Economic Justice and The Minimum Wage Myth

Election cycles always serve a useful purpose in shining a light through the murky business of national politics, offering voters a more clear-cut view of where each party really stands on important issues, as politicians seek to rally their respective bases to get out the vote. In-between elections, both parties tend to gravitate toward the center in an attempt to appear more “mainstream” and to attract the ever-elusive “moderate” voter. However as elections appear at the horizon, both parties retreat to their respective bases and fill the airwaves with incantations of promises and threats certain to entice or frighten voters to the polls en masse. The Republicans, of course, are propping up national security and the war on terror as the central issue of the election, if not the modern era. What most Americans consider as important, albeit lower-tier issues such as the economy, high gas prices, the environment and employment are also getting their due attention. The left is well known for conjuring up hackneyed class-conflict rhetoric, the kind hyperbolic nonsense that would make Karl Marx proud. Black economist Walter Williams aptly labels such political panderers as “poverty pimps”. Whether or not any of the members of the far left have ever cracked the binding of the most remedial textbook or commentary on economics is suitable question worth pondering. Among the most recently employed tricks from the left’s worn-out playbook is hardly a new one, considering their modus operandi. The question of the minimum wage found itself in the spotlight recently as Democrats hoped to enact a gradual increase in the so-called “living wage” from the current $5.15 to $7.25. Although the legislative action foundered in the Senate, Democrats are hoping to use it as an election year lightening rod to jolt their base to the ballot box.

Ignoring the rules of economics and hurdling vituperative charges that those opposed to increasing the minimum wage are motivated by greed, acting in the interest of big business while coolly ignoring the plight of the lower class, the left is determined as ever to keep the issue alive for November. However a closer look at a relatively uncomplicated economic principle will illuminate the controversy surrounding the minimum wage debate and will prove that government meddling in the minimum wage actually does far more harm than good. The irony is that the harm that results affects most directly those whose cause the left is purporting to champion, younger workers and the lower class.

It can be taken as a given that the overwhelming majority of those currently earning a minimum wage are young people, mostly students working part-time while attending college. In fact, of the entire population earning a minimum wage, only 2.8% are over 30 years old. Such a group is classified in economic circles as “low-skilled” or “under-skilled” employees. These workers are at that formative stage in their lives where they are learning important work-related skills that will serve them in the future. It goes without saying that young people, given the paucity of their work experience, have much to learn from entry-level positions in terms of skills. These jobs often serve as an introduction to the world of business. Having worked in retail years ago as a young student, I can vouch for this claim. While hardly a glamorous job, over the course of several years I learned a number of skills that come in handy to this day. Employers at any given trade can hire a robust number of youngsters and the new employees can earn some money while they attend school and at the same time receive invaluable work-related skills for the future. Entry-level positions serve as a first-step to better opportunities down the road and to eventual salary increases based on merit rather than government dictum. We can once again look at the numbers and see that within a year’s time, the average income of the worker earning a minimum wage will actually jump 30% due to raises based on his increased value to the business. Let’s now take a look at the deleterious consequences of government intrusion in the wage rates.

It is not difficult to see that if a small business if compelled, via legislative fiat, to pay their entry-level positions a higher salary, the forced increase in wages will have detrimental repercussions down the road, since the labor costs to the employer will have increased dramatically. Employers will not be able to hire as many workers in the first place, since the cost to the employer will have gone up as a result of the higher wages he will be forced to pay, so less people will have jobs, period. This will inevitably lead to a sizable number of workers being dropped from the company’s payroll because they will have become a liability for the company. Some may like to paint the picture that average businesses are hording piles of money in a safe. Wouldn’t it be the compassionate thing to force them to crack open their safes and share the wealth with their "underpaid" employees? In reality, such a scenario is is just that, an cooked-up scenario. Forcing the average business to arbitrarily pay their employees more will result in a good number of employees losing their jobs. In addition, an increase in the minimum wage will result in higher prices, since the employer will look for ways to compensate for the additional labor costs siphoned off to pay his workers. The dirty little secret is that the minimum wage movement is a red herring, intended to conceal the true source of the motivation behind the government’s interference. The political backers of the wage increase are hoping that the spillover effects will result in a jump in union wages and union contracts, which will, in turn, result in voters turning out in their favor come November. This is simply a political ploy. The minimum wage is nothing more than an invasive, disguised tax on business. Once again, the taxpayers will face the brunt of the damage done since the base-line for union contracts is covered by the taxpayer. Someone needs to have the temerity to proclaim the obvious, that forcing an arbitrary minimum wage increase will result in job losses.

This is a brief overview of the inherent problems associated with government intrusion into the free-market. In fact, statistics prove that every time the government has meddled in the minimum wage, unemployment, among young blacks in particular, has actually increased. Economist Ronald Nash succinctly sums up the case against government intervention in wages. “Interventionism cannot be justified in the short run because if fails the moral test. And interventionism cannot be justified in the long run because it fails the economic test.” In other words, interventionism fails the moral test because those who may temporarily benefit from an increase in the minimum wage will do so at the expense of those who will lose their job because of the employer’s increased labor costs. It fails the economic test because it's simply bad policy for a business. It will result in both higher prices and a higher unemployment rate. The left’s objective in promising to increase the minimum wage for those they label as “disadvantaged” amounts to a rotten quid pro quo. Scraps are tossed out in return for votes and nobody but the politicians end up better off when all is said and done.

Bush's Report Card

Conservative ire with President Bush has recently reached a fever pitch as the godfather of the conservative movement, Bill Buckley, unleashed a surprisingly harsh litany of critiques against the president. When asked about Bush’s legacy, Buckley stated rather baldly, “There will be no legacy for Mr. Bush. I don't believe a successor would re-enunciate the words that he used in his second inaugural address, because they were too ambitious, so therefore I think his legacy is indecipherable.” Recent headlines have mirrored this pique among the conservative block with the present administration, “Bush’s Base Betrayal”, “The Conservative Revolt” and “Conservative Anger Grows Over Bush’s Foreign Policy”. When attempting to size-up the administration, it seems conservatives focus on one of the three “pillars of conservatism” and assess Bush according to his handling of each. The first of the three pillars, as I see it, consists of social issues like abortion, gay “marriage” and embryonic stem-cell research. The second is foreign policy, in particular, the war on terror and how that war is being conducted in light of events in Iraq. And finally, the third pillar of conservatism is economic policy. Although I have a high degree of respect for the president, and support much of what he has set about to do, I would be less than candid if I were to gloss over the fiscal lacerations inflicted on our economy by a Republican administration and Congress, something of a scandal to say the least. His stance on social issues and his foreign policy merit a more positive evaluation. I’ll dish out to Bush two “cheers” and one “jeer”.

A simple look at the numbers of the past 5 ½ years will reveal some disturbing trends and forecasts for our nation’s economy. The Bush era has so far overseen and sanctioned a 45% increase in federal spending, and we still have 2 ½ years to go, with no sign of slowing down in sight! To draw up a comparison, President Clinton presided over a spending jump of a “paltry” 32%, and that was over his entire two-term presidency. We currently live under the shadow of the largest federal government in the history of the nation. In 2005, federal spending careened to an astounding $2.7 trillion. Bush has shown a lamentable fondness for Keynesian economic policies that have been proven time and again ineffectual. He has enthusiastically embraced reckless federal spending while pushing for an increase in the money supply via his proxies at the Federal Reserve, resulting in soaring inflation rates. President Bush seems incapable stopping and/or unwilling to reign in the extravagant spending of his Republican Congress, having vetoed only one bill in the past 5 ½ years. The one bright spot on Bush’s fiscal track record is his tax cuts, which has clearly helped nudge the economy toward positive growth. But as usual, the devil is in the details. The lifeblood of government spending flows from two veins, taxes and that which the government borrows and inflates. On the latter, the borrowing and inflating, the present administration has done little to curb its spendthrift proclivities. Unfortunately, the negative vastly outweighs the positive in this arena of political analysis. The president has simply not made fiscal responsibility a priority, shirking a traditional banner of the conservative movement. It’s a tragic political irony of epic proportions: Republicans finally control Washington as never before, thanks in large part to the fiscal conservatives who, as it turns out, placed false hopes in the Bush ascendancy. One of the Republican Party’s traditional battle cries aimed at rallying its base to the polls during the insufferable era of Democratic dominion in DC was the promise to reign in Congress’ insatiable check-writing impulses. If the Bush and Congressional shopping sprees continue through 2008, he will go down in history as the nation’s most profligate president. Conservatives are justified in their disappointment here. Grade: D

Moving on to the second pillar of conservatism, foreign policy and the war on terror, President Bush deserves a more propitious analysis. In stark contrast to the utopian platitudes and naïve world-view of the leftists in the United Nations and European Union, Bush is driven by a refreshing realism and pragmatism, the same pragmatism which has over the centuries, distinguished the United States from other nations. Margaret Thatcher memorably advised, “The ultimate test of statesmanship is what to do in the face of war” and that this “requires a continuous investment in defense and a constant resolution to resist aggression”. Who could deny that Bush has, since 9-11, enthusiastically embraced this wise precept from one of the colossuses of the anti-communist leadership of the 1980s? Ample room exists for criticism of the many tactical decisions made by the administration since the war on terror commenced. However, feckless UN resolutions, policies of détente, and half-measures of irresolute military force have proven embarrassingly impotent in dealing with Islamofascist terrorists bent on merciless destruction and slaughter, rooted in what George Weigel has aptly identified as anarchic-nihilism wedded to a skewed monotheism. Such an unorthodox enemy demands a particularly forceful answer from the West, and the United States, with a select smattering of European nations that also understand this reality, have banded together to face this danger. Fortunately, President Bush seems immune to the shrills of Sirens pent up in the United Nations, who tantrum on about the supposed violation of international law by a “unilateral” United States. That the United States is a member of the United Nations by no means implies that it must sacrifice its right as a sovereign nation to defend itself from attacks. Most scholars on international law see such law as having to do more with contracts and treaties and little or nothing to do with any legislative powers of enforcement. It is important to remember that a country's foreign policy is inextricably interwoven with its unique domestic policies. From this point of view, international relations should always be seen through the prism of a nation’s domestic particularities. There is NO official enforcer of international law, despite what Kofi Annan might wish to believe or project. While the United Nations continues to decay from within as a result of its own undeniable corruption and growing irrelevance, Bush has proven himself a reluctant but willing warrior, ready and able to unleash the full fury of the United States military against the harbingers of terrorism and oppression ensconced in the scorching desert sands of Arabia. Fearless of terrorist threats from abroad and political reprisal at home from scheming politicians seeking to capitalize on perceived or magnified chinks in his armor, President Bush has proven himself resolute, steadfast and unflinching in this war. He saw that something had to be done, and he took action. Grade: A-
Incompetence personified, Kofi Annan

Finally, the spotlight must fall on the conservative “pillar” of social issues. On this score, I once again give the president high marks. My only complaint is that I would like to see Mr. Bush throw his considerable political weight and influence behind struggling candidates in state primaries running against well-funded liberal Republicans. More than once, he has taken an “ends justifies the means approach” in endorsing more “viable”, albeit more liberal, Republicans when faced with tough opposition from the Democratic side. He’s willing to tolerate an ideologically diluted Party so long as he can hold on to his majority in Congress. There is something to be said however for sacrificing principle for politics and I think he could do better giving precedence to conservatism over Republicanism. But when the chips are down, Bush has been remarkably consistent in defending the dignity of the person and the traditional family. He is unabashedly pro-life and, given the political reality, we could hardly ask for anyone better at the present. For those who, like myself, consider the defense of the social fabric of our polis as the defining issue of our time, President Bush is a colossus to our movement. He has opposed the UN’s relentless and pernicious population control measures, he vetoed Congress’ latest attempt to sabotage human life at its earliest stage for experimentation purposes, he signed into law the twice-vetoed law banning the gruesome partial-birth abortion procedure, he backed the ill-fated Constitutional amendment proposal which sought to enshrine marriage as a unique institution in society, consisting exclusively in the union between one man and one woman, and finally, he has installed two extremely high-voltage, conservative Supreme Court Justices with sparkling credentials and frighteningly powerful intellects. The list could go on, but these rank among the most glaring examples of President Bush’s undeniable pro-life vision. The astoundingly high level of poisonous vitriol spewed at Bush by the far left, a motley crew of anti-Christian, degenerate atheists, only serves to crystallize my admiration for the man. I might not always agree with how he goes about it, but in the end, he’s someone I can trust. At the National Prayer Breakfast, President Bush offered these observations on the Catholic Church, "Some people believe you cannot distinguish between right and wrong. The Catholic Church rejects such a pessimistic view of human nature, and offers a vision of human freedom and dignity rooted in the same self-evident truths of America's Founding. ... Freedom is a gift from the Almighty, and because it is universal, our Creator has written it into all nature. To maintain this freedom, societies need high moral standards.” Enough said. Grade: A-

President Bush is a man who says what he means and means what he says. For all his shortcomings and fiscal foibles, he is a man of character and integrity. He still has 2 ½ years in office, time enough perhaps to make some reversals in his wayward economic policies. One can only hope. On the positive side, the president has fulfilled his most important campaign promise of 2000, to restore honor and decency to the office of President of the United States. For this reason, conservatives, Americans, of all stripes should be grateful. Terrorists who wished to test our resolve and watch us scatter like “paper tigers” as Osama bin Laden once derided us, have learned a lesson in the school of the Bush Doctrine. Cantankerous conservative commentators should give Bush credit where credit is due, curb their critique and tincture it with some gestures of appreciation and gratitude.

Distilling Rhetoric from Reality: the United States, Israel and Opportunity

To many elites in the media, the recent crisis in the Middle East proffers yet another opportunity to focus suspicion on the United States and blame on Israel, while directing empty hope and blind faith in the United Nations’ feckless diplomacy and intervention. For those interested in seeing the whole picture of the current conflict, minus the selective sins of historical omission courtesy of the mainstream media, it would serve to backtrack for a moment to 2004 to see the current crisis in full context.

The ever-ineffectual United Nations Security Council passed Resolution 1559 in 2004 which had, as its goal, Israel’s withdraw from Lebanese territory, with the assurance that Lebanon and the United Nations would work together to once and for all deal with the menacing presence of terrorist groups like Hezbollah and Hamas. Sound familiar? A UN Security Council resolution emasculated by the dizzying equivocation on behalf of those who signed on to it, and their predictable refusal to back it up with the threats that it promises. So, the old “land for peace” policy was, once again, embraced by all sides. Israel, fulfilling its end of the deal, withdrew from the territory in question with the sincere hope that its deference to Resolution 1559 would result in lasting peace. In retrospect, perhaps such faith in the resolution’s efficacy was naïve, given the proven track-record of terrorist groups to defy rational diplomacy and negotiation. But at least Israel tried it. For their part, Hezbollah, instead of disbanding and disarming, dug in its heels and bided time to reorganize and beef-up their instruments of terror. Understandably, Lebanese officials were reluctant to go it alone against the forces of this potent terror group, fearing reprisals of merciless havoc and destruction. Blue-helmeted UN peacekeepers were stationed in the area to oversee the elimination of these militias of terror and provide general security, but they obviously failed miserably. Is anyone surprised?

Fast-forward to July 12, 2006. Hezbollah brazenly kills eight Israeli troops, abducts two more, and then has the chutzpah to issue forth a litany of demands for the release of the soldiers. Israel replies to these criminal acts with a refreshing, “Enough is enough” policy and commences a military response to the Hezbollah threat. This presents Israel with a golden opportunity to rid their border of the scourge of Hezbollah, for their sake and for that of a politically fragile Lebanon. Regrettably but predictably Hezbollah has intentionally taken refuge among the civilian population in Lebanon and has refused to let civilians escape to safety. This sets the stage for the narrow analysis of selective news reporters, taking their talking points and action lines from the factions of Hezbollah, accusing Israeli forces of recklessly firing upon innocent civilians. If any lesson can be drawn from the playbook of terrorists over the past several years, it is that their principle modus operandi is to mesh into the civilian population. The benefits, from their point of view are twofold: from the defensive analysis, it allows them the ability of disappearing into innocuous crowds to hide from and confound their attackers. From the offensive point of view, they are afforded an opportunity to strike their enemy, easily identifiable donning military garb, from the shielded veil of the general public. What are the Israelis to do? Many from the United Nations, among the most notable, the ne’er-do-well Kofi Annan, are calling for an immediate cease-fire, while criticizing Israel for using “excessive force”. United States Ambassador John Bolton injected a refreshing dose of realism into the chorus of “cease-fire” shrills, asking rhetorically, How do you affect a “cease-fire” with terrorist organizations? The very idea of negotiating a cease-fire with groups that routinely flaunt accepted standards of international protocol is frighteningly and patently absurd.

Hezbollah fighters entrenched among the civilian population

Where does the United States fit into the equation? Ever since Israel began its military response to Hezbollah, critics in the media and UN have expressed dismay over Bush Administration’s alleged reticence and its refusal to join the chorus of diplomats calling for an immediate cease-fire. This administration is approaching the conflict with a strikingly different attitude than previous administrations, in that it is guided by clear realism instead of naive diplomatic pipedreams of negotiating cease-fires and land for peace agreements with maniacal terror militias. The president and his advisors recognize that the past 30 years of Middle East intervention has proven to be a miserable failure. The crux of the problem remains: Islamofascist terror groups inevitably return to their old tricks of terror and infiltrate Israeli society, chaos erupts, death and destruction ensues. Land for peace policies simply don’t work, history proves it. The United States sees a unique opportunity when Israel resolves to uproot Hezbollah once and for all. Among other things, the destruction of Hezbollah would serve to stabilize the delicate democracy in Lebanon and free that country of a diabolical parasite. As John Bolton has stressed, Lebanon, a peaceful country, deserves that Resolution 1559 finally be taken seriously. But given the UN’s sorry game of endless resolution equivocation, how will Resolution 1559 be successfully enforced and who will enforce it? In addition neither the UN nor the mainstream media want to discuss the deeper roots of this conflict; namely, the dark web weaving together Hezbollah, Iran, Syria and perhaps more ominously, their links to China and Russia, two powerful countries on the UN Security Council. It’s time for the world to wake up, face reality and end the silly diplo-speak talking points and nauseating kumbaya world-view currently animating most UN and media elites. Iran must be confronted. The conflict between Israel and Hezbollah may be the door to do just that.