Friday, February 21, 2014

"Libertarian" Peter Theil Backs $12 Minimum Wage

The San Francisco Chronicle reports:
[B]illionaire tech star Peter Thiel, the San Francisco-based PayPal co-founder who’s given millions to GOP causes, leans toward supporting the idea of boosting the minimum wage to $12 an hour[...]With his support, Thiel joins conservatives who include pundit Bill O’Reilly and who back the idea because it would make workers less reliant on taxpayer-supported benefits like welfare and food stamps[...]Here’s the full text on his position on the initiative:
“In theory, I’m against it, because people should have the freedom to contract at whatever wage they’d like to have. But in practice, I think the alternative to higher minimum wage is that people simply end up going on welfare.’’

“And so, given how low the minimum wage is — and how generous the welfare benefits are — you have a marginal tax rate that’s on the order of 100 percent, and people are actually trapped in this sort of welfare state.”

“So I actually think that it’s a very out of the box idea — but it’s something one should consider seriously, given all the other distorted incentives that exist.”
This is quite frankly one of the most bizarre positions that I have ever heard come out of the mouth of a supposed libertarian.

First, Theil does not seem to be aware that raising the minimum wage will increase the number of those without jobs. Even the CBO gets this. (SEE:  CBO: Minimum Wage Hike Could Cost 500,000 Jobs).

Second, there is an implication in Theil's position that businesses can simply be coerced into increasing wages beyond market rates without consequences. In other words, he appears to have no comprehension of how free markets work and that you can't simply over-rule market prices without all kinds of distortions occurring.

Third, he ignores the foundation of libertariainism, the non-aggression principle, by calling for coercion against private contracts between businesses and individuals, even though "in theory" he objects to such an approach. On this point, he sounds like Alan Greenspan.



This is why Theil gets invited to Bilderberg meetings "in theory' he is a libertarian but when it comes down to the "practical," he is a Greenspan interventionist.

11 comments:

  1. If that is his overriding concern then maybe he should be advocating abolishing both the minimum wage and welfare.

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  2. “In theory, I’m against it, because people should have the freedom to contract at whatever wage they’d like to have. But in practice, I think the alternative to higher minimum wage is that people simply end up going on welfare.’’

    Wait, so you think MORE people being out of work due to increasing the minimum wage is going to keep people off of welfare?

    Why is it people, even supposedly smart ones, completely leave their brains at the door when discussing economics? Is their some kind of anti-economics disease in the air that only a minority of people are immune to? *Bangs head against wall*

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    Replies
    1. I don't think he is being stupid, he's avoiding touching the third rail socially.

      What happens under the present system is that wages can be kept lower than they otherwise would be due to welfare programs. Various assistance programs allow the workers who qualify for them to underbid those who do not, driving down wages for all.

      Increasing the minimum wage would prevent this underbidding to some degree. It would also put more people above the threshold to qualify for assistance programs. But it also prices some people out of the job market. So instead of a lot of people on some welfare there will be somewhat fewer people on a lot of welfare. Probably at a net greater cost to taxpayers.

      It's currently socially unacceptable to eliminate the welfare programs so the debate is how deal with their consequences with more interferences which of course have more consequences.

      Delete
    2. Re: Jimmy Joe Meeker,
      -- Increasing the minimum wage would prevent this underbidding to some degree. --

      Why would there be a need to prevent it? Does Theil think that employers are stupid and don't realize they're competing against welfare to entice workers to work?

      What increasing the minimum wage across the board will do is make labor costs much higher on those states were welfare incomes are much lower, thus increasing the level of unemployment for the low-skill workers and driving them towards welfare rosters.

      Delete
  3. Perhaps the largest factor encouraging government intervention is government intervention.

    The thought process above assumes that the present interventions are a given and then tries to figure out what further intervention might fix the consequences of them ignoring or discounting the consequences of the new intervention.

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  4. -- "But in practice, I think the alternative to higher minimum wage is that people simply end up going on welfare." --

    And since employers are simply too stupid to figure that one [assuming the idea that people would take welfare over the current minimum wage was true, for the sake of argument], then we need to make them pay their employees more...

    Igor: Brilliant idea, master!

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  5. I wonder if Mr. Theil would feel this way if his productivity was worth $11/hr to his employer...

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  6. Increase in minimum wage -> increase in unemployment-> more people on welfare.

    what the hell is Thiel talking about?

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  7. Hard to see Thiel, a private equity underwriter with Clarium Capital Management, as a libertarian. Especially given Peter Thiel's Palantir Technologies which specializes in spying via massive secret databases.

    http://peureport.blogspot.com/search?q=peter+thiel

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    Replies
    1. Of course he isn't a libertarian.
      When you see a legitimate role for government coercion or violence to play you're simply not a libertarian.
      Peter Thiel is basically a Koch Brothers clone.

      Delete
  8. Not bizarre; entirely predictable because Thiel faces a distorted incentive of his own: fawning media who always shower attention on conservatives or libertarians who appear to support liberal causes. Speaking of "distorted incentives," not all minimum wage earners face them, two examples being students or non-primary wage earning spouses earning extra income, but there are many other examples. Thiel's proposal eliminates many of these jobs. Perhaps bored with heaping and piling money, Thiel is aiming for attention. The Miley Cyrus of Silicon Valley.

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