A woman I know was born with three kidneys–and in poverty. Meanwhile, there was undoubtedly some wealthy person who was desperate for a kidney. Both could obviously have been made much better off by the transfer of one kidney at a suitably high price. However, such a mutually beneficial transaction would have provoked outrage among intellectuals, politicians, and others in the business of being outraged. These delicate souls need not worry. No such transaction took place. Instead, this lady spent decades struggling to make ends meet, and with an extra kidney that did nothing for her, except make her go to the bathroom more often than most other people. Any wealthy person with malfunctioning kidneys who could have made it worth her while to give up her extra kidney just suffered from the lack of that kidney and may even have died because of it. But this spared the moral sensitivities of third parties.
While this situation is rare, the mindset it illustrates is all too common and applies in all sorts of very different situations. For some people, finding some misfortune appalling leads them to object to the adjustments that can be made to reduce that misfortune. They hate to think anyone has to resort to that.
Pawnshop owners, for example, are looked down on for “taking advantage” of the poor by providing what they most need–money–in exchange for some of their meager assets. Once, as a young man in dire straits, I was able to eat only because I could pawn my one suit. But some might have called this “exploitation.”
It is likewise considered to be exploitation to pay low-skill workers what their productivity is worth, rather than what third-party observers would like to see them paid. Again, the initial misfortune of these workers leads many observers to object to the means of mitigating that misfortune by accepting lower wages in order to have a job at all.
One of the currently fashionable crusades on college campuses across the country is against “sweatshops” in the Third World. If college students or others want to supplement the earnings of Third World workers, they can reach into their own pockets and take out some money to send them. But that is neither as cheap nor as satisfying as denouncing other people for not paying them more.
Let’s go back to square one. Why are some people paid more than others? Because their work is more valuable to employers. Employers don’t pay you what you “need” but what your productivity will justify.
Do we wish that the poor had the skills that would make them more in demand and therefore cause them to have higher pay? Of course. But railing against reality is not helping anybody, whether we are talking about third kidneys or the Third World.
It is irresponsible self-indulgence to advocate specific policies without considering the specific consequences of those policies. Nor need we speculate about what those consequences are likely to be. Both history and economics tell us.
Wages imposed above the level set by supply and demand call forth more job applicants, while employers hire fewer workers when labor is made artificially more costly.
Machinery may be substituted for labor or higher-skilled workers may be substituted for those with lower skills, now that the latter are prevented from offsetting their lower skills by accepting correspondingly lower pay.
None of this is new. Half a century ago, public opinion in Britain caused British firms in colonial West Africa to pay higher wages than local economic conditions would have warranted. Net result? Vastly more job applicants than jobs.
Not only did great numbers of frustrated Africans not get jobs. They did not get the work experience that would have allowed them to upgrade their skills and become more valuable and higher-paid workers later on.
Most of these Africans were very poor people who could have used all the skills and experience they could have gotten, in order to raise their standard of living. But they were denied this opportunity by people in Britain who thought they were doing them a favor by pressuring companies in Africa to pay higher wage rates.
Today, American students are having a great time picketing stores and feeling superior to those who are providing jobs that Third World workers are eager to have. Denying unfortunate people opportunities and feeling good about it has long been a hallmark of the morally self-anointed.