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Injustice of the Minimum Wage

19 February 2014, 09:53
Good intentions often form the foundation of social and economic disasters, but ‘do-gooders,’ high on their sense of moral superiority, never learn from their mistakes—so someone has to school their victims.

The minimum wage has often been proposed as a morally superior, more ethical solution to help unskilled workers access a much-needed raise. The people who advocate the injection of minimum wage into certain job markets are often the sort of people that have never had need for a minimum wage, and the few who themselves once would have benefitted from a minimum wage have long since overcome their need for such economic intervention—yet somehow they forgot what allowed them to rise above their situation in the first place: hard work, not handouts.

Once a minimum wage law is passed, scores of people who were employed and drawing a paltry salary on which to sustain themselves end up jobless. Why is that? Because of the shortsightedness of the morality-obsessed clans that champion minimum-wage legislation! These ethics-spewing groups assume that once a minimum wage is passed for a certain job sector, employers will simply grit their teeth and fork out the inflated salaries as was demanded by a few vocal liberals and now made law.

But the fact is that an economy is a dynamic, living entity, and employers won’t simply dispense with profits just because a group of campaigners demand that they do so. Such an assumption is a clear indicator that advocates of the minimum wage don’t understand the basics of economics!

What actually happens when a minimum wage is passed is that employers pay the higher wages only to a small number of affected workers they have, namely the best performing, the young, the partially skilled, and so on, while the old, the unskilled, and the infirm are retrenched because they simply aren’t economically viable anymore due to their lower productivity. Employers simply switch to working their most capable workers harder to improve productivity, while the money they save having fired the rest means they have roughly the same level of expenditure per unit of output as before the minimum wage was implemented. But, of course, in the economy, tens of thousands (or more) people now find themselves out of work, which was NOT the case prior to the passing of a minimum wage law.

These unfortunate victims of a plan to help them will now not be able to afford feeding themselves, or paying their rent, or paying for their medicine … but, hey, they were promised they would be better off by people who don’t actually know what happens when you meddle with the levers of an economy. Ironically, it is exactly these most desperate of people whom the lobbyists used as examples of how the ‘system is failing the least of the least’, all in the aim of softening the public’s and government’s hearts to the idea of passing a minimum wage. In light of these facts, do these liberal lobbyists have no shame?

The fact is that the facts do not bother lobbyists. In the aftermath of a newly passed minimum wage law, numerous people will now testify to enjoying more gainful employment—this is that cream of the crop group that now absorbed the salaries of their former, less capable colleagues about to go on welfare (if that safety net even exists to catch their economic plummet). But the lobbyists—ever proud of and emboldened by their newfound success—give themselves endless praise for doing ‘a good thing for society’ … and then move on to planning their next ‘moral’ campaign, something like ‘tax the mega rich.’

Unfortunately for society, the same principles apply to taxing the super-rich as applies to the minimum wage example we just dealt with. And again, campaigners don’t appreciate that passing laws that tax the wealthy does not actually mean the rich will pay these higher taxes reserved exclusively for them. The mega-rich never have an never will sit idly by and allow sizable chunks to be taken out of their personal fortunes—and all because some housewives got together and decided it’s time to take money from those who are most adept at procuring wealth for themselves. Let us also not forget that the ultra-rich employ hundreds, sometimes thousands of people who also benefit from working in the businesses of society’s elite.

Where the tax the rich ideology collides fatally with reality is when one considers that multi-millionaires and billionaires have all the means necessary to relocate the vast majority of their wealth to countries where they will be taxed much less aggressively. This is why and how countries like Sweden and Singapore attract so much foreign investment—because they allow tax breaks to the rich and assist them in starting new businesses with minimal red tape to clear, which leads to more locals being employed and the local economy growing at a healthy pace—a win-win situation for everybody.

It really is that simple, which is why people want to make it complicated, so they can divert attention from the effective solutions and gain support for their well-intentioned but wholly ineffective alternatives.

(And take my word for it, Singapore’s economy is BOOMING, because some of the world’s wealthies entrepreneurs and individuals have been relocating their personal wealth and their businesses here to escape the economic oppression of the rich that is now fashionable in the west.) And people still wonder why the western economies can’t start up again after the recession—because too much liberal propaganda and demands are flooding the economic combustion chambers!

From the abovementioned scenarios, we now see a way for South Africa to prosper. The way for South Africa to attract foreign investment is to lower tax rates on the rich, cut the testicles off these ‘unions’ (in quotes because they behave more like gangsters than unions), and relaxing these overly sensitive laws regarding ‘worker rights.’ If you give people so many rights that they become unemployable by foreign or even local companies, then what you have actually given them is an economic noose with which to hang themselves.

No foreign company looking for cheap labour (the only hope of employment for the unskilled and uneducated) will even legally be able to employ the common South African—there are too many anti-capitalist blocks on the labour force to allow such upliftment to commence.

Now, if South Africa relaxed its worker rights, reduced direct taxation for the rich (tax them on other luxuries which they consume more of anyway), and maybe allowed a bit of labour force exploitation to fertilise the economic soil in which industries grow, then scores of new businesses will open and even greater scores of previously unemployed people will, at least, have jobs in which they can gain skills that will allow them to pursue better jobs in the future.

But nobody ever goes into the townships to ask the poor, “would you dispense with the right to strike so that you can finally feed your family and save up to send your children to university?” Everyone just accepts the cliché that to help the poor, higher-paying jobs must be created out of an imaginary pool of foreign investment.

And being exploited while you are desperate and uneducated is not nearly as much of a human rights violation as the liberally-inclined would have you believe. Interns—I’m talking people with one or multiple university degrees behind their names—are exploited by the system all the time, and they willingly submit themselves to such temporary exploitation because they know that they will gain valuable hands-on experience that will later enable them to get a much higher-paying job.

Similarly, a mineworker with not so much as a high school diploma to his name can be exploited as a labourer for a maximum of three years, at which point he will have sufficient work experience and skills to be able to pursue better work opportunities. (Whether he does so or not is totally up to him and not the prerogative of some union who demands that he get paid more and more every year for doing the same work at the same level of productivity.) The key is to get the poor working without pause, not striking endlessly!

But if the poor are systematically empowered this way, why would they vote for a government that operates on promises and not performance?

See, that mineworker may eke out a desperate living, but he will be sending his children to school and, later, to university. He may remain poor for the rest of his life (if he does not seek out better and better opportunities as his skills multiply), but at least his children will start their careers at a much higher level than where he started his. In but one generation, our mineworker’s children won’t be desperate, and they will be educated enough to not listen to a government that tells them “it will be an insult to your forefathers if you do not vote as tradition dictates.”

We can clearly see that the ANC government benefits keeping worker’s rights so utopian that they become wholly unemployable by any real-world company. All these ‘rights’ that common South Africans have serve only to shackle them and their children to poverty, ensuring that more empty promises will ensure a successful reelection of the ruling party rather than it actually delivering on those promises.

There are many more clichés of thought floating about society (e.g., the nonsensical—not to mention completely devoid of facts—claim that the rich are getting richer and the poor are getting poorer), all of which have some group championing some ‘ethical’ solution to solve these perceived social and economic troubles and injustices. But these groups and their solutions are often cause the greatest impedance to the real solution that have been tried and proven effective in other societies, for centuries now … in some cases.

Sadly, the public laps up these pedestrian ideologies without much thought for what effect they actually will have on flesh and blood people. All that is required for some ideology to be favoured by the public is for it to be presented as ‘morally superior’ or ‘the right way’ … or worse yet ‘common sense’, and then Jane and Joe Plain will be cheering in support! Of course, the reality is that good-intentioned ideas rarely yield superior or even practical results, and in the dog-eat-dog world we live in, half of something is better than all of nothing.

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