Minimum Wage Laws: State Intervention Leads to Individual Degradation

The following article from the Objective Standard Blog explains how minimum wage laws hurt individuals.  In addition, it highlights how the issue has become mischaracterized, cloaked in the shrouds of altruism.  This ideology is perhaps the most dangerous of all, for it legitimizes the State in almost every aspect of life.  Regarding the minimum wage, altruism supplants the individual’s ability to earn a living, with the State’s authority to forcefully redistribute wealth.

Minimum Wage Laws: Immoral, Crippling, and Nevertheless Supported by Many.

Why America Needs to Kill Its Entitlement Ideology

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Largely a result of decades of government dependence, too many people today lack the basic concept of personal accountability.  Many view the act of collecting their government benefits (whether they be food stamps, WIC, TANF, or other programs) as an act to which they are entitled.  Yet, few acknowledge that this ideology is politically counter-intuitive, morally alienating, and fiscally unsustainable. The following account of a Walmart employee’s encounters with welfare recipients illuminates not simply a few bad apples, but an ideology of rot.

“I understand that sometimes, people are destitute. They need help, and they accept help from the state in order to feed their families. This is fine. It happens. I’m not against temporary aid helping those who truly need it. What I saw at Wal-Mart, however, was not temporary aid. I witnessed generations of families all relying on the state to buy food and other items. I literally witnessed small children asking their mothers if they could borrow their EBT cards. I once had a man show me his welfare card for an ID to buy alcohol. The man was from Massachusetts. Governor Michael Dukakis’ signature was on his welfare card. Dukakis’ last gubernatorial term ended in January of 1991. I was born in June of 1991. The man had been on welfare my entire life. That’s not how welfare was intended, but sadly, it is what it has become.”

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What we are witnessing as a society is not a few destitute people, but a culture gradually consumed by an ideology that fails to permit returns on personal growth and achievement.  Rather, the welfare-entitlement ideology rewards bad behavior. This is known as perverse incentive in professional circles and has been linked to the actions of our most troubled institutions: banking, investing, education, and of course government.

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The political implications that this destructive force has reached everyday Americans is certainly not without importance.  From the voting booth, the problem is a double-edged sword.  So long as my neighbor feels social justice entitles him to a portion of my paycheck, he is likely to vote in politicians supporting the same ideology.  And a particularly disturbing political phenomenon known as “the tail wagging the dog” states that if such an ideology grabs hold of America many politicians will – against their better judgment – adopt said ideology in order that they be voted into office. The average voter holds onto sentiments divorced from the productive attributes of healthy society, while the politician embraces the same political ethos for personal gain.  The people think they’ve earned such benefits, while politicians enjoy the wide support they receive for supporting them.   Thus, the welfare-entitlement ideology is especially damaging because it attacks America from both ends of the social scale.  The result is often the demise of the middle, and most productive, segment of any three-class structure.

Where this will lead America is of course the core question that lies at the heart of the welfare debate.  Laying emotional attachments to notions of entitlements aside, the debate should focus on the financial implications to the health of America.  The insolvency of our federal government cannot be ignored and, coupled with the notion of dependence, highlights a further complication as to how those dependent upon government handouts will survive once the government (by fiscal necessity) withdraws its hand?  This is a loaded question, for most will be destitute absent the necessary skills to survive.

So the moral and practical implication of the welfare-entitlement ideology is two-fold as well.  Just as government spending crowds out the private sector, reliance on government crowds out self-reliance.  Benjamin Franklin knew this fact well.

“I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.” 

Necessity is the mother of invention, as the saying goes, but our current ideology completely negates necessity.  The consequences are severe.  Under the welfare-entitlement ideology, America becomes not a nation of promise and prosperity, but one where government controls both its economic vitality and the very sustenance of its people.

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Capitalism’s True Legacy, Freedom and Plenty

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Anthony Gregory’s piece below exerts a passionate defense of our nation’s and the world’s namesake.  Indeed, capitalism has taken quite a beating over the past few decades. Yet, despite all the ideological debates among politicians, bureaucrats, and academics, one cannot deny that the fruits of capitalism are present all around us.  It was not government that provided us with our way of life. Rather, the twentieth century saw its progress forged from the furnaces of the human mind.   Ingenuity, entrepreneurship, and labor built the world we live in, not welfare, food stamps, social security, medicare and the myriad of state-funded programs that are now draining the coffers of Americans nationwide.

It is simply a fact that capitalism, even hampered by the state, has dragged most of the world out of the pitiful poverty that characterized all of human existence for millennia. It was industrialization that saved the common worker from the constant tedium of primitive agriculture. It was the commodification of labor that doomed slavery, serfdom, and feudalism. Capitalism is the liberator of women and the benefactor of all children who enjoy time for study and play rather than endure uninterrupted toil on the farm. Capitalism is the great mediator between tribes and nations, which first put aside their weapons and hatreds in the prospect of benefiting from mutual exchange.

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Gregory’s piece is not so much an argument as it is a simple reminder to the American people that capitalism works.  The primary debates coming out of Washington today are ideological, yet, it is the practical ideology of capitalism that produces. Capitalism’s three basic tenets of free-exchange, free-markets, and labor mobility are themselves based on freedom: the freedom to exchange my dollars as I see fit, the freedom for me to enter into any market absent artificial barriers such as government-mandated licenses, and the freedom to work where I choose.  What those in Washington do not have that proponents of capitalism possess in abundance is the substantive proof that our ideology is practical because it has produced the beds we sleep in, the food we eat, and a level of opulence that allows us leisure and the opportunity to raise responsible children who will continue in capitalism’s namesake.

Take a look at Gregory’s article, and remember that while capitalism is based on the ideology of freedom and production, its opponents will have you believe they can bring you the same degree of freedom, albeit from an ideology based on altruism, central planning, and the forced redistribution of wealth.

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Starbucks Job-Creation Campaign Embraces Altruism

via Mises.org

Perhaps a worn out, yet relevant, proverb – “Give a man a fish and he eats for a day.  Teach a man to fish and he eats for a lifetime.” – needs some re-emphasis.  If we look closely at our society today, it is not difficult to see this proverb shattered to bits.  Yet, we are often too busy with our day-to-day jobs and family responsibilities to see just how large a fissure is opening up in the social bedrock of America. Simply, it is one of ideology, and consequently, is often dismissed as such, as if ideology has no practical application in our lives. Starbucks CEO Howard Schultz echoed this sentiment during a recent CBS interview.  “And we need to literally put our feet in the shoes of American people. They’re not worried about ideology. They’re worried about schools for their kids, jobs, housing. This is a problem that is not based on partisanship. This is based on citizenship.”  Whether Mr. Schultz believes ideology plays no part in the American conscience or not, such a statement is worrisome.  For an ideology is nothing less than a set of perceptions, or moral rulings if you will, that we as individuals use to make decisions from what to feed our children, who to work for, or where to spend our money.  It is my contention that the most efficient way to diagnose many of today’s problems is to examine where ideologies conflict with reality.

As a Starbucks partner (employee), I was surprised at their recent job-creation campaign.  My initial shock came from its obvious association with government-backed funding (CDFI’s are funded by the U.S. Treasury Department, and the  Housing and Economic Recovery Act of 2008 authorized CDFI’s to become members of the Federal Home Loan Banking System, the latter being a government-sponsored banking institution). However, Adam Stover’s piece, highlights the fundamental contradiction of a “job-creation” campaign based on donations instead of profit creation.  After all, since when does the free market divorce job  growth from profit creation.  The following is an excerpt from Stover’s article.

While well intentioned, Starbuck’s zeal is misplaced. The microfinance firm that they have partnered up with uses donations rather than actual sales transactions to raise money. One of the key requirements for a “sustainable” job is a profitable business. Profit cannot be calculated without a value scale, which measures a good or service versus some quantity of money; donations do not provide this. Donations represent money without the value of profit and consumer need, both of which are vital to the sustainability of a job or business. When the donations cease, so will the job or business.

Perhaps a more interesting question enters the forum when one reads the Opportunity Finance Network’s mission statement: “Opportunity Finance Network® (OFN) is the national network of Community Development Financial Institutions (CDFIs)—private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream.”  Two points are worth mentioning here.  First, any institution sponsored by government dollars cannot, by definition, be “private” as claimed.  Moreover, I call your attention to the last line concerning the “economic mainstream.”  The logical inference to be drawn from our discussion then becomes whether the “mainstream,” or status quo, has shifted from an economy based on profit and growth leading to job creation versus one dependent upon donations emboldened with the altruistic spirit of what our dear politicians term the “public good.”   And here lies the contradiction, for free-market job creation cannot exist in an economy based on donations and stimulus, at least not in a sustainable fashion.

While Starbucks rightfully claims the revered title of global corporation and the success inherent with that label, one has to wonder why Starbucks promotes values contradictory to those which paved its own road to success.  Examples such as these are warning signs of a society and an economy that is fundamentally at odds with itself.  For what this campaign concludes is that donations, charity, and altruism are as valuable in practical and ideological terms as profit, ingenuity, and the individual.  Yet to any entrepreneur,the backbone of American progress throughout the last century, these two sets of ideals are in direct opposition and cannot coexist.

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