Economic freedom is a moral matter

When asked about my core principles, I always put foremost among them the maxim that a good or service is worth what buyer and seller agree that it is worth.  Period.  No other entity has a right to be party to the transaction.

Amity Shlaes, author of the indispensable history of the Great Depression The Forgotten Man, makes that case compellingly at NRO today.  A few days ago, she had reaffirmed the economic case against the minimum wage.  In today's followup, she explores its moral dimension:

Consider the current employment culture. Sit down with an employment officer at the company where you hope to work, and something feels strange. After a while, you realize what it is: The party on the other side of the desk is not a company executive, it is Jacqueline Berrien, the head of the EEOC. The process moves in similarly creepy fashion when you are the one offering the job: Sure, your future hire is there in the flesh, but you might as well be talking to Thomas Perez. That is, the rules the United States secretary of labor enforces determine the course of your conversation more than anything you, or the new hire, might feel like saying.

It was not always thus. In the 19th century and well into the 20th, many employers and employees believed that their relationship, the two-party one, was key. Outsiders — regulators, unions, lawmakers — were intruders. That privacy of employer and employee often yielded negative results. The employer might exploit the employee. But the two-party dynamic often succeeded. Because the employee-employer pair set their terms together, they trusted each other. From time to time, they also helped each other.

It wasn't until well into the 20th century that the Supreme Court departed from a position of affirming this view:

In 1905, the Supreme Court supported this old view when it held that New York State might not regulate the hours worked at a bakery because doing so interfered with the sanctity of the contract between worker and employer. The case, Lochner, has long been ridiculed by progressives and conservatives alike as an example of absurd federal interventionism: After all, the issue was a state law, not a law passed in Washington, D.C. Several decades later, in the 1923 case Adkins v. Children’s Hospital, the Supreme Court explicitly rejected the minimum wage, with Justice Sutherland explaining of the minimum wage: “It exacts from the employer an arbitrary payment for a purpose and upon a basis having no causal connection with his business, or the contract or the work the employee engages to do.” It was only another decade-plus later, in West Coast Hotel, that the enervated justices finally succumbed and opened the door to a third party, the labor regulator. Well into the second term of a progressive administration, justices do tend to get intimidated, and the Supreme Court certainly demonstrated that in West Coast Hotel.

She concludes with the observation that the minimum wage - and government rules in general - create a sterility, a lack of organic evolution, that takes the humanity out of economic endeavor:

The relationship between employer and worker does matter. The employer who cannot set his business’s wages, or who must, whether or not he can afford it, increase wages, is an employer who is less likely to invest in his relationship with his employees. He is also less likely to hire and more likely to use a temp agency, to “nickel and dime” in the way that progressive cartoons mock. States and towns rarely supply institutions as wonderful as the Andrew Carnegie libraries. When rules intrude, the loss to personal ambition, workplace satisfaction, and civic culture is great. So great that perhaps someone will eventually figure out a way to quantify that.  

The minimum wage debate contains all the principles at stake in the war for Western civilization's soul in microcosm.