As the Obama Presidency continues to unravel, he keeps looking for one distraction after another to take the focus off of the economy, foreign policy, etc. We have the Bowe Bergdahl scandal to distract from the VA scandal right now, but prior to this we started to see Obama sense another electoral shellacking in the upcoming midterm elections. Naturally he did the only thing he knows how to do, not govern of course, but revisit his successful “divide and hate” election strategy. We see it in the White House pushing its “Gender Pay Gap” myth that takes all of two minutes of research to blow away, their anointing the Koch brothers as the left’s hate du jour, and of course there is the minimum wage. This push to raise the minimum wage will probably be addressed in more detail by reviving my “Economics for Politicians” series as soon as I get the chance to pull it together.
One of the left’s arguments for raising the minimum wage, forcing Wal-Wart to unionize, etc. goes along the lines of, “By paying less than a living wage employees are forced onto public assistance (food stamps, welfare, etc.). This amounts to a massive subsidy for those corporations paid for by the taxpayer.” Believe it or not I find it to be an interesting argument, but I think it only works in a small, relatively homogenous society, as there are many arguments against raising the minimum wage (again, let’s hold off on them until I can write my follow up post).
What if we’re looking at this from the wrong direction? Instead of fretting over how much to force employers to pay their employees so that the left can meet that quantifiable, concrete measure of “whatever dollar amount makes leftist elites feel good about themselves”, why not look at what we can do to make necessities less expensive so that workers have a better shot at providing for themselves even if they lack the skills to command a higher wage? Café Hayek did a fun series of posts that compared the goods in old Sears catalogs to what they would cost today. By taking into account not only price inflation and wage inflation the post figured out how many hours need to be worked to obtain the various products, Two examples are here and here. To make a long story short, most of the goods we enjoy today are higher quality and cost a lot less, but check out the links.
However much we might long for the good old labor market days of the 1950’s the many changes to society have made goods a lot cheaper. The best part of this is cheaper goods disproportionately help the poor, since their lower incomes mean that any basic goods bought take up a greater portion of their income. In terms of the basic necessity of clothing we’ve taken care of one of the needs – care to go shopping at Wal-Mart, anyone?
How about food? In “The World Is Flat” Tom Friedman gives a surprisingly balanced look at Wal-Mart. He cites the leftist argument of their wages pushing employees onto government assistance, but also mentions that their lower food prices disproportionately help to feed the poor. What else can we do about high food prices? How about if we stop wasting corn on producing ethanol fuel? It’s not like it’s helping with the intended purpose of reducing “greenhouse gas” emissions. Or how about opening sugar markets, as our combination of market distorting subsidies and tariffs hurt consumers? Again, as the poorest spend a far larger percentage of their income on sugar (or any food) than do those hated one percenters, is this not the compassionate thing to do? Of course, resisting this reform enjoys strong bipartisan support. As I wrote a few years ago:
Phase out market-distorting subsidies and tariffs. The more drastic the change the more resistance there will be, so this needs to be done slowly over several years. We all know there’s a reason that no politician who wants to be president will call for ending corn subsidies before the Iowa caucus during the primaries or call for ending sugar subsidies (Florida) before the general election. While it will hurt targeted industries in the short run we can offset it by lowering our corporate tax rates across the board – flatter taxes, anyone?
Health care costs are another popular cause of the left, and the leftist argument is that a fully implemented Obamacare is the answer. Their premise seems to go like this:
- Force all Americans to buy health insurance
- Limit choice, and force them to buy plenty of extras they don’t want as gift to Big Pharma and the biggest insurance companies
- Which of course, makes health insurance more expensive to buy
- Help people too poor to afford their new policies by taking more money from the people who can afford it
This is the part where the Underpants Gnomes take us to the final step: Affordable, quality health care for all! Of course, to jump to this final stage one has to ignore that evil, biased, phenomena known as “reality”. Oddly enough, the same people who cheerlead any government spending labeled “stimulus” get really prickly when you point out that Obamacare has become the perfect example of a “Negative stimulus”.
How about energy? In the Obama administration’s never ending war on prosperity the EPA is using fraudulent data to push through a law that will achieve not only a regressive tax in higher electricity costs, but also serve to destroy jobs as well.
What about housing? Rent controls are ironically, a great means to make housing more expensive. In general housing will also be more expensive in left-leaning cities that tend to favor rent control. Granted, rent control isn’t a perfect “correlation = causality” analogy that suggests that voting for Democrats equates voting for higher housing costs. There are other factors to consider, such as the geographic location of these cities immediately coming to mind. But instead of interfering with the transactions between landlords and tenants maybe giving the incentive to increase the supply of available housing could better bring down costs? Shouldn’t the people who like to use platitudes like “Think globally, act locally”, actually… do so?
And although this isn’t one of the more pressing needs of the poor, addressing the college tuition bubble will help to decrease the number of poor we see in the future. Back in 2012 I had a number of ideas that are two lengthy to go into here, but to make a long story short I argued that we should give students better options as well as far more data to help them make those choices. You’ll have to read the whole thing if you want to find out more. I’ll close out this point with two more nuggets to try to entice you to read my education post – it will be hated by higher education bureaucrats and it will probably destroy the more radical courses of study on many campuses.
There you have it – if we want to help the poor why not take steps to meaningfully help the poor? Of course, I still fully support every leftist minimum wage Chickenhawk who wants to start their own business and pay their interns or their unskilled entry level employees $15 per hour. It will never be possible to lift every person out of poverty, but at the very least we can start taking a hard look at the laws that are feeding it. Sadly, taking a stand and fighting against the various entrenched interests that benefit from each of these items is not a simple thing to do. And fighting the status quo doesn’t make you popular, especially in Washington, DC. It’s a lot tougher than showing “compassion” by passing laws that take other people’s money. So I put it to those of you who are demanding higher minimum wages and aren’t putting up any of your own money – are you ready to personally take action to help the poor? You say you love them by offering them government assistance while they’re poor, but do you love them enough to help them get out of poverty on their own?
@freddoso does a great job to summarize these points:
I love this chart. pic.twitter.com/rWc0rBhZqf
— David Freddoso (@freddoso) June 9, 2014
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Crossposted from Brother Bob’s Blog