June 6, 2003
A couple of years ago I had a silly idea for a marketing ploy: advertising space was going for a premium (ahh, those were the days) and there was one "space" that was being totally underutilized: the signs held by the homeless. Those things are probably read as frequently as many billboards and that marketing space is worth something. And hey, the people holding them usually are looking for money--so there was an opportunity for someone to bridge the gap, and possibly help people who are looking for money "earn" it rather than beg for it. The idea is simple: pay people to hold a sign advertising something and pay them what they would otherwise get begging.
Now this wasn't a serious idea and is probably in bad taste and raises some difficult questions (such as what are these people using the money for--answer for many is self-destructive drug habits), so I was fascinated to see that a pizza joint in Portland has tried this out. Already there is criticism--some along the lines that I mentioned above. But one of the weakest arguments against: exploitation--and the pizza shop owner is, apparently, already being investigated.
This is probably as clear cut a case as any: is no job really better than an "exploitative" job? Is there such thing in a free country as "exploiting" someone for not paying him a "fair" wage? After all, people are free to say no. Many believe so and favor a minimum wage, among other "protections." But list almost always in these discussions is a balanced discussion of the tradeoffs. If the pizza owner is forced to pay a "fair" wage, he will undoubtedly choose to forget the whole venture--and homeless people who apparently of their own free will have chosen this activity will be denied a meager opportunity. Is that "fair"? The trade off for wage laws is that there are necessarily fewer jobs--and so it is inevitable that those at the lowest end of the economic spectrum are the ones that suffer--rather than benefit. Look at the unemployment that wage laws have wreaked in several "old" European countries--among many others--for examples.
Exploitation is in the eye of the beholder--if people want lower paying jobs rather than no job, shouldn't that be their choice? Higher income workers have that ability--and can move down on the income level when times are tough and jobs are scarcer--why shouldn't lower income workers have that flexibility?
At the core this debate usually comes down to the issue of paternalism: can people make their own decisions as to what's in their best interest or does the state have to "protect" them (from themselves--that is their own inclination to choose something, such as working for a low wage, that the state doesn't believe they should choose.) There are many paternalists out there--and on some issues I can have paternalist tendancies--and I've found that it is very hard to argue with people who simply believe that the state knows better than the people it represents--it's almost an article of faith. But at the very least it is irresponsible to ignore the trade offs we make--if not explicitly then implicitly--when exersizing paternalism. In the instance of wage laws the paternalist is not just refusing to allow people to work under a certain wage floor but he is reducing the number of jobs available. So be a paternalist if you must but be clear about what you are forcing on people: you may be raising the incomes of some, but you are costing others their jobs. You aren't just choosing who to help, you are choosing at the same time to hurt others. Who are you to make that choice?