

The Happy Meal Fallacy - mseebach
http://marginalrevolution.com/marginalrevolution/2015/07/the-happy-meal-fallacy.html

======
cgearhart
The only fallacy here is the idea that workers always make rational choices.
While some workers may be willing to work for less than the cost of staying
alive -- or otherwise compromise on their needs (not wants) -- in order to
compete for jobs, we (as a society) should not allow them to work for that
rate because it creates downward pressure on wages (forcing more rational
workers to compete at an unsustainable price), and otherwise undermines the
stability of the economy.

This trope about the evils of regulation ignores that it is possible for the
market equilibrium to exist below the cost of survival. Modern society has
acknowledged that "survival" includes a number of things that haven't
traditionally been included like healthcare, retirement, and more. Wages don't
scale on a continuum, and there is a floor beneath which a worker cannot
survive in a given economy. When these benefits aren't provided by an
employer, they end up being subsidized by the government (particularly in the
US).

It is reasonable, as a society, to require that the businesses that
participate (and benefit) in our economy uphold a minimum level of
compensation for their employees in order to increase social stability and
reduce overall reliance on government support.

------
daenz
I think the Happy Meal analogy is a little backwards. When comparing it to
workers and contractors, a more accurate one is:

Customers always got fries and a drink with their Happy Meal. Restaurants
realize they can exploit their future customers by removing the fries and
drink from the Happy Meal, but keeping the price the same. Customers are still
hungry, so they're forced to continue to purchase this lesser meal for the
same price.

~~~
jdbernard
Yes. The article sets up a false equivalence. In the case of the happy meal
the power imbalance is not nearly as severe as it is in the case of
employment. I think I tend to agree with the author regarding benefits, maybe,
but either way I don't find this a convincing out productive argument.

------
jljljl
The price of health insurance varies (generally, decreases) when the entire
community purchases it vs. just the people who highly value it. This is
because health insurance is priced based on the expected health outcomes of
all of its customers.

This isn't quite the case with Happy Meals. I'm thinking that a regulation
requiring everyone purchase happy meals vs regulation that everyone purchase
health care have different overall welfare effects, but I'm not sure what they
are.

------
michaelchisari
I don't understand why *market advocates, whether conservative, libertarian,
or whatsoever, always resort to dangerously over-simplistic analogies.

