Friday, August 5, 2016

I Don’t Understand Higher Level Economics, So Here Are Victor's Economic Principles

By Victor J. Ward

Any person who walks the face of the earth can understand basic economics. You do not have to be a genius.

I know, because I understand basic economics, and I am not a genius.

Maybe the really “smart” economists would say that I only “think” that I understand economics. But, they would say, in reality, since I don’t know the mathematical economical underpinnings of an Edgeworth Box or Reaction Functions or Nonlinear Programming, I can’t really know what is going on in the higher-level world of economics. (I just looked up Mathematical Economics on Wikipedia and copied some of the concepts. Before looking, I didn’t even know something like an Edgeworth Box existed.)

Fair enough. The only basic economics I know are the day-to-day economics of my life.

Here are Victor’s Economic Principles.


If I need to hire a babysitter, and I post the job on or, you should know that I am NOT going to hire you if you are a man.

Got that? I promise you that I am going to discriminate against you because of your gender.

The only men that will ever watch my son are men that I have built a relationship with over the course of several years. 

Other than that, don’t even bother asking. Even if I were in dire need of a babysitter, there is no way that any MALE babysitter from or is watching my kid.

Again, am I discriminating because of gender?

Yes, you better believe it.

Equal Pay For Babysitters

So count out equal pay for babysitters. Male babysitters are not going to get in the door so they will get $0.00 from me compared to what I pay female babysitters.  

And I don't pay the female babysitters equally based on the hourly work they put in female babysitters. Take that Karl Marx.

I have a few women that I call when I need someone to watch my son. Let’s call them Angelica, Betty, and Cathy.

Is the job the same? Yes, watch our son; feed him dinner; make sure that he stays out of trouble; and put him to bed if it’s a late night.

That sounds like equal work, right? Do I pay Angelica, Betty, and Cathy the same amount?

Of course not.

My son likes Angelica. When I offered to give her the wifi password, she said, “No, I won’t need it. I will be playing Legos with your son and then we will go outside in the backyard.”

Angelica gets the most per hour. She didn’t charge that much, but I tip very well, especially for excellent service.

My son really likes Betty as well. She’s not quite as good as Angelica, but she’s still pretty good. She’s very punctual and responsible. 

Betty gets the second most per hour, also because I tip very well.

Cathy gets the least. I only call her when I can’t hire Angelica or Betty. Do I give her a tip? Sure, but it’s somewhat half-hearted. I want her to feel good about watching my son so that she will continue to do a decent job, but, I don’t want her to feel *that* good because I don’t plan on using her that much.

Equal work, but nothing close to equal pay.

A person can legislate it all they want. It will never happen in my world.

House Cleaning

My wife and I hired a small, family run cleaning crew that cleans our home. Let’s call it Bill’s Cleaning Service.

I would give them a B-. They don’t cost that much, and they do an OK job; it hasn't been bad enough for me to fire them, but not good enough for me to give them a tip outside of a healthy Christmas bonus.

Recently, though, they broke my kitchen faucet. The faucet is expensive.

According to the smart economists, this type of destruction helps the economy. I am going to buy a new faucet. Because I am going to spend money, this helps the economy. Or so the smart economists say.

It may help the economy of the place where I am going to buy the faucet, but it hurts my wallet and it definitely isn’t going to help Bill, because I am going to fire him.

Minimum Wage

My family is going on a trip, and we need someone to walk our four dogs. We are going to offer the job to a child of one of our friends.

His pay will be $10/hour.

What is the minimum wage? I have no idea, but let’s say that it is $15/hour.

If my friend’s son charged me that much, then why would I hire him? He’s never walked our dogs before and he is not a professional.

I have as much experience with him walking our dogs as I do the “Paw Patrol Professional Dog Walker Service.”

But, at least the Paw Patrol has a full-blown business based on dog walking. Dog walking is not a hobby for them; if they don’t do things correctly, they don’t get paid and they don’t eat.

If my friend’s son does not do things correctly, then he may not walk my dogs again, but that is probably the end of the story. His incentives are much different.

I am willing to take a chance on the kid walking my dogs. If I am going to have to pay him $15/hour in consideration of him walking my dogs, then he is going to need to pay me $5/hour in consideration of the risk that I am taking in hiring someone with less experience.

And, by the way, this seems like an easy solution around your typical Minimum Wage Law. If an enterprising youth wants to get hired, then they should contract with the employer. The employer will pay the entrepreneurial but inexperienced and somewhat untrustworthy youth the minimum wage in exchange for the youth scooping ice cream.

There will be a second contract. The entrepreneurial but inexperienced and untrustworthy youth will pay the employer the delta between whatever the youth is really worth and the minimum wage in consideration of the employer taking the risk of hiring someone who is inexperienced and somewhat untrustworthy.

This seems like an effective workaround of the Minimum Wage Laws for anyone who wants to use it. For those seeking an entry level job, It’s either use my workaround or get replaced by a robot.


I don’t understand higher level economics, just Common Sense Economics---and that works for me.

Victor J. Ward  first came across libertarianism by reading Murray Rothbard's Ronald Reagan: An Autopsy and Walter Block's Defending the Undefendable. He holds a law degree from the University of California, Hastings College of the Law and an MBA from Santa Clara University. He is author of The Smartest Christian In Babylon: why and how faith trumps science -- a common man's journey towards God