Minimum wage

To start my politic ranting, I thought I'd start with the minimum wage. Something controversial, yet not all that important, right?

One view of minimum wage (taken by the right) is that pure capitalistic economics show that having a minimum wage is bad, bad, bad. If you're not worth the wage, you shouldn't be making it. It's an artificial limitation on capitalism and should have no place in society. If you raise the minimum wage, you make it more difficult to higher someone.

On the oposite side, you have people who look at those making minimum wage and say they need a "living wage". Can you feed a family on $5.15 an hour?

Here's how I see it. Both are right. (How's that for compromise?) Having a minimum wage does in fact cost jobs. Everything in this world is about money. If I, as a business man, have to pay someone more, there are only a couple things I can do. I can charge my consumer more, to make up for the extra pay. I can fire an employee so that overall I spend the same on employees, and either force the other employees to work harder or to replace the employee with technology. Either way it either hurts consumers by increasing the price, or it makes it harder to find a job. If you make the slippery slope argument, why should you stop at having a minimum wage at $5.15, or $6.65... I'd much prefer to make $40 an hour. What would happen to the economy if the minimum wage was set to $40? Inflation would take over until $40 was worth $5.15, and it doesn't help anyone out.

What would happen if I went the other way? Minimum wage is abolished. There would be some people who made much less. Would someone work for $1.00 an hour? I don't know. Maybe some teenagers.... I guess if I had to make money, and there was nothing left for me to take, I would work for that. What really would happen if we got rid of the minimum wage?

I understand that it is hard to raise a family on very little money. I have been richly blessed, and know that I won't fall into poverty, but that doesn't mean everyone has had as good a time as I have. Why can't we help those people by increasing the minimum wage, so that they can survive?

Well, first, if you increase the minimum wage, who does it really help? Over half of all minimum wage earners (53%) are under the age of 23. Less than 5% of all minimum wage earners are the sole breadwinners in their families. You are mainly helping those who are working at their first job. I guess that's not a bad thing, but does it help more than it hurts?

Here are my solutions. First, I haven't decided if I would abolish the minimum wage. I would need to get specific arguments for the abolishment before I get rid of it. My reasoning is it is good to have some minimum so people aren't exploited. (The same thing with child labor laws... I'm not completely anti-goverment.) We as a society can handle a little excess here. I would tie the minimum wage to inflation, and keep it fairly low. What if we tied it also to some percent of workers.... right now there are about 1.6 million people making minimum wage in the US. So, let's say that the minimum wage is adjusted up or down so that approximately 0.5% of Americans are making minimum wage.

Now, my solution to those who are making minimum wage who are trying to support a family... Isn't that why liberals want a minimum wage? To help those families? A detour, if you will....

I am not opposed to helping those in need. In fact, I feel it is my Christian duty to help them. In the ideal world, we as a community would help people, even when it's not mandated by the government (through taxes). I wouldn't even have a problem with the government forcing us to help (because it does strengthen the country if everyone is doing well). What I don't like is the waste in government. Of all institutions, I really believe the government is the least efficient. That is why, I think, many conservatives are seen as heartless. Not because we don't want to help, but because we don't want the government forcing us to give money to them so they can waste it. I would propose that we still help people, through the government, because nothing else will be tolerated right now. There is too much momentum in the government to change that over night. But, what can we do to cut down on waste? That is where most of my solutions will come in....

Okay, I'm back on track. One thing we could do is to attach money to head-of-households. Let me explain. What the current rise in minimum wage is trying to do is help those households dependent only on minimum wage. But, having a universal minimum wage covers more than just those who really need it.

If, after a family is deemed "poor", the government can help out by increasing their wage. Say a family really should earn $10 an hour (I have no idea what the proper sum would be, but this is just to show the idea). If the family has been deemed "poor", than the government steps in and says, get a job at minimum wage if you must. We will suplement your income so you actually earn $10 an hour. So, at $5.15 the government chips in another $4.85. Now, we can have a scaled system so that if the person gets a raise, than the government subsidy goes down, but not by as much. (this would encourage people to still work hard to get a raise). So, say the person gets a dollar raise, now making $6.15 per hour, the government reduces their subsidy by $0.50, so the person makes $10.50, and this continues until some set amount ($15.00 an hour?)

This encourages work, because if you don't work, you don't get paid. It also encourages working longer hours, rather than some minimum amount that you have to. It doesn't hurt the employer, or employee. It helps the person work their way out of poverty, without just a handout.

So, final analysis, is keep the minimum wage, but tie it to inflation and/or percent of workers on minimum wage. (Better yet, let the states decide their own minimum wage. You can even have a federal law stating there must be a minimum wage, but the states set it...) To help those who really need it, and only those, have government help. This would really be a job for the welfare people, keep it with them to simplify things.

So, where are the problems with my analysis? (I know there are some). Please leave comments so we can talk about it, and I will revise as needed. Thanks.

Welcome Message

I have decided to start a blog on politics. (Original, I know). My main reason is purely selfish... The easiest way for me to make decisions is by talking to someone about all sides of the issue, and then deciding for myself. I think my wife is getting tired of my ranting, so I get to write it out here.

My purpose for this site is the examine random topics and determine exactly how I feel about it. Though I would consider myself a conservative, that does not mean I espose all conservative values. I also will try and be completely honest with myself. Why is it that I want government in my life for some things, but out of my life for others? I will try and reason out what I personally feel is the best compromise.

Most of all, I would love to read your comments. I do not want this to be political bashing... I want honest and open communication so that all sides of the issue come out. I realize that there is deep-seated hatred (is that too harsh of a word?) between political parties. I don't want that to show up here. I will delete any such comments.

I have been reading different books, and will try and post a book review, along with what I got out of it for people to comment on. If you would like to suggest a topic, please do.

Last of all, remember..... the gospel is true, and life is wonderful!!!!

Book: Supercapitalism

Supercapitalism is an interesting economics book written by Robert Reich. The main premise of the book is that starting in the 70's, the United States, and to some extent the world, started transforming economically into supercapitalism. From the 30's to the 60's, the US economic form was capitalism, (Reich terms it Democratic Capitalism), but a more benign form than what we have now. There were large oligopolies that cornered markets, and in so doing were able to obsorb costs which currently would not be allowed. During democratic capitalism, large companies could pay higher wages, better health insurance, etc. because they didn't have to fear competition. This allowed a large middle class, people who stayed at a job forever, etc. At this time, consumers and investors didn't have a lot of choice. There wasn't a lot of inovation because there wasn't the incentive to inovate like there is now. Reich contends that CEO's of companies were more like statemen, rather than the highly competitive leaders they are today.

With the advent of a truly global economy, faster travel, internet, and many firms competing for your dollar, supercapitalism was born. Now we have a choice where to buy things. We can shop around for a better price. Investors can quickly move their money in the stock market to a firm that will give them a better return. This has increased competition, which increases the need for the company to gain competitive advantage over others. This is done by lowering costs by being more efficient (a good thing, right?), cutting jobs (is that good or not?), pressuring suppliers to lower prices (like Walmart does on a large scale). Supercapitalism has increased our power as consumers (we get what we want when we want it) and also investors (we get a higher return on our money). It reduces the goodwill a company can have. For example, in the car industry. Originally GM could give great benefits to the unions, but once more competition came, they had to streamline. That meant better, cheaper, more efficient cars for us, as well as better return for investors, but it also meant layoffs and worse benefits for the employees.

Another problem with supercapitalism is that companies are trying to gain competitive advantage over others through politics. Industrial PACs (political action committees) have increased dramatically and there are more lobbiests than ever before. Even when legislation is debated that doesn't seem to deal with industry, they still get involved. If you remember in 2006 there was a debate over drilling off the coast of Florida and California. The oil companies lobbied for the drilling, and the main force against the drilling? You would think environmental groups, but it was actually the tourism industry. They were worried about potential oil spills that would ruin the tourism in those states.

Reich only had a few suggestions on what could be done about the bad side effects of supercapitalism. His main solution is that we need to stop treating companies like people. When there is criminal conduct, it's not the "company" who does wrong, it is the people who make the decisions. Companies should not be taxed, because they just pass it on to consumers. If we agree that a company is simply a legal contract between investors and workers, than you tax the investors, rather than "the company". With this definition, that a company is not an entity equal to a person, than rules could be inacted to limit the ability of companies to affect government. Reich states we need to seperate capitalism and democracy. Limit corporations from donating money to politicians (shareholders still can, because they are covered under the constitution, but companies have no constitutional rights), and then the government can make the rules without the influence of the corporations whose only focus is to make money for their shareholders.