December 15, 2018

The Best Argument Against Minimum Wage Laws: You Don’t Own Other People

min wage article picWith Democrats about to take control of the House, it is likely we will see an increase in the federal minimum wage pass the lower chamber, even if it has no chance of becoming a law. We will just as surely hear opponents making completely sound economic arguments against minimum wage laws.

Minimum wage laws cause unemployment, these opponents say, because they price those workers whose skills don’t justify the minimum wage out of the market completely. If a worker only has the skills to produce $14/hour worth of benefits to an employer, the employer is better off not employing that person rather than losing $1 dollar/hour doing so, if the minimum wage is $15/hour. And regardless of where the minimum wage is presently, any increase in the price of labor will result in less demand for labor, all other things being equal.

That’s basic economic reasoning and wasn’t even controversial until recently when, for political reasons, economists like Paul Krugman began contradicting their own earlier writing on the same subject. But as economically sound as the unemployment argument against minimum wages may be, it ignores a previous and much more important one: you don’t own other people.

Read the rest at Foundation for Economic Education…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Fast food and retail employees are capitalists, too

fast_food_strikes_ap_img_1TAMPA, January 6, 2014 – It’s startling how pervasive Karl Marx’s worldview has become, even here in the supposed home of capitalism. Economists since Adam Smith have represented the division of labor with names for the different roles played by individuals within it at any given time.

But it was Marx who identified “capitalists” as vampires sucking the blood of victim workers. He didn’t use labels such as capitalist and worker merely to explain economic roles, but identified them as separate classes in a political struggle.

Without even realizing it, even pro-market Americans accept these assumptions and largely base their arguments upon them. When the debate devolves into one in which low income earners claim an entitlement to higher wages and high income earners respond by telling them why they don’t deserve higher wages, Marx has already won.

There is no difference between capitalists and workers. All workers are capitalists, even those currently making minimum wage in the fast food or retail industries.

Somehow, the employment contract has assumed a Romulan cloaking device that prevents people from seeing it for what it is. The employment contract is a buyer-seller exchange, like any other. Employees sell a product to employers at a mutually agreed upon price.

That the employer will use that product to make another and then sell it is not substantively different from a manufacturer buying a tire or a bearing and using it to manufacture a bicycle. This is not to say that human beings in an employment agreement have no more worth than a tire or a bearing. Rather, they are fulfilling the same economic function in a complex production process as the manufacturer of the tire or the bearing.

Employees produce the product they sell to employers themselves. Therefore, they must have capital, i.e. “the means of production.” It is their minds and bodies, with which they produce the products called fast food grill services, or cashier services, or shelf stocking services. They sell these products to the highest bidder, the employer willing to pay the most in cash and benefits in exchange for the products they offer.

Employees at a fast food establishment don’t make lower wages than doctors or engineers because they are less educated, less skilled or part of some imaginary “class.” They make lower wages, i.e., are forced to sell their product at a lower price because the product they produce is less scarce than that produced by doctors and engineers.

There is no question of justice or injustice, social or otherwise. It’s simple supply and demand. The supply of capitalists who can produce fast food grill services is far greater than the supply of capitalists who can produce doctor or engineer services.

Like all exchanges in a free market, the exchange between the capitalists commonly known as “employees” and those known as “employers” should be voluntary. Minimum wage laws destroy the voluntary nature of these exchanges for both parties. It prohibits employers from buying services at the market price and prohibits employees from selling services at the market price.

It turns employees into “crony capitalists,” just like the corporate recipients of farm subsidies or the beneficiaries of favorable regulation. Government intervention allows them to charge higher prices than they could in a free market and insulates them from the competition of people willing to sell the same product at a lower price.

Ultimately, it results in higher prices for consumer goods, which affects everyone, including the employees it purports to help.

Raising the minimum wage raises the cost of production. As capital is finite, that means that less overall goods and services will be produced. Scarcer goods and services mean higher prices. Higher prices lower real wages.

So, unlike the higher standard of living corporate crony capitalists realize through government intervention, employee crony capitalists realize a lower one. Raising the minimum wage also gives politicians cover for all sorts of other interventions, none of which are designed to improve the lives of fast food employees.

During the 19th century, wages increased modestly at the market rate, but vast increases in production made consumer goods more abundant and thus cheaper. Real wages skyrocketed, as average income earners could buy almost twice the amount of goods and services with each dollar by the end of that century.

There was also a gold standard that prevented the inflation we have today, but that is another story.

Minimum wage laws destroy the cause and effect relationships that result in higher production, lower prices and ultimately a higher standard of living for everyone. Lower consumer good prices benefit low income earners much more than high income earners. High income earners can afford a 20% increase in the price of a pound of hamburger or a gallon of gas.

Not once in all of history have low income earners been better off after listening to the demagogues. They won’t be this time, either.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

 

Does excessive noise help cause big government?

Does excessive noise help cause big government?TAMPA, February 24, 2013 ― “If there’s one thing I hate, it’s all the noise, noise, noise, noise!”

There’s not much to like about The Grinch before his sentimental conversion at the top of Mount Crumpet. But it’s hard not to sympathize with him just a little when he utters those words. If quiet was in short supply in 1966 Whoville, it’s completely nonexistent in 2013 America.

I walked into a Jimmy John’s sub shop last week for the first time in two years. They recently began offering all of their subs as lettuce wraps, making them permissible as an occasional treat for primals. I knew I had missed the delicious #9. What I hadn’t missed was the music. At 12:30 in the afternoon, Jimmy John’s plays it at nightclub volume. Ordering and waiting the 1-2 minutes it takes to get your food is bad enough. Eating there is out of the question.

There is scarcely a restaurant anywhere that doesn’t pipe music throughout its dining room and onto its patio. Gas stations now blare music at customers while they pump their gas. Supermarkets, retail stores at the mall, and even public parks have all followed suit.

If it’s not music, then it’s television. Doctor’s office waiting rooms now bombard the ears and the psyche with vapid programming clattering off every uncarpeted surface. So do most auto repair shops.

There is virtually no spot accessible to the public that does not fill the soundscape with music or television. Even libraries are following the trend.

I know I sound like an old guy in baggy gray pants and a Humphrey Bogart hat, but I’m not. I love music. I love loud music. I played in bands for over twenty years and still like to crank up my Marshall amp and let some AC/DC rip on my vintage guitar.

I have nothing against music or television and certainly respect private property owners’ right to play either as loud as they wish to.

I just wonder when and where 21st century Americans ever experience quiet, outside of their jobs. When do they have the kinds of stimulating conversations with friends that are impossible when shouting over a restaurant sound system? When do they just sit and think, reflect or daydream?

It’s possible that the answer is “never.”

The term “noise pollution” is generally associated with the left and its never ending quest to impede commerce and industry. The war on noise fits nicely into the leftist worldview that when humans are left free to pursue their happiness, they naturally destroy the environment, including the sound environment, causing harm to themselves, each other and (gasp!) their furry co-inhabitants.

But does noise pollution also help cause big government?

Read the rest of the article at Communities@ Washington Times…