Who decides? The state or the individual?

Re: Who decides? The state or the individual?

Thomas wrote:

joefromchicago wrote:
In this situation, who should make the decision regarding Worker's wages and hours: Worker and Boss, negotiating between themselves, or the state, through its minimum wage/maximum hour legislation?

Worker and boss. The rationale depends on whether you ask the natral rights-libertarian in me or the utilitarian in me. I switch between both personalities, depending on which side of the bed I got up on this morning.

On reflection, I'd prefer to ignore the utilitarian side for now. As you made clear in your initial post, you want to talk about philosophy first, not economic policy. But the utilitarian part, as much as it matters for public policy, is boring from a philosophical viewpoint. As with free speech, free assembly, and free religion, the interesting cases about freedom of contract are the ones where freedom is pragmatically inexpedient. So let's skip pragmatics and talk principles. In this spirit, let me offer a case I find analogous to the one you presented in your initial post. (You will probably disagree.)

The case involves a fairly typical three-way relation: Adam loves Bertha. Charlie loves Bertha too, even a lot more than Adam does. Bertha, in turn, loves them both, but prefers Adam over Charlie by just a little bit. Under laissez faire in marriage, the current policy in Western countries, Bertha ends up marrying Adam. Poor Charlie stays behind, single and miserable. He would be much happier than he currently is if Bertha had married him instead. Adam and Bertha, on the other hand, would each be just a little less happy than they currently are. Overall, it would have been a gain in aggregate happiness.

So what if the government discovered this? What if it pursued, in its benevolence, a policy of prearranging its citizens' marriages for maximal connubial happiness? What if the marriage commission correctly determined it could improve on laissez faire? What if, having determined all this, the commission prohibited Adam's marriage with Bertha, compelling Bertha to marry Charlie instead?

In my philosophical view, this case is almost exactly analogous to yours about worker and boss. Bertha's liberty, to which she has a fundamental right, makes her free to marry whoever will marry her on her terms. At her convenience, she may adjust her terms to the pool of potential spouses -- or not. Analogously, the boss's liberty makes him free to hire whoever will work for him on his terms. (The boss, too, may adjust his terms to the pool of available workers -- or not.) In both cases, government intervention can improve on laissez faire because we assumed it can. Nevertheless, in both cases, that still doesn't entitle it to mess with people's fundamental right to liberty.

You, Joe, presumably agree with me about the marriage, but disagree about the work contract. So what do you think is the philosophical distinction between our two scenarios?

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Re: Who decides? The state or the individual?

fishin wrote:

Now that was for 2003 but it tells me that 97.1% of those that are employed us have been able to negotiate deals that get paid better than minimum wage.

That's a statistic that means very little, since it is drawn from a society that already has minimum wage/maximum hour laws. I wonder what the numbers would have looked like in 1903 rather than 2003.

But I don't want to focus exclusively on the wisdom or foolishness of minimum wage/maximum hour laws per se. I'm more interested in who gets to decide these sorts of matters: the individuals involved in the transaction or the government.

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I think Thomas' marriage analogy fails on the basis of considering compelling social interest. One might be able to vaguely make a case for greater happiness among a group of individuals concerned with Bertha's marriage, such as family and in-laws, but the situation is difficult to quantify and it falls outside the range of even the pursuit of happiness, as one is seen as having a right to pursue happiness, but is not guaranteed that one will obtain happiness. In the United States, the government is said to be established, among other things, to promote the general welfare (and also to insure domestic tranquility, as one might allege would be the outcome of Thomas' marriage commission, although, once again, you'll have trouble quantifying what does now and what will in the future constitute the happiness of those involved--Charlie might find someone he loves much more than Bertha, and Bertha and Adam may grow tired of one another).

It is far easier to argue that the state can promote the general welfare effectively by regulating labor relations, including wage and hour minimums and maximum, than i think could reasonably be said to be the case with a marriage commission. The freedom of capital to get labor at the cheapest possible rate could be said to be trumped by the right of the people in the aggregate to assure a specific minimum definition of welfare, in that case with regard to wages and hours. Therefore, one might allege that the freedom of capitalists is not the compelling state interest, but that the welfare of the people is. In the case of the marriage commission, even leaving aside the absurdity of attempting to establish standards upon which to judge the cases involved, the freedom of individuals to marry whom they please (who will consent) cannot reasonably be alleged, in my opinion, to come into conflict with a compelling state interest in promoting the general welfare (or insuring domestic tranquilty--which clause most likely refers to keeping the peace in public, rather than insuring individual happiness in personal relationships).

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Setanta is full of hot pop. Compelling social interest indeed. Thomas makes all the sense in the world but Gas bag Setanta, who thinks he knows a great deal, after he copies his interminal and meaningless screeds from old History books is, as most people from the old sod tend to be, just a bit dotty.

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Re: Who decides? The state or the individual?

Thomas wrote:

Worker and boss. The rationale depends on whether you ask the natral rights-libertarian in me or the utilitarian in me. I switch between both personalities, depending on which side of the bed I got up on this morning.

For the natural rights libertarian in me, there isn't much of an argument to make. In this capacity, I believe that people have a fundamental right to liberty. This means they can do everything they want as long as it doesn't interfere with the equal rights of others. If Jack chooses to offer Joe a job for $5/hour, and Joe chooses to accept, that's a matter between consenting grown-ups who know what they're doing. The same moral principle that prohibits the government from messing with the sex life of consenting grown-ups, also prohibits it from messing with the economic life of consenting grown-ups.

Suppose Worker and Boss decide that the limitations on information that they both have frequently cause them to enter into bad bargains, and so they have both freely ceded a portion of their liberty right to a third party mediator, whose job is to decide upon the terms of Worker's employment, based upon all relevant factors, including those unknown to both Worker and Boss. For Worker and Boss, this is an advantageous bargain, and so both are happy to have their liberty right limited in this particular situation. Is that acceptable to a natural-rights libertarian, or would you contend that it is never proper for free individuals to freely cede a portion of their liberty to a third-party?

Thomas wrote:

The utilitarian in me is somewhat more flexible. If you do an economics 101 welfare analysis, you find that, depending on worker's and boss's utility functions, the government can increase the general welfare with moderate and carefully calibrated minimum wage laws. I'm still not a big fan of government-set minimum wages though, for three reasons. 1) Employers and employees know more about the job they contract about than the govenment does, the government is in an inferior position to tell what the wage "ought to" be. 2) Alternatives such as the Earned Income Tax Credit achieve the same advantages with less severe side effects, 3) The government itself is properly thought of as a political market, not an omniscient, benevolent philosopher king. Hence, even if the government can incease the general welfare with a carefully calibrated minimum wage, that doesn't mean the minimum wage it actually sets will be carefully calibrated.

I think (1) is not necessarily true, (2) is of some interest from a utilitarian perspective, although not much, and (3) is a strawman argument. But since you don't want to talk about your utilitarian alternative, we can reserve this discussion for another time.

Thomas wrote:

On reflection, I'd prefer to ignore the utilitarian side for now. As you made clear in your initial post, you want to talk about philosophy first, not economic policy. But the utilitarian part, as much as it matters for public policy, is boring from a philosophical viewpoint. As with free speech, free assembly, and free religion, the interesting cases about freedom of contract are the ones where freedom is pragmatically inexpedient.

That may very well be true, although I'm not sure why utilitarianism is boring from a philosophical viewpoint. I find it very interesting, albeit very mistaken.

Thomas wrote:

So let's skip pragmatics and talk principles. In this spirit, let me offer a case I find analogous to the one you presented in your initial post. (You will probably disagree.)
...
In my philosophical view, this case is almost exactly analogous to yours about worker and boss. Bertha's liberty, to which she has a fundamental right, makes her free to marry whoever will marry her on her terms. At her convenience, she may adjust her terms to the pool of potential spouses -- or not. Analogously, the boss's liberty makes him free to hire whoever will work for him on his terms. (The boss, too, may adjust his terms to the pool of available workers -- or not.) In both cases, government intervention can improve on laissez faire because we assumed it can. Nevertheless, in both cases, that still doesn't entitle it to mess with people's fundamental right to liberty.

You, Joe, presumably agree with me about the marriage, but disagree about the work contract. So what do you think is the philosophical distinction between our two scenarios?

Bertha is certainly free to marry one or the other of her suitors, but she isn't free to marry both (which, quite possibly, is the solution that would produce the most utility). That's because the state has decided, for reasons entirely unrelated to its legitimate interest in preserving Bertha's freedom to marry, that plural marriages have a general disutility that outweighs their presumptive utility for the individuals involved. Now, of course, one can argue whether the state has made the right decision with regard to plural marriages, but most people (including you, I suspect) are willing, so long as the state sanctions marriages, to allow the state some role in deciding who can marry whom and under what terms.

And so the situation of Bertha and her two suitors and the situation of Worker and Boss are not really different in kind. It's just that, in the former case, the state has decided that its interests are not so great as to outweigh the liberty interests of the individuals involved, whereas in the latter the state's interests are greater than the interests of either Boss or Worker to agree on the conditions of Worker's employment.

Now, are the state's interests economically optimal? Quite possibly they are not. But then we can't necessarily conclude that Worker's and Boss's interests are economically optimal either. On the other hand, there's no reason to think that the state's decision is necessarily worse than the one that would have been made by Worker and Boss.

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Setanta's blurb about the right of people in the aggregate to assure a specific minimum definition of welfare completely overlooks the hundreds of studies that have been done which show that any rise in the minimum wage in the United States does not lead to a totally good result. Many entrepreneurs decide and have decided that the rise in minimum wages are not feasible and so they do without one or two employees and attempt to work without them. The enormous rise in automatic check outs in retail stores in the USA signal the disgust of the entrepreneur with the never ending wage demands which, people like Setanta do forget. leads inevitably to more inflation which really erodes any raise in the minimum wage. Setanta obviously does not know that the rise in the minimum wage inevitably raises all the wages above that line thus contributing to a rise in the price of goods. This inflation eats at the alleged gain. Anyone who doubt that has only to look at the disasterous policies set in place by the doddering old fool, Jimmy Carter. Wages went up 5% and prices went up 7%. What was the advantage of that for the worker?

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Joe from Chicago would get thrown out of any court in the Middle West with his specious reasoning. So the Earned Income Tax Credit does not help those at the bottom of the economic ladder? What a hoot! Try to take it away from those people. It sometimes makes the difference between surviving out of deep debt and making it.

Who is this third party that Joe from Chicago refers to? A group of lawyers billing at 250 per hour? They will,of course, stretch out the talks so that their fees will exceed any advantage gained. In his state, Joe from Chicago knows that the criminals control such third party conferences. The governor is a crook. Leave it to the market which does not have any evil intents. Adam Smith knew.

Joe from Chicago is wrong when he says that the state has a right to intervene in the marriage between Bertha and her suitor and then attempts to make a parallel to the employer-employee situation. It doesn't work. Joe from Chicago is apparently so wed to bureaucracy and paper work( a lawyer's tools) that he does not know that Unions and thier advocates were the ruination of our US economy. Now that the free market has responded by utilizing the global market and the establishment of factories and shops all over the country which are non Union, the mafiosi who ran the Unions previously may groan and moan but our county is far better off economically. The Stock Market is at an all time high, as our the 401K's of nearly fifty million workers.

I am sure that Joe from Chicago would vociferously resist the attempt of any group or commission to negotiate the fees of attornies. The lawyers would, of course, tell the world that the market should be the mechanism which controls their fees.

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Re: Who decides? The state or the individual?

joefromchicago wrote:

Suppose Worker and Boss decide that the limitations on information that they both have frequently cause them to enter into bad bargains, and so they have both freely ceded a portion of their liberty right to a third party mediator, whose job is to decide upon the terms of Worker's employment, based upon all relevant factors, including those unknown to both Worker and Boss. For Worker and Boss, this is an advantageous bargain, and so both are happy to have their liberty right limited in this particular situation. Is that acceptable to a natural-rights libertarian, or would you contend that it is never proper for free individuals to freely cede a portion of their liberty to a third-party?

In principle, that's no different than two companies contracting to settle their disputes through arbitration. I see no problem with that. I'm pretty sure a sufficiently shrewd lawyer can make up some trick scenario where voluntarily surrendered liberty traps me in a paradox. I'm also sure you're a shrewd lawyer. Razz

Setanta mentioned John Stuart Mill earlier. Mill's solution to the problem you described, exposed at some length in his Principles of Political Economoy, is that workers start up their own companies and run them as workers' cooperatives. That way, whatever an individual loses with its worker's hat on, it gains with its owner's hat on. By Mills description, workers' cooperatives were profitable and expanding at the time he wrote, and theiresults were encouraging. There are only few of them left nowadays. Evidence, perhaps, that the problem you describe isn't much of a problem anymore?

joefromchicago wrote:

I think (1) is not necessarily true,

You said the other day that you'd like to read in the libertarian literature more. So perhaps you'd be interested in looking at the libertarian case for the proposition. Specifically, there are two essays I found interesting: Friedrich Hayek, The Use of Knowledge in Society (1945), and Herbert Spencer: Over-Legislation (1853). If I only had time for one, I'd read Hayek.

joefromchicago wrote:

That may very well be true, although I'm not sure why utilitarianism is boring from a philosophical viewpoint. I find it very interesting, albeit very mistaken.

Utilitarianism is philosophically interesting. The application of utilitarianism to regulations on minimum wages and maximum hours is not. That's just an Econ 101 finger excercise in number crunching.

joefromchicago wrote:

Now, of course, one can argue whether the state has made the right decision with regard to plural marriages, but most people (including you, I suspect) are willing, so long as the state sanctions marriages, to allow the state some role in deciding who can marry whom and under what terms.

This is technically true, but without consequence. I don't approve of the state sanctioning marriages, and would reduce it to just another contract, to be guided by plain vanilla contract law. That deprives marriage of government perks, but frees it of any limitations beyond those required to make a contract: Two or more consenting grown-ups, meeting of minds, and so forth.

joefromchicago wrote:

And so the situation of Bertha and her two suitors and the situation of Worker and Boss are not really different in kind. It's just that, in the former case, the state has decided that its interests are not so great as to outweigh the liberty interests of the individuals involved, whereas in the latter the state's interests are greater than the interests of either Boss or Worker to agree on the conditions of Worker's employment.

I agree all three scenario (including the solution with the polyandrous marriage) are the same. And all three scenarios, my position is that the actors have a fundamental right to freedom of contract, which the government may not legitimately infringe.

joefromchicago wrote:

Now, are the state's interests economically optimal? Quite possibly they are not. But then we can't necessarily conclude that Worker's and Boss's interests are economically optimal either. On the other hand, there's no reason to think that the state's decision is necessarily worse than the one that would have been made by Worker and Boss.

I agree -- and given this ambiguity, the question becomes how we deal with it. Unlike you, I believe in the freedom of contract as a similarly fundamental right as free speech, free excercise of religion, freedom from unreasonable searches and seizures, and the rest of the list. So my approach to the uncertainty you describe goes like this: Pretend the Supreme Court had to reverted to the moral positions it took during the Lochner era. Alternatively, pretend that America just amended its constitution to say "The right of the people to freedom of contract shall not be infringed." As a consequence, I imagine, the Supreme Court would subject all interventions into the economy to strict scrutiny. Federal, state, and local governments could still regulate the economy, but only if they could prove that the particular regulation is narrowly tailored to fulfill a compelling government interest.

How would you deal with the ambiguity?

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MarionT wrote:

Joe from Chicago would get thrown out of any court in the Middle West with his specious reasoning.

Hi Marion! You mention the courts of the Middle West, so tell me: what would Richard Posner say about the arguments we are exchanging here? And how do you as a rather left-wing liberal think of Richard Posner's conservative views?

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Setanta wrote:

I think Thomas' marriage analogy fails on the basis of considering compelling social interest.

What social interest? If joefromchicago works 65 hours a week instead of 45, how does that affect you as a member of society?

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In a moment, Thomas.

Joe, i decided that Thomas' marriage commission analogy was inapt on the basis of compelling state interest. However, i recognize that analogy is a very effective method of examining an idea. So i am lead to wonder what your specific intent is in this discussion.

Do you intend to only and specifically discuss the negotiations between labor and management? Or, do you intend a general discussion of the bases of contractual agreements between private parties (including, of course, capital, as privately owned companies, partnerships and corporations can be considered individuals in the eyes of the law, can be considered "persons")?

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Thomas wrote:

Setanta wrote:
I think Thomas' marriage analogy fails on the basis of considering compelling social interest.

What social interest? If joefromchicago works 65 hours a week instead of 45, how does that affect you as a member of society?

This might deny me the opportunity to find employment in those additional 20 hours per week, say, 20 hours of Joe's time and 20 hours of your time. I believe it is correct to say that ceilings of hours were originally intended to assure more employment opportunity for the general publice. In the United States, pursuant to the terms of the Fair Labor Standars Act (first enacted in 1938, and revised many, many times since then), employees were entitled to overtime pay of one and one half times their ordinary rate for hours worked in excess of mandated ceiling on hours (it contains a great many provisions--for example, each employee is entitled to a "lunch break" of not less than twenty minutes, no sooner than three and one half hours, and no later than five and one half hours after the commencement of the employees shift; i was once a union steward with AFSCME specializing in discipline and greivance). I believe the intent was to assure that employees were not exploited by being forced by circumstance or necessity into working more than a set number of hours per week, which was seen both as protecting the health of the worker, and potentially provided more employment for the general labor pool.

Additionally, there is a compelling interest in assuring that i don't, as a party to the agreement with the employer, feel compelled to work more hours in a pay period than the mandated ceiling (without just overtime compensation) simply because the employer can pass me over to hire someone who is willing to work more than the mandated ceiling.

In England, the first labor relations act which was passed was to prohibit the practice of men entering a textile mill with a wife and children to produce piece work--in essence, the employee's wife and children became his "subcontractors." This was passed before limitations on child labor and outright prohibition of child labor below a certain age were enacted. The position of those supporting the legislation was that this constituted an abuse of labor to the unfair advantage of the employer. It should be noted that the practice involved paying less for the piece-work produced by women and children than was paid to the adult male, which was a major impetus for the movement to outlaw the practice.

So, to say it as briefly as possible, the compelling state interest is to provide employment to a many workers as possible, and to lift from labor the burden of compulsion in production.

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The Fair Labor Standards Act and it's history would, i think, be of interest to those in this discussion.

The United States Department of Labor's Fair Labor Standards Act history page.

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Setanta wrote:

This might deny me the opportunity to find employment in those additional 20 hours per week, say, 20 hours of Joe's time and 20 hours of your time.

I agree that's a perfectly valid public interest. But you said the public interest sets work contracts apart from marriage. I don't see this difference here. True, if Joe works 20 hours, you can't work those same 20 hours anymore. But the same is true about marriage: If Joe marries a woman, you can't marry that same woman anymore. So where is the difference in public impact between these classes of contracts?

Setanta wrote:

So, to say it as briefly as possible, the compelling state interest is to provide employment to a many workers as possible, and to lift from labor the burden of compulsion in production.

That's a reasonable opinion, even though I disagree with it on two points. For one, I don't know that American courts would find that the preservation of (nearly) full employment is a compelling state interest. Sure, it's a legitimate, even an important state interest. But is it a compelling state interest? The kind of interest that would justify race-based classifications? An interest so important the government could sterilize people if necessary to achieve it? I'm not certain enough to rule this out entirely. But my gut instinct tells me that U.S. courts probably wouldn't find full employment "compelling" in this sense. Joe, would you care to venture a guess?

Secondly, suppose you're right. You just persuaded a court that full employment is a compelling state interest. Then the next question (for me) is this: Are maximum hour and minimum wage laws narrowly tailored to achieve full employment? I believe the answer is 'no': the theory you describe in your first paragraph reflects what economists call the "lump of labor" fallacy. It reached the zenith of its reputation during the age of mercantilism. Ricardo (1817) debunked it conclusively. Then it stayed debunked until the Great Depression, when it had a brief comeback. Today, the theory is thoroughly discredited among economists again. Only the snake oil salesmen of economics -- journalists like Thomas Friedman and Lou Dobbs -- continue to peddle variations of it. But to persuade judges, you'd need a credible expert witness. No such witness today would testify under oath that minimum wage or maximum hour laws are tailored to achieve full employment. Let alone narrowly tailored.

I think if American courts applied strict scrutiny to current labor regulations, few of them would withstand it.

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Thomas wrote:

Hi Marion! You mention the courts of the Middle West, so tell me: what would Richard Posner say about the arguments we are exchanging here? And how do you as a rather left-wing liberal think of Richard Posner's conservative views?

MarionT wrote:

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Setanta's blurb about the right of people in the aggregate to assure a specific minimum definition of welfare completely overlooks the hundreds of studies that have been done which show that any rise in the minimum wage in the United States does not lead to a totally good result. Many entrepreneurs decide and have decided that the rise in minimum wages are not feasible and so they do without one or two employees and attempt to work without them. The enormous rise in automatic check outs in retail stores in the USA signal the disgust of the entrepreneur with the never ending wage demands which, people like Setanta do forget. leads inevitably to more inflation which really erodes any raise in the minimum wage. Setanta obviously does not know that the rise in the minimum wage inevitably raises all the wages above that line thus contributing to a rise in the price of goods. This inflation eats at the alleged gain. Anyone who doubt that has only to look at the disasterous policies set in place by the doddering old fool, Jimmy Carter. Wages went up 5% and prices went up 7%. What was the advantage of that for the worker?

Joe from Chicago would get thrown out of any court in the Middle West with his specious reasoning. So the Earned Income Tax Credit does not help those at the bottom of the economic ladder? What a hoot! Try to take it away from those people. It sometimes makes the difference between surviving out of deep debt and making it.

Who is this third party that Joe from Chicago refers to? A group of lawyers billing at 250 per hour? They will,of course, stretch out the talks so that their fees will exceed any advantage gained. In his state, Joe from Chicago knows that the criminals control such third party conferences. The governor is a crook. Leave it to the market which does not have any evil intents. Adam Smith knew.

Joe from Chicago is wrong when he says that the state has a right to intervene in the marriage between Bertha and her suitor and then attempts to make a parallel to the employer-employee situation. It doesn't work. Joe from Chicago is apparently so wed to bureaucracy and paper work( a lawyer's tools) that he does not know that Unions and thier advocates were the ruination of our US economy. Now that the free market has responded by utilizing the global market and the establishment of factories and shops all over the country which are non Union, the mafiosi who ran the Unions previously may groan and moan but our county is far better off economically. The Stock Market is at an all time high, as our the 401K's of nearly fifty million workers.

I am sure that Joe from Chicago would vociferously resist the attempt of any group or commission to negotiate the fees of attornies. The lawyers would, of course, tell the world that the market should be the mechanism which controls their fees.

************************************************************

It is clear to me that the doddering Setanta can only handle queries that do not test his aging brain too much and Joe from Chicago has spent too much time in traffic court. But my posts stand unrebutted.

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Thomas, i didn't say that the public interests sets employment contracts apart from marriage contracts. Specifically, you imagined a marriage commission which would determine specifically which individual could or would marry another specific individual. I said that i didn't believe the state had a compelling interest in doing that. I said that i do believe the state has a compelling interest in attempting to created as much employment opportunity as it can. I referred to Joe's additional 20 hours and your additional 20 hours as an opportunity for me to work 40 hours--it was simply intended to be illustrative of the intent of the state in asserting a compelling interest to create a ceiling on hours.

As for how American courts would react to the principle, i suggest that you follow the link i provided to the Department of Labor's page on the history of the Fair Labor Standards Act. It has some interesting information on the subject--specifically on the cases prior to 1938 in which the Supremes had struck down child-labor laws and minimum wage laws. In particular, it mentions the Tipaldo case.

You can read about that case at this "FDR and the Supreme Court" page.

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This is the "Find Law" page on Morehead versus the People of State of New York, which is the formal name for the Tipaldo case.

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Thanks, Setanta, this page is a cornucopia of interesting New Deal cases. I peaked into each of them, but haven't had time yet to read them all in full.

This thread is probably not the right place to consider the merits of these decisions as constitutional law. They probably do over-interpret the due process clauses. On the other hand, their Commerce Clause jurisprudence strikes me as much more plausible than what came after 1937. But whatever one may think of these cases as law, they undoubtedly make for excellent political documents. And when I consider them this way, I fully agree with those judges who would uphold freedom of contract and strike down New Deal legislation. They seem to strike just the right balance between individual liberties and the powers governments need to preserve order.

In my opinion, consenting, sane grown-ups have a fundamental right to contract with each other in any way they see fit. Governments are instituted among men to secure fundamental rights such as this one. They can infringe on these rights, but only to relieve an acute emergency endangering other people's lives, liberty, and property. So on the one hand, the freedom of speech does not protect the right to shout "fire" in a crowded theater. On the other, the government may not silence you unless that's neccessary to remove a clear and present danger. Analogously, "[t]he liberty protected by the Fifth Amendment does not include the right to persist in [an] anarchic riot." (I didn't know this line until today.) A little price-fixing is okay if it relieves acute economic distress. But the government has no legitimate power to impose permanent price controls, permanent production quotas, and permanent minimum wages.

I agree with the court's approach in these pre-1937 cases.

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Re: Who decides? The state or the individual?

Thomas wrote:

joefromchicago wrote:
Suppose Worker and Boss decide that the limitations on information that they both have frequently cause them to enter into bad bargains, and so they have both freely ceded a portion of their liberty right to a third party mediator, whose job is to decide upon the terms of Worker's employment, based upon all relevant factors, including those unknown to both Worker and Boss. For Worker and Boss, this is an advantageous bargain, and so both are happy to have their liberty right limited in this particular situation. Is that acceptable to a natural-rights libertarian, or would you contend that it is never proper for free individuals to freely cede a portion of their liberty to a third-party?

In principle, that's no different than two companies contracting to settle their disputes through arbitration. I see no problem with that.

What if the mediator is called "the State?" Any problem with that?

Thomas wrote:

Setanta mentioned John Stuart Mill earlier. Mill's solution to the problem you described, exposed at some length in his Principles of Political Economoy, is that workers start up their own companies and run them as workers' cooperatives. That way, whatever an individual loses with its worker's hat on, it gains with its owner's hat on. By Mills description, workers' cooperatives were profitable and expanding at the time he wrote, and theiresults were encouraging. There are only few of them left nowadays. Evidence, perhaps, that the problem you describe isn't much of a problem anymore?

Well, the problem really is whether individuals or the state should make these kinds of economic decisions. I don't think that problem has gone away.

Thomas wrote:

You said the other day that you'd like to read in the libertarian literature more. So perhaps you'd be interested in looking at the libertarian case for the proposition. Specifically, there are two essays I found interesting: Friedrich Hayek, The Use of Knowledge in Society (1945), and Herbert Spencer: Over-Legislation (1853). If I only had time for one, I'd read Hayek.

I've never read any Hayek, so that is something I'll have to look into. I think I'll save Spencer until I've had a chance to re-read Bentham and Mill.

Thomas wrote:

Utilitarianism is philosophically interesting. The application of utilitarianism to regulations on minimum wages and maximum hours is not. That's just an Econ 101 finger excercise in number crunching.

I disagree. Economists typically view their work as value-free, but it is often informed by utilitarianism, which is value-laden.

Thomas wrote:

This is technically true, but without consequence. I don't approve of the state sanctioning marriages, and would reduce it to just another contract, to be guided by plain vanilla contract law. That deprives marriage of government perks, but frees it of any limitations beyond those required to make a contract: Two or more consenting grown-ups, meeting of minds, and so forth.

I agree with you, but, until we reach that stage, I also believe that the state should exercise some constraint over who can marry whom.

Thomas wrote:

I agree all three scenario (including the solution with the polyandrous marriage) are the same. And all three scenarios, my position is that the actors have a fundamental right to freedom of contract, which the government may not legitimately infringe.

Is the freedom of contract based on it being economically efficient, or is it based on some sort of Lockean "natural right," or is there some other reason that the freedom of contract is so fundamental?

Thomas wrote:

I agree -- and given this ambiguity, the question becomes how we deal with it. Unlike you, I believe in the freedom of contract as a similarly fundamental right as free speech, free excercise of religion, freedom from unreasonable searches and seizures, and the rest of the list.

I don't think that's necessarily true. I'm quite prepared to admit that the freedom of contract is a fundamental right -- at least for argument's sake. We may, however, have different views on why it is a fundamental right.

Thomas wrote:

So my approach to the uncertainty you describe goes like this: Pretend the Supreme Court had to reverted to the moral positions it took during the Lochner era. Alternatively, pretend that America just amended its constitution to say "The right of the people to freedom of contract shall not be infringed." As a consequence, I imagine, the Supreme Court would subject all interventions into the economy to strict scrutiny. Federal, state, and local governments could still regulate the economy, but only if they could prove that the particular regulation is narrowly tailored to fulfill a compelling government interest.

How would you deal with the ambiguity?

I'm not sure what "ambiguity" you're talking about here. If the constitution were amended in the way you suggest, I think the supreme court would revert to a Lochner-style jurisprudence. As a policy, I think that would be a bad thing, but on this thread I'd rather stick to discussing the general philosophical issues than the specific practical ones.

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Who decides? The state or the individual?

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