You might be interested in reading over my discussion with DavidGrace.
Liberals and libertarians both agree it’s rude to intentionally give people bad directions. Unfortunately, liberals, and too many libertarians, don’t really grasp that minimum wages are the same exact thing as bad directions.
The point of markets is to efficiently allocate resources… including people. In a market, resources are allocated by value signals… prices/wages/revenue/profits. The efficiency of the allocation depends on the accuracy of the signals. Because minimum wages are inaccurate signals, they inefficiently allocate people… especially poor people.
The free movement of resources is only beneficial to the extent that they move to where they are most needed. Are unskilled workers most needed in the US? If so, where in the US are they most needed? The only way to know the true answers to these questions is to abolish the minimum wage.
When we think of wages as compensation then it’s only natural to think of fairness. But when we think of wages as signals then it’s only natural to think of accuracy.
A bee dances in order to signal the value of a flower patch. The longer/harder the bee dances, the more calories it sacrifices, the more valuable the flower patch. Does it matter how accurate the signal is? Well yeah. The less accurate the signal, the less efficient the allocation of bees. Either too many or too few bees will visit the patch. The hive is certainly harmed by the inefficient allocation of bees.
Our society is also harmed by the inefficient allocation of workers. It’s socially costly when a town has too many, or too few, unskilled workers. Liberals don’t seem to think it’s ever possible for an area to have too many unskilled workers. A labor surplus is unfathomable. Well… their analysis usually never really goes much beyond fairness.
So I think the best place to start is on the agreement that it’s rude to give people bad directions. Then it’s necessary to explain that wages are directions. Wages inform students in high school and poor people in Mexico about the value of the different career paths. In no case is it ethical or beneficial to deceive students or poor people about the true availability/necessity of different jobs.
I haven’t gotten around to putting it into a decent story. But it’s for sure a fact that the efficient allocation of resources depends on accurate value signals.
