Agreeing With Statists For The Wrong Reasons: Minimum Wage
Since its first enactment in New Zealand in 1894[1], minimum wage laws have interfered with the market process of determining the price of labor. Such laws now exist in most countries. Proponents claim that a minimum wage improves living standards and worker morale while reducing inequality and poverty.[2] Libertarians and conservatives have tried ad nauseum to oppose the existence or increase of the minimum wage,[3,4] to little avail. It is therefore necessary to try a different approach. Let us see how minimum wage hikes can undermine the legacy economic system, and thus why one might agree with statists for the wrong reasons.
A minimum wage law makes it illegal to hire laborers for less than a specified rate of payment per unit time. In order to justify paying an employee a given amount, the employer must be getting at least that much value from the employee. (In practice, an employee must be more valuable due to the overhead cost of running a business.) Raising the minimum wage thus renders unemployed anyone who cannot be sufficiently productive to be worth paying the higher wage. Laissez-faire advocates tend to consider this effect as a negative, but perhaps it is not. The people left unemployed by a minimum wage hike can be the types of people that statists claim to want to help, but they also can be political enemies of liberty as well as foreign migrants. Raising the minimum wage can protect domestic workers from competition and demographic displacement while depriving leftist activists of their day jobs. This will shift the political landscape away from socialism.
That being said, other humans are not the only competition around. Automation of jobs that were once performed by humans has long been occurring and is poised to continue. Minimum wage laws can give robots an advantage by pricing all humans out of the market in certain occupations. This frees people to engage in more fulfilling activities, at least until the silicon hordes come for those too. Some people may not find another occupation, but this presents its own opportunity for the anti-statist. The lower the percentage of labor force participation, the more people will sign up for state welfare programs. Contrary to mainstream libertarian thinking, this is a good thing. It is politically impossible to reform or abolish such programs because voters will remove from office anyone who tries to keep them from living off of the public treasury. What can be done is to overload and collapse the welfare state, and one method of doing this is to raise the minimum wage high enough to leave vast numbers of people unemployed. Though such an overload was originally a leftist plan to initiate universal basic income, there is reason to believe that such a program would be even worse for society over the long term. The civil unrest that would eventually occur once that program fails as well is an opportunity that libertarians can utilize if they prepare for it properly.
For people who can still find work with a higher minimum wage, there is another effect that harms the establishment. The long march through the institutions performed by leftists, followed by their use of academic power to push their agenda, is recognized as a serious problem by all of their opponents. One way to combat this problem is to present would-be university students with more attractive options. For intelligent people, higher entry-level salaries can make bypassing a degree and going straight into the workforce the best option, which would deprive Marxist professors of young people to indoctrinate. Additionally, the student loan crisis can be mitigated by not creating as much debt in the first place.
Many critics of minimum wage laws point to the price increases that must result, as a price floor on wages is an additional cost of production which must be passed on to the consumer. While this may make life more difficult for the poorest people, it would also discourage degenerate consumerism in favor of low time preference behavior. Production would thus be oriented toward eucivic goods rather than crass desires. The increase in saving could be used to fund investments, and the rising price inflation would encourage this rather than hoarding fiat currency.
Last but not least, if people cannot make ends meet in the state-sanctioned economy, then they will look for alternatives. A ban on employing people for less pay than a legal minimum is also a ban on workers selling their labor for less than that amount. But as with any other law that criminalizes a good or service that is in demand, the trade is not stopped but driven underground. This would be a boon to the informal economy in general and the cryptocurrency movement in particular. Raising the minimum wage to push people in this direction would reduce tax revenues, which in turn would increase national debts to the point of forcing spending cuts or hyperinflation. Again, the system is pathologically incapable of being reformed, so change must be imposed by external means of this sort. Either outcome would hasten the demise of the current system and usher in a new economic and social order.
Minimum wage laws are one of the most onerous statist interventions into the market economy, but like many other government programs, they usually achieve the opposite of their stated purpose. However, the aforementioned effects will be more destructive to the establishment than to the cause of liberty, so let us support raising the minimum wage to absurdly high levels for the wrong reasons.
References:
- American Academy of Political and Social Science. “The Cost of Living”. Philadelphia, 1913.
- “Should We Raise The Minimum Wage?”. The Perspective. Aug. 30, 2017.
- Black, John (Sep. 18, 2003). Oxford Dictionary of Economics. Oxford University Press. p. 300.
- “The Young and the Jobless.” The Wall Street Journal. Oct. 3, 2009.
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