One of the brilliant economic minds of the 20th century was Dr. Milton Friedman. He had a rare combination of advanced economic knowledge and common sense.
Dr. Friedman lectured in the late 1970s on the subject of equal pay, whether by gender, race, etc. Friedman proffered the view that when the government mandates equal pay, it removes economic penalties from employers for discriminatory behavior. In the absence of equal pay laws, should an employer penalize an employee based on a nonproductive discriminatory practice, that employer will also be penalized via having higher costs and therefore lower profits versus a nondiscriminatory employer. Friedman concluded that: “I do not believe that it is desirable that we move in the direction of having a government bureaucrat decide whether A may hire B or not, whoever A and B are … and in consequence I think programs of this kind are both reducing our freedom and reducing equality. And they will … disadvantage … the very groups [they] intended to help.”
Contrast Freeman’s conclusion with that proffered by President Barack Obama. During 2014’s National Equal Pay Day, the President stated that “women still make only 77 cents to every man’s dollar.” While this discrepancy may be accurate, it is rather ludicrous for any anyone who understands Econ 101 to blame this on discriminatory practices. No sane (greedy) capitalist would hire a man if he could hire a woman to do the same job at a 23% discount. To think otherwise is to believe the human beings are not inherently greedy. It is interesting that human greed is the reason that liberal so often use to justify governmental interventions in the first place.
Since Friedman’s lecture over 30 years ago, equal pay laws have been added and strengthened with thousands of bureaucrats hired to enforce them. Obama’s contention that “women still make only 77 cents to every man’s dollar” as a result of discriminatory practices, if correct, would attest to the government’s abject failure in remedying this supposed discrepancy.
Milton Freeman and those that follow his school of economics do not believe in capitalism because it is inherently fair or without flaws. Their belief in capitalism is instead based on the understanding that it is the best mechanism for efficiently allocating supply and demand in a complex economy. 30 years of ever-increasing governmental interventions through laws, regulations and spending programs that have failed have proven Friedman to be correct.