Freedom, Society, and State - Ludwig von Mises Institute

wage the unskilled might find jobs. They would pay so
little however that such workers would still have to
rely on government for assistance. The libertarian
response is two-fold. First, most of the lowest paying
jobs are not had by the breadwinner but by other family
members desiring to supplement the family income. And,
second, wage rates do not depend on the individual
w0 r k e r 's phYsica I prod uc t i v i t Y but on the rna r gina I produet
i vi ty of labor. Barbers and butlers perform their
services today in much the same way they did two hund
red yea r s a go. Yet, says economi s t Ludwig von Mi ses,
the wagera t e sea r ned by s uc h "wo r ke r s are today muc h
higher than they were in the past. They are higher bee
a use the y are de t e r mine d by the rna r gina I prod uc t i v i t Y
of labor. The employer of a butler withholds this man
from employment in a factory and must therefore pay the
equivalent of the increase in outputwhich the additiona
I emp I oymen t of one man in a factory would br ing
about."(53)
This means that while the unskilled worker would
s e I d om be c om ewe a I thy his wa ge rat e wo u I d ten d to be
h i g her t han c omm 0 n 1 y tho ugh t, pro v ide d the r e we r e
alternative means of employment open to him. What is
needed are more jobs available for the unskilled. But
the effect of such regulations as the minimum wage and
licensing restrictions is to eliminiate just those
job s • Rep e a I 0 f s uchi e g i s I a t ion wo u I d beex pe c ted t 0
pro v ide a d e qua t e, but not I u c rat i v e, wa ge s for the
unskilled.
In br i ef, the movement from government to the market
would reduce poverty in two ways. First, the disman
t 1 i n g 0 f the weI farestate wo uIde1 iminate the i ncentiveto
fail which is inherent in government poverty
programs. Second I y, the low-paying jobs generated by
the repe a 1 0 f the min i mum wa g e wo u 1d s e r vet 0 enco urage
such valuable job skills as hard work, cooperation with
others, punctuality, etc., which are valuable steppingstones
to better, higher-paying jobs.
The mar k e t pro c e s s, libe r tar ian s say, wo u I d a 1s 0
help the poor in their capacity as consumers. Consider,
for example, the "ghetto merchant." Since prices
in the ghetto average about 10 percent more than prIces
for goods in other neighborhoods, the ghetto merchant
is often excoriated for exploiting the poor. But the
key question is why is the ghetto merchant able to
charge, and receive, such prices; why don't such prIces
attract additional competitors? The answer is that
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