The Adam Smith Institute has recently created a ‘shit storm’ by advocating the abolishment of the National Minimum Wage. I’m going to be controversial and say that the Adam Smith Institute is theoretically correct in its advocacy.
In a perfectly free society with a perfectly free market, there is no need for wage protection, or in fact any protection. Therefore the NMW is not needed. However, we do not live in a perfectly free society, nor do we have a perfectly free market. Therefore labour protection is necessary to counter the exploitative practices that spring up from an imperfect society and market.
Now, proponents of the free market will say here that the market doesn’t exploit and the ‘guiding hand’ of the market will shelter the vulnerable. My retort to that: only in a perfect society and market.
The Adam Smith Institute’s research was into how the NMW should be…
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