Photo: Horse eating from a feedbag in Florence
, Italy. Public domain.
Richard Epstein / For fair employment outcomes, trust the marketplace, not the regulators
. . . The numerous critics
of trickle-down economics have included such notable historical figures as the actor Will Rogers, who believed in “trickle-up” economics. Not to be outdone, the once-famous economist John Kenneth Galbraith opined
, "If you feed the horse enough oats, some will pass through to the road for the sparrows." These naysayers seek some other mechanism to reduce the levels of income inequality that markets create.
Their standard solution from the New Deal on forward has been to impose regulations that redress social inequality, such as minimum wage laws and overtime statutes, which are both predicated on the belief that these contractual interventions will induce the wealth transfers needed to overcome serious income inequality, without reducing the total level of economic goods and services. That fantasy ignores the simple truth that everyone, employers and workers included, responds to incentives. Faced with the threat of regulation, employers will . . .