Feb

21

Rent-Seekers For The Minimum Wage

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“In economics, rent seeking occurs when an individual, organization, or firm seeks to make money by manipulating the economic environment rather than by making a profit through trade and production of wealth. The term comes from the notion of economic rent, but in modern use of the term, rent-seeking is more often associated with government regulation than with land rents.”

Over on the Lou Dobbs web site, there is a little item that says:

For a list of companies across the country supporting a raise in the minimum wage for their workers, see the following link:
http://www.businessforafairminimumwage.org/signatories

I found the choice of words interesting, specifically “supporting a raise in the minimum wage for their workers”. Looking over the short list of signatories of Business Owners and Executives for a Higher Minimum Wage, I found that most, if not all of these businesses that are actual businesses and not left wing 501(c)(3) organizations look like long established companies, many of whom by the nature of their business probably don’t even hire young or unskilled workers. Even if some do, I would ask a question. If they support a raise in the federal minimum wage for “their workers”, why do they even need a law to force them to do so? Are they mentally incompetent, unable to make that decision for themselves and require the government to point a gun to their head to force them to pay their workers more?
Of course the question sounds ludicrous, and everybody with a three digit IQ would say; it is obvious that they are able to make that decision for themselves and anybody that needs the government to force them to do what they are more than willing and able to do themselves must be an idiot!
Now we can logically speculate two possible scenarios about these so-called “socially responsible” businessmen, assuming they do hire young or low skilled workers.
One, they already pay their low skilled, entry level workers more than the minimum wage, probably much more.
Or, the second scenario, they are only willing to pay those workers a higher minimum wage if their competitors are also forced to pay the same higher minimum wage.
In either case, the benefits are the same for the type of businessman who promotes a higher minimum wage. If he doesn’t hire minimum wage workers or he does, the damage he can inflict on his less profitable smaller competitors or new startups that have a lower wage work force will more than make up for any personal financial loss, if any in the long run. If he’s lucky, he’ll force his competition out of business.
The only conclusion I can reach is that these socially responsible businessmen are really self interested rent-seekers, political entrepreneurs who favor the seedy world of gaining competitive advantage through politics instead of the honorable practice of free competition.
It’s either that or they are incredibly naive to think that artificially raising the minimum wage everywhere regardless of local economic conditions will not have adversely affects, like hours being cut or some entry level jobs disappearing altogether.

Jan

23

Holy Minimum Wage!

Filed Under Economics, Minimum Wage, National | Leave a Comment

George Reisman, author of Capitalism: A Treatise on Economics debunks the minimum wage faith healers and their false religion with this article on mises.org.
To the non-believer in the religion of political economic engineering, Reisman’s scientific logic will be purely academic, but sadly to those that believe Congress can solve our social and economic problems by wielding its magic pen, their faith in phoney elected gods will likely not be shaken.

The State Against Economic Law: the Case of Minimum Wage Legislation

When it comes to matters such as the theory of evolution and stem-cell research, so-called liberals—i.e., socialists who have stolen the name that once meant an advocate of individual freedom—ridicule religious conservatives for their desire to replace science with the dictates of an alleged divine power. Yet when it comes to matters of economic theory and economic policy—for example, minimum-wage legislation—these same liberals themselves invoke the dictates of an alleged divine power. Their divine power, of course, is not the God of traditional religion, but rather a historically much more recent deity: namely, the great god State.

Traditional religionists believe that an omnipotent God came before all natural law and was not bound or limited by any such law, but rather created such natural laws as suited him, as he went along. Just so, today’s liberals believe, at least in the realm of economics, that the State is not bound or limited by any pre-existing natural laws. In the case in hand, the State, today’s liberals believe, is free to decree wage rates above the level that would exist without its interference and no ill-effects, such as unemployment, will arise.

READ ON