Friday, 27 May 2016

Horrors: Trump says something un-PC.

He said that female employees getting pregnant is a genuine cost for employers. Well fair enough: it is! And for that reason, employers (if we just consider the economics rather than social considerations) are justified in paying a woman of child bearing age less than a man with the same qualifications, experience, etc.

So what’s the best solution to that problem? Well as already intimated, the solution that maximises GDP is to let employers pay market price for different types of labor – after all, it‘s widely accepted in economics that GDP is maximised where prices are set at free market prices, unless there are obvious reasons for not doing so (as is the case with for example alcoholic drinks).

Having done that, and if we think it wrong for there to be any sort of difference in pay for men and women, we can implement some sort of subsidy for all female employees, perhaps paid for by a tax on all male employees. Indeed that principle is already in effect in that we let employers pay relatively little to unskilled and inexperienced employees, with those employees’ pay sometimes being made up by the state via various forms of “in work” benefits, negative income tax, and the like.

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