Montreal, August 15, 2005 No 157

 

THE RATIONAL ARGUMENTATOR

 

Gennady Stolyarov II is a science fiction novelist and philosophical essayist, and is Editor-in-Chief of The Rational Argumentator. He lives in Chicago.

 
 

THE MINIMUM WAGE AND THE INSTITUTIONALIZED PROLETARIAT

 

by Gennady Stolyarov II

 

          George Orwell's dystopia in 1984 entails totalitarian rule of the country of Oceania by a socialist Party determined to pursue power for the sake of power and impose suffering for the sake of suffering. While today the full scope of Mr. Orwell's prediction has thankfully not come true, elements of it have disturbingly developed for decades in the policies of the United States government toward business. The principle of capitalism poses a severe threat to the Party in 1984 as the vehicle moving toward a meritocratic society and a technological paradise, both key to the improvement of living standards. In order to halt the advance of industry, the Party seeks to bring industry into its grasp, to subsequently apply it, not to the material gain sought by the capitalists, but to the mental indoctrination required for tribal supremacy. 

 

          The process of dismantling private enterprise has been lengthy and devastating in the United States as well. It has proceeded at a more gradual tempo than in Oceania, with fewer outbreaks of violence against entrepreneurs, yet it has been no less coercive. It is advocated by those ideologues of government force whom Ayn Rand rightfully called "Witch Doctors," regulators who seek to compel individuals to rely on their arcane justifications for ridiculous policies that stifle entrepreneurs' ability to innovate via reason. Due to the modern Witch Doctors' influence, companies face one menace, among many others, which deprives them of their funds and rights: the ever increasing minimum wage. At the same time, as a perfect tool for creating a chronically suffering, permanently dependent underclass, the minimum wage is equally deleterious to workers, consumers, economic prosperity, and reason itself.

          It is of no mind-boggling challenge to resolve that the artificial determination of salaries results in widespread unemployment; a man will not remain hired by a company in a situation where the quality of his labor does not warrant his cost to the employer. A minimum wage is an effective prohibition of employment for any person who possesses insufficient capacity to be worth the current hourly rate of $5.15. It is detrimental to businesses, which will lose a substantial portion of the pool of potential labor as well as current employees. Policy analyst James Bovard describes the toll each subsequent increase of the minimum wage had taken upon the laborers of the United States.
 

          "Congress raised the minimum wage in nominal terms by 46 percent between 1977 and 1981; a federal commission estimated that the minimum wage hikes resulted in the loss of 644,000 jobs, including jobs that were not created. The National Bureau of Economic Research estimated that minimum wage hikes in 1980 and 1981 reduced the employment of minimum wage workers by 3 to 4 percent. A 1983 General Accounting Office report entitled 'Minimum Wage Policy Questions Persist' found 'virtually total agreement that employment is lower than it would have been if no minimum wage existed... Teenage workers have greater job losses, relative to their share of the population or the employed work force, than adults'. [...] Congress ... voted to raise the minimum wage in 1989 -- from $3.35 to $4.25 an hour. A 1991 National Restaurant Association survey found that, as a result, 44 percent of restaurants were forced to reduce the number of employee hours worked, and 42 percent reduced the number of people employed. Professor Welch estimated that the 1989 increase in minimum wages reduced teenage employment by roughly 240,000 jobs." (James Bovard, Lost Rights: The Destruction of American Liberty, "How Fair are the Fair Labor Standards?" 1994.)

          These statistics are mere reinforcement for common sense. Yet the sheer horror of the initiatives lies in that they create a permanent impoverished underclass. For the under-qualified, entry-level positions of low salary are required to obtain experience in the workplace and thus the enhancement of their capacities. An increase in their wages will be voluntarily agreed to by an employer who would value them for their services to his enterprise. In order to retain them on his payroll, he would be required to furnish them with such funds as they deem acceptable in exchange for their efforts. In a free-market system devoid of government interference in salary contracts, one who believes himself not to be earning a sufficient amount will abandon the present place of his employment and seek another. It is then common sense to assume that the persons who are yet inadequately skilled to earn the minimum wage would have been eager to attain a lesser amount had bureaucratic intervention not barred them from such an option. Unable to improve their value through practical experience and unwelcome in the workplace as they are (although many companies, in a genuinely capitalist setting, would have been pleased to hire them in performing basic tasks compatible with their expertise), they are left to languish in poverty, maintained to a level of mere subsistence by government welfare programs, becoming utterly dependent upon the state.

          Renowned Austrian economist Ludwig von Mises describes this phenomenon as institutional unemployment, a chronic condition unique to settings in which coercive regulation of the economy is implemented. The expanding underclass has been the major beneficiary of distribution initiatives and the motive behind their rising expense, behind what is in essence the broadening of government influence upon private lives. Let readers recall the proles in Orwell's dystopia, who are compared to cattle subsisting off of government handouts in basic goods as well as "popular culture," the State stuffing them with food from one hand and inculcating them with decadence from the other. The proles, over generations, have become content with their undignified animal-like life cycles of birth in poverty, consumption of whatever is available, breeding by thoughtless impulse, and death at sixty. Winston Smith finds these shells of men to be so inextricably attached to the oligarchy that any hope for their defiance is illusory. Are the parallels to the current beneficiaries of America's welfare system not lucid?
 

"If one considers the effects of the minimum wage and the nature of its support, flowing from the most authoritarian and socialist cliques of the country, one will realize that it is a tool of the Witch Doctors designed to achieve the very consequences of economic deterioration, unemployment, expansion of government intrusion into private life, and general decline of living conditions."


          In addition, the expenditures of businesses had become augmented by their inability to obtain a work force at its rightful market value. In order to function profitably, it is of frequent necessity for an employer to reduce output and/or the improvement of his production capacities, both qualities requiring the support of a sound financial base. The overall economy becomes threatened by decline, for any nationwide wage hike affects numerous enterprises, small and large. Consumers do not receive their products, producers are unable to develop and innovate, workers are barred from labor, under circumstances in which a better alternative is available, to be reached through the absence of minimum wage regulations and the permission by the government of a capitalist economy intervening in which is beyond the state's right in the first place!

          However, instead of recognizing the elementary and rational option gleaming before them, the bureaucrats continue to devastate the country with additions to the minimum wage. The Democratic Party, reinforced by labor union propaganda, is at present attempting to elevate this dreadful sum to $6.75 per hour. Its demagogues demonstrate vehement and at times physical opposition to anyone who dares oppose their dogma. Ludwig von Mises, in 1949 (which was, incidentally, the year of 1984's publication), had, too, spotted alarming tendencies of denunciation and censorship applied to dissenters.
 

          "The very essence of the interventionist politicians' wisdom is to raise the prices of labor either by government decree or by violent action or the threat of such action on the part of labor unions. To raise wage rates above the height at which the unhampered market would determine them is considered a postulate of the eternal laws of morality as well as indispensable from the economic point of view. Whoever dares to challenge this ethical and economic dogma is scorned both as depraved and ignorant. Many of our contemporaries look upon people who are foolhardy enough 'to cross a picket line' as primitive tribesmen looked upon those who violated the precepts of taboo conceptions. Millions are jubilant if such scabs receive their well-deserved punishment from the hands of the strikers while the police, the public attorneys, and the penal courts preserve a lofty neutrality or openly side with the strikers." (Ludwig von Mises, Human Action, 1949. "XXX. Interference with the Structure of Prices.")

 

Labor Unions and Collectivism

          An irrational aversion to basic economic science drives the socialist left and the labor unions, themselves collective organizations which claim to uphold the rights of the worker, but in reality diminish them. This is due to the inherent flaw of "collective bargaining," the robbing of individual capacity to negotiate contracts and working conditions and its surrender to a behemoth of an organization with a rigid agenda not pliable to the will of a single rank-and-file member. The only measures successfully implemented through the advocacy of such amorphous "wholes" are simplistic and obedient to the tribal principle of "one size fits all." Considerations of particular persons and their rational interests are impossible in a union and not desired by its leadership. Should an individual find his wage or his employer's overall wage policy adequate, he is nevertheless pressured to strike and crush violently any resistance to a dogma antithetical to logic.

The fanaticism with which minimum wage had been upheld by such groups is an alarming revelation of its fundamental evil.
 

          "In all countries the labor unions have actually acquired the privilege of violent action. The governments have abandoned in their favor the essential attribute of government, the exclusive power and right to resort to violent coercion and compulsion. Of course, the laws which make it a criminal offense for any citizen to resort -- except in the case of self-defense -- to violent action have not been formally repealed or amended. However, actually, labor union violence is tolerated within broad limits. The labor unions are practically free to prevent by force anybody defying their orders concerning wage rates and other labor conditions. They are free to inflict with impunity bodily evils upon strikebreakers and upon entrepreneurs... who employ strikebreakers. They are free to destroy property of such employers and even to injure customers patronizing their shops. The authorities, with the approval of public opinion, condone such acts. The police do not stop such offenders, the state attorneys do not arraign them, and no opportunity is offered to the penal courts to pass judgment on their actions. In excessive cases, if the deeds of violence go too far, some lame and timid attempts at repression and prevention are ventured. But as a rule they fail. Their failure is sometimes due to bureaucratic inefficiency or to the insufficiency of the means at the disposal of the authorities, but more often to the unwillingness of the whole government apparatus to interfere successfully." (Ludwig von Mises, Human Action, 1949. "XXX. Interference with the Structure of Prices.")

          Not merely do the bureaucrats frequently assist the unions in legalizing their ludicrous demands, but they remain deliberately passive toward blatant violations of human rights. A man who earns a prosperous existence and deems his present contract to be satisfying is assailed, with his life under fire, for refusing to relinquish his well-being and for rejecting, in essence, the infliction of a similar act upon other human beings. Unions are not content with mere discussion and debate on such a topic, for they are well aware of the fact that all reason stands opposed to them. Their outright neglect of the law stems from the irrationality of their doctrine, and it is evident that the government's condonement of them stems from the irrationality of key government officials.

          If one considers the effects of the minimum wage and the nature of its support, flowing from the most authoritarian and socialist cliques of the country, one will realize that it is a tool of the Witch Doctors designed to achieve the very consequences of economic deterioration, unemployment, expansion of government intrusion into private life, and general decline of living conditions. Suffering is a desired condition for the persons practicing obsequious deference to the epitome of mindlessness, the Party. The moral cloaking the would-be oligarchs provide for the dogma is capable of being exposed by persons of insight, such as Ludwig von Mises.
 

          "The problems of labor unionism have been obfuscated and utterly confused by pseudo-humanitarian blather. The advocates of minimum wage rates, whether decreed and enforced by government or by violent action, contend that they are fighting for the improvement of conditions for the working masses. They do not permit anyone to question their dogma that minimum wage rates are the only appropriate means of raising wage rates permanently and for all those eager to earn wages. They pride themselves on being the only true friends of 'labor', of the 'common man', of 'progress', and of the eternal principles of 'social justice'." (Ludwig von Mises. Human Action, 1949. "XXX. Interference with the Structure of Prices.")

          Yet labor is degraded by the unions' crusade, the common man is left jobless, progress is halted, and social justice becomes a dim memory from the age of near-laissez-faire. The practical results of the minimum wage utterly refute the deceptive imagery associated with it by the indoctrinators. The mask, however, is strengthened by its appeal to the impulses of the ignorami, namely to sloth. The man who is the greatest beneficiary of minimum wage initiatives is one who remains employed at a higher rate than his capacities would normally have permitted him to receive. In a majority of cases, due to a lack of material stimulus for him to improve in his skills, he will remain incompetent and perfectly content, possessing the knowledge that his wallet will not become thinned as a result. A large quantity of such depraved persons occupying posts essential to the economy would result in the overall plummeting of quality in goods and services and a deterioration of living standards, another pathway to the world which the nihilistic evil of the Party seeks to impose.
 

 

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