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Wednesday, September 15, 2004

Abolish Minimum Wage Laws

Put yourself in the place of union leaders who have managed to increase wages of union workers to artificially high levels. What is to prevent jobs from going to non-union contractors? Answer: minimum wage and prevailing wage laws.

Perhaps you thought unions just want to give poor people a raise. No, what they really want to do is keep poor people unemployed, reserving more jobs for themselves. Of course unions would never admit to such a thing; political agendas are always advanced for noble reasons.

But once in a while someone blurts the truth. That was the case when Dick Gephardt revealed the true agenda behind his support for minimum wages during his 2004 presidential campaign. He told Teamsters Local 238 in Cedar Rapids, Iowa, that he favors an international minimum wage -- one that he says is high enough so that American workers are not competing with slave, sweat-shop and child labor around the world. Apparently candidate Gephardt would like to un-employ all the world’s poor, not just the poor in his country.

Minimum wage is just one example of how government meddling into the marketplace hurts the very people they claim to be helping. Rent control is another. Both have to do with dictating price, which always upsets the balance of supply and demand. When you dictate a minimum price for labor, it causes the supply of jobs to be reduced. This is just basic economics that no economist would dispute. Isn’t it ironic that the same politicians who support minimum wage are the ones boasting how they are going to create jobs! Go figure.

Now suppose you are working at minimum wage. Would you be in favor of the minimum wage being raised? Maybe so, because you might get a raise. On the other hand, your employer might respond by laying you off. Do you want to risk it? If so, you don’t need a law. You can set your own minimum wage. Go to your employer and demand a higher wage now. Tell him you refuse to work for less. If he thinks you are worth it, he will give you what you demand. If not, he will dismiss you.

But wait a minute! If you have set your own minimum wage and it is refused, you can negotiate a lower wage if you want to. But if you let the government set your minimum wage for you, you are out of a job – period; the government has taken away your freedom to negotiate.

If minimum wage is not the answer to increasing wages, what is? Wages are governed by worker productivity, because employers will hire workers only if their productivity is enough to show a profit after wages are paid. Productivity is improved by innovation and capital investment; government has no part in the process except to get out of the way. Again, no economist would disagree, yet this is an answer politicians can’t live with because it doesn’t make them appear important.

Libertarians oppose minimum wage on moral principles; it is wrong to use force in the marketplace to dictate prices to buyers and sellers. Interesting how good moral principles turn out to be best for everyone in a practical sense as well.

Tuesday, September 7, 2004

Americans with Disabilities Act

The Americans with Disabilities Act, or ADA, passed during the first Bush administration, is intended to eliminate, or at least minimize, discrimination against the disabled. Trumpeted as equal rights for the disabled, it gives people the right to sue if they can show that someone has discriminated against them because of their disability, in the areas of employment and in access to facilities.

Supporters of the ADA claim that it is a violation of a person’s civil rights to be discriminated against. I disagree. My view is that discrimination is a violation of civil rights only when government is doing the discriminating. However, an individual or a business has the right to discriminate, because freedom of association is a basic human right, whereas freedom from discrimination is not.

I concede that discrimination against the disabled can be senseless and bigoted. But a government social engineering program based on coercion is not the answer. Not only does it expand government authority in a dangerous way, but it is actually making the situation worse. For example, the ADA has hurt employment of the disabled by increasing litigation risk associated with hiring the disabled.

The proper way to reduce discrimination against the disabled is through education, persuasion, and social pressure. We will always have some discrimination, which is quite appropriate; after all, blind people can’t be airline pilots. The real question is – who should decide when discrimination is or is not appropriate? Should it be a free people, or should it be the government?

Government must grant equal rights to all, but special privilege to none. When ADA is used to give the disabled access to government services, it is defending their right to equal protection under the law. However, when ADA is directed against the private sector, it being used to grant special privilege.

Thursday, September 2, 2004

Child Labor Laws

No doubt you learned from your government school text book that unions pushed to pass labor laws in the early twentieth century to stop the exploitation of children by greedy industrialists, who paid children low wages to work long hours in unsafe sweatshops. These laws made it illegal to employ pre-teens and young teens is factories.

Now think for a minute. Surely you suspected something wrong with the story you were being told. If conditions were so harsh, why couldn’t these young people just quit their jobs. Who was forcing those poor hapless children to slave in these sweat shops? Was it their parents? If so, then are we to believe that union leaders care more about children than parents do? And how can you help young workers by taking away their jobs?

See what I mean? Something is wrong with this government school text book story.

The real story is quite different. Children originally left the farms to work in harsh factory conditions because it was a matter of survival for them and their families. Since child labor competes with unionized labor, unions have long sought to use the power of the state to deprive younger workers of the right to work. Union workers wanted those factory jobs for themselves.

As a side note, union-backed legislation prohibiting child labor came after the decline in child labor had already begun in America. The reason for the decline was that capital investment and subsequent productivity improvements meant that more people were lifted from poverty and could afford to keep their children at home and in school.

In the Third World today, where poverty is still the norm, the alternative to "child labor" is all too often begging, prostitution, crime, or starvation. Today’s Unions absurdly proclaim to be taking the moral high road by advocating protectionist policies that inevitably lead to these consequences.

It often happens that social legislation inadvertently harms the very people it claims to help. In the case of child labor laws, the harm was (and is) intentional.


Portions taken from related article “Markets, Not Unions, Gave us Leisure” By Thomas J. DiLorenzo, 8/24/04, at http://www.mises.org/