Political Philosophy

John Stuart Mill and the Minimum Wage

My reading of John Stuart Mill is that he would oppose any attempt by the government to impose or raise the minimum wage. In On Liberty he wrote:

… the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. … the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right. These are good reasons for remonstrating with him, or reasoning with him, or persuading him, or entreating him, but not for compelling him, or visiting him with any evil in case he do otherwise. … The only part of the conduct of any one, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.

I suspect that he would see no harm to anyone when an employee voluntarily agrees to work for an employee at a wage to which both agree. I suspect that he would argue that each of the two parties would agree to the contract only if each expects to gain. I also suspect that he would argue that the agreement imposes no direct or obvious cost to anyone else.

One goal in when I teach principles of economics is to have students on their political philosophy. Political philosophy examines fundamental questions about why governments exists, its proper role, and what warrants government intervention into the lives of its citizens.

Here are some possible perspectives based on my reading and definition of terms. Please comment if you have suggestions for improvement.

1. Anarchy. Any government is immoral.
2. Classical liberalism. The goal of government is to maximize the individual liberties of its citizens. To do so, it provides citizens with laws and courts to protect them from theft, coercion defends them from invasion, and supports rules of law that define and protect property rights and contracts. I think that they generally agree that the government should also provide public goods when markets fail to do so and intervene when market transactions impose external costs or benefits on others.
3. Utilitarianism. The goal of the government is to maximize the total welfare of its citizens. Government should act if the sum of the benefits to it citizens exceeds exceeds the sum of its costs, even if some citizens suffer a net loss.
4. Pareto optimality.   The government should act only if every citizen benefits. This position is not practical in most situations. A more practical refinement is that the government should act only if the vast majority of its citizens benefit and the loss suffered by the minority is small and as small as possible. The refinement recognizes that transactions costs of both reaching unanimity and identifying benefits and losses are high. It allows for government to act when everyone knows that some people will suffer some harm but cannot identify easily who or exactly how much.

Which of these positions best reflects your political philosophy? Feel free to add a comment with your preference. Combinations are new positions are welcome.