that might cause a certain amount of edginess in the population. 299 00:25:41.520 --> 00:25:47.520 And this continues from then on. The point is, we now reach a big new plateau of minimum wage unemployment structure. 300 00:25:47.520 --> 00:25:52.520 Here we have the big Negro-white unemployment gap, which continues forever from then on. 301 00:25:52.520 --> 00:25:54.520 It's a permanent part of the American heritage. 302 00:25:54.520 --> 00:25:59.520 And we have a very high teenage Negro unemployment ratio, which also continues to the permanent part of the American heritage. 303 00:25:59.520 --> 00:26:05.520 And that's it. And it was almost as if the diabolical hand was at work, because then from then on, Freeman and Rosen show that 304 00:26:05.520 --> 00:26:09.520 every time the unemployment rate would dip a little bit, Congress would jack up the minimum wage again. 305 00:26:09.520 --> 00:26:27.080 In 1966, Freeman and Rosen wrote their article to point this out and say, look, this is what's 306 00:26:27.080 --> 00:26:28.080 been happening. 307 00:26:28.080 --> 00:26:31.440 And they were then debating a great new breakthrough in minimum wage, which is to raise the minimum 308 00:26:31.440 --> 00:26:37.440 wage of $1.65 an hour from $1.25, I think, that we're ahead of reach by these little 309 00:26:37.440 --> 00:26:50.440 And Friedman warned, went down and testified before Congress and warned that if you do this, if you raise the minimum wage rate to $1.60 an hour, you're going to have 33% unemployment, teenage negro unemployment. 310 00:26:50.440 --> 00:27:03.440 And they all said he was crazy, he was ridiculous, no relation whatsoever between minimum wage and employment. Sure enough they put it in, and sure enough within a year or two, teenage negro unemployment rate was up to about 33, 34, 35, where it remains to this day. 311 00:27:03.440 --> 00:27:12.080 So, we have 35% unemployment. Now, according to Brozen, who I have personal contact with, 312 00:27:12.080 --> 00:27:16.200 the rate is really much higher, because it includes the seeking work part. A lot of teenage 313 00:27:16.200 --> 00:27:20.680 negroes are discouraged, are really seeking work and are discouraged because there's no 314 00:27:20.680 --> 00:27:24.280 point in seeking it, no point in going down to the office and whatever and trying to find 315 00:27:24.280 --> 00:27:31.160 a job. To include all that in, the rate is something like 60%. So, you have to have this 316 00:27:31.160 --> 00:28:00.240 The second line of defense of the advocates of minimum wage as well, they don't deserve 317 00:28:00.240 --> 00:28:24.600 There are also more sinister forces at work. I've already mentioned labor unions, restricting 318 00:28:24.600 --> 00:28:29.080 the supply curve of labor, pushing it to the left. For example, in the Friedman-Brosen pamphlet, 319 00:28:29.080 --> 00:28:35.800 Senator Javits, a speech that he made in the mid-60s, before Congress or the Senate, defending 320 00:28:35.800 --> 00:28:36.800 a higher minimum wage. 321 00:28:36.800 --> 00:28:41.240 And what he said was, we can't allow the product of cheap labor to come up from the 322 00:28:41.240 --> 00:28:49.080 South, where wage laws are lower, to interfere with or outcompete our heroic textile manufacturers 323 00:28:49.080 --> 00:28:51.080 in New York and so forth. 324 00:28:51.080 --> 00:28:56.160 And here we touch on another important nub of the situation, which is the use of imposing 325 00:28:56.160 --> 00:29:10.880 In this situation, we have a kind of a regional thing in the United States where the North 326 00:29:10.880 --> 00:29:13.120 has been industrialized much faster than the South. 327 00:29:13.120 --> 00:29:17.640 As a result of that, since the marginal productivity of Northern workers has been higher than Southern 328 00:29:17.640 --> 00:29:22.640 workers because of the increased capital investment, Northern wage rates have been generally higher 329 00:29:22.640 --> 00:29:23.640 than Southern wage rates. 330 00:29:23.640 --> 00:29:29.920 The result of this situation in a free market is a two-fold tendency toward equilibrating, 331 00:29:29.920 --> 00:29:33.280 a long-run equilibrating of this situation. 332 00:29:33.280 --> 00:29:37.120 One through southern workers moving to the north and taking advantage of the higher wage 333 00:29:37.120 --> 00:29:41.160 rates and thereby tending to raise wage rates in the south and lower them in the north and 334 00:29:41.160 --> 00:29:46.040 bring them into equilibrium, and secondly the tendency of northern employers and northern 335 00:29:46.040 --> 00:29:50.480 capital to move to the north or the south to take advantage of the lower wage rates 336 00:29:50.480 --> 00:29:51.480 there. 337 00:29:51.480 --> 00:29:53.480 This tends toward industrializing the south. 338 00:29:53.480 --> 00:29:55.480 This is a general and long run tendency. 339 00:29:55.480 --> 00:30:06.480 This general and long run tendency is particularly important, unfortunately, in those industries in the North, which are marginal anyway, which are inefficient, obsolescent, and so forth, such as textiles, such as printing, etc. 340 00:30:06.480 --> 00:30:13.480 We can do much better by going out to the South, having a much better labor pool, cheaper land prices, and so forth, and so on. 341 00:30:13.480 --> 00:30:20.480 So, we have a situation where indeed the printers, southern printers and southern textile manufacturers can have some peace. 342 00:30:20.480 --> 00:30:21.480 and Northern. 343 00:30:21.480 --> 00:30:26.080 What the Northern manufacturers would like to do, what they love to do, is to have a 344 00:30:26.080 --> 00:30:31.120 tariff line at the Potomac, a high tariff barrier, because they can use the same bloody 345 00:30:31.120 --> 00:30:35.600 arguments that they do against Chinese and Japanese labor and African and so forth. 346 00:30:35.600 --> 00:30:41.280 We are forced to compete with these terrible low-wage employers, except in this case it's 347 00:30:41.280 --> 00:30:42.280 within the United States. 348 00:30:42.280 --> 00:30:44.240 So the point is, it's the same sort of argument. 349 00:30:44.240 --> 00:30:47.080 The fact that there's no national boundary between us is really not important. 350 00:30:47.080 --> 00:31:14.280 The Northern manufacturers have turned to a subtler device, the inefficient one, which 351 00:31:14.280 --> 00:31:29.320 In other words, you're imposing higher costs on everybody, supposedly, yet most of the 352 00:31:29.320 --> 00:31:33.120 people being hit are the southern competitors. 353 00:31:33.120 --> 00:31:38.280 As I say, Javits spelled this out blatantly in this speech. 354 00:31:38.280 --> 00:31:42.640 What we have here is an unholy alliance between liberal humanitarians, I don't know what they're 355 00:31:42.640 --> 00:31:43.640 doing. 356 00:31:43.640 --> 00:31:49.640 We have a lot of CIO people who know very well what they're doing, and inefficient Northern manufacturers also know what they're doing. 357 00:31:49.640 --> 00:31:56.640 These latter two forces are being largely responsible for the money and the muscle in the lobbying for the increased minimum wage. 358 00:31:56.640 --> 00:32:03.640 So we have, once again, as in many other things, we have an unholy alliance between really headedness and sinister interest, 359 00:32:03.640 --> 00:32:08.640 both working hand in hand to the disadvantage of the rest of the population. 360 00:32:08.640 --> 00:32:19.640 There's a very good paperback book by Stewart and somebody on the economic effects of minimum wage laws, which goes into lengthy analysis. 361 00:32:19.640 --> 00:32:27.640 One of the things they found out, for example, is the result of minimum wage laws in the textile industry and other industries has been an increased concentration in the industry. 362 00:32:27.640 --> 00:32:33.640 In other words, to particularly bankrupt the smaller employers who can't afford to pay a higher wage rate. 363 00:32:33.640 --> 00:32:45.640 Another sinister interest at work here is larger firms within the same industry have to put hobbles on the competition of the smaller competitors, drive them out of business or quasi-bank problems. 364 00:32:45.640 --> 00:32:49.640 This is true of social legislation in general. 365 00:32:49.640 --> 00:32:55.640 That, I think, covers the minimum wage. 366 00:32:55.640 --> 00:33:02.640 I also want to wrap up the whole labor sphere, the whole population question. 367 00:33:02.640 --> 00:33:10.640 There are fans in population. There's a lot of population hysteria now. The thing is I'm at this point old enough to remember population hysteria in the opposite direction. 368 00:33:10.640 --> 00:33:16.640 When I was growing up in the late 30s and early 40s, there was lots of population hysteria, except it was the reverse of the present one. 369 00:33:16.640 --> 00:33:23.640 The idea then was too few babies being born. In France, for example, the birth rate has fallen considerably for the last previous 20 years. 370 00:33:23.640 --> 00:33:29.640 They were talking about racial suicide or national suicide in front of the French population. There would be no Frenchmen left in 50 years. 371 00:33:29.640 --> 00:33:42.760 and also all these countries needed a lot of people a lot of young physically fit young men are going to the army and get shot and the source of that cannon fodder would dry up 372 00:33:42.760 --> 00:33:53.000 that was a terrible thing so there's a big intellectual and cultural push for a larger population and as I say the population hysteria then was in that direction 373 00:33:53.000 --> 00:33:58.720 Right now, last few years, of course, the fashion is just the opposite. So anytime a 374 00:33:58.720 --> 00:34:04.880 baby gets born, there's practically almost a bonfire lit outside the test. And we have 375 00:34:04.880 --> 00:34:09.520 a zero population growth group, etc., etc. But we have, I think, a very similar kind 376 00:34:09.520 --> 00:34:15.160 of irrationality in part of both forces. One of the points is, in general, in an economic 377 00:34:15.160 --> 00:34:19.240 analysis of population is that usually you've got about the population that you need in 378 00:34:19.240 --> 00:34:31.240 in the sense that the population, the quantity of population is usually about what, in the long run, about what's needed, about what's best for the capital structure and the degree of market, the division of labor, and all the rest of it. 379 00:34:31.240 --> 00:34:38.240 And so what's overpopulation in one area might be, or in the same area, might be underpopulation in very different circumstances and vice versa. 380 00:34:38.240 --> 00:34:43.240 For example, you all know about the evil Sparta. 381 00:34:43.240 --> 00:34:50.040 Sparta was the first case of community population control. It was a rather rigorous case. It 382 00:34:50.040 --> 00:34:55.440 was a case, even our current big ZPGP will might walk a wee bit of the Spartan method. 383 00:34:55.440 --> 00:34:59.960 First of all, you have to remember the Spartans had no Fifth Amendment and no Bill of Rights 384 00:34:59.960 --> 00:35:05.040 or any of that stuff. So they went all out. The Spartan situation, the Spartans in ancient 385 00:35:05.040 --> 00:35:10.480 Greece, any new Spartan baby would immediately be put out in the woods at night for 24 hours 386 00:35:10.480 --> 00:35:15.480 by itself. If it died, then it was too bad. It showed it was unfit for the rigors of Spartan life. 387 00:35:15.480 --> 00:35:22.480 And if it lived, then it was accepted into the community and raised. This was a primitive method of population control as before on modern techniques. 388 00:35:22.480 --> 00:35:26.480 The reason why the Spartans did that is not because they were total monsters, 389 00:35:26.480 --> 00:35:31.480 but because they were somehow anti-baby in some philosophic sense. The reason they did it was very simple. 390 00:35:31.480 --> 00:35:35.480 They were living in a static society. There was no free market, to say the least. 391 00:36:05.480 --> 00:36:16.480 When you have a caste kind of system, you have a non-free system, a pre-industrial society or a post-industrial society which is so controlled and restrictive, they can't do much. 392 00:36:16.480 --> 00:36:22.480 And so the Spartans did it up because they were philosophically anti-baby because they were driven to it by these economic considerations. 393 00:36:22.480 --> 00:36:28.480 On the other hand, Athens didn't have to do it because Athens was a flourishing market kind of economy and they were highly commercialized. 394 00:36:28.480 --> 00:36:31.480 It didn't suffer from any kind of overpopulation question. 395 00:36:31.480 --> 00:36:37.480 So, again, what the optimum population is depends very much on what's going on in the whole system. 396 00:36:37.480 --> 00:36:41.480 For example, the North American continent, when Columbus discovered America, 397 00:36:41.480 --> 00:36:46.480 the North American continent, including Mexico and Canada and the United States, 398 00:36:46.480 --> 00:36:50.480 had approximately a million Indians total. It's very difficult to figure out. 399 00:36:50.480 --> 00:36:55.480 Say a million Indians is about it. These million Indians were not exactly living in an affluent state. 400 00:36:55.480 --> 00:37:00.480 If there had been 10% more Indians, they all might have starved. They were in a very limited kind of system. 401 00:37:00.480 --> 00:37:08.480 But the million Indians are just about the right population for the economic terms for the whole land area of the North American continent. 402 00:37:08.480 --> 00:37:14.480 Now, of course, we have something like 400 million living in the same place area where a million Indians have lived, 403 00:37:14.480 --> 00:37:20.480 all of whom are living in a much higher living standard, even the poorest American and Canadian, a much higher living standard than the average Indian. 404 00:37:20.480 --> 00:37:29.480 And without too much trouble, the reason being, of course, the difference in increased capital investment, the productivity, the whole market economy which comes into the picture. 405 00:37:29.480 --> 00:37:38.480 So 400 million Indians back in 1490 would have been a holy mess, an unholy mess, I can say, with everybody killing each other for a few pieces of food that were left. 406 00:37:38.480 --> 00:37:41.480 400 million people now are in fairly good shape. 407 00:37:41.480 --> 00:37:52.480 So again, the population is not sort of an absolute from outside. It depends on the economics of it, it depends on what's going on with the capital investment, with the whole standard of living, the production system and so forth. 408 00:37:52.480 --> 00:37:54.480 You can't really isolate one from the other. 409 00:37:54.480 --> 00:38:00.480 To give you an example of our population right now, even not just talking about the Indians, 410 00:38:00.480 --> 00:38:07.480 countries with a very high population density, probably the highest population density is say Holland, at least one of the highest. 411 00:38:07.480 --> 00:38:11.480 Holland has an enormous number of people per square mile, yet they have a very high standard of living. 412 00:38:11.480 --> 00:38:15.480 Japan has a very high population density, has a high standard of living, growing. 413 00:38:15.480 --> 00:38:22.480 Hong Kong has a huge population density, an enormous number of people, practically no resources at all, has a very high standard of living. 414 00:38:22.480 --> 00:38:27.040 On the other hand, there are many very poor areas in the world which have a very low population 415 00:38:27.040 --> 00:38:32.160 density. Many parts of South America have very few people in it. A few Indians living 416 00:38:32.160 --> 00:38:38.000 on practically nothing. Here you have a situation of very low population and low standard living. 417 00:38:38.000 --> 00:38:42.080 Many parts of Africa have very few people in it too. See, our image of the teeming masses 418 00:38:42.080 --> 00:38:46.000 in underdeveloped countries is really mostly in Asia. But when you get to Africa and South 419 00:38:46.000 --> 00:38:49.720 America, they have a very different kind of situation. Even in Asia, as I say, you have 420 00:38:49.720 --> 00:39:06.720 In Hong Kong, we're doing very well. Also in China, which is technically highly populated at least, most of the population is in the coastal areas. Inland, you have very few people. There's really no correlation between population density and living standards. 421 00:39:06.720 --> 00:39:12.880 Within the United States, the ZPG-therics have reached a hysterical combination, just 422 00:39:12.880 --> 00:39:17.160 to the point, by some kind of tragic irony or whatever, or non-tragic irony, just to 423 00:39:17.160 --> 00:39:20.000 the point where the population growth is decreasing, it's leveling off. 424 00:39:20.000 --> 00:39:24.600 In other words, in the last few years, we've had a big leveling off in the birth rate, 425 00:39:24.600 --> 00:39:29.800 and which will presumably continue, helped a lot of ZPG people, but certainly a trend 426 00:39:29.800 --> 00:39:35.920 which started before ZPG will continue on after, because for various reasons, economic 427 00:39:35.920 --> 00:39:40.880 and Culture, etc. Birthrate is leveling off very rapidly and we'll get to a ZPG point 428 00:39:40.880 --> 00:39:46.120 in a couple of years at this rate. It's sort of typical, characteristic. The high point 429 00:39:46.120 --> 00:39:51.960 of ZPG hysteria comes to the point where the ZPG goal is being achieved anyway. Basic reasons 430 00:39:51.960 --> 00:39:58.200 for this, fairly simply, the first thing that happens when you industrialize, this is what 431 00:39:58.200 --> 00:40:01.880 happened in Western Europe, it's what happened in the underdeveloped countries in the 20th 432 00:40:01.880 --> 00:40:05.280 century, the first thing that happens vis-a-vis population is they cut the death rate. Lots 433 00:40:05.280 --> 00:40:27.920 In the 19th century England, you had a big increase in population, the same way in many 434 00:40:27.920 --> 00:40:33.280 20th century developed countries, and what has always happened up to a mile, which seems 435 00:40:33.280 --> 00:40:37.200 The thing that seems to be fair, a bit fair to happen in the future, is as the economy 436 00:40:37.200 --> 00:40:42.080 develops, as the standard of living goes up, each family decides to cut their birth rate 437 00:40:42.080 --> 00:40:43.840 because they don't want to have eight families at risk. 438 00:40:43.840 --> 00:40:49.440 For one thing, if you have eight kids in a farm situation, rural farm situation, it's 439 00:40:49.440 --> 00:40:53.160 usually an economic asset because each kid at the age of, there's no child labor laws 440 00:40:53.160 --> 00:40:56.960 on the farms, each kid at the age of five or something is not milking the cow or whatever 441 00:40:56.960 --> 00:40:57.960 else. 442 00:40:57.960 --> 00:41:01.360 And so kids are usually in that economic asset for the farmer, but as you urbanize and as 443 00:41:01.360 --> 00:41:15.360 As you must realize, this isn't true, as I mentioned before about the keeping child labor out and child labor laws, even so, even without that, I presume that kids will very often be in that economic liability for the parent for a long time, if not forever. 444 00:41:15.360 --> 00:41:28.360 So kids in urban America now are really consumption goods rather than investment, rather than a factor of production. As the kid gets older and goes off on his own, he doesn't plow back much money that the parent offers anyway. 445 00:41:28.360 --> 00:41:48.360 The kids, as far as the parents are concerned, have a net economic liability. It might be a great psychic asset, but economically there's a liability, so as a result of which, and it doesn't take a great genius to realize this, you have big cuts in the birth rate and few, whereas as the economy develops and industrializes and urbanizes, the birth rate tends to fall quite dramatically. 446 00:41:48.360 --> 00:42:02.360 I can tell, even though this is journalistic, in my own family, my grandparents, great-grandparents, had about eight kids, eight kids from both sides, and my grandparents had less than that, and the present generation has like one kid apiece of that, or two. 447 00:42:02.360 --> 00:42:10.360 So there's a big falling off in birth rates as the people start living go up. I presume this will continue. 448 00:42:10.360 --> 00:42:14.360 So you have an initial cut in the death rate. This causes a big increase in population. 449 00:42:14.360 --> 00:42:39.360 In the United States, everything appears to be too crowded and books have been written. 450 00:42:39.360 --> 00:42:43.360 Jacques Ellel, for example, who is an interesting phenomenon. 451 00:42:43.360 --> 00:42:47.080 L.L. is a French reactionary, the deepest dye, reactionary in the truest sense, he's 452 00:42:47.080 --> 00:42:52.400 a Calvinist nut, wants to go back before the industrial era and go back to everybody weaving 453 00:42:52.400 --> 00:42:55.240 his own boots and all that sort of stuff. 454 00:42:55.240 --> 00:42:59.000 He hates technology with a purple passion, so he has made great cause with the new left, 455 00:42:59.000 --> 00:43:03.720 which has very different reasons to hate technology, and I was thinking of L.L. as being some sort 456 00:43:03.720 --> 00:43:05.720 of a new leftist, and they should only know. 457 00:43:05.720 --> 00:43:10.520 At any rate, L.L. talks about the good old days, the glorious old days, the middle ages, 458 00:43:10.520 --> 00:43:38.520 in the United States, the 1970 census showed that from 1960 to 1970 there was an absolute 459 00:43:38.520 --> 00:43:41.520 for All in Population for, I think, one third of the counties in the United States. 460 00:43:41.520 --> 00:43:44.520 Decline in population. That's just a leveling off of growth. 461 00:43:44.520 --> 00:43:46.520 You have a lot of ghost towns out there. 462 00:43:46.520 --> 00:43:50.520 The Middle West and the Southwest, if you've seen the movie Last Picture Show, 463 00:43:50.520 --> 00:43:55.520 you see the depressing picture of the total collapse, a gradual collapse of this town. 464 00:43:55.520 --> 00:43:59.520 People leave, people go to the big city, and so forth and so on. 465 00:43:59.520 --> 00:44:01.520 An absolute decline in a lot of population. 466 00:44:01.520 --> 00:44:05.520 Also, there's a lot of land out there with no people on it in the West. 467 00:44:05.520 --> 00:44:07.520 You might ask the question, who wants to go there? 468 00:44:07.520 --> 00:44:09.520 That's a different question altogether. 469 00:44:09.520 --> 00:44:11.520 The point is, lots of land, lots of empty spaces. 470 00:44:11.520 --> 00:44:14.520 Even the inner cities have not really increased in population. 471 00:44:14.520 --> 00:44:18.520 New York City has remained the same total population for about 30, 40 years now. 472 00:44:18.520 --> 00:44:20.520 The same seven million. 473 00:44:20.520 --> 00:44:22.520 And we haven't increased at all. 474 00:44:22.520 --> 00:44:26.520 The thing which has increased in the United States, the population which has increased, is the suburbs. 475 00:44:26.520 --> 00:44:28.520 No question about that. 476 00:44:28.520 --> 00:44:32.520 But aside from the suburbs, there really has been no population growth worth speaking about. 477 00:44:32.520 --> 00:44:35.520 and the total itself is leveling off. 478 00:44:35.520 --> 00:44:39.520 The reason why we think it's more crowded is that people are too affluent. 479 00:44:39.520 --> 00:44:42.520 As people standard living a lot, they zip around a lot. 480 00:44:42.520 --> 00:44:45.520 They go to Europe, they go on vacationing and so forth and so on. 481 00:44:45.520 --> 00:44:47.520 They make themselves visible, which they weren't before. 482 00:44:47.520 --> 00:44:51.520 See, the medieval peasants here in the hut with the late pigs wasn't visible to anybody, 483 00:44:51.520 --> 00:44:54.520 except for whoever happened to wander in. 484 00:44:54.520 --> 00:44:58.520 Since there were no roads in those days, that wasn't very likely. 485 00:44:58.520 --> 00:45:01.520 So you have a situation where things seem more crowded, 486 00:45:01.520 --> 00:45:05.120 But it's not because of population growth, it's because people are better off and they 487 00:45:05.120 --> 00:45:07.120 start to zip around a lot more. 488 00:45:07.120 --> 00:45:12.640 And they come into the big city, they do all sorts of things which make things appear crowded. 489 00:45:12.640 --> 00:45:18.120 I don't know what solution there is to that, this crowding thing, it boils down to either 490 00:45:18.120 --> 00:45:23.400 going off to the hills of Montana and becoming a hermit, which is one solution, or killing 491 00:45:23.400 --> 00:45:31.280 all these people, which is not a very libertarian solution, also not very practical, or hoping 492 00:45:31.280 --> 00:45:46.280 In any case, the strains and crowding of a more affluent society becomes very helpful 493 00:45:46.280 --> 00:45:52.320 in the economic sense to think in terms of, again, not population as an absolute but relatively 494 00:45:52.320 --> 00:45:53.320 to the economy. 495 00:45:53.320 --> 00:45:56.160 Look at this diagram, one more diagram to inflict. 496 00:45:56.160 --> 00:46:09.160 In this diagram we have standard of living or growth per person, I mean product per person on the y-axis, and number of people on the x-axis. 497 00:46:09.160 --> 00:46:17.160 And if we had no people at all, and if a great new play came out and wiped all of us out tonight, wiped the whole world out tonight, there won't be no production anymore. 498 00:46:17.160 --> 00:46:21.160 So we started at the origin point. 499 00:46:21.160 --> 00:46:28.160 And we keep growing up. In other words, what we have is, as we keep increasing the number of people, we increase the production per capita. 500 00:46:28.160 --> 00:46:33.160 And so finally you reach a point where it reaches a maximum, and then levels will often start declining. 501 00:46:33.160 --> 00:46:37.160 This is the standard of living again. 502 00:46:37.160 --> 00:46:42.160 Now picture this maximum point, by the way, is called in economics the optimum point. 503 00:46:42.160 --> 00:46:45.160 In other words, at this point, this is the optimum population. 504 00:46:45.160 --> 00:46:52.000 The maximum population would be the zero that's on the x-axis to get up to this maximum standard 505 00:46:52.000 --> 00:46:53.000 of living production. 506 00:46:53.000 --> 00:46:59.200 Now the thing is, I don't like the term optimum, it's very unfortunate because it implies ethical 507 00:46:59.200 --> 00:47:00.200 and ethical imprimatur. 508 00:47:00.200 --> 00:47:05.640 It doesn't really have to do it all, it simply means maximum population and maximum standard 509 00:47:05.640 --> 00:47:06.640 of living per person. 510 00:47:06.640 --> 00:47:10.520 It doesn't necessarily have to be the ethical and moral optimum because it could very well 511 00:47:10.520 --> 00:47:21.520 So people could say, well, I'd rather have more kids in the family and take a slight reduction in output, have five kids instead of two and have a 10% income cut. 512 00:47:21.520 --> 00:47:29.520 Certainly not immoral for them to do this. So optimal population simply means really maximum population point per head for any level of population. 513 00:47:29.520 --> 00:47:37.520 For every country, every economy, every capital structure, every technological picture, there'll be some different kind of, some different point. 514 00:47:37.520 --> 00:47:42.520 The point is, again, for the Indians, it was far to the left of the United States. 515 00:47:42.520 --> 00:47:48.520 The Indian population, let's say, was a million, for us it might be, who knows, more like 400 516 00:47:48.520 --> 00:47:49.520 million. 517 00:47:49.520 --> 00:47:52.520 Picture half the country dying tonight from some plague. 518 00:47:52.520 --> 00:47:54.520 Let's say half the United States died in a plague tonight. 519 00:47:54.520 --> 00:47:58.520 Let's cut the labor force factor here on the chart. 520 00:47:58.520 --> 00:48:03.520 This would mean that we have a lot of factories and a lot of productive equipment lying idle. 521 00:48:03.520 --> 00:48:05.520 This would cut the output per capita. 522 00:48:05.520 --> 00:48:11.020 We simply wouldn't have the people to man all this stuff, which keeps the whole production system, the capital system together. 523 00:48:11.020 --> 00:48:17.020 On the other hand, if we suddenly, Angel Gabriel came down and doubled the population overnight and cloned us all sort of magically. 524 00:48:17.020 --> 00:48:20.520 You know, it's magic cloning with something that would be two Rothbards and so on and so on. 525 00:48:20.520 --> 00:48:28.020 We have double the population, then we have again a problem because we have too many people per the machines or per the work for them to do, 526 00:48:28.020 --> 00:48:30.020 and the production per capita would go down. 527 00:48:30.020 --> 00:48:34.020 So we know pretty well if we either double the population overnight or halve it overnight, 528 00:48:34.020 --> 00:48:36.220 We'd be below the optimum population point. 529 00:48:36.220 --> 00:48:38.580 We don't know really what the optimum population is. 530 00:48:38.580 --> 00:48:41.180 Point is, even the statisticians can't really tell us. 531 00:48:41.180 --> 00:48:43.460 But we know conceptually, and we know pretty much 532 00:48:43.460 --> 00:48:45.860 that the economy will tend to be, in the long run, 533 00:48:45.860 --> 00:48:47.060 more or less what the optimum is, 534 00:48:47.060 --> 00:48:49.220 at least not too far on either side of it. 535 00:48:50.620 --> 00:48:52.180 You see, if you take the population growth, 536 00:48:52.180 --> 00:48:54.180 you don't account for these trends. 537 00:48:54.180 --> 00:48:57.260 You simply extrapolate the trend automatically, 538 00:48:57.260 --> 00:48:58.420 as many of these statisticians do. 539 00:48:58.420 --> 00:49:00.020 You'll wind up with 10 billion people 540 00:49:00.020 --> 00:49:03.860 per square foot in the year 2200, or whatever the nonsense is. 541 00:49:03.860 --> 00:49:19.860 The point I'm trying to say is that the economist looks upon a population problem with benign neglect, to use the term which is used in other areas, figuring a little subtle about the right way, stop bellyaching about it. 542 00:49:19.860 --> 00:49:25.980 One of the reasons about the ZPG thing that's happened is because in the first two decades, 543 00:49:25.980 --> 00:49:30.500 in the 1920s and 1930s, the first two decades after World War I, the birthrate in the United 544 00:49:30.500 --> 00:49:31.500 States fell pretty dramatically. 545 00:49:31.500 --> 00:49:36.060 There was a sort of continuing fall in the birthrate and the population rate in terms 546 00:49:36.060 --> 00:49:38.500 of also, the rate of population growth was falling. 547 00:49:38.500 --> 00:49:43.060 We were going to get to a, we were getting to a ZPG kind of situation for various reasons, 548 00:49:43.060 --> 00:49:45.980 the growth of affluence, the fact that women were becoming more career oriented and so 549 00:49:45.980 --> 00:49:49.980 and so forth and so on. And the whole culture had changed, the idea that the function of the family 550 00:49:49.980 --> 00:49:53.980 doesn't necessarily have as many babies as possible, etc. So things were going on pretty well 551 00:49:53.980 --> 00:49:57.980 for the ZPG types. When bingo comes World War II, and then we had a sudden shift, 552 00:49:57.980 --> 00:50:01.980 an obviously one-shot kind of shift 553 00:50:01.980 --> 00:50:05.980 in cultural values, 554 00:50:05.980 --> 00:50:09.980 and the veterans came back in World War II, there was a big impetus for 555 00:50:09.980 --> 00:50:13.980 baby things, an enormous shift back to the old idea that 556 00:50:13.980 --> 00:50:17.980 The place for women is in the home, they're hanging up curtains and producing lots of babies. 557 00:50:17.980 --> 00:50:25.980 That's presumably a reaction to the war, the fact that everybody was upset that they were going to die in the war and they wanted a sense of immortality and they were rootless and all that. 558 00:50:25.980 --> 00:50:33.980 And the result of this was sort of a temporary 10-20 year baby boom and baby-oriented culture, we had for quite a while. 559 00:50:33.980 --> 00:50:42.980 And I interpret the whole ZPG thing as sort of an hysterical shift back to what was, what had been the trend anyway before 1945 and probably continue to be anyway. 560 00:50:42.980 --> 00:50:43.980 Anyway. 561 00:50:43.980 --> 00:50:50.260 And so we're getting back now to essentially the affluent sort of more women working and 562 00:50:50.260 --> 00:50:53.100 so forth and so on, which we were getting anyway in the 20s and 30s, which we're now 563 00:50:53.100 --> 00:50:54.100 kind of coming back to. 564 00:50:54.100 --> 00:50:59.140 Well, I think that's basically all I have to say about populations.