Freedom, Society, and State - Ludwig von Mises Institute

Put differently, government poverty programs enc
0 u rag e, p e. r hap sun.w itt i n g 1 y, the adop t ion 0 f wh a t
Banfield termed the "lower class mental ity." The
result is that these programs actually increased the
number of poor.
e. The Market and the Poor.
Granted that government programs have failed, the
quest ion is, given the "culture of poverty," would pure
laissez faire prove any more effective? Libertarians
believe that it would.
As noted earlier in Section 1 of this chapter, the
libertarian maintains that the unhampered market tends
to employ every factor of production at its most value
productive point. Since it is the poor who can least
afford the squandering of scarce resources, it is they,
says the libertarian, who most benefit by the market
process. What of the objection that although this is
very well for the "able-bodied poor," most who are poor
today have I ittle education and/or physical handicaps?
Such unskilled workers do not benefit from the market
process since their productivity tends to be so low
that they cannot even find jobs. Libertarians respond
that such individuals cannot find jobs not because of
their low productivity but because minimum wage laws
establish wages in excess of their productivity.
For example, in the 1950's and early 1960's most
e I e vat 0 r s we reoperated rna n ua I I Y and rna n y res tauran t s
had their dishes washed by hand. These jobs were
usually filled by the unskilled: the young, uneducated
and the handicapped. They did not pay much, but that is
jus t the poi n t. As the min i mum wag e wa s r a isedt 0
$.75, then to $1.00 and then to $1.25 per hour, the
bui lding owners discovered that it now was economical
to automate their elevators, thereby eliminating these
jobs. The same was true with dishwashers. As the minimum
wage was ra i sed, they were replaced by automated
dishwashing machinery.(52)
The root of the problem, therefore, is not the low
productivitiy of the unskilled worker. It is the fact
that, being prevented by the minimum wage from offering
a compensating difference for his low productivity, his
labor, under this condition, is overpriced and he is
therefore unemployed.
But, i teo u ] d b e 0 b j e C ted, wit h 0 u t the min i mum
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