Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Do we desire to be cradled, and then carried throughout life to our graves by this partisan propelled bureaucratic monstrosity? ... as individuals of sovereign dignity, are we now so terrified, bewildered, and impotent that our main purpose is to seek asylum from the potential hazards of freedom? Have we no faith in our natural strengths and abilities?”     Sergei Hoff

July 27, 2006

Republicans Being Democrats… Again

by Brad Warbiany

House GOP pressing vote on minimum wage

House Republican leaders, giving in to political reality, plan a vote to raise the $5.15 minimum wage before leaving Washington this weekend for a five-week recess.

“Whether people like it or not, we need to go ahead with it,” said Rep. Mike Castle, R-Del., who supports the idea. “There’s a general agreement among Republicans (opposing the raise) that `maybe we don’t like it much, but we need to move forward with it just for political reasons.’”

The No. 3 House GOP leader, Majority Whip Roy Blunt of Missouri, said the plan was to have a vote before week’s end. But Majority Leader John Boehner, R-Ohio, said Republicans leaders were working to pass the increase but that “no decisions have been made.”

It was a decade ago, during the hotly contested campaign year of 1996, that Congress voted to increase the minimum wage. A person working 40 hours per week at minimum wage makes $10,700, which is below the poverty line for workers with families.

Democrats have made increasing the wage a pillar of their campaign platform and are pushing to raise the wage to $7.25 per hour over two years. In June, the Republican-controlled Senate refused to raise the minimum wage, rejecting a proposal from Democrats.

The chairman of the House Education and the Workforce Committee said the GOP would embrace the increase to $7.25 per hour and probably attach a proposal passed last year that would make it easier for small business to band together and buy health insurance plans for employees at a lower cost. Rep. Howard McKeon, R-Calif., said the minimum wage bill probably will not include tax cuts such as a repeal of the estate tax.

Great… So let me get this straight.

You’re going to give the Democrats what they ask for. In order to try to make it slightly more politically palatable, you’re going to barely ease regulations on small business. And when you might have an issue worth going tit-for-tat on, and actually getting a real concession from the Democrats, you roll over.

An estate tax repeal would be the ultimate poison pill for Democrats on this bill. I can just see the quandary they’d be in, knowing they can’t vote against a minimum wage, but being against the estate tax repeal. And it’s a politically great move. If you’re going to do something to help the rich, why not do it as an offset to helping* the poor. Yet the Republicans are not going to do it.

The Republicans are showing, once again, that they’re just as statist as Democrats, but with some nice religious authoritarianism and hyper-nationalism thrown in on top of it.

Thanks, guys. I really feel good about voting for you chumps in 2004.

* Yes, I realize the minimum wage hurts the poor. But in the political world, perception is reality, and the perception is otherwise.


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38 Comments

  1. “Forty-eight Republicans, many of them moderates or representing districts with large working-class populations, wrote Speaker
    Dennis Hastert, R-Ill., requesting a vote this week on an increase.”

    This part kills me, that today a “moderate” republican is ok and/or pushing for not only a minimum wage, but an increase in the minimum wage. Wasn’t there a time in history when even the concept of minimum wage was a radical, socialist idea? It’s sad that today “moderates” are all for this leftist policy.

    Comment by Ryan — July 27, 2006 @ 10:27 pm
  2. Brad Warbiany writes:

    “* Yes, I realize the minimum wage hurts the poor. But in the political world, perception is reality, and the perception is otherwise.”

    So Brad, do you let others (in the “political world”) create the reality, or do you enter in to the mix and try and create a subtancial, meaningful part of it yourself?

    You sound like a follower, not a doer, all the while admitting that the minimum wage hurts the poor.

    “Perception is reality” – Think about it, one can be a part of the “perception”, or stand back and -watch- the “perception”.

    What would you rather do ? From your post, it sounds like you watch and comment about a particular status quo.

    Personally I say – The raise in the minimum wage is absolutely essential, and instead of USING the poverty class for cheap labor–

    (because one can easily abuse the availability of cheap labor and get away with it)

    –instead, House Republican leaders can GROW A SPINE and get the minimum wage raised every year to be realistic.
    Yes, I am saying – revolve the economy around a realistic minimum wage. Make that the reality.

    “Perception is reality” ? Try perceiving differently.
    (especially since you gave a clue that you were so inclined)
    and do not be afraid to express it, OFTEN.

    Thats all. Jump in there. Do it.

    Comment by xavier — July 28, 2006 @ 12:10 am
  3. [...] Further thoughts here and here [...]

    Pingback by Below The Beltway » Blog Archive » Libertarians And The GOP: What’s The Point Anymore ? — July 28, 2006 @ 2:40 am
  4. xavier,

    The economic reality is that the minimum wage hurts the poor by reducing their chances for employment. While the few who remain employed are better off, those who are fired as a result are worse off. That’s the economic reality.

    The moral reality is that when people are free to contract for their labor, we assume that they have the freedom to set their wage based on what they think is fair, not what the government thinks is fair. That’s liberty.

    I’m not saying we can make perception into reality, but that politicians act on what people perceive their actions to mean, not what will actually happen. Laws against “price-gouging” or “windfall profits” are perceived by the economically ignorant in this country as a good thing. In reality, that doesn’t make them good policies, but politicians will pander regardless.

    Whether you call me a follower or a doer (nice ad-hominem, by the way!) means little here. I’ve argued against the minimum wage countless times, because I think it’s an economically damaging policy. That was the reason for adding the footnote, because the only reasonable way to explain the thought I was trying to explain in the “poison pill” paragraph is that politicians could couch their argument for giving a tax break to the rich as an offset against “helping” the poor. The footnote was a reminder that I don’t actually believe that a minimum wage increase will help the poor, but because the general public does, that’s how it would be perceived.

    Comment by Brad Warbiany — July 28, 2006 @ 5:47 am
  5. Your opinion that a minimum wage damages the economy is interesting, but why don’t you link out to some research supporting your claim? There’s plenty of research that says it doesn’t damage the economy or decrease the number of available low-paying jobs… Your unsupported statements mean nothing without facts to back it up…

    some facts to dispute your claim:

    1. A higher minimum wage does not mean higher unemployment. One comprehensive study found increases in the minimum wage in various states in the late 1980s and early 1990s did not result in increased unemployment. It found a minimum wage increase in New Jersey did not cause a decrease in lower-wage jobs.

    2. Small business growth has been greater in states with minimum wage levels above the federal level. A report by the Center for American Progress and Policy Matters Ohio found that the “11 states with a minimum wage above the federal minimum of $5.15 per hour had higher rates of small business growth between 1997 and 2003.”

    3. State minimum wage hikes have increased payroll and revenue without creating job loss. “A recent report from the Wisconsin Department of Workforce Development said last year’s increase in the state’s hourly rate — to $5.70 from $5.15 — produced $175 million in additional payroll and a $3 million boost in state tax revenue.”

    sources:

    http://www.pupress.princeton.edu/titles/5632.html
    http://www.bloomberg.com/apps/news?pid=20601039&sid=aO0TOGX8SeHY&refer=columnist_sperling
    http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1648601
    http://www.azstarnet.com/allheadlines/134045

    Comment by DenverOasis — July 28, 2006 @ 6:41 am
  6. to: Brad Warbiany,
    Where’s the Liberty for those Malaysians working for a dollar a day?

    LIBERALISM IS LIBERTY!

    Comment by Iam — July 28, 2006 @ 9:50 am
  7. Iam,

    Where’s the Liberty? Probably in the fact that if they weren’t working for a dollar a day, they’d be subsistence farming and starving.

    Comment by Brad Warbiany — July 28, 2006 @ 9:57 am
  8. Yep, Liberalism Is Liberty.

    Also, don’t forget:

    Freedom Is Slavery

    War Is Peace

    Ignorance Is Strength

    And, we all love Big Brother-

    Comment by Doug Mataconis — July 28, 2006 @ 10:19 am
  9. Minimum wage increases don’t cause workers to lose their jobs, paying CEOs and the upper tier of management millions does. Without a minimum wage workers would get less today, not more. Many would still work because their other option is die of starvation. It’s very easy to discuss the cold hard facts of capitalism when you’re not the one barely getting by on $5.15 an hour.

    Comment by Breunor — July 28, 2006 @ 11:25 am
  10. Re: >The economic reality is that the minimum wage hurts the poor by reducing their chances for employment.

    So what. If a small percentage can’t get work but all of rest are permanently lifted out of poverty then that is worth it.

    Maybe they can send their kids to college and break the cycle of poverty instead of maintaining the slave class that you see to prefer.

    Comment by Shawn — July 28, 2006 @ 11:29 am
  11. The economic reality is that the minimum wage hurts the poor by reducing their chances for employment.

    The economic reality is pyramid shaped. The haves stand on the shoulders of the poor. $7.25 per hour in 2006 is a total disgrace.

    How people manage to live on that crust of stale Walmart bread is a mystery. Of course the profits plus the tax cuts for business takes no account of the ogoing social costs of such usury.

    Well if one wants a higher crime rate .. a downward spiral of ill health plus all the repression that is now so much in evidence in the so called Western Democracies then go for it.

    But dont complain about the hempen rope when its your turn.

    Comment by Ivor Hughes — July 28, 2006 @ 11:32 am
  12. DenverOasis,

    My apology for taking a few hours to approve your comment, I hadn’t seen that it was pending moderation (due to the number of links).

    As for a quick google search on studies like this, how about Cato?

    http://www.cato.org/pubs/regulation/reg18n1c.html

    Based on the pattern of aggregate employment, we estimate that during the year of the $3.80 hourly minimum, 4.8 percent fewer teenage men were employed than would have been if the $3.35 minimum had been retained. The corresponding reductions for teenage women and teenage blacks are 6.6 percent and 7.5 percent, respectively; while for adults who did not finish high school, the reductions are 1.5 percent, 2.5 percent, and 4.4 percent, for men, women, and blacks, respectively. When the minimum wage was raised a second time, to $4.25 per hour, employment of low-wage workers fell a second time. The employment reductions over those implied by the $3.35 minimum and the decline in aggregate employment are: 7.3 percent, 11.4 percent, and 10.0 percent for teenagers; and for adult high school dropouts they are 3.1 percent, 5.2 percent, and 6.7 percent.

    Our conclusion is simple and direct: to the extent that increased minimums raise the cost of hiring low-productivity workers, fewer of those workers will be employed. Note, however, that our finding of greater job losses for teenagers is due to the fact that a large fraction of teenagers have low wages, and it is not because the teenagers who earn low wages are necessarily more likely to lose their jobs than are the adults who also earn low wages. Teenagers constituted only 32 percent of those earning $4.25 or less in the year before the 1990-91 increases. Hispanic workers constituted 20 percent, blacks 16 percent, and adult women without a high school degree 12 percent of this low-wage population. We have not asked whether increased minimums reduce the employment of low-wage teenagers more or less than the employment of low-wage adults. The question of which workers earning low wages are most harmed by increased minimums is more subtle and demands further research.

    Basically, as I mentioned, for those who still have a job, it’s a benefit. For the 5-10% who lose their job it most certainly is not.

    Comment by Brad Warbiany — July 28, 2006 @ 11:57 am
  13. Yes, raising the minimum wage would help the poor while upsetting the businesses that hire them. Without any regulations in place for immigration control illegals will simply take the jobs at a lower pay making the poor unemployed and the businesses happier paying lower wages. There are always several sides to an issue. Another side is that minimum wage jobs are usually held by high school kids, second income earners, second jobs and by illegals. There are not very many head of household earners bringing home minimum wage. Businesses will hire fewer if they have to pay considerably more for non skilled labor.

    Comment by Crystal DeGolier — July 28, 2006 @ 12:00 pm
  14. Problem with Cato is that they have an answer and then craft the research to get that answer. Has anyone ever seen a Cato report where they were surprised to find that their preconcieved beliefs were wrong. Please send links

    Comment by warren solow — July 28, 2006 @ 12:19 pm
  15. It’s a fallacy that minimum wage increases hurt the poor, and I see it perpetuated here again. Minimum wage increases lower employment which is true, however, they lessen poverty as well. You can pick up any non-biased Economics 101 textbook and you can learn about studies that support my contention.

    In other words, yes, unemployment rises, but poverty in general is reduced. I recognize this might sound like splitting hairs, but when you throw around terms like “hurting the poor” consider what you are talking about. Individuals may find it more difficult to obtain a job, but society overall has less poverty when minimum wage is increased. I guess the question you have to ask yourself is “do I want to live in a country with high unemployment, or do I want to live in a country with high poverty?”

    Of course the best method of reducing unemployment and decreasing poverty is to support training and educational opportunities for people on a lower socio-economic rung.

    Comment by Greg Lance — July 28, 2006 @ 12:28 pm
  16. I dont buy the point about a business hiring fewer. Neither am I a great fan of bum paper statistics.

    I am British and moved to New Zealand a couple of decades ago. I did so because I wanted a better life for my children, than that which was offered by the UK. Because Charles Dickens was resurrected and alive and well.

    I also served 9 years in the British military but I had a hard job discerning the land fit for hero,s .. and the sooner people wake up to the great scam to which we have been subjected the sooner we will get some peace and justice.

    Things went down hill when the multitude of Empire peasants demanded their liberty. Fat Cats always eat the poor.

    When I first arrived here there was a very different economic system in place. The crime rate was low. A murder every 2 or 3 months .. people would leave their doors unlocked.

    Well that didnt last long .. we got a real harsh dose of Free market economics, American style. Dog eat dog just doesnt cut it.

    We now have ghettos ,new prisons being built. Murders occur almost daily. People are mugged in broad daylight for a purse or a wallet, car thefts are at a record high. We now have a general health situation which is nearly as bad as that of the US.

    I dont need economic theory to tell me what I can see with my own eyes. What has happened to peoples sense of decency and fair play ?? Gone to the pig trough .. everyone.

    Comment by Ivor Hughes — July 28, 2006 @ 12:30 pm
  17. warren,

    In this TCS Daily piece, Don Boudreaux links to a study by the Bureau of Economic Research that shows the same. Although Boudreaux also points out the difficulty in proving anything either way, since we usually have no control group in real world, and a bunch of different factors.

    Greg,

    My favorite method for reducing poverty would be to cut taxes and institute competition in our school system, which would allow employers to either pay higher wages or reduce the cost of goods (both good for poor people), and would invariably help train poor people by getting them out of inner-city prisons schools we send them to each day.

    Comment by Brad Warbiany — July 28, 2006 @ 12:34 pm
  18. Warbs:

    “the few that remain employed are better off” is only true in marginal cases. Everyone else is the same or worse off.

    There will be some currently-underemployed individuals whose wages will rise to meet the new law. Their current wages represent some percentage of total cost of goods; they only benefit under a minimum wage increase if some or all of their wages contribute at a smaller rate toward the cost of the goods or services they produce in aggregate. In all other cases, their real wages are the same or worse than they are today.

    Those who are most likely to see ANY benefit from the increase are those with the lowest current wages. Unfortunately, those are also the least likely to keep their jobs. Everyone who either a) doesn’t get a raise because they already make over the new minimum or lose their job or b) gets a raise of less than the increase in goods and services is handed a real-wage decrease by this legislation.

    Net-net, a minimum wage increase is a loss for all but marginal cases, not the “permanent lift out of poverty” that Shawn sees. The “cold hard facts of capitalism” that Breunor talks of at $5.15 an hour are exacerbated at $7.25 when $7.25 won’t buy as much as $5.15 will now.

    Comment by Brock — July 28, 2006 @ 12:44 pm
  19. Brock,

    I understand that those least likely to keep their jobs are the ones currently closer to $5.15 than $7.25. I considered mentioning that in my last comment…

    Warren & DenverOasis,

    Here’s a study by some profs at the University of Oregon: http://www.uoregon.edu/~lsingell/Minimum_Wage.pdf. They studied two very similar periods of minimum wage growth, offset by two years, in the neighboring states of Oregon & Washington. They most definitely saw a reduction in employment corresponding with the increase in minimum wage.

    Comment by Brad Warbiany — July 28, 2006 @ 12:51 pm
  20. Union contract negotiations start with the minimum wage and that is why democrats want it raised every few years. It has nothing to do with helping the poor or anyone else other than union members, who mostly vote democrat.

    Comment by Jim — July 28, 2006 @ 1:11 pm
  21. Well surely it can be seen that the system is not working ? Both the UK and NZ run on a two party system just the same as in the USA ..

    When the economy was vibrant one could walk out of a job and straight into another the same day. And this at a decent living wage. No talk of paying starvation wages then .. the employers were vying for workers.

    It seems to me to be very simple .. there is only one cake and those who take the biggest slice do so at the expense of those below.

    This can only happen in a society where Labour serves capital .. Capital should serve labour. When a mans family has a full stomach he has no time for crime or mayhem.

    Who is it exactly that is outsourcing American jobs ? Who is it that is employing at minimum wage ? I really do not think Hispanics are to blame.

    It also seems to me that its always the immigrant that gets the blame .. and it will never change until people get to the real root of what is going on. Try this for a link …

    http://www.herbdatanz.com/chickens_come_home_to_roost_ivor_hughes.htm

    Remember Steinbecks ‘Grapes of Wrath’ .. the system just is not working .. take a real look around.

    Comment by Ivor Hughes — July 28, 2006 @ 1:46 pm
  22. Usally congress has exempted certain types of small businesses from having to pay minimun wage.
    My question is what makes cetain type of work less valuable to society? Have seen management detroy a business while blaming those off shore workers, who were certainly making less than minimum wage. Labor is the scapecoat for every failure in the free market.
    Not every person would benifit from training. There would become more people lokking for the same jobs. There will always be adults who need a job and they will work two and one part time minimun wage jobs if its required. It almost seems as if you think thats OK, while you sit on your ass for as much as one third of the week. I do less work myself than I did when I made less money. Why isn’t business being affected by your salary. Quite a few small businesses employ skilled labor and professionals.
    I am not saying, but no one here acts like they have live on the edge. 7.25 an hour is still crumbs.
    Funny, I just could never find the data that their statistics came from, researching anything from Cato. You barely can find an author of the articles. Estimates have to extrapolated from something. Looks more like it was wistful thinking.

    Comment by VRB — July 28, 2006 @ 2:10 pm
  23. VRB,
    I have to agree in the main .. Britain was an Empire that America fought to free herself from. The road that America now walks is the same road.

    Look to Britain if you want to see where the road goes to .. Britain is now a second rate power. Built on slavery white and black with harsh laws imposed by the Iron Masters.

    The very people themselves draped in whispers of the Magna Charta .. Oh rememeber St Crispins day .. Agincourt .. Trafalger then think of Flanders Field .. nothing more than cannon fodder fighting the wars of conquest for the folks upon the hill.

    The real crunch came when they took away the poor mans commons so that he could no longer sustain himself on the land .. 7 million acres where the poor grazed their small holding animals which supported them in their pittance. This was done by an act of Parliment (The Mother of the free) all that was needed was for the land owners to agree and the land was enclosed. The peasants were robbed in a trice .. not much more than 200 years ago .. and the people still gather at Albert Hall each year .. The Annual Promenade Concert .. do you know what the finale of the concert is ? LAND OF HOPE AND GLORY MOTHER OF THE FREE!!

    The peasants were herded in their droves to work in Englands dark satanic mills, oh and lets not forget the coal mines. Child Slave labour men and women toiling from dawn to dusk for a pittance. Oh they died young and from the multitude of emerging industrial diseases.

    Then came the awful genocidal Irish Potato Famine as they drove yet more people from the land. America took a lot of those halpless Irish as Immigrants .. and the Capitalists laughed all the way to the bank .. they attacked the people with horse dragoons and cut them down like dogs.

    Never forget the principles upon which the American revolution was founded .. but then I can see .. its nearly too late is it not ??

    See thats the way they do it .. first they divide us .. then they marginalise us then they deal to each margin in its turn. I can see that happening in America now!

    Just look to Britain a second rate power dependent on American patronage .. its whole society .. every city with great ghettos of the poor immigrant who sought a better life. Lured by lies and greed.

    One day those ghettos will explode in anger and violence and the authorities will be powerless to stop it. My Country oh my country .. the bastards took my love of country and used it to wipe their bathroom seat.

    Beware America its happening to you now ..

    Comment by Ivor Hughes — July 28, 2006 @ 5:31 pm
  24. Please forgive me if I appear to be pissing on someone elses parade. I arrived at the site via a news item in Google News and the banner of your site fired me up.

    I was born a Celt in Britain and I feel sure that if we delved way back, we would find some common roots and bloodline. The Maori of New Zealand grant such people a place to stand and speak on the Marae. (The Meeting House)

    As a specie we stand at a cross roads upon which our very survival depends. If America fails the Western World then I fear we must all go down together.

    I said it before in an earlier post .. the system is not working! Usury as a system is not viable. There has to be a better way of ordering our affairs we do not need to keep repeating the bloody lessons of history.

    God Help America! lets have some solidarity!

    Comment by Ivor Hughes — July 28, 2006 @ 9:12 pm
  25. Ivor, one of the things you will notice, if you read this site in depth, is the opposition to government intrusion in individual affairs. The primary reason for that opposition is that two-fold:

    1. It doesn’t work. The West is full of nations, including America, that have been trying that for centuries, look at the outcome.
    2. The more regulation, the larger the political bureaucracy, the power the politicians, the more room there is for corruption.

    Think about that for a while, then look at what we seek to change.

    Comment by Eric — July 29, 2006 @ 7:14 am
  26. Some years back I worked in an area where the local employers has gotten together and decided that they would not hire anyone within each others business. This area was about 100 square miles. They let it be known that anyone found looking for work at these other companies would be fired. The differences in pay would vary up to .15 an hour. These manufacturing jobs were around minimum wage. I found this out after having already interviewed someone for a job.

    In these circumstances, it would seem that this is coercive employment. You would risk be fired, because you want to better yourself and make up to .15 more an hour, 6 dollars a week. I sort of thought this was the similar to being assaulted. If you are beaten, you can ask the government to prosecute the perpetrator. If you can’t make a living, all you get is shrugged shoulders. It’s your own fault for working in those companies.

    I can understand the arguments for less government, but lets not say that our society would be that much better. We really can’t anticipate what would happen in some instances. Our society is much different that before WWII. It also takes more sophistication to negotiate the obstacles in our world. There can only be so many push carts in the world.

    Comment by VRB — July 29, 2006 @ 11:34 am
  27. I think Eric hits the spot with his comment on opposition to government into personal affairs. Why is it the government’s job to help the poor? The government exists to defend my rights to life, liberty and property; not to be a charity or in this case a wage setter. There are private charities to help the poor, and the free market exists to set wages. Anytime the government tries to assume one of these roles, nothing good comes from it.

    Comment by Ryan — July 29, 2006 @ 4:38 pm
  28. Ryan, isn’t work part of life, and how does one protect themselves from an amoral institution. Somehow when unions are formed, thats a threat to the free market too. We all would be very much poorer if the free market ran its course. I think you would have a society that Ivor has described. We can just take all the labor laws and regulations an see how well we will be treated. The are millions of other people in the world that are just as well educated. We would have no special favor.

    Comment by VRB — July 29, 2006 @ 5:25 pm
  29. VRB,

    Couple questions for you.

    1. How do you know that we would all be poorer if we let the free market run its course? We never have, so we have no basis to make such a statement.

    2. Those of us opposed to government regulation of the market are not, normally, opposed to unions per se. We are opposed to government support for, and regulation of, unions. Just as we are opposed to government support for, and regulation of, corporations.

    3. Why do you, or anyone else, deserve special favor over and above any other person? It shouldn\’t matter whether I\’m white, black, brown, educated, uneducated, American, Somali, or any other differentiator that has no bearing on my character and capability. Why should any person be given special favor by government regulatory fiat?

    Consider the effect of government intrusion on the market. There is a principle in the marketplace called economy of scale. Basically, it says that certain activities are much more efficient with much larger organizations; manufacturing cars, for example. It turns out that making money in a market that is heavily regulated by the government has an economy of scale factor occurring. Very large companies can afford the armies of attornies, regulatory experts and so forth to navigate those regulations, manipulate them and influence the government for more of them that a small company cannot. Unions can, and do, achieve the same economy of scale with government regulation. Government regulation is a boon to large corporations and unions. It contributes to higher prices, lower employment and worse working conditions.

    I don\’t deny that, in most cases, the regulations are done for the best of reasons. However, the law of unintended consequences has played into the hands of the unscrupulous to create a corporate nation that squeezes the little guy out. If you want changes to benefit the little guy, one of the first is get the government out of the business of regulating every single facet of our lives. Or, shall I let another man speak for me?

    \”It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?\”
    – James Madison
    (1751-1836), Father of the Constitution for the USA, 4th US President
    Source: Federalist Papers 62

    Comment by Eric — July 29, 2006 @ 7:47 pm
  30. Well, it would seem Eric has said everything I would like to have said in response to you, and he said it much better than I would have at that, so thank you Eric. A note on the “amoral institution” question: it is my belief that in a free market, a corrupt corporation will fail because the general consensus will turn against it and go to other places for the same product. In a free market, a corporation would have to be competitive and appeal to consumers, or it would die.

    On top of that I’d like to add a thought. I’m a very mathematical person so I’m going to go through this the long way.
    Given: I have a right to my property and thus the right to do whatever I want with it as long as I do not infringe on another person’s rights to life, liberty or property.
    Given: I start my own business (my property) that does well, grows and eventually does so well it turns into a multi-billion dollar corporation.
    What gives the government power to infringe on my right to property by telling me how to run my business?

    Comment by Ryan — July 29, 2006 @ 10:20 pm
  31. Eric,
    Just as you said, it’s your belief. The closest thing I have seen to the free market is the mercantilism of the 16th century. I just have opinions of human nature that are different than your. The consumer now, doesn’t walk. What makes you think they will change their behavior in the future?

    Ecomonics is not a science. Its only a series of probabilities. Nash’s equations and graphs look simple, Ryan look at the real thing.

    Comment by VRB — July 30, 2006 @ 7:59 am
  32. While I’m sure Eric will go into more depth, mercantilism is NOTHING like a true free market.

    Comment by Mike — July 30, 2006 @ 9:51 am
  33. Exactly… Modern corporatism is nothing like actual free-market capitalism. As Eric points out, the larger your business, the *better* you are in a regulatory environment. While over-regulation might damage your profit margin in the short term, in the long term it will ensure that your smaller competitors get knocked out of business trying to comply with that regulation.

    The only way to fix the problem is to take away government’s power to regulate.

    Comment by Brad Warbiany — July 30, 2006 @ 11:45 am
  34. Actually VRB, I’m not talking about my belief at all. The effect of the regulatory environment is visible all around us. Go ask any small businessman or entrepreneur about the impact of government regulations and his/her ability to compete. Look at who lobbies for more regulations. Look at who succeeds in such an environment. Ask yourself if that is really what you want.

    You might consider, when you discuss mercantilism, that the greatest advocate of free markets and capitalism, Adam Smith, was absolutely opposed to the mercantilism of the British Empire. What we practice now is modified mercantilism, usually referred to as corporatism. We do not have free market capitalism.

    I’d be curious where the comparison of the British and French Empires’ practice of mercantilism and the free market came from?

    I’m also curious how you respond to my three questions for you?

    Comment by Eric — July 30, 2006 @ 8:08 pm
  35. Eric .. I do know what its all about .. its about people .. and its about a fair go for everyone.

    Now it seems to me the posts in this thread are literate and well informed. However not everyone is born equal and as someone remarked earlier in the thread .. for some people retraining or upskilling as the latest jargon would have it .. it would not benefit them.

    Like it or not there is no going back .. there has to be a better way of ordering our affairs .. My first wife was a Finn and she took me around a papermaking factory .. The man who swept the floor and kept the aisles clean was proud to announce that his son was general manager of this very large plant.

    What made this plant so different in my eyes was that it was a cooperative .. every single person had shares upon which they received a dividend at years end .. everybody held the same amount of shares. The wage scale was so arranged that the Managing Director or President as Americans call them received a maximum of 10 times the lowest wage in the plant. The pay differentials were stepped according to the degree of responsibility that each person carried.That company buzzed and literally shone with pride at their achievements in the market place ..

    The economics of it all I later found in a paperback called ‘Small is Beautiful’ It was written by Dr E.F. Schumacher who was the chief economist for the British Coal Board at a time when it was the largest industry in Europe.

    In it he described a company called the Bader Commonwealth (British) who dealt in paint and chemicals and they operated along the same lines .. the former owner and MD .. described his inner struggle as he tried to follow his friend and mentor Dr Schumacher .. I am sure we would all understand and sympathise.

    There are six billion of us .. The Doha free trade talks have collapsed .. the answers to that are to be found in a book written by an American Banking Exec it was called ‘I was an Economic Hitman’ ..

    An American General of Marines called Smedley Butler said “War is a Racket, I was no more than a high class hitman for big business” .. So as I have said there has to be a better way .. if not then we are doomed every last one of us.

    Now I see that your Congress has ratified a bill to increase the minimum wage tied of course to a decrease in estate duty. At the end of the day the average Joe Blow has little more than the roof over his head for which he has paid 3 times the asking price over many years of repaying his mortgage .. Inflation has taken care of any of his so called gains .. its the same everywhere .. we are all yoked with usury .. there is no freedom there its an illusion ..

    My understanding was that Patrick Henry was a pragmatic man .. his ideals are no longer attainable because of population pressures and demand for resources .. In todays world the only way to attain his ideal for America is for America to subjugate those areas that has the resources that she requires ..

    So what about some liberty freedom and justice for everyone not a priviledged few .. I think it was an American who said “If we dont hang together, we will most assuredly hang individually”

    Trade satisfies a mans deepest instinct because that is how his inner economy functions everything engages in fair trade with everything else .. the problem with Empire trade is that its based on usury and greed and enforced by a murderous military.

    Now you may feel that I am off beam .. but think about it .. I hear Patrick Henrys bones a rattling

    Comment by Ivor Hughes — July 31, 2006 @ 1:08 am
  36. I have asked many times and have not gotten an answer that I could understand exactly what is a free market. I am always told what it is not. My definition comes from what I think people are saying about it. The comparison was not an intellectual one, just thinking of commerce without regulation. My exposure may not have been technical or philosophical enough for this discussion.
    I don’t really disagree with the visible effects of regulation. I work in an environment that deals in the absurdities of regulation. I still think there should be more purposes of government than you. As I said before, I consider work as a part of life and think there is an intrinic right for a person to work. (I had been thinking of a situtation where you may not be hired or fired because of your DNA.) I see the purpose of work to provide the means to take care of ones self. If you are not being paid where you can put a roof over your head and eat, then your labor is that of a slave. As long as humans are not perfect, I would not trust government or the free market to provide completely, the common good.

    Comment by VRB — July 31, 2006 @ 2:18 pm
  37. I forgot Eric, No.1 was my thoughts, I didn’t say I knew. Its not really easy for me to break it down. I could say intuition. I know that’s not an argument. I think I answered the others in my last comment. I have not spent years refining my polictical or philosophical beliefs, so when I comment the argument may not be as sharp as I’d like. Working on it.

    Comment by VRB — July 31, 2006 @ 2:33 pm
  38. I can tell you what a free market is, by the economic definition. There are going to be some other folks who will argue with me about this definition because they are coming at it from a political position.

    A market, by definition, is a mechanism to distribute goods and services. A free market is a market that is 100% efficient. That means that all possible information is known to all market participants and all goods and services are sold for their marginal cost.

    In a perfectly free market, you would know, for example, what the marginal cost of a mocha grande at Starbucks is, and you would also know that Joe’s Coffee Shop sells a large mocha that is exactly the same as Starbucks, including the same quality. Starbucks would then have no choice but to sell you their mocha grande at the same price as Joe does, or go out of business.

    In a free market, monopoly becomes impossible. In a free labor market, some of the examples you discuss become impossible.

    Of course, a 100% efficient market is not possible. It may not even be desirable. But, the closer you can get to it, the less ability there is for large organizations, whether corporations or unions or bureaucracies, to distort the market to benefit themselves. As markets become less efficient, that is less information is available to the market participants and more distortion is in place due to regulation and monopoly, some market participants have to lose when others gain. As a market becomes more efficient, more participants gain and fewer lose.

    Hopefully that helps clarify why free markets are good and regulated markets are bad.

    There are some things that free markets are not good at (gasp, the horror, a free market liberal saying such a thing!). They don’t deal well with commons and they don’t deal well with externalities. It’s these areas where an outside force, such as government, is needed.

    Comment by Eric — July 31, 2006 @ 11:01 pm

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