Chapter 4. Market Interventions

Link to syllabus

Figure 4.2 p. 105. The Effects of a Price Ceiling

Other standard examples are gasoline, medical care, textbooks

Figure 4-8 p, 117. Effect of a Quota on the Market for Taxi Rides

Figure 4.5 p. 110. The Effects of a Price Floor

Standard example is minimum wage.Graph is repeated as Figure 8-8 p. 223.

Figure 8-8 p. 209. Effect of a Minimum Wage on the Labor Market

US has low minimum wages! P. 105 2nd edition, for 2005 or so.

US continues to have low minimum wage in 2011! P.113

Minimum Wage:

Nominal and Inflation Adjusted

There is a similar analysis for quota restrictions on taxis, on pp. 116-18

.

Conclusion: feel sorry for people who ride in taxis in New York.

Application to labor unions.

The argument is made that labor unions function by artificially raisingwages, by restricting access of workers to certain jobs (i.e. union shop).

This might be considered the anti-union view.

There is also a pro-union view, which evaluates labor unions as defenders of workers’ rights to a safe workplace, non- discrimination, and see unions as a means of helping workers through education.

Libertarian Philosophy

No government intervention, at all.

mt believes that in the US one cannot find politicians who consistently support a libertarian position, on issues such as:

• Gun Control• Abortion• Child Pornography• ‘Illegal’ drugs• Immigration