Ain’t no way I’m watching the Democratic Convention.
Especially when I can be enjoying myself this week at the Mises Institute‘s “Mises University” program, which is the anti-Democratic Convention.
Here, students learn how society and economy order themselves without central planning, speech codes, or community activists.
Yesterday I listened to Professor Ben Powell of the Free Market Institute at Texas Tech University discuss sweatshops, a topic he’s covered on my show.
This was by far the most persuasive talk I’ve ever heard on the subject, and possibly one of the most persuasive talks I’ve ever heard on any subject.
The short version: it’s not legitimate to compare someone’s income in a Third World sweatshop to a comparable person’s income in the United States.
Instead, we have to compare that income to the available alternatives. Only when we realize how shockingly low these countries’ per capita incomes are can we draw conclusions based in reason rather than emotion.
The Democratic Convention will no doubt be filled with demands that workers be given this or that benefit. That’s been the trend for a hundred years: keep imposing burden after burden on the private sector, and pretending it’s all without cost.
The free-market response has been this: employers are prepared to pay their workers a certain amount in compensation. It’s a cost.
And a cost is a cost is a cost. They don’t care if that cost takes the form of wages, or fringe benefits, or massages at work. If the overall cost to the employer is unchanged, the employer is indifferent between different compensation combinations.
So…if we think we can just force the private sector to provide some benefit, well, we sort of can, but it will come at the expense of something else: wages, breaks, whatever.
Here’s why I bring this up: Ben actually bothered to ask workers in Third World factories what they themselves prefer. How about that!
Ben asked: would you prefer lower wages in exchange for better working conditions, paid vacations, etc.? And in each case, the overwhelming answer — usually over 90%, and often well over 90% — was no. We’d rather have our wages.
As these societies get wealthier and wages increase, workers are more willing to exchange a portion of those wages for these other amenities. But prematurely making that decision for them only makes them worse off — a point we see even more clearly when we bother to ask for their input.
I’ll tell you one more thing: my Contra Krugman co-host Bob Murphy (who’s also at the Mises Institute this week) and I just spent over an hour planning out the presentations we’re doing and the games and activities we’ll have on the cruise he and I are hosting aboard Royal Caribbean’s Liberty of the Seas this October.
You’ll learn a lot and laugh even more, trust me.
Grab your cabin before they’re gone: