Emotional economics has given birth to theories that calm…
““Emotional economics has given birth to theories that calm examination cannot justify. One of these is the idea that labor is being “underpaid” generally. This would be analogous to the notion that in a free market prices in general are chronically too low. Another curious but persistent notion is that the interests of a nation’s workers are identical with each other, and that an increase in wages for one union in some obscure way helps all other workers. Not only is there no truth in this idea; the truth is that, if a particular union by coercion is able to enforce for its own members a wage substantially above the real market worth of their services, it will hurt all other workers as it hurts other members of the community.””
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Wage subsidies for a specific group raise costs for others and reduce overall welfare.
In simple terms: Higher wages for one group can hurt others.
Key Takeaway
Consider market-wide effects of wage policies.
Themes
labor economics
policy
distribution
Mood
analytical
critical
Type
economic
policy
When to use this quote
- government wage setting
- union negotiations
- industry salary standards
Key Concepts
wage theory
market equilibrium
collective bargaining
Questions to Reflect On
- What are the trade‑offs of targeted wage increases?
- How do market forces adjust to wage distortions?
A Different Perspective
Assumes all workers have identical needs.