The Democrats' perfect paradox

With the economy in critical condition, the last thing we need is for politicians to obfuscate the nature of the crisis, scapegoating the free market, and providing us with more false choices.  In President Barack Obama's address to graduating ASU students, he discouraged them from pursuing profits and encouraged them to do volunteer work.  On the surface, it all sounds so good.

Personally, I believe volunteerism and charity are both noble.  People should come to the assistance of others, especially in times of need.  But, at the same time, this requires no federal legislation, such as the GIVE Act.  In fact, the best way to encourage volunteerism and charity is to create an economic climate that encourages production and profits.  There can be no charity without capital.  For politicians to say that they support volunteerism and charity, while simultaneously supporting policies that are destroying the economic foundation of the country, is akin to putting the cart before the horse.  If we become a nation of non-producers, dependents, and paupers, where does the charity come from?

With the economic crisis being blamed on everything but central economic planning, it is no wonder that people are confused and politicians have been able to use this as an opportunity to exploit these troubled times for their own personal gain.  Make no mistake about this: the Republicans, under the leadership of former President Bush, did not kill the economy with too much laissez-faire.  The key to Republican success in the future will come from acknowledging that fact, and then running from President Bush's legacy of false prosperity, as opposed to claiming credit for it.

When President Bush first got into office, annual federal expenditures were around $1.8 trillion, not even counting off-budget outlays.  By the time President Bush left office, federal expenditures exceeded $3 trillion, not even counting off-budget outlays.  That is hardly "free market conservatism."

There is nothing wrong with profit-seeking, per se.  Not all profits are bad.  So long as profits are earned on the free market, they are good and necessary for a growing economy.  Within the construct of the unhampered free market, the only way to obtain profits is to earn them through productivity, i.e., conferring a social benefit.  The late philosopher Franz Oppenheimer referred to that as the "economic means" to obtain profits.  The government, however, distorts this process.  That is because the government does not sustain itself by satisfying consumer demands, but through compulsory taxation, i.e., the threat of violence or actual violence. (That is why problems inhere in everything the government touches.)  Oppenheimer referred to that as the "political means" to obtain profits.  Thus to the extent that businesses are dependent upon the government for survival - e.g., military contractors - then they, too, do not have to satisfy consumer demands - i.e., be productive  - for sustenance.   That does not represent free market capitalism.  Please, politicians, don't attack the genuine free market by erecting your own crony capitalism straw man.

While many on the left reject big business and big capital, many simultaneously embrace big government.  But it is government power that big capital uses to manipulate the market in its favor.  Why can I not think of a single libertarian billionaire?  (Ross Perot was not and is not a libertarian.)  If big capital was so in favor of unbridled free markets, then I should be having money pour into my campaign for Congress.

How can there be charity without productivity and profit-seeking enterprise?  Why is it considered to be more noble and virtuous for a so-called non profit to sustain itself through the altruistic charitable contributions of others than it is for businesses, producing things on the free market, to engage in mutually-beneficial and voluntary exchange? 

How can there be job growth without profits?  If we were to sit 100 businessmen and businesswomen down in a room and ask them if they could hire more people, i.e., create jobs, without profits - i.e., operating at losses - I am sure the unanimous response would be "No!"  How can politicians claim to support higher wages for everybody and job growth while simultaneously attacking profit-seeking?

As Ludwig von Mises and Eugen von Bohm-Bawerk saliently articulated, labor can't increase its share at the expense of capital.  Nobody can argue against capital without arguing for a reduction in their own standard of living.  Thus the problem for the left should not be with capital, per se, but that capital is so inaccessible to the common person. 

Why is capital so inaccessible to the common person?  This is because every tax, every regulation, and every government program begets capital consumption, making capital artificially scarce, and thus drives up the cost of capital.  Politicians love this, because they get more power.  Big business loves this, because this creates barriers to competition.  Big capital uses big government to control capital, in order to drive up its cost.

In fact, one way big business drives up the cost of capital is through another policy which those on the left support: minimum wage law.  Where is the logical consistency in telling people to go do volunteer work, while simultaneously supporting minimum wage law? 

Many people believe that the government can, by fiat, raise wages. The government can no more raise wages through minimum wage law than it can create prosperity by outlawing poverty. Real wages can only be increased through increased productivity. Creating a minimum wage does nothing to create a job. By creating a minimum wage, many productive jobs are eliminated. The effect is to create idleness, thus diminishing real wages.

Many people - both for and against minimum wage law - construct their arguments based upon the fallacy that raising the minimum wage will be inconsequential, since most people get paid over minimum wage. Proponents of minimum wage laws believe government interference with the market isn't injurious, resulting in the belief that minimum wage is inconsequential - save to make everybody more prosperous. Many opponents argue that the minimum wage need not be increased, because they believe it to be entirely inconsequential. This is a myopic view, which only sees that which exists, but not that which doesn't exist thanks to minimum wage.

It is state power that the wealthy elites use to manipulate the market on their behalf. Minimum wage is a good example of a fascist regulation which benefits the wealthy elites. Minimum wage ensures that only the very wealthy can become employers. How is one who gets $10 per hour to hire somebody for more than half of their own wage? These are the jobs that don't exist, which make up the hidden costs that can't be calculated. It may be true that by the time the government gets done regulating the economy, those who are still left with jobs may have higher nominal wages. However, due to the people who are now without productive jobs, real wages will be much lower.

A good way to illustrate how minimum wage laws help the wealthy elites control the poor is to look at political campaigns. Many politicians rely upon volunteer labor for their campaigns. Suppose politicians learned how to do proper math, and then realized that volunteer workers get paid less than minimum wage. And then, seeing that paradox, those politicians decided to close up the "volunteer work loophole." What would this do to the poorer candidates who couldn't afford to pay all of their campaign volunteers? Who would be left to run for office then?

Seriously. Tell me if my math is wrong here, but don't people get paid less than minimum wage when they do volunteer work? Isn't zero less than minimum wage? If there should be a minimum wage, then shouldn't volunteer work be criminalized? Is this not at least a slight paradox? It seems to me that being in favor of minimum wage law and volunteerism at the same time is schizophrenic. Yet, it isn't unusual to see politicians promoting state-sanctioned volunteerism, seeking the help of campaign volunteers, but advocating increases in the minimum wage at the same time.

I could also make the argument that all forms of charity should be curtailed. What is the objective difference between working for less than minimum wage and giving away so much of your wages that you end up with less than minimum wage? There is nothing to prevent people from giving away their wages. If we are to take central planning to its own logical conclusion, then there should be laws to determine how much of your wages you are allowed to donate to charity.

And you thought those immigrants were "driving down wages" with cheap labor. What about the cheaper-than-dirt, free labor provided by volunteer workers? You now have to compete against people who are willing to work for free. The "evil" of volunteerism surpasses that of the immigrants. If only volunteers would get their heads together, unionize, stop working for free, and demand some pay. Come to think of it, home-cooked meals must be doing all sorts of "damage" to culinary workers. Maybe we should outlaw homemade meals.

Sadly, while what I am saying is self-evidently true, I find that minimum wage proponents like to play ignorant when I explain the minimum wage/volunteerism paradox. They lose their ability to engage in abstract thinking, by repeating the truism that volunteer work is volunteer work, but the job you get paid for isn't. That is my entire point. It is as if they suddenly forgot that no pay is less than some pay.

This paradox makes perfect sense, but only if you understand that everything the government is pushing for is aimed at holding onto power.

We do need more charity in this country.  But we need real charity.  The politicians don't want us to practice real charity.  If they did, they would be promoting free markets, and would be cutting the government's budget.  Why don't government employees, who get paid by an organization that steals every penny it spends from producers, take pay cuts?  Now if there is one form of volunteerism the government should promote, it should be amongst its own employees.  How can politicians direct and centrally plan private charity and volunteerism?  How can politicians know who should be volunteering for what activity?

The government promotes pseudo-volunteer schemes, which undermines the spirit of charity.  In many cases, the government even promises more government benefits - even though the government can't make good on its promises it has already made, such as to us disabled veterans - to these "volunteers."  Like I mentioned earlier, there is no need for federal legislation in order to promote volunteerism - unless, that is, politicians seek to exploit well-intentioned people for their own political gain.  The idea is to use well-intentioned people to serve their own political interests, creating the illusion that the government is a philanthropic institution.  The process impersonalizes volunteerism and charity.

This push for federally-guided volunteerism is a tacit acknowledgement that the government is incapable of raising wages by legislative decree - that it could was a Marxist dream.  At the same time government grows because politicians are unwilling to cut spending, the rest of us are expected to take pay cuts, working without pay.  Objectively, the Democrats are telling you to embrace poverty and accept a reduction in your standard of living, while the bureaucracy remains intact.  You got that, slave?