I thought about responding to this but then I decided that it wasn’t worth the effort. However, shortly after reading your story… I stumbled upon another story which contained the key aspect that’s entirely absent from your analysis…
Unlike taxis, which create an artificial scarcity by issuing a limited number of medallions, Uber uses market mechanisms to find the optimum number of drivers, with an algorithm that raises prices if there are not enough drivers on the road in a particular location or at a particular time. While customers initially complained, this is almost a textbook definition of a Supply and Demand Graph, which uses market forces to balance the competing desires of buyers and sellers. — Tim O’Reilly, Networks and the Nature of the Firm
O’Reilly did the heavy lifting… which reduced my (opportunity) cost of responding to your story.
Not enough = shortage
Too many = surplus
If Uber is suffering from a shortage of drivers… then it can solve this problem by raising “wages”. Doing so would logically increase the supply of drivers. Once Uber arrived at the optimal supply of drivers… would it make sense for Uber to continue raising wages? No… because then Uber would suffer from a surplus of drivers.
A minimum wage is based on the idea that the natural wage is too low. But a low natural wage communicates that there’s a surplus of unskilled labor. If there’s too many unskilled workers… would it make sense for the government to artificially increase their wages? No… because this would only make the problem worse. Rather than having too many unskilled workers… we’d have way too many unskilled workers.
China had way too many unskilled workers. The difference is that their wages accurately communicated this. Wages were incredibly low. In other words, unskilled labor was extremely cheap. Capitalists, when they were finally given the opportunity, responded accordingly by building factories in China. As the demand for labor increased… so did the wages.
Any moron can think of wages as compensation. But it takes a moderate amount of intelligence to understand that the point of wages is to accurately communicate whether more, or less, of certain types of labor are needed.
Adam Smith clearly explained the basic concept a gazillion years ago… value signals. Either liberals still haven’t gotten the memo or…