Thursday, April 21, 2016
"Capitalism and the Minimum Wage: 'I Got Mine, Screw You.'”
"Capitalism and the Minimum Wage:
'I Got Mine, Screw You.'”
by Fred Reed
“To understand the arguments of capitalists against the minimum wage, follow the money. In all the thickets of pious reasoning about the merits of capitalism and the market, and of freedom of contract, and of allowing this marvelous mechanism to work its magic, and of what Adam Smith said, the key is the dollar. The rest is fraud. Carefully ignored is the question that will be crucial in coming decades: What to do about an ever-increasing number of people for whom there is no work.
There is of course much hypocrisy in the theoretical edifice. For example, businessmen argue that the minimum wage constitutes intolerable interference by the government in the conduct of business-meanwhile sending armies of lobbyists to Washington to make the government interfere in the conduct of business. In fact capitalists have no objection to federal meddling. They just want it to be such meddling as puts more money in their pockets. Nothing more. Ever.
In like fashion they say that they want to protect the worker’s freedom- yes, his freedom, such is the capitalist’s benevolence, the worker’s freedom–to sell his labor at a mutually agreed price. Curiously, in practice this means the employer’s freedom to push wages as close to starvation as he can get away with. This miraculous congruence of high principle with low profit is among the wonders of the universe.
A capitalist will similarly object to zoning on grounds of protecting property rights–it’s his land, and he can do with it as he likes- but if you buy the lot next to his house and build a hog-rendering plant, he will shriek for… zoning.
In every case, without exception, his high principles will lead to more in his pocket. He will be against a minimum wage because, he says, it prevents young blacks from entering the job market and learning its ways. You can just tell he is deeply concerned about young blacks. He probably wakes up in the middle of the night, worrying about them. He doesn’t, however, hire any. Purely incidentally, not having a minimum wage saves him… money. And if he were truly concerned about young blacks, might he not express this concern by- paying them a living wage?
The quest for cheap labor has perhaps caused less misery than war- itself a most profitable business, war- but it is neck and neck. Businessmen imported blacks as slaves to have cheap labor, with disastrous results continuing to this day. Businessmen encourage illegal immigration from the Latin lands so as to have cheap labor. They sent America’s factories to China to have cheap labor. And now they peer with wet lips and avid gaze at… robots.
These will drudge away day and night, making no demands, never unionizing,, needing no retirement or medical benefits. Actually, though, capitalists want robots because capitalists care about freedom and want to help young blacks.
A cynic might see this as intellectual scaffolding for social Darwinism and unaccountability– see, it’s all due to the workings of the market, and the capitalist is only a bystander But no. It is about freedom, and justice, and all.
Among the fantastic trappings of- ”free enterprise” sounds nicer than “capitalism,” doesn’t it?– is that it rewards hard work and determination which if pursued will lead to prosperity. This is both believed and beloved by many who believe it in part because for them it performed as described. The intelligent, healthy, ambitious and–a major advantage–unscrupulous can usually get ahead. And so, talking with others like themselves, they ask, “If I can do it, why can’t they?” The underlying notion is that the poor are poor because they are lazy and lack ambition. Some fit the description. Lots don’t.
Here we come to Commentator’s Disease, epidemic and among talking heads and columnists.
A woman of my acquaintance once said, “In Washington, you assume that everybody is in the 99th percentile.” Decompressed from the apothegmatic, it is true. Cognitive stratification is very real, though seldom noticed and never mentioned. The city attracts the highly bright. They hang out together. They date. They marry. They don’t know anybody who is not like them. The same holds in many places, and on the web, but Washington is where policy comes from.
By and large they are neither arrogant nor snobs. Since they are all in the same bracket, snobbery would be difficult. They include a great many journalists. It is fun to speak of the press as imbeciles, but, apart perhaps from babble-blonde anchors chosen for their looks, they are not. The duller probably clock an IQ of 120. Even at dismal publications like Army Times and Federal Computer Week, with both of which I was once familiar, you find very smart people.
What has this to do with the minimum wage? A fair amount. People of IQ 130 and up tend to assume unconsciously– important word: “unconsciously”– that you can do anything just by doing it. If they wanted to learn Sanskrit, they would get a textbook and go for it. It would take time and effort but the outcome would never be in doubt. Yes, of course they understand that some people are smarter than others, but they often seem not to grasp how much smarter, or what the consequences are. A large part of the population can’t learn-much of anything. Not won’t. Can’t. Displaced auto workers cannot be retrained as IT professionals.
Few of the very bright have have ever had to make the unhappy calculation: Forty times a low minimum wage minus bus fare to work, rent, food, medical care, and cable. They have never had to choose between a winter coat and cable, their only entertainment. They don’t really know that many people do. Out of sight, out of mind.
Cognitive stratification has political consequences. It leads liberals to think that their client groups can go to college. It leads conservatives to think that with hard work and determination…
It ain’t so. An economic system that works reasonably well when there are lots of simple jobs doesn’t when there aren’t. In particular, the large number of people at IQ 90 and below will increasingly be simply unnecessary. If you are, say, a decent, honest young woman of IQ 85, you probably read poorly, learn slowly and only simple things,. Being promoted, or even hired, requires abilities that you do not have. This, plus high (and federally concealed) unemployment allows employers to pay you barely enough to stay alive. Here is the wondrous working of the market.
As the stock market reaches new highs and the nation’s wealth concentrates in fewer and fewer hands, we hear that a rising tide floats all boats. This is fine if you have a boat. Maybe it only looks as though capitalists flourish while the middle class sinks and the welfare rolls grow and kids have to live at home and they will have no retirement. Well, some boats leak, I guess.
When the theorists of free enterprise imagine that our dim-witted young lady should be permitted the freedom to sell her labor for what it is worth, they do not worry that her labor isn’t worth enough to feed her. Some who say this simply do not understand what her life is going to be if she is paid what her labor is worth. Others, with the lack of empathy that characterizes conservatives, don’t care. If you look at the godawful conditions of their employees in the sweatshops of, say, Bangladesh, you will see that not caring is common. Let them eat cake.
The question arises: What does the country do with the large and growing number of people whose labor is worth nothing? Or, perhaps more accurately, whose labor isn’t needed? We see this in the cities today. An illiterate kid in Detroit has no value at all in the market for labor. Assuming that he wants to work, a questionable assumption, what then? Endlessly expanding welfare? What about the literate, averagely intelligent kid for whom there are no jobs? If people working in McDonald’s can barely live on their wages, and strike, or the state institutes a higher minimum wage, McDonald’s will automate their jobs, is automating their jobs, and conservatives will exult- the commie bastards got what they asked for.
This is capitalism in its perfection.”