Wednesday, December 20, 2017

Answering a Correspondent’s Comment on On 'Deserving' a Higher Minimum Wage

In response to my article On 'Deserving' a Higher Minimum Wage, correspondent uzza commented:

Minimum wage has nothing to do with the collective. As you say, only individual producers create and own wealth. A minimum wage doesn’t transfer wealth from the state to the employee, it forces individual employers to pay a portion of their wealth to the employees who create that wealth. Minimum wage laws prevent employers from taking wealth from its rightful owners and redistributing it to themselves, a.k.a stealing.

What’s morally wrong is for the employer to forcibly take from one person and keep it for themself [sic]. No one deserves to be forced to turn over his wealth to another against his will. No one deserves the wealth they create to be forcibly confiscated by an employer. When an employer gains wealth by such means, they are stealing the property of others.

Nor is it the place of an employer to judge what employees are worth. What a person 'earns' and what the wealth they produce is 'worth' is determined by the market. The market gives it a certain worth, the employer redistributes that worth by giving a percentage to the employees who created it. Without minimum wage laws employers are free to, and typically do, set that percentage at an arbitrary amount approaching zero, in defiance of both the market and morality. Minimum wages laws simply prevent employers from taking the wealth of others and redistributing it to themselves.

It’s not only markets that uzza is confused about.

Uzza apparently doesn’t understand the difference between government action (political power) and private action (economic power). Government is the only institution that may legally coerce, by direct or threatened physical force, obedience to its edicts (laws). Private individuals cannot coerce, only persuade through voluntary cooperation. Voluntary cooperation is the nature of employer-employee relationships. Physical coercion—guns, shackles, fines and prison—is the nature of all laws, including minimum wage laws. Of course “A minimum wage doesn’t transfer wealth from the state to the employee.” The state has no wealth other than what it can take from private producers. Minimum wage laws transfer wealth from the employer to the employee under threat of guns, shackles, fines and prison—assuming, of course, that the employee is lucky enough not to be qualified only for one of the jobs outlawed by the minimum wage law, in which case he wouldn’t have a job.

Uzza apparently doesn’t understand the difference between slavery and employment. Contra Marx, employment isn’t analogous to slavery. They are, in fact, opposites both morally and practically. Slaves cannot quit. Employees can, unless her employer can convince her to stay via compensation or other rewards. While he doesn't specifically mention Marx’s absurd equation of slavery employment, which he termed “wage slavery,” Marx is implied.

“Workers” have been around forever, through all of the millennia of poverty-ridden stagnation, toiling to survive with no hope of achieving a better life than their parents—generation after generation after generation. Suddenly, around 250 years ago, general economic progress appeared, lifting the productivity and standard of living of the common man into a steady and dramatic upward trajectory. What changed? The liberation of the human mind under free market capitalism in turn paved the way for the rise of the professional entrepreneurial business industrialist. The professional business entrepreneur is the creator who organized and integrated the knowledge of the scientist, the imagination of the inventor, providers of investment capital, and labor under what one of the greatest of these creators, Steve Jobs, called “one of the most amazing inventions of humans,” the “incredibly powerful” legal construct called the company.

Yet, Uzza apparently is still persuaded by the obsolete notion that the source of wealth is mere physical labor. Business organizations—the organization of all factors of production into a productive purpose, the building of factories, the provision of the tools of production, capital investment, end products, knowledge and training, etc.—require no human effort to create and maintain, the “labor theory of value” implies. Businesses are simply a natural raw material, like a rock or a tree or iron ore, that employers just happen to stumble upon and commandeer. The jobs just grow on these trees. The myriad critical decisions required to maintain and grow the business? They don’t exist. Business enterprises are not created by amazing visionary leaders. Instead, the knowledge discovered by the scientist magically transforms into valuable end products by mindless muscular employee labor, like the labor of a slave or a mule—but which somehow magically coordinates itself into a common production goal. The prime source of production, intellectual labor, doesn’t exist. That’s because the spirit—i.e., the mind—doesn’t exist, according to the dialectical materialist Marx: Hence, the notion that any gain by the employer is theft of the employee, who stays in the job voluntarily because he is too stupid to know that the paycheck which he voluntarily agreed to accept in exchange for his contribution to the productive mission of the business is really slave wages.

To claim that it is not “the place of an employer to judge what employees are worth” completely ignores reality. Of course, an employer can be wrong on his judgement. But it is his business and his job to judge. Also, his right; if not his right, then whose? But, unlike the government, he cannot force his judgement on anyone. Another correspondent, Mike Kevitt, observes that “The market, here, is the employer's and employee's mutual determination, by their own judgments, of the value of the employee's role in the creation of wealth. That value is percentage of the value of the wealth. The government can't judge it any better than anybody else. And it doesn't have the right to do so.” I would add, and the consumer. What we call “the market” is the cumulative voluntary economic judgements of employers, employees, and consumers. The “market” is not some disembodied decision-maker. Nor are the government’s coercive edicts the market.

Employees contribute to the creation of wealth. The business is the creator, and the businessman, or employer, is the prime mover. Steve Jobs created the iPhone. Everyone else is a contributor. But without Jobs, no iPhone. It is the man who formed the pizza business who is the creator. Everyone else is a contributor, paid accordingly—that is, according to the market; that is, according to the judgement of the consumer who buys the pizza, which informs the judgement of the pizza businessman as to how much to pay his employees, who then judge whether the offered wage is worth giving his labor for.  But in the end, no pizza business creator, no pizza business.

Uzza apparently believes that employees are incapable of developing economic power from which they can then bargain for and command higher pay. Knowledge, ability, skill, conscientiousness, experience, a teamwork temperament, hard work, and good moral character—that is, virtue—have no economic value. Employees, by definition, are helpless incompetents. Therefore, without minimum wage laws, employers would set all wages “at an arbitrary amount approaching zero” if left free to do so. Of course, uzza doesn’t explain how, if this “race to the bottom”—this “arbitrary amount approaching zero”— is true, why then do less than 5% of employees nationwide actually labor for minimum wage. How is it that few people who star at minimum wage remain at minimum wage. And he doesn’t explain how, being utterly incompetent, the employee manages to create the wealth that the employer allegedly steals by hiring him.

Mandatory minimum wage laws are the real wage theft—the theft of the employer’s and/or his business’s wealth for the unearned “raise” of his employees; the one’s who haven’t been priced out of their jobs.

Star-Ledger letter: Raising the minimum wage to $15 would cost small businesses dearly—A businessman’s dissent against the minimum wage increase.

Related Viewing:

"Why Marxism?" An Evening at FEE with C. Bradley Thompson—Foundation for Economic Education

1 comment:

Mike Kevitt said...

Yes, the consumer with his demand as per his production, too. The employee and employer determine wages. The employer and consumer determine prices. The transactions are executed and that's the market. If this market doesn't sustain the employee and/or the employer, and/or proves inadequate to the consumer, they experience a 'market failure', a lack of judgment somewhere between them, for THEM to correct by adjusting wages and/or prices by any means within the restriction against initiatory force, which is the model or standard for law, therefor, by any means within law, which are rules so circumscribed. That's free will; that's the market, always changeable by mutual free will; that's law; that's government. Initiatory force is crime by criminal plan, from WHEREVER it comes.