Monday, July 16, 2012
Abolish Job-Destroying Minimum Wage
By Goodspaceguy, 2012 July 11 - July 16.
Dear Fellow Crewmembers of our Spaceship Earth,
This is message #44 from me, Goodspaceguy, on my blog Our Spaceship Earth.
I, Goodspaceguy, refer to our Earth as our Spaceship Earth, on which we travel through space around our Sun, and with our Sun, we travel inside our Milky Way Galaxy. We should try to raise the living standard all around our Spaceship Earth by speaking out against the stagnation-promoting minimum wages, which we should abolish.
We build our living standard by the goods and services that we produce for each other in our exchange economy.
Profits and losses tell the many, many, competing businesses what we want and what we don’t want. Businesses that, at equilibrium prices, efficiently provide goods or services, which we want, tend to be rewarded with profits.
Inefficient businesses that, at above equilibrium prices, offer us good and services that we don’t have much desire for, tend to be punished with losses and declining business and unsold inventories.
We the workers produce goods or services for each other in our specialized jobs. Our production is sold into our marketplace of exchange. We receive our compensation and buy some of the many other things that other people produce for our marketplace, such as toothbrushes. Our living standard goes up because we can buy things cheaply at their equilibrium price. But it would be very time consuming and difficult for each person to produce their own things of quality, such as toothbrushes or pens or movies or medical care or jet transport airplanes. Without the marketplace of our exchange economy, we would do without many of the things we currently buy from each other. Doing without, our living standard would be much lower.
People who live outside the exchange economy and attempt to produce everything for themselves have a lower living standard. For example, the frontiersmen had difficulty producing good toothbrushes for themselves. They lost their teeth early, and they died early.
In our exchange society, we workers determine our living standard by the amount of goods and services that we produce for each other. The more everyone produces, the greater the supply and the cheaper things become. The equilibrium prices fall, pushed down by the increasing supply and the lower prices required to sell that increased supply. As prices fall, we are able to buy more and more, and our living standard goes higher and higher. As governments inflate their currencies, we often don’t notice when true prices fall. Inflation misinforms us. Because of our increased production per person in the advanced nations on Spaceship Earth, we find that our living standard becomes better than that of the nobility of the Middle Ages in Europe.
We tend to determine prices by the interaction of supply and demand in our competitive, free-market, which works for us, the consumers. This holds also for the various prices for the many different kinds of labor.
Our economy is usually out of balance. We sabotage our own economy. Usually the average cost-of-labor is high in comparison to the amount of money we consumers have to spend or invest. We then buy only part of the different kinds of available labor. The rest of the labor goes unemployed, as is the situation now in the year 2012. Our economy remains sabotaged. We currently have a stagnant economy of high unemployment. When not sabotaged, an economy is supposed to recover rapidly from a recession. This has not happened for us, because the sabotage continues. A significant way we sabotage our economy is by supporting the job-destroying Minimum Wage. Around our world, we should abolish the employer-damaging minimum wages. Our world needs leaders who will attack the job-destroying minimum wages. Our Spaceship Earth needs leaders who will work to unsabotage their economies and end the waste of valuable labor, referred to as unemployment.
If the average cost-of-labor falls significantly, then we consumers will have enough money from our production to buy most of the labor available. We will not only have full-employment, but we will also have a labor shortage. At low prices, we will be eager to hire more labor. We will bid the price of labor up, seeking the equilibrium levels of full-employment for the different kinds of labor.
In our competitive, profit-seeking, free market of exchange, our supply of and our demand for our free market goods (including the different kinds of labor) are always interacting and adjusting and re-adjusting in the continuous search for the always changing prices that move our world-wide economy towards its many local equilibriums of full-employment on our Spaceship Earth. In the regions of low production per person, the compensation is lower. In the regions of high production per person, the compensation is higher.
The job-destroying minimum wages cause fewer people to be working. The more expensive the people in relation to their production, the fewer people are hired by us the consumers. Fewer people are contributing to producing the living standard. Production determines our living standard. Through the trickery of the minimum wages, the fewer workers end up supporting more people on welfare. With fewer people working and more people on welfare, production and our living standard is less. The lost production of the people not working and even on welfare means a lower living standard. For example, with people not working, houses go un-repaired and un-painted. Cars go un-repaired and un-waxed and un-washed. Clothes go un-mended. Furniture and appliances go un-repaired. Things go un-manufactured and services go un-performed, and our civilization becomes littered with trash because those who are un-employed are not producing. Therefore as production is less than it could be, purchasing power in our society is less than it could be. Production is purchasing power. In our exchange society, we pay for what we consume with what we produce. Being thrown out of work by the job-destroying minimum wage means that many are not producing goods or services for their fellow human beings. They are not contributing their special services to what would be a higher living standard for themselves and for the buyers of what would have been their production.
At the higher average cost-of-labor promoted by minimum wages, society does not buy all of the available labor. Unemployment continues. Production is less than under full employment. The production of consumer-desired goods and services is less than what it could be. The lowered production means a lower living standard for us, the people. We the people cannot consume that which we have not produced. Because of the job-destroying minimum wages, we produce less of what we want to consume.
When the people in society at the front-of-the line are overpaid, (paid more than the equilibrium price for their special type of labor) consumers run out of money before they get to the people at the end of the line, whom we then call the unemployed.
But if we have a lower average cost-of-labor promoted by our competitive, free market, which tries to hire everyone, then society buys more labor. At a lower average cost-of-labor, there is more work to be found. Employment increases. With more people working, production goes up. The increased production of goods and services (causes an equilibrium-seeking price decrease often hidden by inflation) equals a higher living standard. We have more to consume.
In our exchange economy, when we consumers pay each other their equilibrium rate-of-pay as determined by free-market supply and demand for their type of labor, then we consumers have enough money to employ everyone who is willing to work at their equilibrium rate. We get our desired full-employment economy of higher production. Higher production equals a higher living standard. More people are working. More people are helping. We have decreased the sabotaged our economy.
Again, in our exchange economy, we work for each other. The changing equilibrium prices for the different types of labor are determined by the interaction of our changing supply and our changing demand for the different types of labor. Our supply of and our demand for our different kinds of labor are always changing, therefore the free-market, equilibrium prices are always changing.
In our competitive free market that works for us, the consumers, the changing prices for our labor are always trying to keep our economy in balance. The equilibrium prices are always being sought and re-sought. When the average price of labor goes too high, we buy less. More unemployment appears. It becomes more difficult to find work. When the average price of labor sinks too low, we buy more. Labor shortages appear, and it becomes easier to find work. We bid the price up labor up, back towards equilibrium. We should want a good balance between our roles as consumers and our roles as workers.
Again, good students of economics should know that the effects of the different but rigid minimum wages are to abolish jobs, push struggling employers out of business, reduce production, and, thereby, reduce the living standard, and encourage the wage and price, upward, inflationary spiral.
Inflation is harmful. Inflation can be thought of as a hidden, harmful tax. The rigid minimum wages seem to help ratchet up inflation.
Under job-destroying minimum wage systems, those businesses that survive in our inflation-prone economy will give some people pay raises. This creates the illusion that the employer-destroying minimum wages are good. This is a false impression because the illusion ignores the people who lose their jobs and the illusion ignores the people who have difficulty finding jobs in the minimum wage, sabotaged economy, and the illusion ignores the businesses that have shut down. Some people get illusionary pay raises in our inflationary economy, but our production, our living standard really decreases, and crime increases.
People who retain their employment after their inflationary pay raises think they are better off, but they are actually worse off. Consider the greater pressure to perform to keep one’s job, the large number of unemployed wanting to take our jobs, the increased difficulty of finding another job, one’s unemployed friends and relatives, societies decreased production of goods and services, and the increased mental damage from unemployment and increased crime.
By pushing people out of our (working-for-each-other) work force and lowering production and thereby society’s living standard, the job-destroying minimum wages have also increased the number of homeless people. People are exploited by being denied employment. Those still employed are being exploited by being the true providers of welfare to those who are granted welfare.
Abolishing the job-destroying minimum wages and thereby getting more people helping will help move us towards full-employment equilibrium and a truly higher living standard because of our higher production.
The job-destroying minimum wages produce stagnant economies that continue to stagnate year after year. Abolishing the job-destroying minimum wages would improve the economy. It would get more people producing. It would get more people consuming that production in our exchange economy.
Many people were not taught the science of economics in high school. They were not taught about the destruction of lives caused by the employment-destroying minimum wage. As governments inflate their currencies, some people demand increases in the minimum wages, not understanding that the minimum wages are significantly lowering the living standards around our world, around our Spaceship Earth.
But the job-destroying minimum wages are really spreading disaster throughout our families and our society by introducing rigidities, by encouraging recessions, by prolonging recessions, by maintaining stagnation, by retarding growth, by lowering our living standards.
Some friends or family members or people you notice out in the community may have difficulty finding employment, never realizing that the underlying cause of this difficulty is an employer-damaging minimum wage that has helped sabotage the local economy and, indeed, the world economy. Employers compete for employees, but when employers are damaged, when their profits decrease, they usually hire fewer employees. Production falls. Our living standard falls.
In our democracies, some of you leaders understand the misery that is being caused by the employment-destroying minimum wages. It is important that you work for the abolishment of these harmful, minimum wages in your part of our Spaceship Earth. Working to abolish the misery-promoting minimum wages is part of good citizenship and leadership. In which areas of our Spaceship Earth can you help to develop higher production per person and thereby a higher standard of living. Explain to other people in our democracies how the job-destroying minimum wages lower production and thereby lowers our living standard.
Some people merely call for the reduction of the job-destroying minimum wages. This is not good enough. Why destroy any jobs? Merely reducing the destructive-minimum wages, merely reduces the unnecessary misery. It doesn’t abolish the misery. At only a reduction in the minimum wages, there still are people who can’t find jobs. People have problems, but usually there are lower prices where it can be profitable to employ them in spite of their problems. Even though some people have noticeable problems, why should we lose their production contribution to the living standard. People-with-problems can still contribute to the production that raises the living standard on our Spaceship Earth. Therefore, remove the cause of this misery by working for the complete abolishment of the life-destroying minimum wages. Set the prices of our labor by the interaction of the supply of our different kinds of labor with our demand for our different kinds of labor.
Explain to those open-minded people, who will listen, that our changing prices for our different kinds of labor are supposed to be determined by the interaction of our demand for that kind of labor with our supply of that kind of labor. Again and again explain to people that in our exchange economy, we work for each other and through our production, we raise the living standard.
Explain to people that in our competitive, free-market economy, prices are best set by our supply of and our demand for whatever is being exchanged, including labor.
By adjusting prices (including wages) to the equilibrium levels by the interaction of supply and demand in our competitive free markets on our Spaceship Earth, we help keep our world markets in balance. We help keep people fully employed. Then more people help to produce an increased living standard all around our Spaceship Earth.
Job-destroying minimum wages do not belong in our competitive, free market economy, which works for us, the consumers. Help abolish the misery-promoting minimum wages.
a 2012 candidate for Congress from District Seven of Washington State