06. May 2016 · Comments Off on Double Standards and an Argument Against Minimum Wage · Categories: Economics, Politics, Social/Culture · Tags:

While searching for arguments against minimum wage I found this article by Tim Worstall published by Forbes. It’s about 1100 words that essentially says one thing… that minimum wage is immoral. I gotta say, I was pretty disappointed in the explanation. I was expecting some creative interpretation of scripture or something but all he actually said was this…

“As I say, there‚Äôs nothing wrong with the basic position, that people should have enough to eat. But given that it is us, collectively, who are making this decision then it should again be us, collectively, who are willing to pay for our moral position.”

So he’s basically saying that if the American democracy demands a minimum wage for the American worker, the “moral” thing for the American democracy to do is pay it themselves. Do you see how ridiculous that is? No? Well, let’s apply this sense of morals to the concept of a supply-chain and see how much sense it makes… I added a diagram to try an make this clear as possible…

supplychain&advocacy

When a supplier up the chain increases the price of a component, he doesn’t offer to pay the difference just because he increased the price. The supplier is expecting the downstream consumer to either pay the price or find another supplier but according to Tim Worstall’s argument, this is immoral. There really is no reason why a democracy or a union that supplies labor should be subject to a different set of rules (other than to isolate the issue in rhetorical packing material that won’t break these eggshell arguments against minimum wage). If it’s immoral for an organization that provides labor, such as a union or democracy, to make such a demand without paying for it themselves then it’s also immoral for upstream suppliers to demand a price for their products and services without paying for it themselves. According to this moral perspective the suppliers should either buy their own products and give them to consumers for free or they should let consumers pay whatever they want for the supplies.

So why the double-standard? Or maybe I should be asking if they even realize it *is* a double-standard. I’ve had this discussion before and a typical response is to say that democracies and labor unions don’t provide labor… laborers do. Well, that’s like saying McDonald’s doesn’t serve hamburgers, their employees do. In other words, it’s a pointless distinction that only serves to reveal how shackled up our perceptions can be. The only reason why we don’t think of a democracy as a supplier of labor is that we aren’t accustomed to seeing it presented that way. That doesn’t mean it’s not true. Besides the discussion is about upstream polices that affect downstream cost, not the merits of individual workers. Again, let’s have a look at the picture.

As we can see a factory can decide the price of it’s own product based on the cost of production and related business. Likewise, a supplier can decide the price of it’s own product for the same reasons. A labor force also has associated costs, such as food, education and healthcare but the only entity in the picture that actually deals with all these things is our democracy. So, it makes sense that our democracy would advocate a fair price to cover the costs. That’s what minimum wage is.

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