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NOTE Minimum Wage

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Welcome to the third session of this week's seminar, and I'd like to start, as usual, with a moment of silence.

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Okay, today the topic is minimum wage, and the point I would offer for your consideration is that free enterprise,

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Private property rights, economic freedom is a recipe for peace and prosperity and a reduction of poverty.

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Whereas laws such as the minimum wage not only are counterproductive in the sense that they don't achieve the goals that the advocates of them favor,

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but it's worse because many of the advocates of minimum wage do not even aim at this.

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But that's a point that I will make as I continue in this discussion.

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Now, last time during the free trade discussion, we said that all trade is mutually beneficial.

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And I gave the example of a tie versus a pen.

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The same principle applies in the labor market.

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If I hire you to give me piano lessons and I pay you 20 bucks for those piano lessons,

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it must mean that I value the 20 bucks more than, rather, it must mean that I value the piano lessons more than the 20 bucks.

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And it must mean that you value the 20 bucks from me more than you value the alternative costs of your time.

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You could have been doing something else, giving someone else a piano lesson or sleeping or whatever it is.

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So the principle of mutual benefit in the ex-ante sense pervades the economy.

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It's not just ties and pens or purchases of cars.

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It also applies in the labor market.

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There is no exploitation in the labor market if it's a free market,

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or if you want, you can say each one exploits the other,

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but that sort of violates the whole idea of what exploitation means,

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namely taking unfair advantage.

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And as I mentioned here, a better way to put it is that it's mutual cooperation and mutual benefit.

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Before I get into the evils of the minimum wage, first I want to ask a more basic question and that is why do we have to work at all?

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Why work at all? The obvious answer is we live in an era of scarcity.

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We didn't live in an era of scarcity. If we were in the Garden of Eden, we wouldn't have to work and wages wouldn't arise because wages are the payment for work and there'd be no such thing as a minimum wage.

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It's all God's fault or it's our fault for him kicking us out of the Garden of Eden. I'm not sure how to put that. I'll have to ask our theological friends on that.

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But the point is that we don't live in an era or an epoch or what have you, a situation, a milieu of post-scarcity.

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We are in a scarcity. We are in a scarce situation.

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Will we always live in a scarce situation?

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Can one day if Bill Gates gets churning and more people invent stuff

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and eventually you sort of wish for a bicycle and a bicycle pops there

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and you wish for chicken dinner and you get a chicken dinner?

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Well that's possible. I think even on Star Trek the guy would say

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The computer, you know, the English accent, that bald guy, John Picard or somebody, Luke Picard, and they'd say computer, give me, you know, this and the computer would give it to him.

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Is it ever possible? And I think the answer is no.

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Because there are certain things that by their very nature have to be scarce.

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You can only be at one place at one time.

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You can only do one thing at a time.

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There are wishes that we have that may not be reciprocated, for example the guys may want to date Britney Spears or the gals may want to date someone like Ben Affleck or Murray Rothbard who I think is cute, but we won't go into that, but they might not want to date you and now it's possible to make a blow-up toy Murray Rothbard or a blow-up toy Britney Spears but if you want the real thing

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there's only one and and thus there's a necessary scarcity so I think that we

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better get used to you know set back relax you know we're in for scarcity for

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the foreseeable future so we might as well get used to it okay given that we

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have to work why don't we all work for ourselves what's this employment crap you

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know it's exploitative it's hierarchical I'm kidding I don't think it's

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exploitative or it is hierarchical but there's nothing wrong with that as we

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hopefully established yesterday well why do we have employers and employees why

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don't we each work for ourselves well one of the answers for that is you know

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we could work for ourselves we do have independent people working on their own

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But there are advantages of people hiring other people, for example, economies of scale, some jobs you need four or five people or four or five thousand people to do them.

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Well, how does it all start? Assume everyone is in independent practice, we're all single member firms.

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How does anyone ever get to hire someone else?

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You know, the Marxists would say they're exploiting or something, they're evil, but that's not it.

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What it is, is that someone saves a little bit of money and makes an offer to someone else and says,

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look, I'll give you, you know, five bucks an hour or something and you're only making four bucks an hour on your own,

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but I, because I have these great skills and I can mobilize you and cooperate with you,

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I can raise your productivity. And someone else comes to work for him and that's how it starts.

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It starts out of mutual benefit, so there's nothing wrong with employment or

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being an employer or an employee. The employer makes a better offer

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to a person who is now self-employed. What is it that the

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employer offers to the employee? Well the first thing

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What he offers is time.

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Suppose we want to go into the business of making these podiums here and we want to start from scratch.

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What do we have to do if we want to do it independently or as a workers co-op where there is no employer?

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Suppose I'm the employer and you guys are workers and you're bitching and moaning and whining that I'm exploiting you.

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You could start a factory doing this.

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What would you have to do?

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You'd have to buy or rent a factory.

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Then you'd have to buy or rent saws and get wood and find out where you could sell it to.

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This would take weeks or months to do, right?

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During this time, what are you guys doing for salary?

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Well, you're basing on savings.

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And if you don't have much savings, you can't do it.

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Because the time that the first one of these rolls off the assembly line and then gets sold is going to be months.

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So what I'm doing as the employer is I'm staking you to time.

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I'm saying, look, I'm going to pay you a salary all the way through, even though I'm not going to get the first one sold for months, but I'm paying you a salary.

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So the first thing that I, the employer, give to you, the employee, is time.

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The second thing is risk-bearing, because suppose that that great and glorious day six months from now,

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when the first one of these rolls off the assembly line, no one wants to buy it.

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They say, what, it's wood and killing wood is evil, you know, we have a new PETA,

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only not people for the ethical treatment of animals, but people for the ethical treatment of wood.

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Don't laugh, you know, it could happen in today's new year.

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And no one wants to buy it. They want plastic or metal podiums.

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Do I now come back to you and say,

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Hey, guess what? I got bad news for you.

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Remember that salary I paid you for the last six months?

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Well, it didn't sell, so give me the salary back.

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I can't say that.

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Namely, I'm bearing the risk that these things will sell.

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If you guys had to do it on your own,

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either individually or as a worker's co-op, you would bear the risk.

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The third thing that the employer offers is the initiative.

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I had the idea, I mobilized you.

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This isn't necessary because you could have conceivably

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had the idea and come to me and say,

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hey Block, how would you like to be

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the residual income claimant?

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And you give us time and risk, and it's our idea.

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So it could be that way, but usually it's not that way.

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So the employer gives time, risk bearing,

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and entrepreneurship.

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And he becomes the residual income claimant,

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namely he makes a contract with the employees and pays you a certain amount

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and then any difference between the selling price of the final product and what he has to pay

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in the form of wages and salaries and raw materials expenses, he keeps

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and that's the employer-employee relationship.

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Okay, what would wages, well before I get into that, I want to raise another question.

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The Marxists have this idea that there's a reserve all made the unemployed, and wages will be bid down,

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and there are problems with automation, you know, that take away jobs.

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Let's raise that first question about automation taking away jobs.

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and there's only so much work to be done and there'll be a reserve arm of the unemployed because we won't have enough things to do in order to create jobs for everyone.

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So the question is, from whence do jobs come? Where do we get jobs from?

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And this is just a different way of giving the answer of scarcity, but let me go through it anyway because it might be of help to you.

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What I have here is the idea of a wish list and a wish list, you know, what we do is I go around and say, okay, Prem, what do you want?

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And he says, oh, a yacht. And I go over to Ben and I said, Ben, what would you like?

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He said, oh, he'd like a chicken dinner or something like that.

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And what we do is we make a wish list by asking everybody what they want.

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And we go to all six billion people and we ask them, what do you want?

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And you get a very, very, very long wish list, six billion times everything that anyone ever wants.

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How far down do we get on our wish list at any given time?

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Well, we get, say, this far and think of this list as, you know, millions of things.

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How far down do we get?

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Well, it depends upon how hard and how smart we work and with how much capital equipment,

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which pretty much depends upon how much economic freedom we have.

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Okay, now suppose somebody comes up with an invention.

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Let's suppose I invent the cure for tooth decay.

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Now we have vast unemployment on the part of dentists.

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and not only dentists but the people that make drills and things like that

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and secretaries and nurses for dentists

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so isn't this horrible, aren't I public enemy number one

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for inventing a cure for tooth decay

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because I created unemployment and now if you get into the Keynesian twist what's

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going to happen is

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the dentists are going to stop buying things, they'll stop buying bicycles and

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then the bicycle manufacturers will all go broke and you know they will stop

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Stop buying baked goods and the bakers will go broke and you get this reverberation.

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So aren't I a bad guy? Shouldn't I be put in jail even though I didn't initiate any violence?

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I created vast unemployment? You'll be happy to hear the answer is no.

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I'm not the bad guy. Because what happens is that we free up labor.

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We can now go a little bit down on our wish list, thanks to me.

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Because all the dentists that used to be having to cure our tooth decay are no longer needed because we don't have tooth decay.

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I sort of went poof like that and no one has tooth decay.

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Well, now they're freed up to create things that they couldn't create before and we can get down further on our wish list.

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Another way of putting this is with the production possibilities curve, you know, here you have guns, here you have butter.

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What we've now done is increase the production possibilities.

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That would be the more technical way of saying it, but I like this wishlist idea

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that what you're doing is you're freeing up labor to create things that couldn't be created before.

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That's why we live a civilized life, because we've allowed innovations or free trade or what have you.

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Another point that the Marxists make is that wages would go down to subsistence levels if we had markets,

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It's because wages are really determined by employer generosity and you can't trust employers to be generous.

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And I would say that the counter argument to that is, and this is an empirical claim,

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is that if people's productivity really was at subsistence level,

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What would you pay for a slave?

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Now look, I don't want anyone interpreting that I'm favoring slavery.

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I don't favor slavery, it's a course of activity.

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But just as a purely economic matter,

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what would you bid for a slave if his productivity was at subsistence level,

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namely he couldn't produce any more than necessary to feed him?

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Zero.

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You wouldn't bid anything for a slave

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who couldn't produce more than that was necessary to feed him.

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And yet, we have had slavery tens of thousands of years ago

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when presumably productivity was way lower than it is now.

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Which shows that we never were at a productivity level below subsistence level.

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Okay, okay, you know, there's a storm or a typhoon or something

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and then, you know, everything is screwed up and productivity's levels might go below subsistence like in Africa where they have these problems,

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military fighting, what have you. You can have below subsistence level productivity,

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but it can't be as a general rule because it's incompatible with the institution of slavery and slavery, as we know, exists all throughout history.

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So all throughout history we deduce that productivity levels were above subsistence.

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Stiegler offers an analysis of what you need for subsistence and he has the following.

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Let me see if I can work this machine here.

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This is what will probably be a better diet than the diet we have now.

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370 pounds of wheat flour, 57 cans of evaporated milk, 111 pounds of cabbage,

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25 pounds of spinach, 285 of dried navy beans.

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If you ate that, you would subsist for a year and probably do better in terms of just physiology

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And he estimates the cost of this as $8 a month, but this was in 1950, so you'd have to increase it a little bit.

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So the point is that subsistence is a very modest sort of a thing.

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Okay, what I want to now do is claim, well what I want to do now is to claim that wages in the free market will tend to be equal to marginal revenue product.

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So first they have to define what marginal revenue product is, and what marginal revenue product is, is this stuff.

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Marginal revenue product is the change in total product when you hire one more worker.

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So, for example, let's assume you have 100 workers and you're thinking of hiring a 101st worker.

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And you know that 100 workers will create for you $10,000 worth of widgets.

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And now you hire 101 workers and somehow the total product rises by $5.

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And what you're doing is attributing $5 to the marginal worker.

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Now, this is an estimate. People don't come, workers don't come with a little sign on their forehead or a little lapel like this saying, you know, $5 an hour.

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The employer has to estimate that. Employers who are accurate estimators of this, as we'll see, will make more money than employers who can't estimate their way out of a paperback.

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Employers who are accurate estimators of this, as we'll see, will make more money than employers who can't estimate their way out of a paperback.

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They all tend to lose money.

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Okay, so now I say having established that the marginal revenue product of our worker is $5 an hour, I want to ask what will his wage be like?

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And I say there are three possibilities.

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Either the wage will be higher than marginal product, or the wage will be equal to marginal revenue product, or the wage will be less than marginal revenue product.

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And to put a numerical example on it, suppose that the first possibility is that the wage settles at $7 an hour, given a marginal revenue product of $5.

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And there are problems with this, because if you're paying workers $7 an hour for stuff that they're giving you $5 an hour's worth,

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When you're losing $2 an hour on every worker, you're not going to last too long.

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So we can pretty much eliminate that as a reasonable possibility.

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Okay, let's take the third case.

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Suppose the wage gets established at $2 an hour and the marginal revenue product is $5 an hour.

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Can the firm long endure? Yeah, they're making money hand over fist off the backs of their workers.

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They're exploiting workers in the lexicon, not only of the Marxists, but even of the mainstream economists.

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We Austro-libertarians, if I can use such a phrase, and amalgamate the normative and the positive, would not say that.

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What will happen? Well, what will happen is that the wage will tend to rise.

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Because, well, let's go through a drill.

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Suppose that I am an employer and I now have a worker for $2 an hour.

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And you guys are fat capitalist pigs too, not just me, we're all capitalist pigs here.

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And Maximilian, since you're sitting in the front, I'll pick on you.

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What would you do if I had a worker and I was paying two dollars an hour

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but he's producing five dollars an hour worth and you're a competing

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employer, what would you do?

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Three dollars?

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I'm kicking you out of the fat capitalist pig club.

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That's too generous, remember what you want to do is maximize profits.

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You don't want to be so generous, the workers get uppity and you know

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They get snarky and they don't tip their hat and they don't bow and scrape if you give them too much money.

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Prem, what would you offer?

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Two dollars and one cent.

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Two dollars and one cent is the right answer.

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And the next employer would be 202 and 203 and we'd go on up toward five dollars.

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We might not ever get to five dollars because, you know, there are costs of finding workers.

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See, the theory is not that wages tend to equal marginal revenue of product, but rather, not that it'll equal to it, but rather it'll tend toward that direction.

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Because any gap is a profit gap and just as nature abhors a vacuum, so does capitalism abhor a differential or a profit.

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In equilibrium, wages will equal marginal revenue product. In equilibrium, there'll be no profits.

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We're never at equilibrium, we're always moving toward it, and of course, there are forces moving us away from it because things change, you know.

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People change their productivity, new machines come in, substitutes, complements, it gets complicated, things change.

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But wages tend to go up toward that level, one, through the bidding of employers.

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It's not for nothing that growers in California go down to Mexico with trucks and buses,

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and they get those workers and they bring them up to the U.S. in California, get them to pick stuff,

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and the wage in Mexico is very, very low, and they bid up the wage by two or three or four fold,

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and then the liberal do-gooders start moaning and saying,

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Well there's not hot and cold running water in the shacks that they put them in when they're forming

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and Cesar Chavez who is a hero on the left but is one of the most evil vicious people known to man

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well he's not up with Hitler and Stalin but you know he's not a good guy because what he was doing

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is trying to keep the Mexican workers out of California because they're you know

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taking jobs away from his unionized workers. So they go down there, they don't go down there with whips and guns, they go down there with offers of something multiple of what the Mexican workers are getting, and then the people in San Francisco and other hippies, you know, I'm sort of like, what's that guy in South Park that hates the hippies? Cartman, I'm sort of like Cartman on the hippies, hippies are evil, you know, these

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Wine and Breed types in San Francisco that don't know economics if it hit them in the head think that César Chávez is a hero

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But he is really the villain because he's preventing

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Employers from going down and bidding wages higher than than what they are bidding them up toward

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Productivity levels now this

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How dare you cough in my class Lauren

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I've got a present for you.

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These, this process of going 201, 202, that would only be theoretical,

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just to illustrate what the Tarton month or the bidding process would be.

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Actually, it would might go to three or four or something would go quicker,

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because the tendency is for wages to equal marginal productivity.

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And it not only comes from the employer side,

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But also from the employee side. Employees get together in a bowling league and they chat and they say well what do you make and what? You're making twice as much as me?

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I'm going to quit my job and come ask your boss if I can work with you. So from both sides, wages tend to equal marginal revenue productivity.

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Okay, now we introduce the minimum wage knowing why and how wages are set on a free enterprise system.

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Notice that the minimum wage law is an unemployment law on the face of it, not an employment law.

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Because the minimum wage law doesn't say you should raise wages to $7, it just says it shall be illegal to pay anything less than $7 an hour.

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Let's take that as an example of a minimum wage.

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So anyone who doesn't have a productivity of $7 an hour is in equilibrium going to be unemployed.

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So it doesn't compel anyone to raise wages, it just forbids anyone to pay below a certain level.

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That's what the minimum wage law is.

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Do you people know what the high jump record is?

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The Olympic high jump record?

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About eight feet?

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I don't know, this would be about eight feet.

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There are guys that come and run up and jump over eight feet.

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I mean, that's just spectacular.

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You get a world-class athlete who can do that.

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Most meets, you know, 7'6", which is still pretty high.

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A good high school athlete might be able to jump over 6 feet.

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Elementary school people who are trained for this, or middle school kids, you know, 4 or 5 feet.

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I want to demonstrate to you some physical ability.

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Just watch this, and I want a little applause if I make it.

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Watch.

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No applause, coins.

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I just jumped over this chair.

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It's about three inches high.

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Different amounts, different athletic ability will get you over different barriers.

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What I want to say is that the minimum wage law is not a floor under wages which, as it rises, raises everyone's wage, which is the usual view, the view in the religion departments and the sociology departments and the view of most people.

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Boy, I'm out of breath from that physical one. This is pathetic.

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Rather, the minimum wage law is like a high jump thing. You have to jump over it to get a job.

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And different people have different skills, just as in physically jumping over obstacles.

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They have different abilities to jump over minimum wage levels. And what is their ability?

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Their ability is their productivity. So if they're very productive, they can jump over it.

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If they're not very productive, they can't jump over it.

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And the higher the minimum wage is, the harder it is to jump over it, right?

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It's easy to jump. Suppose the minimum wage law was 10 cents an hour.

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Most people could jump over it.

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Are there people for whom 10 cents an hour in the United States, in the modern era, is a reasonable productivity level?

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Yes, there are such people.

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They're not physically handicapped, they're mentally handicapped.

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Mentally handicapped people have very low productivity levels.

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And yet, it's been determined by psychologists and such like people

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that mentally handicapped people can be helped by having a job.

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Because if they don't have a job, it's sort of boring.

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I'm not into this. I'm not an expert on why it helps them psychologically.

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But somehow it's been determined that it helps them to have a job.

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What kind of jobs can they have?

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Well, maybe stringing beads, things like that.

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And you have to subtract from their productivity the costs of the person who guards them

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or is their nurse or whatever because you can't let them out alone

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because they'll just, I don't know, do weird things because they're mentally handicapped.

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I often think that if I lost an arm or a leg, I'd still be me.

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You know, I'd be in a wheelchair or whatever, but I'd still be me.

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Whereas if I lost my brain or, you know, my ability to think, I wouldn't be me.

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So in a sense, you know, arms and legs are just conveniences.

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Whereas mental handicapped is really bad stuff.

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And these people need all the help they can get.

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And it used to be before the advent of the minimum wage law that they would have jobs.

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And they would work at very low wages but they would be paid and it paid employers to hire them because they could make a profit off of them.

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I mean it sounds horrible making a profit off of the helpless, but really what it's doing is cooperating with them as I've tried to establish.

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Then came the minimum wage law and no longer would it pay anyone to hire them because I think the minimum wage law,

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The first minimum wage law was 25 cents in the 40s, and these people were way below 25 cents in the 40s, you know, a penny to an hour or something like that.

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So what they did, you see, they could have got them in make-work jobs, like raking leaves and paying them, but they're not really working, but that didn't work.

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Somehow, even though they're mentally handicapped, they sensed that they weren't being paid for a job.

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And happily, compassionately, they made an exception for mentally handicapped people.

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And you didn't have to pay them the minimum wage.

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But the point is that if you have to make an exception for the law, what good is the law?

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A second example is teenage workers during the summer.

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You know, everyone's having, you know, please hire teenage workers during the summer,

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otherwise they'll riot or whatever.

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And then you have an exception for teenagers, in other words if the minimum wage, I don't know what the minimum wage law is now, it keeps changing, is it 5.15 or 5.35 and it's scheduled to go up in groups of time, I don't know, every year it'll go up another 50 cents.

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Well, teenagers, a lot of them don't have that productivity plus it's hard to tell which teenager can work well because at that level what's important is that you show up for work on time and you don't sass the boss and you don't sass the customers and I mean they're big and strong but that doesn't mean they have productivity if you have to keep them from fighting with each other or fighting with the customers, you know the productivity is negative if they do that. So it's very hard to determine what their productivity is.

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And they've come up with exceptions for minimum wage laws and such is the level of knowledge of these things that when they did this in France, there was an actual riot.

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What happened, here's a riot, and let me read the, I guess you can't see this, or can you, well I'll read it to you.

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Plainclothes police arrest the Young Man Center after rioting broke out during a demonstration.

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Tens of thousands of workers and students marched in Paris and a coarse-skinned city

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yesterday to protest the jobs policy of the Premier of France, specifically his plan to allow a below minimum wage for young people entering the workforce.

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So here they're making an exception, a compassionate exception for the minimum wage law just to enable teenagers to get jobs and the teenagers are rioting.

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because they have the view that the minimum wage law is a floor under wages and as you raise it, everyone's wages rise

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and they see this compassionate program as a way of stopping their wages from rising

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whereas actually it's a barrier over which you have to jump and the higher it is, the fewer the people can get over it

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but they don't realize that

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I told you yesterday that I had an honors class and after two or three weeks of going over this intensively, this young lady who was a magna cum laude graduate said,

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I see your point and I agree with it, but I don't like it. There's something viscerally hateful about this idea.

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I have a hard time wrapping my mind around it, why it is so, but it seems to be.

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Well, if it were so, suppose the minimum wage law really were a floor under wages and by raising it you could raise wages.

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Why be pikers? Why be skin flints? Why just have a minimum wage law of five or six or seven dollars an hour? Why not make it ten?

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Well, I shouldn't say that because at Harvard and other such places of ignorance they're now trying to have a living wage for the janitors and ten dollars an hour seems to be what they want.

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Why ten? Why not a thousand? Ten thousand an hour.

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I was once in a debate on the radio with a unionist, and I'll be speaking about unions in a second,

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and I said, you know, why be so skin flinty about, you know, advocating five or six or eight or ten?

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Why not ten thousand? And he said, that's too theoretical.

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We had a very high-placed libertarian come to campus and I will mention his name because I don't want to embarrass him.

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And somebody asked him, well, if you couldn't vote for the libertarian, who would you vote for, the Democrat or the Republican?

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And his answer was, that's the stupidest question I've ever heard.

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And his answer was to my students.

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And when I heard about this later, I said, you know, there are some people who have an IQ above room temperature.

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For them, theoretical questions are okay. It's part of the academic apparatus.

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And there are other people with IQs down there who can't tolerate the idea of a theoretical or a hypothetical.

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So this unionist was, well, I don't know, if I was on that side of the debate, I'd probably say the same thing.

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I don't know what else you could say. It's too theoretical. It sounds okay.

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But the point is that they know in their bones that if the minimum wage law was $100 or $200 or $300 an hour,

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virtually everyone would be unemployed, with the exception of some high-priced lawyers or Madonna or somebody like that

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who makes more than $100 an hour. Heck, even I make more than $100 an hour when I do consulting.

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I had the instance where some government employer wanted me to consult with him and I said 400 an hour and he said okay.

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Then, you know, he wanted me to consult with him on how to improve Iraq and I said, well, you know, the best way to improve it is to get the U.S. out.

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Sort of hung up on me, but that's part of the question.

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Okay, so what determines who jumps over the bar and who can keep employed in the face of minimum wage is productivity, marginal revenue productivity.

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And who's got it? Well, when it comes to jumping over a bar, teenagers are much better than people my age.

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I'm 64 and you saw the barrier that I could jump over. I'm sure kids here in age 20 could jump over the chair upright with a little running lead.

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I couldn't. I'm just too old and fat to do that.

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Well, here we have an example of who jumps over the bar.

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And we look at the unemployment rate of teenage males and adult males.

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And we look at the minimum wage law with a step function.

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The minimum wage law is getting higher and higher.

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And the teenage male rate is getting higher and higher.

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And before the advent of the minimum wage law, the unemployment rate of teenagers and adults was about the same.

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But now all of a sudden, teenage unemployment is rising. Why? There's no other reason other than the minimum wage law.

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Teenagers can't jump over the minimum wage barrier, even though they could jump over a high jump barrier.

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But it's a different contest. It's not a physical ability to jump over a teenager.

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I'll bet you most of the teenagers in this audience could jump over this table.

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table, whereas the adults couldn't, whereas the adults have more productivity

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because you know adults have more experience and adults know better what

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they're good at and then have switched jobs whereas teenagers don't and it's a

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well-known fact that people in their 40s 50s and 60s have more productivity than

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and people in their teens and that's why young teenage males have such bad employment experiences.

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Okay, I want to now consider a whole bunch of objections to my thesis.

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My thesis is that the minimum wage law is a horrible thing.

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The first one is the following diagram.

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Let's have a supply and a demand curve, quantity of labor and a wage.

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Whoops, I'd better make it a little smaller.

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Okay, and let's suppose that right now there's no minimum wage and these people's productivity is $5 an hour

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and there are a thousand workers and what is the wage bill?

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What are they all being paid? Well, they're being paid $5,000.

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Okay, that's fine. I'm simplifying. In reality, the wage wouldn't be exactly $5, but what the heck?

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We're talking rough now. Okay, now we have a minimum wage law, and the minimum wage law is $7 an hour.

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And we have unemployment, and now we have 900 workers who are working. And what is the wage bill?

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The average bill is now $6,300. Well, first of all, 100 people lose their jobs, so that's one point on my side.

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But on the other side, on the side of the objector, you could say, well look, let's all the workers band together.

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Under the old system, the average worker was getting $5.

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Under the new system, if the 900 workers will share their pay with all 1000, the average worker could make $6.30 an hour, which is better than 5.

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So isn't this good? Well, this is one objection.

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Now you might say, well they wouldn't share, but at least theoretically it shows that the minimum wage law can work and it can help.

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So that's one objection. The problem with this objection is, the problem with this objection is that the man curves, their elasticity changes based on the length of run.

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Now let me introduce this in the following way. When a baseball pitcher winds up, notice this prowess here, you know, and he throws the ball, and he throws it at around 80, 90 miles an hour.

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Why does he throw it so fast? Stupid question. The reason is, the faster it is, the harder it is for the batter to adjust.

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Whereas when the baseball pitcher throws the ball in batting practice to give the batters confidence, he throws it at 40 miles an hour and then they swat it all over the place, right?

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Because the slower the ball is, the bigger it looks. I mean when it goes by at 90 miles an hour, it goes by real quick.

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It's the same with tennis, you know, they'll serve it at 130 miles an hour.

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Whereas if they're just playing, you know, they'll serve it like this at 30 miles an hour and then it's easy to, you know, get around and, you know, hit the ball.

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You know hit the ball whereas if it's coming at 130 miles you just sort of go like that and you miss the ball

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Unless you're really good at it

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So the more time there is the more you can adjust

395
00:41:50.960 --> 00:41:54.240
One of the biggest boosts in the minimum wage law was

396
00:41:54.960 --> 00:42:00.120
And when it went from forty dollars forty cents an hour to seventy cents an hour it was almost a doubling

397
00:42:00.320 --> 00:42:09.320
And during that time, if you went on an elevator, there would be this guy in the elevator.

398
00:42:09.320 --> 00:42:15.320
He wasn't a pervert. He wasn't, you know, trying to grab you or anything.

399
00:42:15.320 --> 00:42:18.320
He was the elevator operator.

400
00:42:18.320 --> 00:42:22.320
How many have ever been in an elevator with an elevator operator?

401
00:42:22.320 --> 00:42:25.320
John and, what's your name?

402
00:42:25.320 --> 00:42:28.320
You don't look that old. I don't know how you did it.

403
00:42:28.320 --> 00:42:42.320
But in the United States you have to be an old coot like me and John to have been a kid in an elevator and the guy would go like this until the elevator was exactly on level with the floor.

404
00:42:42.320 --> 00:42:51.320
When that minimum wage law went up from 40 to 70 cents, how many elevator operators lost their jobs the very next day?

405
00:42:51.320 --> 00:43:00.320
None, not a one, because if they would have fired elevator operators, the tenants would have been in an uproar, you know,

406
00:43:00.320 --> 00:43:05.320
you know, we're paying rent to get up and down and now you're firing elevator operators?

407
00:43:05.320 --> 00:43:19.320
So the demand curve for elevator operators in the very short run looks like that, quantity of labor, wages, namely the very next day,

408
00:43:19.320 --> 00:43:32.320
So here is 40 cents an hour, and here is 70 cents an hour, and you move from point A to point B.

409
00:43:32.320 --> 00:43:35.320
Right, my handwriting is okay, you can all see this.

410
00:43:35.320 --> 00:43:42.320
Not a single solitary person lost their job, and everyone is going whoop-de-doo, minimum wage, uberallis.

411
00:43:42.320 --> 00:43:48.320
You know, this is hot diggity dog stuff.

412
00:43:48.320 --> 00:43:51.320
Right? I mean, the minimum wage law is great.

413
00:43:51.320 --> 00:43:56.320
It practically doubled our salary thanks to the benefits of the government.

414
00:43:56.320 --> 00:44:03.320
And those evil employers are only paying us 40 cents an hour because our marginal productivity was 40 cents an hour.

415
00:44:03.320 --> 00:44:12.320
And now this shows that Block is all wrong because we're still getting 70 cents an hour even though our marginal revenue product is 40 cents an hour.

416
00:44:12.320 --> 00:44:15.320
Well, what happened the next day?

417
00:44:15.320 --> 00:44:20.020
or the day after, well, it takes a week or two or three or something

418
00:44:20.020 --> 00:44:23.020
and either people, instead of building buildings like this,

419
00:44:23.020 --> 00:44:25.620
they build them long and narrow so you don't have elevators

420
00:44:25.620 --> 00:44:29.520
or what happened was you got automatic elevators.

421
00:44:29.520 --> 00:44:34.620
See, automatic elevators were competing with the hand-driven elevators

422
00:44:34.620 --> 00:44:39.120
but at 40 cents an hour, the hand-driven were beating the automatic

423
00:44:39.120 --> 00:44:43.320
but at 70 cents an hour, the automatic were beating the hand-driven.

424
00:44:43.320 --> 00:44:48.720
So what happened over the next two, three, four, five years is that all the elevators became automatic,

425
00:44:48.720 --> 00:44:50.420
but then nobody connected the two.

426
00:44:50.420 --> 00:44:55.920
They said, oh, it was the interest rate, or it was, you know, this, or it was technology.

427
00:44:55.920 --> 00:45:01.120
Now, I don't deny that sometimes automation stems from technology,

428
00:45:01.120 --> 00:45:06.020
but sometimes it also is engendered by comparative wages.

429
00:45:06.020 --> 00:45:11.620
And at 40 cents an hour, the hand-driven elevators were competitive, at 70 cents they weren't.

430
00:45:11.620 --> 00:45:17.020
So after the next two, three, four years, there were no more automaker elevators.

431
00:45:17.020 --> 00:45:21.620
So what the demand curve looks like, it's sort of like a spiral.

432
00:45:21.620 --> 00:45:28.320
So if this is the immediate run, this is the short run, and then the medium run, and then...

433
00:45:28.320 --> 00:45:37.420
And finally, eventually, the marginal revenue product curve is flat.

434
00:45:37.420 --> 00:45:40.820
And if the demand curve for labor is based on marginal revenue product,

435
00:45:40.820 --> 00:45:44.920
the marginal revenue product is flat in equilibrium, which we never get to,

436
00:45:44.920 --> 00:45:47.920
but we always tend toward that in that direction.

437
00:45:49.420 --> 00:45:53.420
So it's, you know, back to jumping over the barrier.

438
00:45:53.420 --> 00:45:59.420
And all those guys were unemployed at 70 cents, if their productivity was only 40 cents.

439
00:46:00.420 --> 00:46:00.920
John?

440
00:46:00.920 --> 00:46:06.720
My dad was an electrician who made quite a bit of money going into learning how to wire in

441
00:46:06.720 --> 00:46:12.720
Creative Destruction

442
00:46:12.720 --> 00:46:24.720
Yep. Okay, let me get to another objection. This is a more, I don't know, more serious objection.

443
00:46:24.720 --> 00:46:33.720
I don't know how to characterize that and I sort of apologize to people who are not really majoring in economics

444
00:46:33.720 --> 00:46:38.280
economics and had two or three micro courses because you're not going to really get this and I'm

445
00:46:38.280 --> 00:46:44.160
not even going to give the answer to it I'll just give the objection now and it's from monopsony.

446
00:46:44.160 --> 00:46:51.760
The objection that some people will give to what I just said about the minimum wage law is monopsony

447
00:46:51.760 --> 00:47:02.560
And how does monopsony work? Well, the first run at monopsony is this curve right here.

448
00:47:02.560 --> 00:47:27.560
What you have is, monopoly, well, I don't know if I should go into it because I want to go into it on Friday when I do the monopoly, monopsony stuff, but let me just give a few minutes on this now.

449
00:47:27.560 --> 00:47:41.560
Monopoly, according to the neoclassicists, is a single seller of goods. According to the Austrians, monopoly is government privilege where competitors are not allowed in, so it's very different.

450
00:47:41.560 --> 00:47:54.560
Monopsony for the Austrians would be a marketing scheme where only the government can buy wheat and anyone else is forbidden from buying wheat or corn or whatever it is.

451
00:47:54.560 --> 00:48:00.160
but a monopsony for the neoclassicists, I'm now giving a neoclassical objection

452
00:48:00.160 --> 00:48:06.120
to my analysis of the minimum wage. The way the neoclassicists view monopsony

453
00:48:06.120 --> 00:48:16.600
is that it's a single buyer and what happens with a single buyer is here is

454
00:48:16.600 --> 00:48:22.400
the supply curve which is based on average factor costs and here is the

455
00:48:22.400 --> 00:48:34.400
demand curve for labor, and where the demand and the supply meet, you get C or the competitive price and quantity.

456
00:48:34.400 --> 00:48:44.100
Okay, so if it was a competitive industry for the neoclassicists, you would be at point C.

457
00:48:44.100 --> 00:48:50.200
However, what you do for the monopsinist is first you pick a quantity,

458
00:48:50.200 --> 00:48:58.440
And the quantity is where the marginal revenue and the marginal cost hit, and they hit at quantity one.

459
00:48:58.440 --> 00:49:02.240
How many people know what I'm talking about and have seen this before?

460
00:49:02.240 --> 00:49:07.680
About half of you. Okay, so I'm not losing everyone on this. Okay.

461
00:49:07.680 --> 00:49:15.960
And people out there in radio and TV land might benefit from this as well.

462
00:49:15.960 --> 00:49:24.160
Okay, so point C is where the competitive industry would be, and then everything I just said would be true.

463
00:49:24.160 --> 00:49:33.360
But now we introduce monopsony, and monopsony means that as you buy more and more, the price rises even faster.

464
00:49:33.360 --> 00:49:38.160
It rises according to the marginal cost curve, and as I say, I'll do more on this on Friday.

465
00:49:38.160 --> 00:49:42.160
So I'm just sort of giving a quick run over on this.

466
00:49:42.160 --> 00:49:58.260
So now you have to pick a quantity and you pick quantity one with a marginal revenue and the marginal cost hit which is right here and then that's the quantity and then what's the price?

467
00:49:58.260 --> 00:50:19.260
These are the prices where that quantity intersects the supply curve, which is at M, so the monopsinist will pay less and buy less than would the competitive industry because M is below and to the left of C, yes?

468
00:50:19.260 --> 00:50:29.260
Now we introduce the minimum wage law. And when we introduce the minimum wage law, we get the following situation.

469
00:50:29.260 --> 00:50:38.260
We get a situation where the minimum wage law is above M.

470
00:50:38.260 --> 00:50:56.860
And as you know, let me make this a little bit bigger, when the marginal is above the average, the average rises.

471
00:50:56.860 --> 00:51:03.260
When the marginal is equal to the average, whether it's cost, the revenue or anything else, the average stays the same.

472
00:51:03.260 --> 00:51:06.660
And when the marginal is less than the average, it pulls it down.

473
00:51:06.660 --> 00:51:19.660
This is the common sense, you know, that if you've got a string of quizzes where you got 90, 90, 90, 90, and you get another 90, namely the marginal is the same as the average, it doesn't pull your average up or down.

474
00:51:19.660 --> 00:51:30.660
Whereas if you get a 70 on your last quiz, it'll pull your average a little down. If you get a 95, it'll pull it up a little bit. So it's just that sort of common sense notion.

475
00:51:30.660 --> 00:51:55.660
Okay, so now what happens here is that the minimum wage law or the minimum wage level, which is over here, is now the marginal curve up until it hits the average cost curve where upon it rises up to the marginal cost curve.

476
00:51:55.660 --> 00:52:01.660
So, you get this dotted thing. The new marginal cost thing goes from here to here and then up here.

477
00:52:01.660 --> 00:52:10.660
And the new average cost curve goes along, because remember when the marginal is flat, so must the average be flat.

478
00:52:10.660 --> 00:52:16.660
So the new average cost curve goes along here and then up to the average cost curve.

479
00:52:16.660 --> 00:52:25.660
So again, we ask, where's the quantity? And the quantity is where marginal revenue and marginal cost hit each other.

480
00:52:25.660 --> 00:52:31.660
Well, here's marginal cost and here is marginal revenue and they hit right there.

481
00:52:31.660 --> 00:52:39.660
So that's the new quantity one. And now you go to the supply curve and the supply curve is this sort of a thing.

482
00:52:39.660 --> 00:52:45.660
So you get to that dot where I've got a square around it.

483
00:52:45.660 --> 00:53:09.660
That's one illustration of it. Another illustration of the same thing, only I put the minimum wage law in a different place, is right here, where again you get this Q1 and the point is that whether you're on this curve or this curve, what both of these have in common, and I'll reduce it so you can see both together.

484
00:53:15.660 --> 00:53:25.660
What both have in common is that the minimum wage law raises the quantity and the price that labor is paid.

485
00:53:25.660 --> 00:53:30.660
And this is the opposite of what we've seen before.

486
00:53:30.660 --> 00:53:42.660
In the other case, you see when it's a competitive industry and here you have say that $5 an hour and here's the $7 an hour.

487
00:53:42.660 --> 00:53:46.660
The Minimum Wage Law

488
00:54:12.660 --> 00:54:15.660
In the monopsony case, more workers will be hired.

489
00:54:15.660 --> 00:54:23.660
So this is a contradiction of what I said when I said that it'll create unemployment.

490
00:54:23.660 --> 00:54:30.660
Okay, if I got some great jokes for you guys, I'm continuing on my payback for blonde jokes kick.

491
00:54:30.660 --> 00:54:39.660
Pretty soon I'll get into blonde jokes, but here are some pro-blonde jokes, I suppose.

492
00:54:39.660 --> 00:54:46.580
What did God say after creating man? I must be able to do better than that.

493
00:54:46.580 --> 00:54:53.700
What did God say after creating Eve? Practice makes perfect.

494
00:54:53.700 --> 00:54:58.260
What is the one thing that all men at singles bars have in common?

495
00:54:58.260 --> 00:55:01.940
They're all married.

496
00:55:01.940 --> 00:55:06.020
Man says to God, God, why did you make woman so beautiful?

497
00:55:06.020 --> 00:55:08.660
God says, so you would love her.

498
00:55:08.660 --> 00:55:17.660
To God the man says, why did you make her so dumb? God says, so she would love you.

499
00:55:17.660 --> 00:55:22.660
Okay, now we get a regular blonde joke.

500
00:55:22.660 --> 00:55:28.660
A plane is on its way to Montreal when a blonde in economy class gets up and moves to first class section and sits down.

501
00:55:28.660 --> 00:55:32.660
The flight attendant watches her do this and asks to see her ticket.

502
00:55:32.660 --> 00:55:36.660
She then tells the blonde that she paid for economy and that she will have to sit in the back.

503
00:55:36.660 --> 00:55:42.260
The blonde replies, I'm blonde, I'm beautiful, I'm going to Montreal and I'm staying right here.

504
00:55:42.260 --> 00:55:48.560
The flight attendant goes to the cockpit and tells the pilot and copilot that there is some dumb blonde bimbo sitting in first class

505
00:55:48.560 --> 00:55:52.260
who belongs in economy and won't move back to her seat.

506
00:55:52.260 --> 00:55:58.360
The copilot goes back to the blonde and tries to explain that because she only paid for economy, she will have to leave and return to her seat.

507
00:55:58.360 --> 00:56:03.260
The blonde replies, I'm blonde, I'm beautiful, I'm going to Montreal and I'm staying right here.

508
00:56:03.260 --> 00:56:07.580
Once you've got something, you stick with it, I guess, if it's working.

509
00:56:07.580 --> 00:56:11.500
The co-pilot tells the pilot that he probably should have the police waiting when they land

510
00:56:11.500 --> 00:56:16.220
to arrest this blonde who won't listen to reason. The blonde says, you say she's blonde, I'll handle

511
00:56:16.220 --> 00:56:22.300
this. I'm married to a blonde and I speak blonde. He goes back to the blonde, whispers in her ear,

512
00:56:22.300 --> 00:56:26.460
after which she says, oh, I'm sorry, and gets up and moves to her back to her seat in the economy

513
00:56:26.460 --> 00:56:32.700
section. The flight attendant and the co-pilot are amazed and ask them what he said to make her move

514
00:56:32.700 --> 00:56:51.700
Okay, let's get back to minimum wage. If the minimum wage law is so bad, and this business of monopsony I don't think is a counter example, and I'll get to it on Friday when I do the monopoly monopsony business, if it's so bad, why do we have it?

515
00:56:51.700 --> 00:56:55.700
and I'll get to it on Friday when I do the Monopoly and Monopsony business.

516
00:56:55.700 --> 00:56:58.700
If it's so bad, why do we have it?

517
00:56:58.700 --> 00:57:06.700
Well, you know those detective shows on TV or the Sherlock Holmes books?

518
00:57:06.700 --> 00:57:12.700
Whenever you see a dead body, one of the things you do is you ask, well, who benefits?

519
00:57:12.700 --> 00:57:19.700
Right? I mean, if there's an old lady there, you look to her airs, you know, which air bumped her off maybe?

520
00:57:19.700 --> 00:57:24.700
And then you look at their, you know, where they were on the night of the murder or something like that.

521
00:57:24.700 --> 00:57:31.700
If it's a spouse, you look at the other spouse, maybe that spouse wanted to get rid of this one and marry someone else.

522
00:57:31.700 --> 00:57:38.700
You look for motive. So we ask, well, who benefits from the minimum wage law?

523
00:57:38.700 --> 00:57:44.700
And given that the main effect of the minimum wage law is unemployment for teenagers,

524
00:57:44.700 --> 00:57:50.700
Who benefits from unemployment for teenagers?

525
00:57:50.700 --> 00:57:53.700
Well, I've got a little list here.

526
00:57:53.700 --> 00:57:55.700
Prison guards.

527
00:57:55.700 --> 00:57:59.700
They benefit because unemployed teenagers get into trouble.

528
00:57:59.700 --> 00:58:03.700
They're bored and they can't get any money from honest work.

529
00:58:03.700 --> 00:58:07.700
So they engage in robbery and then prison guards get more jobs.

530
00:58:07.700 --> 00:58:09.700
So that's one possibility.

531
00:58:09.700 --> 00:58:13.700
I don't think it's true, but I'm just going down a list of who benefits.

532
00:58:13.700 --> 00:58:19.000
Another one is teachers, you know, if they're unemployed, maybe they'll go back to school.

533
00:58:19.000 --> 00:58:27.700
Another one is psychiatrists, because kids who are bored are likely to get into more psychological troubles.

534
00:58:27.700 --> 00:58:31.800
I don't think any of them has any effect.

535
00:58:31.800 --> 00:58:34.700
The way Murray used to say is that these are just hypotheses.

536
00:58:34.700 --> 00:58:38.300
Now we have to go out and test them or check them or see if it's really true,

537
00:58:38.300 --> 00:58:42.300
Because this is not praxeology, this is an empirical question.

538
00:58:44.300 --> 00:58:47.300
Another group who benefits is unions.

539
00:58:47.300 --> 00:58:55.300
And before I get into that, or this is the way I'd like to illustrate that, is with an isoquant.

540
00:58:56.300 --> 00:59:05.300
This is an isoquant, which means iso is equal and quantity is quantity.

541
00:59:05.300 --> 00:59:19.300
And here you have say a hundred bushels of wheat and over here we have land and over here we have labor.

542
00:59:19.300 --> 00:59:27.300
Okay, now there are some countries that engage in intensive farming and then there are other countries that engage in extensive farming.

543
00:59:27.300 --> 00:59:34.300
Extensive would be a lot of land and very little labor, a lot of land, very little labor.

544
00:59:34.300 --> 00:59:40.300
And then there are other countries that have a lot of labor, they're very labor-intensive and very little land.

545
00:59:40.300 --> 00:59:45.300
For example, where is the U.S., A or B?

546
00:59:50.300 --> 00:59:55.300
Well, given the choice of A or B, or let me ask you the other one, where is Japan, A or B?

547
00:59:56.300 --> 01:00:01.300
Japan is clearly B, the U.S. is A.

548
01:00:01.300 --> 01:00:10.300
The U.S. is much more land intensive, the Japanese is much more labor intensive, they've got many more people per acre,

549
01:00:10.300 --> 01:00:18.300
whereas in the U.S. you get one guy in a big tractor trailer combine who goes a square mile or two or three,

550
01:00:18.300 --> 01:00:26.300
whereas in Japan or Italy up those hills is very intensive farming in many European countries.

551
01:00:26.300 --> 01:00:35.300
Okay, well suppose that the price of land rises, which way do we go?

552
01:00:35.300 --> 01:00:47.300
Well, you move in this direction because the natural tendency is to substitute away from any factor production that is suddenly more expensive.

553
01:00:47.300 --> 01:00:52.300
Okay, everyone sees this, this isn't rocket science.

554
01:00:52.300 --> 01:00:58.740
But let's now change things and realize that you can do the same thing with say

555
01:00:58.740 --> 01:01:06.120
a hundred shoes and here you can have skilled labor and here you can have

556
01:01:06.120 --> 01:01:16.580
unskilled labor, right? And some companies can make their product with a lot of

557
01:01:16.580 --> 01:01:21.340
skilled labor and very little unskilled labor, others can do it the other way

558
01:01:21.340 --> 01:01:32.340
There are various combinations of factors of production that you can use to make 100 shoes.

559
01:01:32.340 --> 01:01:37.340
There's not one way to make shoes. We don't have fixed proportions or anything like that.

560
01:01:37.340 --> 01:01:44.340
Now, suppose I tell you that skilled labor has suddenly become more expensive.

561
01:01:44.340 --> 01:01:49.340
And you're an employer, what would your natural tendency be?

562
01:01:49.340 --> 01:01:57.340
Well, again, if skilled labor gets more expensive, you would tend to substitute,

563
01:01:57.340 --> 01:02:01.340
fire a few of the skilled workers and hire a few unskilled workers,

564
01:02:01.340 --> 01:02:05.340
and keep making a hundred chews in a slightly different proportion.

565
01:02:05.340 --> 01:02:07.340
Everyone with me? That makes sense?

566
01:02:07.340 --> 01:02:10.340
Okay, so here's the scenario.

567
01:02:10.340 --> 01:02:14.340
The union, which is mainly the skilled workers, comes to the boss and says,

568
01:02:14.340 --> 01:02:21.740
says, boss, you're unfair, you're only paying us $20 an hour, we want $25.

569
01:02:21.740 --> 01:02:28.700
And the boss says, I'm going this way, I'm going to fire a few of you guys, maybe ten

570
01:02:28.700 --> 01:02:32.540
of you, and I'll hire 25 unskilled workers or whatever the proportion is so that I can

571
01:02:32.540 --> 01:02:36.340
keep doing 100 shoes.

572
01:02:36.340 --> 01:02:43.620
And now, the union doesn't like this, and there are various ways that the union can

573
01:02:43.620 --> 01:02:56.620
can deal with this. One, they can pass Wagner Act, or one of those labor legislation acts that ties up the handcuffs of the employer.

574
01:02:56.620 --> 01:03:07.620
But that's tough, although they'll try that, but it's tough. You know, you have to bribe all sorts of people and there's opposition, you know, the manufacturers don't like it.

575
01:03:07.620 --> 01:03:14.120
Another way is you beat up the scabs. They're not in the Union now with them. You beat them up.

576
01:03:14.120 --> 01:03:19.620
The problem is, you know, when you get in a mud fight, even if you win, you get mud on you.

577
01:03:19.620 --> 01:03:29.120
Beating up scabs is so lowbrow, so blue collar. I mean, you know, it's fun and all, but still,

578
01:03:29.120 --> 01:03:34.620
there's a much better way. There's an ingenious way.

579
01:03:34.620 --> 01:03:39.620
What you do is you pose as the savior of the workers, of the downtrodden, you say,

580
01:03:39.620 --> 01:03:49.620
look, we've got to, I was going to say price these buggers out of the market, but that's the subterranean view.

581
01:03:49.620 --> 01:03:54.620
What we've got to do is help these scabs, we've got to raise their wages.

582
01:03:54.620 --> 01:04:03.620
And if we raise the wages of these unskilled workers, then no longer does the employer want to go this way.

583
01:04:03.620 --> 01:04:15.620
Now he might even want to go that way. If you raise them enough, you know, the heck with seven, let's raise it to ten. That'll really put the kibosh on those guys.

584
01:04:15.620 --> 01:04:24.620
This is a pretty vicious kind of an activity. And it's much better because now you can pose as a good guy.

585
01:04:24.620 --> 01:04:30.620
See, with the Wagner Act and the labor legislation, and certainly with beating up scabs, you're seen as a bad guy.

586
01:04:30.620 --> 01:04:34.620
But here you're seen as the friend of the downtrodden.

587
01:04:37.620 --> 01:04:43.620
So this is a hypothesis and then what you have to do is go out and test it.

588
01:04:44.620 --> 01:04:47.620
I hate to sound non-Austrian but this is not praxeology.

589
01:04:47.620 --> 01:04:49.620
So we can test things like this.

590
01:04:49.620 --> 01:04:51.620
We can certainly illustrate it.

591
01:04:51.620 --> 01:04:58.620
We can see how do unions testify when the minimum wage law is being proposed.

592
01:04:58.620 --> 01:05:04.620
And by golly and by gum, we find out there are staunch advocates of the minimum wage law.

593
01:05:04.620 --> 01:05:13.620
They never say this. They say, you know, they give you this crap about, you know, the floor and we have to help the downtrodden and they don't let them in the Union.

594
01:05:13.620 --> 01:05:20.620
But that's one analytic framework with which to look at this.

595
01:05:20.620 --> 01:05:28.620
How many unions do you think actually earn the minimum wage?

596
01:05:28.620 --> 01:05:35.620
Very, very few. See, you have various hypotheses. Why are they favoring the minimum wage?

597
01:05:35.620 --> 01:05:42.620
One is because they're filled with the milk of human kindness and they want to raise wages for the downtrodden with whom they're in competition.

598
01:05:42.620 --> 01:05:47.620
The other is this analysis, that they want to price them out of the market.

599
01:05:47.620 --> 01:05:54.620
They don't want the employer to have an economic incentive to fire them and hire unskilled workers.

600
01:05:54.620 --> 01:05:59.620
They want it the other way around. So they artificially boost their wages and that's it.

601
01:05:59.620 --> 01:06:08.620
Walter Williams tells a very similar story about the white racist unions in South Africa pre-Mandela,

602
01:06:08.620 --> 01:06:15.620
where there was job reservation laws, the good jobs were reserved for whites and the bad ones for blacks.

603
01:06:15.620 --> 01:06:24.620
This wasn't working out to the union satisfaction because a lot of the employers couldn't promote the blacks,

604
01:06:24.620 --> 01:06:28.620
but they were paying them based on their marginal productivity because of bidding wars.

605
01:06:28.620 --> 01:06:34.620
And a much better way of getting rid of the black competition was to artificially boost the black wages

606
01:06:34.620 --> 01:06:36.620
or have a minimum wage for everyone.

607
01:06:36.620 --> 01:06:41.620
And since blacks had lower productivity than whites for various reasons that I won't get into,

608
01:06:41.620 --> 01:06:44.620
this was a way of eliminating their competition.

609
01:06:44.620 --> 01:06:51.620
And it's particularly vicious and underhanded because you're posing as a good guy and isn't it fun to tweak their noses?

610
01:06:51.620 --> 01:06:58.620
Remember I said one of the important benefits of libertarianism, you get to tweak noses, pompous union noses.

611
01:06:58.620 --> 01:07:01.620
It's just great to pull this sort of stuff on them.

612
01:07:05.620 --> 01:07:09.620
Okay, are unions needed to raise wages in general?

613
01:07:09.620 --> 01:07:17.620
Well, they are, if you think that wages emanate from employer generosity.

614
01:07:17.620 --> 01:07:26.620
And since employers aren't generous, the best way to go is to have a union and force them.

615
01:07:26.620 --> 01:07:32.620
If you believe that wages stem from marginal revenue productivity, then you don't need unions to raise wages.

616
01:07:32.620 --> 01:07:37.620
Indeed, you have to ask the question, what will a union do to productivity?

617
01:07:37.620 --> 01:07:43.620
And productivity determines wages, and the obvious answer is that unions will lower productivity.

618
01:07:43.620 --> 01:07:47.620
They'll have all sorts of warfare and disputes.

619
01:07:47.620 --> 01:07:54.620
You know, sometimes they'll have a strike, not against the employer, but the carpenters and the plumbers will be fighting over who gets to do a certain job.

620
01:07:54.620 --> 01:07:58.620
And, you know, how that helps productivity is beyond me.

621
01:07:58.620 --> 01:08:05.620
Let me give you several points for your consideration on this.

622
01:08:05.620 --> 01:08:09.620
First of all, wages were rising before the advent of unions.

623
01:08:09.620 --> 01:08:24.620
Unions only came into effect in the 20th century, in the 19th century, like you have the Wobblies in 1890, but they were hardly instrumental.

624
01:08:24.620 --> 01:08:32.620
The AFL and the CIO didn't get going until 1915 or 20, somewhere in the early 20th century.

625
01:08:32.620 --> 01:08:37.620
But wages have been rising ever since the Industrial Revolution.

626
01:08:37.620 --> 01:08:42.620
So you could hardly credit unions for the rise in real wages.

627
01:08:42.620 --> 01:08:48.620
Secondly, wages rise in countries where there are no unions or unions are weak.

628
01:08:48.620 --> 01:08:51.620
For example, Singapore, Hong Kong, Japan.

629
01:08:51.620 --> 01:09:07.620
Here the main function of the union, and I'm exaggerating slightly, is to lead the workers in the company song and do calisthenics before you, you know, so we go rah-rah, Microsoft or something, that would be the Microsoft union in Japan.

630
01:09:07.620 --> 01:09:13.620
It's not really unions as we have come to know and love them in this country.

631
01:09:13.620 --> 01:09:16.900
Wages have also risen in industries where there are no unions.

632
01:09:16.900 --> 01:09:21.580
For example, computers, banking, insurance, even babysitters and house cleaners.

633
01:09:21.580 --> 01:09:28.300
Their wages have risen with increasing productivity due to more capital equipment and what have you.

634
01:09:28.300 --> 01:09:30.700
And there are no unions there.

635
01:09:30.700 --> 01:09:41.340
And then the apex of unions were in the 1950s when some 30, 35, 40 percent of the labor force was unionized.

636
01:09:41.340 --> 01:09:48.740
And ever since then, union rates have been declining, while wages have been increasing, Ben?

637
01:09:48.740 --> 01:09:55.040
What is the difference in membership rates between the private and the public unions?

638
01:09:55.040 --> 01:10:00.440
Well, the private sector of unions is now in the single digits, 8 or 9 percent.

639
01:10:00.440 --> 01:10:04.540
The public is something like 20 percent, but the overall is in the low teens,

640
01:10:04.540 --> 01:10:12.540
And this has come down from something like 40% or 45%, something like that.

641
01:10:12.540 --> 01:10:17.540
You know, speaking of public unions, the whole idea behind unions

642
01:10:17.540 --> 01:10:22.540
is that the capitalist pig is an exploiter and you need countervailing power.

643
01:10:22.540 --> 01:10:25.540
But the government is supposed to be wonderful for the liberals.

644
01:10:25.540 --> 01:10:29.540
You know, the government wouldn't exploit, certainly not.

645
01:10:29.540 --> 01:10:31.540
The government is on the side of the working man.

646
01:10:31.540 --> 01:10:37.540
So why do you need a union in the public sector, sort of beyond me?

647
01:10:37.540 --> 01:10:41.540
Interesting question is, when you have a public sector strike, who do you root for?

648
01:10:41.540 --> 01:10:45.540
Because, you know, they're striking the government.

649
01:10:45.540 --> 01:10:55.540
And as libertarians, or even as Austrians, if you can overlook the normative positive for the moment,

650
01:10:55.540 --> 01:10:59.540
it's sort of, you know, it's sort of like two bad guys fighting.

651
01:10:59.540 --> 01:11:04.540
I guess the way I look at it is the more I root for the less powerful of the two bad guys.

652
01:11:04.540 --> 01:11:11.540
Just sort of like when there's a World Series, I root for the underdogs so that they go to full game seven.

653
01:11:11.540 --> 01:11:16.540
So you always root for the weaker team so that it'll be 3-3 and then you can see the last game.

654
01:11:16.540 --> 01:11:20.540
Well, I guess that's who I root for, you know, whoever seems to be the underdog so they keep fighting.

655
01:11:20.540 --> 01:11:26.540
You know, the enemy is my friend, I don't know, something like that.

656
01:11:26.540 --> 01:11:31.540
Okay, where do we go from here?

657
01:11:31.540 --> 01:11:36.540
Ah, now we get to some very interesting stuff.

658
01:11:36.540 --> 01:11:43.540
First, let me give you some empirical evidence on this.

659
01:11:43.540 --> 01:11:48.540
Or some empirical illustrations would be better to put it because I think the fact that

660
01:11:48.540 --> 01:11:54.540
the minimum wage law creates unemployment is a matter of praxeology, therefore you can't test it.

661
01:11:54.540 --> 01:11:59.540
And I'll be talking about the Card, Kruger and Becker business in a minute.

662
01:11:59.540 --> 01:12:04.040
You see, when we talk about motives, that's not a matter of praxeology, so we can test that.

663
01:12:04.040 --> 01:12:12.040
When it comes to praxeology, there's no testing of it any more than there is testing of the fact that when you trade a pen for a watch,

664
01:12:12.040 --> 01:12:17.040
you gain in a mutual sense, you can only illustrate that, you can't test that.

665
01:12:17.040 --> 01:12:24.800
But one of the arguments against Austrians is that, you know, we don't use any empirical data and, you know,

666
01:12:24.800 --> 01:12:28.200
the only numbers on the publications are the page numbers.

667
01:12:29.800 --> 01:12:36.160
It's not true, and I'm going to give you some illustrations of that now and also I think on Wednesday or Thursday

668
01:12:36.160 --> 01:12:39.440
I'm going to do an empirical analysis of economic freedom and

669
01:12:40.280 --> 01:12:45.520
so it's a calumny against Austrians to say that they don't do any empirical work.

670
01:12:45.520 --> 01:12:51.280
work. Rather, the case is that the empirical work has a different interpretation. It's

671
01:12:51.280 --> 01:12:56.760
not testing a praxeological theory, rather it's illustrating it. Because some people

672
01:12:56.760 --> 01:13:05.380
naturally get convinced by just the rigorous logic of it. Other people get convinced by

673
01:13:05.380 --> 01:13:11.780
empirical data. So why not do both? And it's not just to convince people, but you know,

674
01:13:11.780 --> 01:13:15.780
You can't have too much of the truth and this is part of the truth.

675
01:13:15.780 --> 01:13:32.780
Okay, so what's going on here? What I did in Canada is I took the ten provinces of Canada and I asked several questions of them.

676
01:13:32.780 --> 01:13:39.780
I said, first of all, what is their minimum wage level? And that's number three.

677
01:13:39.780 --> 01:13:45.780
And then I said, what is the unemployment rate for the entire population, which is almost irrelevant.

678
01:13:45.780 --> 01:13:56.780
The key here is, what is the unemployment rate for 20 to 24 year old males as a percentage of the rate of unemployment of 25 years old and older.

679
01:13:56.780 --> 01:13:58.780
Why did I do this?

680
01:13:58.780 --> 01:14:05.780
The reason I did this is that there are certain things that cause unemployment that would cause unemployment for teenagers or adults.

681
01:14:05.780 --> 01:14:18.780
And I wanted to wash them out of the consideration, so that's why I took the proportion of unemployment for young people versus old people, or older people, 25 and above.

682
01:14:18.780 --> 01:14:27.780
I really wanted 16 to 20 year olds, but I couldn't get it, so I used 20 to 24 year olds as a proxy variable.

683
01:14:27.780 --> 01:14:36.680
And you'll see that, by and large, the higher the minimum wage at the top, the higher the percentage of unemployment.

684
01:14:36.680 --> 01:14:45.580
In other words, column four is in order of unemployment of young people compared to old people.

685
01:14:45.580 --> 01:14:53.380
And in all cases, the numbers are higher than 100, showing that the unemployment rate of young people is higher than the unemployment rate of older people.

686
01:14:53.380 --> 01:14:55.680
And you don't get perfection here.

687
01:14:55.680 --> 01:15:01.200
There are some anomalies. If you would have chart this, you wouldn't get just a straight line going one way.

688
01:15:01.200 --> 01:15:07.320
But by and large, you can sort of see that the New Brunswick and Alberta have the lowest,

689
01:15:07.320 --> 01:15:14.880
and British Columbia has the lowest minimum wage at 365, 380, and 380 respectively.

690
01:15:14.880 --> 01:15:21.040
And also they're sort of at the bottom. Prince Edward Island, I couldn't get data for.

691
01:15:21.040 --> 01:15:29.640
I did this in October 1985 in a magazine, actually it was in the Financial Post,

692
01:15:29.640 --> 01:15:33.040
which is sort of like the Canadian version of the Wall Street Journal.

693
01:15:33.040 --> 01:15:37.340
And I did it again in May of 85.

694
01:15:37.340 --> 01:15:43.640
I guess when you got something, you keep pushing at it.

695
01:15:43.640 --> 01:15:49.540
And here again, you get the same sort of a thing that the unemployment rate for young people

696
01:15:49.540 --> 01:15:55.260
People compared to old people is ranked in this column and then the minimum wage here

697
01:15:55.260 --> 01:16:01.020
and you can see that the places with $3 an hour minimum wages are at the bottom.

698
01:16:01.020 --> 01:16:06.060
New Brunswick is a bit of an exception, so you don't, empirical work is sort of, there's

699
01:16:06.060 --> 01:16:07.060
a lot of noise.

700
01:16:07.060 --> 01:16:10.900
There are other things that are determining the unemployment rate of young people versus

701
01:16:10.900 --> 01:16:14.060
old people compared to the minimum wage that I didn't control for because I didn't do

702
01:16:14.060 --> 01:16:19.180
an econometric regression, multiple regression, I mean, you can't do that in a newspaper

703
01:16:19.180 --> 01:16:24.780
and when I was at the Fraser Institute I was into, you know, sort of public policy for the average person.

704
01:16:24.780 --> 01:16:41.980
So this is another illustration of it and I did it again in January of 86 and I got again a very similar sort of a thing.

705
01:16:41.980 --> 01:16:49.580
And each time I do it, the provinces are not exactly lined up in terms of minimum wage.

706
01:16:49.580 --> 01:16:53.580
But here what I did is I ranked them in terms of minimum wage here.

707
01:16:53.580 --> 01:17:02.180
And here the numbers are different, but you can see 179 is low and you can see that the 262 is high.

708
01:17:02.180 --> 01:17:10.180
So you get empirical analysis after empirical analysis that shows

709
01:17:10.180 --> 01:17:17.180
that the unemployment rate, if you just control for the minimum wage,

710
01:17:17.180 --> 01:17:24.180
the unemployment rate of young people compared to old people is very highly correlated with the height of the minimum wage.

711
01:17:24.180 --> 01:17:28.180
Again, the barrier, the higher it is, the harder it is to jump over.

712
01:17:28.180 --> 01:17:31.180
Provinces that have a high one, a lot of kids can't jump over it.

713
01:17:31.180 --> 01:17:35.180
Provinces that have a relatively low minimum wage, more teenagers can jump over it.

714
01:17:35.180 --> 01:17:40.180
So this is just more and more buttress support for this contention.

715
01:17:40.180 --> 01:17:46.180
And this is a very important topic because in most plebiscites on this,

716
01:17:46.180 --> 01:17:49.180
when people are asked do you want to raise the minimum wage,

717
01:17:49.180 --> 01:17:53.180
like in New Orleans where I now am located,

718
01:17:53.180 --> 01:17:59.180
recently they had a minimum wage on the ballot and one by two to one majority.

719
01:17:59.180 --> 01:18:04.180
The economic ignorance is rampant everywhere.

720
01:18:04.180 --> 01:18:14.180
You people that are going to become getting PhDs and be economics professors, you're going to have plenty of work cut out for you on this subject and many others.

721
01:18:14.180 --> 01:18:20.180
Okay, let me talk about Card Kruger and Gary Becker and the boys.

722
01:18:20.180 --> 01:18:28.180
Card and Kruger are both very famous economists at Princeton or Yale or some horrible place like that.

723
01:18:28.180 --> 01:18:33.180
Princeton and they go back and forth between the Department of Labor and Princeton.

724
01:18:33.180 --> 01:18:44.180
Okay, well, buddies. And what they did is they did this study, and it was in Pennsylvania and New Jersey,

725
01:18:44.180 --> 01:18:51.180
and what they did is, I forget which one, you should look it up, it's a very famous study,

726
01:18:51.180 --> 01:18:55.180
one of them had a minimum wage raise and the other didn't, and somehow they found out,

727
01:18:55.180 --> 01:19:00.380
based on a telephone survey that the place where they had a minimum wage law

728
01:19:00.380 --> 01:19:06.140
you didn't get more unemployment but the wages rose. And this was published in the

729
01:19:06.140 --> 01:19:12.700
American Economic Review which is the catallact of reviews in terms of the

730
01:19:12.700 --> 01:19:17.500
mainstream. The catallact of economic reviews in my view is the quarterly

731
01:19:17.500 --> 01:19:21.580
journal of Austrian economics and review of Austrian economics but that's a whole

732
01:19:21.580 --> 01:19:29.580
But in terms of prestige and the overall economics profession, the American Economic Review is the key.

733
01:19:29.580 --> 01:19:32.580
It's really seen as number one.

734
01:19:32.580 --> 01:19:47.580
And then you had a whole bunch of Chicago types like Farnes Welch and Gary Becker and I think Buchanan and a few others that just were livid with this.

735
01:19:47.580 --> 01:19:58.380
with this. They were really breathing fire. It was sort of, you know, the gloves were off. They didn't call them the sons of whatever, but, you know, did they?

736
01:20:00.580 --> 01:20:12.260
Well, they wouldn't put that in print, surely. Camp following whores. I love it.

737
01:20:12.260 --> 01:20:22.260
Now, what they did is they criticized this from soup to nuts. They criticized every aspect of it.

738
01:20:22.260 --> 01:20:30.260
What they did is they repeated the survey and they couldn't, you know, replicatability is a key element.

739
01:20:30.260 --> 01:20:37.260
There was this guy, Michael Belial, who did this wonderful study on gun ownership in Revolutionary War times.

740
01:20:37.260 --> 01:21:07.260
and the key there was could you replicate it and the critics see what he was trying to say is that guns were never part of our culture so he went around here and there and he got all sorts of data showing that no one ever knew anything from guns in the Revolutionary War period and then other people critics won the Bancroft Prize and won this prize and that prize in New York Times which is sort of the public equivalent of the American Economic Review went berserk all this is the greatest books and sliced bread and all

741
01:21:07.260 --> 01:21:11.260
And then what happened, and this is sort of the power of blogging,

742
01:21:11.260 --> 01:21:17.260
a bunch of bloggers wrote to him and said, well, you know, I went to this place where you put in your footnote that there was,

743
01:21:17.260 --> 01:21:23.260
and there was no such place, or I went to such a place and there was a place but they didn't have that.

744
01:21:23.260 --> 01:21:28.260
And continually writing him and said, well, you know, could you verify your data?

745
01:21:28.260 --> 01:21:33.260
And he would say, well, you know, screw you, I'm not answering or whatever.

746
01:21:33.260 --> 01:21:38.660
And the upshot was that finally they not only took away his Bancroft Prize,

747
01:21:38.660 --> 01:21:44.760
but they fired him from a tenured position at Emory University, which is one of the better universities.

748
01:21:44.760 --> 01:21:49.260
I wonder when they're going to take away the PhD of that plagiarist.

749
01:21:49.260 --> 01:21:52.360
What's his name? The black guy?

750
01:21:52.360 --> 01:21:55.160
Martin Luther King.

751
01:21:55.160 --> 01:22:01.660
You're supposed to, I mean, plagiarism is supposed to be a bad thing and yet he's been proven to be a plagiarist and they haven't taken away his PhD yet.

752
01:22:01.660 --> 01:22:04.660
But I'm sure they'll get to it pretty soon.

753
01:22:04.660 --> 01:22:09.660
In any case, the key for the minimum wage is replicatability, or one of the keys.

754
01:22:09.660 --> 01:22:16.660
And what they did is they went to the same sources and, you know, the way Carden Kruger did it was pretty rough.

755
01:22:16.660 --> 01:22:22.660
I mean, they would just call some guy and say, hey, you know, and whoever was there, you know, it could have been the janitor,

756
01:22:22.660 --> 01:22:31.660
and then put it down, and when the critics try to replicate it, they couldn't, which is a very low-level criticism.

757
01:22:31.660 --> 01:22:36.660
A more sophisticated criticism is, well, what was your time dimension?

758
01:22:36.660 --> 01:22:45.660
Two days later, of course, no one's losing a job and wages are going to look higher, but what's going to happen six months or a year from now?

759
01:22:45.660 --> 01:22:51.320
My take on this was to try to show that that Gary Becker and the boys were really Austrians

760
01:22:52.680 --> 01:22:59.460
Because if they really stuck to their crappy neoclassical theories their attitude toward Carden Kruger would have been, oh

761
01:23:00.620 --> 01:23:08.080
That's interesting because it's just an empirical issue. It's not praxeological. There is no such thing as praxeology. Praxeology is just cultish crap

762
01:23:08.920 --> 01:23:14.380
So what they should have said is oh, well, you know, maybe economic law works differently in New Jersey and Pennsylvania

763
01:23:15.660 --> 01:23:23.660
Or, well, you know, out of every 100 cases, you know, 95 will show that the minimum wage law creates unemployment,

764
01:23:23.660 --> 01:23:28.660
but 5 will show that it creates, you know, more employment, or maybe there was monopsony, or something like that.

765
01:23:28.660 --> 01:23:34.660
They should have said that, if they were going to be consistent with their neoclassical methodology.

766
01:23:34.660 --> 01:23:38.660
But to their credit, they weren't. They came out with blood in their eyes.

767
01:23:38.660 --> 01:23:42.660
They said, we're going to show that this is crap, and we're going to kick these guys in the butt.

768
01:23:42.660 --> 01:23:49.340
which can only emanate from an Austrian feeling. So what I'm trying to do is to

769
01:23:49.340 --> 01:23:53.940
convince these guys that they're really closet Austrians. I haven't succeeded yet

770
01:23:53.940 --> 01:24:09.820
but I'm trying. Okay, here's another objection to the minimum wage law and let

771
01:24:09.820 --> 01:24:14.820
Let me get this going.

772
01:24:14.820 --> 01:24:27.820
What we assume here is that there is either a minimum wage or no minimum wage and that there's a 40-hour work week

773
01:24:27.820 --> 01:24:31.820
and the marginal revenue product is $2 an hour.

774
01:24:31.820 --> 01:24:36.820
See it at the bottom? And the minimum wage is $5. Can you all see that? Yes? Okay.

775
01:24:36.820 --> 01:25:06.820
Okay, maybe I'll make it a little smaller so it'll, I don't know which way is better but, and also that welfare is 90, so how does this work? Okay, well suppose there is no minimum wage, how much do you get from welfare? If there's welfare, well you get 90, how much do you get from work? Well, 40 hours times two is 80, so you get a grand total of 170. Now suppose there's no welfare, how much do you get from welfare? Zero. How much do you get

776
01:25:06.820 --> 01:25:24.820
Now, let's suppose there is a minimum wage and there is welfare. How much do you get from welfare? 90. How much do you get from work? 0, because at a minimum wage of 5 and your productivity is only 2, you get zip.

777
01:25:24.820 --> 01:25:33.820
And now, suppose that there is a minimum wage but there's no welfare. Well, if there is a minimum wage, you get 0 from work.

778
01:25:33.820 --> 01:25:37.820
And if there's no welfare, you get zero from welfare, so you get zero.

779
01:25:37.820 --> 01:25:40.820
Okay, so what's the objection to my thesis?

780
01:25:40.820 --> 01:25:44.820
The objection to my thesis is making this comparison saying,

781
01:25:44.820 --> 01:25:50.820
look, 90 is better than 80.

782
01:25:50.820 --> 01:25:52.820
True, yeah, I guess 90 is better than 80.

783
01:25:52.820 --> 01:25:58.820
So therefore, minimum wage law is better than no minimum wage law.

784
01:25:58.820 --> 01:25:59.820
You get that?

785
01:25:59.820 --> 01:26:05.820
Since 90 is better than 80, the minimum wage law is better than no minimum wage law for the people concerned.

786
01:26:05.820 --> 01:26:14.820
This is a fallacy, and the fallacy stems from failing to uphold Ceteris Paribus.

787
01:26:14.820 --> 01:26:20.820
Namely, if you want to compare the minimum wage with the no minimum wage law, you have to hold welfare constant.

788
01:26:20.820 --> 01:26:22.820
Either way, doesn't matter.

789
01:26:22.820 --> 01:26:34.820
Namely, you can only make these two comparisons, this one and this one, and in either case here, no minimum wage law is better than minimum wage.

790
01:26:34.820 --> 01:26:50.820
Namely, 170 is better than 90, and 80 is better than zero. But the objection is, but the government won't allow that, because if you're making a certain amount of money, then they won't give you welfare.

791
01:26:50.820 --> 01:26:56.820
And my answer, and this is very hard for me to convince my students of, is I don't care what the government law is.

792
01:26:56.820 --> 01:26:59.820
Ceteris Paribus Uberalis.

793
01:26:59.820 --> 01:27:11.820
If you want to make sense of whether the minimum wage law is a good thing or not, you have to hold everything else constant so you can just see the effects of the minimum wage law.

794
01:27:11.820 --> 01:27:19.820
I've only got a few minutes. Are there any questions or discussion?

795
01:27:19.820 --> 01:27:24.620
Well, I guess my problem is that I'm saying stuff that everyone believes in.

796
01:27:24.620 --> 01:27:29.620
This afternoon we'll get into some more controversial stuff, so thank you for your attention.