Bryan Caplan and Russ Roberts discuss the economics of discrimination and government's regulation of labor markets. They talk about the role of the profit motive in reducing or eliminating discrimination and the role of government, particularly in European labor markets. When does government regulation reduce or enforce discrimination? How do other labor market regulations affect employment and unemployment? What is the impact on the European and American standard of living? Does money buy happiness? Does it depend on whether it is earned or received as welfare? These are some of the topics that come up in this wide-ranging conversation.
Gary Becker, marketplace punishes those who discriminate. Key question: how long does it take? What percentage of discrimination is eliminated quickly?
Wage differences. Residual defined: What can be accounted for by other, non-overtly-discriminatory factors: education, age, IQ, family structure?
Narrowing of discrimination over time: What can profit motive do over time? Sports. Range of racism across society. Landsburg.
Alpaca farms. Get rich quick schemes pop up if there are any profit opportunities. "Straw man/woman". What other market forces work against discrimination?
Skeptics of market forces, pessimistic and optimistic views. Asking government for help. South African example, Walter Williams, South Africa's War Against Capitalism, apartheid. Jennifer Roback (Roback-Morse), 1984, Regulation: Jim Crow Laws limited labor mobility at the expense of blacks. E.g., recruiting employees across states was criminal; being unemployed was illegal.
Davis-Bacon Act: government required to pay union wage discriminated against blacks who were not allowed to be unionized. Minimum wage laws.
European example. Immigrants. Cross-country effects, social safety net, standard of living, cars.
Cross-country quality of life. Over time, is difference same or eroded? Purchasing power parity. U.S. vs. European success in the future? Canada. Unemployment rates vs. job security.
Happiness research defined. Measuring income, unemployment, smiling.
Mailbag (Time mark 47:19-57:45)
On Richard Thaler on Libertarian Paternalism. Ron Baty asks about Alfred North Whitehead (1861-1947), mathematician and philosopher who posited that civilization advances by extending the number of operations we can perform without thinking about them. Does that mean that to advance, we ultimately surrender our choices to government or employers? Russ and in-house guest Bryan Caplan go at the question with no final resolution.