Response to Critique of Edgar The Exploiter

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Okay, this is a response to a video by Bill Burns called, I believe, "A Critique of Ed the Exploiter," and I'm just going to address his points one by one. Unfortunately, as with most of these sorts of videos, it's fundamentally dishonest in that it presents theory as fact and ignores real-life examples that don't fit the theory.

So here Bill Burns is referring to statistics that seem to show that nations with a higher minimum wage do not necessarily have higher rates of unemployment than nations with lower or no minimum wage. Two things to mention here. First of all, "Ed the Exploiter," the film, does not make the claim that introducing or increasing minimum wage levels will increase overall unemployment. All the film aims to show is how introducing or increasing the minimum wage level can be expected to harm, sorry, marginal workers like Simon.

This is relevant because, in my view, an important motivation of minimum wage advocates is to try and help the poor and vulnerable. So it's important for these people to understand how minimum wage is likely to harm exactly these people. The second thing to note here is that assuming that statistics show no robust statistical correlation between minimum wage and unemployment levels, this does not falsify the hypothesis that minimum wage does increase overall unemployment.

The lack of statistical correlation between minimum wage and unemployment or even the presence of an inverse correlation between minimum wage and unemployment are both compatible with the hypothesis that minimum wage increases overall unemployment. The confusion here has to do with minimum wage advocates mistaking, sorry, mistakenly treating statistics derived from phenomena of mass human action as though they come from a controlled experiment.

And of course, they don't. Billions of uncontrolled variables affect unemployment rates. In order to empirically test the hypothesis that minimum wage increases unemployment, it would be necessary to hold all these billions of variables constant and vary only the minimum wage law. Of course, this is practically not possible right now. So Bill Burns' claim is false in two ways. Firstly, the film does not make the claim that minimum wage increases overall unemployment.

And even if it had, this claim is not contradicted by the real-world examples that he cites. He only earns $3 an hour, although his wage is low. Simon appreciates the independence it gives him. I'm not sure how independent you can be on those wages, as we don't know what the cost of living is in Animation Land, but the video tells us that you can be independent on $3 an hour.

No, this video doesn't tell us that we can be independent on $3 an hour. The video tells us that Simon appreciates the dependence that this low wage gives him. So this clearly has to do with a relative increase in independence. Nowhere in the film will you find the claim that this wage is sufficient to be absolutely independent, whatever you know, however we define independence.

Okay, so he's being trained to use machinery that will make him more productive. Now, in the long term, that might be to Simon's advantage, but in the short term, it's most definitely to the company's advantage. That's why companies choose to train employees rather than hire on new staff with experience; it benefits a company, and that's why they do it. Training is not a substitute for wages.

So it's not entirely clear what Bill Burns means by this. Presumably, he believes that it's not okay to offer a low wage, even if you're offering other things to make the deal seem more attractive. Unfortunately, Bill Burns doesn't explain exactly what's wrong with offering a low wage. Bear in mind that Simon is not obliged to accept Edgar's offer. No violence is being threatened against him or his property if he refuses. As such, the offer only increases Simon's possibilities.

Bear in mind also that the minimum wage advocates, at least in their capacity as advocates, do not increase Simon's options, unlike Edgar. And if the advocates are successful in introducing or raising the minimum wage, they actually reduce the options available to people like Simon. If Edgar's offers aren't attractive enough, workers won't sell him the labor he needs to run his factory.

The video now makes the assumption that workers all have numerous choices as to what jobs they can do, whereas the main reason that people take the shittiest jobs and the lowest-paid jobs is that they have no other choice. Bill Burns has to equivocate between two different senses of the word "choices" here to try and make his criticism work. He says that the film assumes workers have many choices about what jobs they can do. That's true, but for unskilled workers, none of these jobs are particularly glamorous.

They're all what Bill Burns would likely consider "shitty jobs." Then Bill Burns says the main reason that people take the shittiest jobs at the lowest-paying jobs is that they have no other choice. Notice that now "no other choice" refers to there being no alternative to a whole set of choices, i.e., the shitty jobs. Notice also that the film did not claim or imply that the choices available to unskilled workers included good jobs, however we define a good job.

So Bill Burns' assertion that people take bad jobs because they have no other choices is not in contradiction with the premise in a film that locally workers have many choices as to how to sell their labor. Also, when Bill Burns says people take certain jobs because they have no other choice, he's exaggerating. Of course, what he really means is that they have no other choices that seem appealing.

We can certainly agree that workers like Simon take such factory jobs because they are the best way they see for themselves to improve their circumstances. This makes it all the more odd that Bill Burns and other minimum wage advocates want to remove this best option, at least as judged by the workers who would have chosen it.

The new minimum wage is $9 an hour. Okay, so now it turns out that $3 an hour is not a sum you can be independent on. In fact, it's a long way short of what you can be independent on. Okay, so first of all, as noted earlier, the film never makes the claim that you can be independent on $3 an hour, however we define independent. Second of all, Bill Burns is assuming that since a law was passed mandating a $9 minimum wage, that this established that $9 an hour is enough to be independent on.

And this is interesting. This contains some other assumptions. First of all, it assumes that however we define independent, the wage necessary in order to be independent is the same for everyone, regardless of their personal conditions, regardless of individual preferences about lifestyle comforts, risk, etc. It also assumes that the state is infallible and that if the state has decreed that $9 an hour is enough to be independent, then it must be true that $9 an hour is enough to be independent.

And of course, it's far from clear that either of these assumptions are true. The idea that minimum wage laws are about injustice or punishing the rich or legislating the poor into wealth is a straw man. Nowhere in the film is it suggested that the motivation behind minimum wage advocacy is to punish the rich or legislate the poor into wealth.

So actually, this is a straw man, and minimum wage is about justice, in the views of its advocates. It's about social justice, and Bill Burns is among this group who believes that minimum wage is about ensuring that every worker exchanges their work for a wage that they can realistically live on without having to rely on welfare, charity, or the support of friends or family just to survive.

This is really puzzling because minimum wage results in Simon losing his job, which will mean him having to live entirely off welfare, charity, or the support of friends and family. If Bill Burns really doesn't like people living off welfare, charity, or the support of friends and family, then he should also oppose minimum wage. Bob's labor at the factory generates $10 an hour for Edgar. A salesman can point to his sales figures as an indicator of his productivity. A widget maker can point to the number of widgets he's made, but the productivity of back-office staff is much harder to quantify.

Yeah, that's certainly true. In real businesses, these things often can't be measured. But this simplifying, pointing out that this is a simplifying assumption doesn't invalidate the central point here, which is that we shouldn't expect employers to knowingly pay workers a higher wage than their expected marginal revenue product warrants.

So Simon doesn't get a raise; instead, he loses his job. So who's going to sweep up and carry things around? As we established at the beginning of the video, this is an important part of Edgar's industry. And well, because Edgar calculated what Simon was worth to him based on expected marginal revenue product, which includes considerations of sick pay, workplace safety, and all kinds of other costs, we know that he believes, at least, he'll be better off if he fires Simon.

So the question of who's going to sweep up and carry things around is not really relevant here. All we need to know is that Edgar believes he'll be better off after he's fired Simon, and that wasn't the case before the minimum wage was introduced. Edgar is irritated. The minimum wage means that if he wants to stay in business, he has to either invest in machines to do the work that unskilled laborers like Simon were doing, or he has to move production to another country where minimum wage laws aren't a problem.

Now interestingly, the video now claims that Edgar can't afford to pay $9 for Simon, whereas even in Bill Burns' simplified example, this isn't true. Remember that Vicki, Bob, and Simon together generate more money than they cost, even with minimum wage. So Edgar is irritated not because he can't afford to pay minimum wage, but because he prefers not to.

This confusion here is understandable; I would have handled this differently if I'd made the video again. But the narrative does make sense if you assume that Edgar was employing many subminimum wage workers, not just Simon. But I agree that this should have been spelled out more clearly in the film. If a company really can't afford its wage bill and it wants to reduce costs by shedding staff, then a high-wage earner is just as likely to be fired as a low-wage earner, maybe even more likely.

What Bill Burns is missing here is that whether a person will be fired or not has a great deal to do with whether their expected marginal revenue product is higher than their wage or not. The minimum wage necessarily means that a larger group of low-wage earners must be paid more than their marginal revenue product level in order to be legally employed. And since profit-maximizing employers prefer not to lose money, these workers will lose their jobs or they won't be employed.

So minimum wage jeopardizes the jobs of low-wage earners while creating extra security for high-wage earners. This is because high-wage earners become artificially under greater demand because they can't be as easily replaced by multiple cheap laborers as they otherwise would have been able to be.

There are numerous real-world studies that show minimum wage does not affect levels of employment at the lower levels, or overall. Well, no. The studies that Bill Burns mentioned are not capable of showing what he claims that they show. All that the studies do is note the presence or absence of correlation. Statistical correlation does not equal causation, and lack of statistical correlation does not establish lack of causation.

As noted earlier, phenomena on the scale of mass human action are affected by billions of uncontrolled variables. We can't use statistics that measure trends on this scale to falsify the hypothesis that minimum wage harms marginal workers. Meanwhile, we do have a solid chain of deductive reasoning that strongly suggests that it does hurt these workers.

The argument that the state has no moral justification to intervene in any agreement between two parties is overlooking the primary role of the state, which is to make society as fair as it can be for its citizens. And minimum wage is part of that.

So first of all, "Edgar the Exploiter" makes clear why minimum wage can be expected to hurt marginal workers, and it's hard to see how doing so is compatible with making society fair, no matter how we define fair.

The second thing, Bill Burns asserts that the primary role of the state is to make society fair. I don't know where he's getting this from. I think he's making it up. In effect, he's saying, "I believe that the state does in fact make society more fair and therefore it's justified in intervening in private agreements." Of course, it's not obvious that the state does actually make things fairer. There are many ways, including the minimum wage law, in which the state further disadvantages the already vulnerable.

Bill Burns has freely admitted that he's not interested in fairness; he's interested in market forces. That's his preference; that's his opinion. And this is a bit weird. I would never claim to be interested in market forces as an alternative to fairness. It is true that I'm not interested in equality; I'm interested in increasing absolute prosperity, which is especially important for the poorest and most vulnerable.

And I'm convinced that markets do a much better job of doing this than political institutions do. But the actions of a market do not automatically justify the outcome of the market. Free-market fundamentalists say that it does, but again, that's just their personal opinion. Now, I've never heard anyone claim that the actions of the market justify the outcomes of the market.

I read an awful lot of work by people who are very much in favor of the free market. It would have been helpful if Bill Burns had given an example of someone actually making this claim, because at the moment it just sounds like he made it up—just another straw man. An opinion, however strongly held, does not become a fact just because you want it to be. I totally agree, and this extends to opinions like "the role of the state is to make society fair."