Skip to main content
Business Observer Friday, Feb. 7, 2014 5 years ago

Why stop at $10/hour? Go all the way: $200!

Barack Obama's campaigns for income equality and higher minimum wages explicitly illustrate what the Jesuit priests called “invincible ignorance.”
by: Matt Walsh Editor

Barack Obama's campaigns for income equality and higher minimum wages explicitly illustrate what the Jesuit priests called “invincible ignorance.”

In spite of all of the evidence to the contrary, the president and those who support these two campaigns with him will never be convinced that both concepts can never be achieved to their desired effect.

Even going back to biblical times, various groups, leaders and movements have sought and promised the imagined nirvana of material equality.

In more modern times, we've seen this delusion in Marx and Hitler; the Soviet Union; the European Union; and, ever since FDR, in the Democratic Party here in the United States.

The method is always the same: Bring down those who have risen above others. Punish achievement.

But in all of this time — more than 2000 years — no one has ever achieved equality for all. Nor will they ever. Indeed, just the idea of redistributing material wealth is in itself a proposition of inequality — the self-anointed choosing one over another. And yet, Obama persists.

As always, the “equalists” rail about increasing the minimum wage. Obama says it should be $10 an hour.

But why stop there? Why not go all the way? Let's really make everyone equal and at the same time, once and for all, eliminate poverty: Pay everyone $200 an hour!

But the truth is no level of minimum wage will ever eliminate poverty or inequality. And even raising it a little is harmful. Milton Friedman once explained this vividly: “What you give to one, you must take away from another.” Give more to one group, you have less to give to another group (e.g. fewer jobs at the entry level, where they are needed most).

That's the economic argument.

It's also a matter of freedom.

What an employer pays an employee is no one's business except the two parties. And certainly it is none of the business of the government.

When an employer and employee agree on a wage, they have created a private contract between themselves. They have voluntarily and peacefully agreed that the wage to be paid is a fair trade for the work that will be provided. That is free enterprise.

But what about exploitation? the “equalists” shout. That's why we must have government-prescribed minimum wages, they say.

That is baloney.

To begin with, when an employee accepts a job and the pay, he is doing so voluntarily. No one is forcing him.

Likewise, if he feels exploited or cheated by an unacceptably low wage, he has choices, one of them the freedom not to take the job or to quit.

Now flip the coin: It's also in the employer's self-interest to pay a fair wage. That will allow his business to attract the right employees he needs to succeed.

If he exploits, employees will quit, the employer's reputation will suffer and he will fail.

If you want wage fairness, there is no better arbiter than the marketplace of two individuals practicing peaceful, voluntary, free trade — the act of a buyer (the employer) and a seller (the employee) agreeing on the value of the seller's good or service.

That is freedom. Bring in the government, and the transaction becomes distorted force, not freedom. Laissez-faire.

+ No more company plans
We all know how this recovery from the 2008-09 recession has been the slowest on record. One of the leading factors for that has been the uncertainty and chaos of the Health Care Affordability Act, aka Obamacare.

We also know, of course, the Republicans were unable to repeal it, and in all likelihood not much is going to change between now and the November election.

Florida Congressman Vern Buchanan essentially echoed that assessment last week. He told us this week Republicans are making proposals (e.g. the “Burr-Coburn-Hatch bill in the Senate), but he doesn't expect significant changes to Obamacare before the November mid-term elections. “I'm hopeful,” he said.

Reading between the lines, that means anything the Republicans propose will go nowhere in the Senate.

It gets worse. In separate meetings — with Buchanan and a CEO meeting with former Congressman Jason Altmire of Pennsylvania — their assessments of where we're likely to end up with Obamacare create little optimism.

Altmire was a former member of a House health care committee and watched up close and personal the creation of Obamacare. He now is a senior vice president for Blue Cross Blue Shield.

Speaking to a group of CEOs last week, Altmire believes:
• Obamacare “is going to come together, and at some point, the mandate (forcing everyone to buy health insurance) is going to work.”
• Young people who declined to sign up for Obamacare now will do so starting in 2015 and 2016 when the penalty for not signing up is 2% and 2.5%, respectively, of their gross incomes.
• Congress soon will tax as income an employee's company-paid-for health insurance plan. Altmire thinks this will bring an end to company-provided health insurance and lead to everyone signing up for either a private or government-run health exchange.

Asked whether he agrees with Altmire's assessments, Buchanan said bluntly: “I don't buy any of it.”

A member of the House Ways and Means Subcommittee on Health, Buchanan is on the front lines of Obamacare discussions.

“[It's] going to bankrupt this country,” he said this week. “It has helped the poor, but it's going to bankrupt the middle class. They're paying for it.”

To wit: When Obamacare was enacted, the Congressional Budget Office estimated the net tax hike at $525 billion over a decade. The estimate now is that it will be around $1 trillion.

And who do you think pays for that? The middle class. Says Buchanan on the future of Obamacare: “It's going to implode.”

Related Stories