Be Open Toward Your Brothers: Minimum Wages and Safety Nets

View 811 Friday, February 21, 2014

 

“Transparency and the rule of law will be the touchstones of this presidency.”

President Barack Obama, January 31, 2009

 

If a foreign government had imposed this system of education on the United States, we would rightfully consider it an act of war.

Glenn T. Seaborg, National Commission on Education, 1983

 

There is a major essay in Commentary by Arthur C. Brooks, President of the American Enterprise Institute: “Be Open-handed Toward Your Brothers: A Conservative Social-Justice Agenda.” \

 

‘Be Open-Handed Toward Your Brothers’

 Arthur C. Brooks

There will always be poor people in the land. Therefore I command you to be open-handed toward your brothers and toward the poor and needy in your land.

—Deuteronomy 15:11

The 2008 election marked the return of progressive politics in America. For the first time in 16 years, Democrats won both houses of Congress and the White House. They wasted no time in articulating a progressive agenda they claimed would offset the Great Recession and turn America toward greater fairness and compassion. Lifting up the poor, decreasing inequality, and curbing runaway income gains among the wealthiest Americans ranked high among their stated priorities.

It has been five years. How has their project turned out?

Since January 2009, the Dow Jones Industrial Average has more than doubled. Last year brought the largest annual increase in the S&P 500 since the late 1990s. And the vast bulk of this sustained market surge has accrued to the extremely wealthy. According to New York University economist Edward Wolff, the top 10 percent of earners own 81 percent of stocks and mutual funds, 95 percent of financial securities, 92 percent of business equity, and 80 percent of non-home real estate. So it comes as little surprise that nearly all the real income growth that President Obama’s “recovery” has generated would flow to the wealthiest Americans. According to University of California, Berkeley, economist Emmanuel Saez, 95 percent of all recovery gains have accrued to the much-vilified “top 1 percent.”

At the same time, the poor have become even more desperate. The number of Americans receiving aid through the Supplemental Nutrition Assistance Program (known as food stamps) has increased by almost 50 percent since January 2009, from 32.2 million to 47.7 million. One in six citizens in the richest country in the world now rely on food aid from their government.

Brooks quotes this in his essay, and asks readers to guess who said it:

“There is no reason why, in a society that has reached the general level of wealth that ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter, and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for these common hazards of life against which few cab make adequate provision.”

“Was it Franklin Roosevelt, John Rawls, Ralph Nader? Not by a longshot. It was Freidrich Hayek. That passage is featured in his seminal free-market text The Road to Serfdom. (1943)

Granted that Commentary, Brooks, and the AEI are more from the neo-conservative movement rather than the Russell Kirk inspired Conservatives who look back to Edmund Burke, we can note that Burke himself said that “For a man to love his country, his country ought to be lovely,” and he made it clear that streets clogged with beggars was not lovely.

I received the following last December, but things got complicated. Ron Unz is a smart guy who has questioned a number of conservative assumptions. He is also the author of a number of conservative initiatives and the rescuer of a number of flagging conservative enterprises. He has lately taken up a new cause:

Announcing Our New Website <http://www.higherwages.org/>

I’m very pleased to announce the release of our www.HigherWages.org <http://www.higherwages.org/> website, associated with our campaign to raise the minimum wage to $12 per hour both in California and across the rest of the United States.

Although we will be adding additional functionality to the website in the future, its primary role will be to provide convenient access to the media coverage and research support for our efforts, as well as those parallel drives by other groups and individuals.

Over the last week, we have been particularly heartened that Norman Ornstein of the conservative American Enterprise Institute, a highly influential Washington policy expert, published a major piece in The Atlantic declaring his strong support for a substantial hike in the minimum wage, demonstrating that the issue has begun to gain traction not merely in liberal circles, but also in some more conservative ones as well. On Tuesday, I appeared on CNBC’s Closing Bell business news show, and the response to my proposal was quite respectful, as has been the reaction when I had previously appeared on several major conservative talk radio stations.

Until the last year or so, many prominent liberals, including such notable figures as economist Paul Krugman, had been skeptical of the benefits of a large minimum wage hike, usually focusing their support on other anti-poverty programs, such as government stimulus packages or larger EITC payments, and other younger liberals were often even more dismissive. For example, when Reihan Salam, National Review‘s chief domestic policy analyst, cautiously raised the possible benefits of a minimum wage hike on an MSNBC discussion show a couple of years ago, he was immediately ridiculed by Ezra Klein and the other liberal pundits for demonstrating such total ignorance of basic economics <http://www.higherwages.org/opinion/immigration-liberal-dc-pundit-denounces-minimum-wage-on-msnbc/> . So it is hardly impossible that conservatives may also begin seeing the issue in a new light, nor could liberals reasonably criticize them for any such change in their position.

Assuming that the resulting job-loss would be as small as many experts believe, I think the conservative case for improving the financial position of working-poor Americans by means of raising their wages rather than increasing their governmental social welfare benefits is a compelling one. And if tens of millions of American families are no longer so poor, the dollars spent on state and federal anti-poverty programs would automatically decline, thereby saving vast sums for the taxpayers. Principled conservatives and free market advocates should support the notion of requiring businesses to pay their own workers rather than allowing them to transfer their expenses to the government and the general American taxpayer.

Here are links to a few of the hundred-plus articles and columns provided on our new website:

The Moral and Economic Imperative to Raise the Minimum Wage <http://www.higherwages.org/opinion/the-moral-and-economic-imperative-to-raise-the-minimum-wage/>

Norman Ornstein, The Atlantic, December 4, 2013

GOP Tech Millionaire Advocates $12/hr Minimum Wage <http://www.higherwages.org/event/gop-tech-millionaire-advocates-12hr-minimum-wage/>

Closing Bell/CNBC, December 9, 2013

Raise the Minimum Wage to $12 an Hour <http://www.higherwages.org/opinion/raise-the-minimum-wage-to-12-an-hour/>

Ron Unz, The New York Times, December 4, 2013

The Push To Raise the Minimum Wage for All Americans <http://www.higherwages.org/event/the-push-to-raise-the-minimum-wage-for-all-americans/>

The Diane Rehm Show/NPR, December 9, 2013

Why the Right Should Boost Minimum Wage, Too <http://www.higherwages.org/opinion/why-the-right-should-boost-minimum-wage-too/>

Clarence Page, The Chicago Tribune, December 11, 2013

$12 per Hour Minimum Wage? <http://www.higherwages.org/opinion/12-per-hour-minimum-wage/>

Steve Sailer, iSteve.com, December 10, 2013

Immigration: Liberal DC Pundit Denounces Minimum Wage on MSNBC <http://www.higherwages.org/opinion/immigration-liberal-dc-pundit-denounces-minimum-wage-on-msnbc/>

Ron Unz, The American Conservative, September 26, 2011

My own view has long been that raising a minimum wage either has no effect (people are already getting that much because they are worth it) or brings about low end unemployment, which eats into the ability for the young and unskilled to enter the labor force. It also adds to the cost of starting a new enterprise, particularly a small one, and that can be devastating to an economy. Capitalism has a tendency to concentrate wealth, and as Adam Smith warned, every time two capitalists get together they plot supporting a scheme in which government prevents anyone else from entering their business. Steve Jobs began in a garage; today’s regulatory environment probably would have prevented him and Wozniak from ever getting started. Interestingly Hewlett Packard started small, grew quickly, and went through a full business cycle; one wonders if it could be started now?

There is also the flat statement by von Mises and other Austrian school economists that the long term effect of minimum wages is unemployment.

Until this week I had never given the matter much more thought.

It is clear that raising the minimum wage while leaving a flood of undocumented – illegal – immigrants available to undercut the minimum wage (and income taxes as well) is likely a formula for disaster; and I have still seen no solution to the deleterious effect of minimum wages on starting new businesses.

I also recall that for many years, the IRS differentiated between single owner businesses and partnerships and limited liability corporations, which is why in my earlier years my writing business was a single proprietor business. The tax laws in those days allowed single proprietorships to employ the minor children of the owner at any wage they thought proper, to deduct those wages as expenses, and, unless they amounted to more than some minimum, there need not be withholding and reporting and all those complications. This was I am sure originally designed to let mom and pop stores employ the children without a lot of paper work. In my case it allowed me to pay my kids for cleaning up the office, running the Xerox, and other such matters – and then to pay their own tuition at school. Of course that was all long ago and has not been done for decades, but it is an idea of how the tax laws could help small enterprises.

All of which is background to an upcoming discussion of these matters. Raising the minimum wage, both generally and for hotel workers specifically, is seriously proposed in California, and I understand there is a movement to raise the minimum wage at the Federal level.

Of the papers Ron Unz cites in his essay, I found the notes by my friend Steve Sailer $12 per Hour Minimum Wage? <http://www.higherwages.org/opinion/12-per-hour-minimum-wage/> interesting. I had not seen it before today.

There is of course a fundamental question of rights; and also of who pays.  The Affordable Health Care Act said that some should have higher insurance premiums so that others could have health care insurance at lower premiums or no premiums at all. In theory there are also subsidies paid for by general revenues, not extracted from those who buy their own health care insurance, and it is rumored that the goal shall be that all health care insurance would be paid for by taxes. I don’t find authorization of any of that in the Constitution, but then I could never see why window washers at an office building in Ann Arbor were engaged in interstate commerce and thus subject to minimum wage laws; the US Supreme Court held they were, as were bakers who sold their bread only in their own stores.

On safety nets, I have always thought those best left to the states, but that is apparently an increasingly old fashioned view. Brooks shows, or purports to show, that all this can no longer be left to charity. Whether it is more efficiently done by government is not obvious to me. We have left our children’s education to government, and taken control of that away from the states, and the result is a system indistinguishable from punishment for losing a war – which In a sense we have, since the teachers have the right to teach our children however they like and we have no right to interfere – or if we do, we do so at our own expense.  And our schools more and more fail to teach a good half – perhaps two thirds – of our children to be able to do anything that anyone would pay them a living wage to do.  Until school graduates are well enough taught that they can go out and work for a living, the schools are an expensive child care operation; if states had that money they could build safety nets as well as operate child care facilities that would be more fun for the kids at a far lower cost.  But perhaps I am whimsical.

 

This discussion will continue during next week, and I may consolidate it into something coherent when it has been discussed. And it is late and I have shopping to do. Sable is getting less and less active, as the cancer sets in, and I don’t think we have a lot longer; but she enjoys our walks, and in the evenings she acts like a happy dog although she no longer has much energy. Alas we will soon have decisions to make.

 

Hoo haw!  Dr. Bowman is about to meet Frances. For those who find this nonsense, you’re missing a great experience. Go to http://freefall.purrsia.com/ff100/fv00001.htm to get started. Alas, ii is a continuing story and makes no sense if you don’t start at the beginning. I assure you that if you start at the beginning and go on to the present time – it will take you a couple of weeks at a reasonable pace – you will not regret it.  This is one of the best examinations of the social consequences of artificial intelligence – if in fact what happens here is artificial, and that’s part of the story – you will ever see.  Recommended.

 

Freedom is not free. Free men are not equal. Equal men are not free.