 It's a honor and a privilege to be here. It's an honor and a privilege to be associated with the Mises Institute. I don't like to brag, but I'm probably the only person in the room that ever shook hands with Mises, and I never washed the hands since. So if you shake my hand, you channel Mises. Now that you'll get a little dirty, but what the heck, it'll be worth it. I'd like to start with some commercial announcements. You probably know that the Mises Institute publishes books like Mises's Socialism, which we are using at my school, Loyola University, in our book club. And I urge high school students or grandparents or grandparents of high school students to consider Loyola University. I have an entire economics department that is free market. You also probably know that Mises Institute produces ties, one of which I'm wearing, but you probably don't know that they produce things for babies. And this one says, worth my weight in gold. Probably that's an underestimate. Here's another one. Babies are praxeologists. It's a bib, and I have grandchildren. They're now 15 months old, and they will be using these things. I have a thing to be given out. It's at the edge of each of the podium, so if you would pass these along to everyone else. The reason I did this is my old buddy Bernie Sanders is now in the news. I'm sure some of you have heard of him. Well, Bernie and I went to high school together. We graduated at the same time. We overlapped four years at Madison High School. We're both on the track team. You'll see the first page is just me right in the upper middle. Somehow they didn't have my address. I'm not sure why not. The second page is a picture of Bernie, and Bernie is on the lower right, second from the right. What he says is to Walter, lots of luck to a four-year teammate. We're both on the track team together. Bernie was one of the best runners in the entire city. I was a mediocre runner, and on the third page you'll see a picture of the track team. Bernie is tall, and we were lined up in a size place. The big guys were in the back, and Bernie is maybe 6'2", or 6'3". He is fourth from the left. He's got a little hoodie there. I'm not sure what the significance of that is. I'm also fourth from the left, but I'm in the third row. I'm sort of lower and to the right of him. Not only did we go to high school together for four years, but we lived in the same quadrant away from Madison High School, so sometimes we'd walk to and fro from school, and also we overlapped one year at Brooklyn College. At the time, I had roughly the same views as my man Bernie. I was a Pinko, Kami, Democrat, progressive, liberal, whatever you want to call it, and we were both Jewish in Brooklyn in the 50s, and everyone was a lefty or Democrat or whatever, and it was sort of in the air. Later on, Ayn Rand came to Brooklyn College to lecture, and I came to Boo and his her because she favored free enterprise, which is despicable as everyone knew. To make a long story short, I had several sessions with her and Nathaniel Brandon, and they recommended two books for me to read, Economics and One Lesson by Henry Haslett and Atlas Shrugged, and after that I became, well, sort of a libertarian, and then I met Murray Rothbard, and he converted me both to laissez-faire anarchism or anarcho-capitalism, and also later on, Austrian economics. Okay, the talk that I'm going to be giving today is on the minimum wage, which is one of Bernie Sanders' favorite things. Not only Bernie, but I get students, my freshman students, they all love the minimum wage, and you're sort of callous if you don't support it. It's very popular, and the belt on Chong and universities and pretty much in the entire population is that if you're against public education, you're against education. If you want to legalize drugs, somehow you favor the use of drugs. If you want to legalize prostitution, you favor prostitution. If you oppose minimum wage, you favor lower wages. Now, all of this is obviously nonsense. You can favor the legalization of drugs and prostitution without favoring the thing itself, and certainly you can favor higher wages without favoring a minimum wage law. The minimum wage law is very popular in college towns, which indicates miseducation on the part of most universities. People have just been misled. They think that somehow the minimum wage law is a floor under wages, and the higher you raise it, the higher wages are. They don't realize that demand curves slope in a downward direction, and yet in every other context, they do realize this. They know that if you want less smoking of tobacco, you raise the price of tobacco or cigarettes through taxes. They don't think you lower it to discourage that. If you want fewer plastic bags, you raise their price. If you want fewer abortions, you raise the price through requirements of additional licenses for doctors and hospital associations. If you want more purchases of fruits and vegetables, you lower their price through subsidies. So in many, many areas, everyone realizes that the higher the price, the less people demand, and the lower the price, the more people demand. But somehow this is an exception. You raise the price of unskilled labor from 7 to 12 to 15, and somehow you don't get less employment. It's just crazy. Economics 101, a floor, minimum wage, creates surpluses, a ceiling, creates shortages. But somehow it doesn't work. I mean, you get a guy like Stiglitz who favors the minimum wage, and then you ask him, Mr. Stiglitz in your textbook or whatever, you said the very opposite, and then he starts talking, and you can't understand what he's saying, how he can reconcile these things. Now, when I was a beginning young stud, now I'm an old coot, but when I was a young stud, what I would do to illustrate this is I would jump over a table about that height, and then when I got a little older, I would jump over my Adichie case pointed this way. And then when I got a little older, I would jump over my Adichie case holding it this way. And then when I got even older, I would put the Adichie case flat down there. See, what they say, to give a good lecture, you're supposed to demonstrate these things, and what I'm trying to demonstrate is that the minimum wage is not a floor under wages, it's rather a barrier over which you have to jump to get a job. So I'm jumping over these various things. Well, now that I'm almost 75 years old, I can't jump over any of this, but I can jump over this piece of paper. So I'm going to illustrate this, and the people on the front, on the stadium can verify this, that I'm going to put a piece of paper down, and I'm going to jump over it. It's going to be a hard slog, because I'm not as spry as I used to be, but watch this, and I want a drum roll. Maybe I'll try out for the Olympics. How are wages determined? The view of wage determination on the part of the populace or on the part of the low-information voter is it's based on employer generosity. If the employer is a nice guy, he'll pay you a lot of money, and if he's a lousy profit-seeking capitalist pig, he will low salary, which is a little strange, because why do some people earn $500 an hour if they're lawyers or doctors? Why do some people, plumbers, earn $50 an hour? Why do people who push brooms earn $10 an hour? Is it because they have different generosity of employers? Very silly. Another theory is that it's government laws. Whatever the government says, the market will do. Instead of raising the minimum wage to $15, why not raise it to $5,000 an hour? Then we'd all be rich. So that's not a good theory either. The third theory is productivity, or discounted marginal revenue product, or for short, just productivity. Wages are determined by productivity, and what is marginal productivity? It just means how much extra can the employer get if he's got you on the shop floor with a case where he doesn't have you on the shop floor? Now suppose I'm worth $10 an hour. That means that if you hire me, your receipts go up by $10 an hour. More widgets come out of the factory. Well, how much do you want to hire me for? What's your first bid? And the obvious answer for the profit-maximizing bid is negative infinity. Namely, you want me to pay you an infinite amount of money for the privilege of working for you. But if we forget about negative sums, a penny an hour. Well, at a penny an hour, you're making $9.99 off of me. You're exploiting me to the tune of $9.99. Well, some other capitalist pick is going to come along and say $0.02. Someone else will say $0.03, $0.04, $1.02. Where will it end? Well, at $10 an hour in equilibrium. Now, we never reach equilibrium or the evenly rotating economy, so that's where we're always tending toward. So if I'm worth $10 an hour, the tendency is that my wage will be $10 an hour. Now, suppose the minimum wage is $12 an hour. Well, now you have to pay $12 an hour to me, and I'm worth $10, so you're minus two. You're going to lose $2 an hour. So either you're not going to hire me in the first place or if you do and you do it once too often, you're going to go broke. So the minimum wage is not an employment law. It's an unemployment law. It doesn't say if it's $15 an hour or if it's $12 an hour, it doesn't say people will be hired at that amount. It just says that if they're hired, they have to be paid that amount, which is a very different sort of a thing. The point is how then can we raise wages? Well, Jeff talked about capital accumulation. If we have capital accumulation, my productivity will rise. The way we used to build buildings like this was with picks and shovels, and now we do it with capital equipment, so people are more productive. And how do you get more capital equipment? Well, people have to save, and how do you get more saving? Well, first of all, the interest rate can't be virtually negative. And second of all, you have to have some assurance that the money that you save, you'll be able to keep, which in many South American countries, you don't have, so their productivity is very low. There are several anomalies about the minimum wage. Now, look at it from their point of view. From the advocates of the minimum wage, I think there's a woman, Savanta, Savanta who's a... Let's pick her, or Bernie Sanders, or any people like that. What are they thinking about? And to show that there's something weird going on here. First of all, if they really think that the justified wage is $15 an hour, why are they gradually raising it? In other words, they never say the national wage is now $7.25. They never say, let's raise it to $15 immediately. They say, let's go to $10 and then $11 and a year later $12. Well, that's a problem. Because look, suppose we had slavery and we had the ability to end all slavery, but we didn't end all slavery. We ended it, but 5% of slaves can be freed every year and then after 20 years all the slaves will be freed. I mean, this would be a contradiction, right? If we're against slavery, we want to end it like that. And if we favor the minimum wage of $15 or $25 or whatever it is, we ought to go like that. But this gradual raising of it shows that we have the power to raise it higher and yet we're only doing it instrumentally. So that in and of itself is a problem. The second one is every year, about this time, May, when high school kids are off for the summer, comes out the message from the mayors of all the congressmen and other politicians, hire a teenager, give a teenager a job. And you know what they do? They have a special exception for a lower teenage minimum wage. If the minimum wage is $10 an hour, the teen minimum might be $4 an hour. But if minimum wage raises wages, why are we being so cheapskatey with teenagers? Why not just raise it to $10 for them? In other words, they realize that if you raise it to $10 for teenagers, they're not going to get any jobs. And in order to help them get jobs, you keep it lower. But that undermines or is incompatible with the whole idea that minimum wage raises wages. So why make an exception for teenagers? Why hurt teenagers? Again, from the point of view of people who favor this. Another one is unions. You know what the unions want? They want to have an exception. They don't want to pay their workers the minimum wage, which is another anomaly. I mean, if the minimum wage is so good and it raises wages, why doesn't it work for union employees? For some reason, it doesn't. And then again, as I mentioned, why not $10,000? I mean, if everyone got $10,000 an hour, we'd cure poverty, right? Another one is foreign aid. Our friends on the left love foreign aid. Well, why give foreign aid? Why don't we just tell these other countries, hey, poor countries, raise you a minimum wage? Then there's the Horatio Alger case. Horatio Alger was some young kid who wanted to get a job and was finding it very hard to get a job. And he went up to the employer and said, let me work for a day for free. And if you like what I'm doing, then you can offer me a wage. Well, what would happen to a person like that? Well, they wouldn't put him in jail. They'd put anyone in jail who hired him. Look, the skunk is a weak animal except for its smell. The porcupine is a very weak animal except for its quills. By the way, how do porcupines make love? Very carefully. The deer is a very weak animal except it has speed. One skilled worker is a very economically weak worker and what compensating differential does he have? The ability to work for a lower wage which is similar to the smell of the speed or the quills of the porcupine but the minimum wage law takes it away. It's as if we're taking away from the porcupine, the deer and the skunk, they're compensating differential and then we wonder why they're not doing so well. Well, they wouldn't be doing so well. Then there's internships. People go and get an internship and how much money do they get paid zero? Well, that's a violation of the minimum wage law. Nancy Pelosi, our friend, was once interviewed about she was favoring the minimum wage and the interviewer said, well, do you have any interns? We're trying to help young people learn skills, yack, yack, yack. But isn't this a contradiction between the minimum wage, aren't you guilty of violating the minimum wage? But then incoherence came about. I mean, you couldn't understand why. Another one is even Hillary doesn't want to raise the minimum wage in upper New York State because the costs of living there are lower and the upper New York State is poor. She just wants to raise it a 15 for New York City but not for upper New York State, Buffalo or Rochester, places like that. But again, this undermines the whole ethos, the whole essence of the minimum wage. Why not help? If anyone should have the minimum wage, it should be the poor areas because the richer areas can fend for themselves. So you want to raise, if Hillary were consistent, logically consistent, which is not her middle name, logical consistency, she would favor a lower minimum wage in New York City where they don't need it and a higher minimum wage everywhere else, which would be highly problematic to say the least. I favor not only getting, not only not raising it and not only not keeping it there and not only lowering it and not only eliminating it entirely, I favor putting the people in jail who are responsible for the minimum wage. Now, what these people will say is well, you know, yes, some people will be unemployed but everyone else's wage will go up. Look, you know, if I fended the minimum wage, the unemployment rate of teenagers and adults was about the same. The unemployment rate of whites and blacks was about the same. Now, after the minimum wage, the unemployment rate of teenagers is double the unemployment rate of adults. Why? Because teenagers have a hard of time jumping over not a physical barrier but an economic barrier and whites and blacks, the unemployment rate used to be roughly the same. Now-a-days, the unemployment rate for blacks is twice as high as whites because the productivity of blacks is lower than whites and the unemployment rate for black teenagers is quadruple. Well, when your unemployment is quadruple, I mean, and they only count you as unemployed if you're actively seeking a job but if you keep actively seeking and you no longer get one, then you're not counted as unemployed so the unemployment rate is gargantuan and if you're unemployed and bored, you're going to get into trouble, you're going to get into crime, you're going to go to jail. It's just a horror and yet the black lives matter and the congressional black caucus, they love the minimum wage, it's just before I started studying this minimum wage, I had a full head of hair, look at me now, I've been pulling it out over frustration over this. And then the thing, the handout that I gave the fourth page, does everyone have this? Anyone? If you don't have it, raise your hand. We'll go over it during the question period and then we'll have some time to distribute it but my time is now up so I have to stop. Thanks for your attention.