For the Public Good

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Why is it that
companies are responsible for being both the cause of and cure for
poverty in this nation? I have grown particularly tired of individuals
who have little understanding of business operating costs advocating
hikes in wages. The actions of companies are, after all, simple
actions by any human. There is no inherent abnormal evil within
a corporation.

The most common
argument claims that companies have a nearly infinite amount of
money; shareholders will not lose more than a few pennies apiece
with a wage raise. Surely, K-Mart could afford to pay employees
two dollars more per hour.

I guess these
wage advocates are partially right. Yes, companies could pay their
workers more. But companies do not act any different than the average
consumer or wage-raising advocate. Why would any person pay more
for a good than they value it?

The ability
to raise wages lies in the hands of both consumers and companies.
Suppose consumers began tipping a dollar to every employee who works
for a business. A checkout clerk at Wal-Mart would make $20 to $30
an hour from this form of exchange.

Yet I have
never heard any defenders of the poor advocate such a system. This
consumer behavior would raise wages for the poor ten times more
than the few cents or dollars suggested by minimum wage laws. Consumers
would have the ability to improve the welfare of low-skilled workers

In fact, I
could use the same argument that minimum wage advocates use. How
much is one more dollar tipped to a gas station attendant going
to affect you when you have already pumped $40 into your tank? No
person can truly argue that a dollar would be too much. Yet no one
willingly gives the extra buck. If individuals are so concerned
about low wages, then they should start tipping every low paid worker
possible. One dollar is not too much. Come on, it is only a tiny
percentage of anyone's total paycheck. It is the same argument used
against businesses, applied to the consumer.

What most people
do not realize is that they behave exactly like "evil"

Who wants to
pay more than they have to for anything? These defenders of poverty
ask corporations to make decisions that no one would make on their

Suppose you
went into a grocery store and saw bananas for $3. Would you go up
to the cashier and say, "I think I will pay $5 even though
the price tag says $3"? The fact is that we are all always
looking for a better deal. This search for better deals is the cornerstone
of a market economy; it promotes competition among companies.

Despite this
obvious fact, large portions of the population still think big businesses
should pay employees more. Few people understand that employees
are just like other goods. They hold a certain value relative to
the business owner’s needs. A minimum wage law can push the minimum
wage to $8 an hour but this does not change the fact that the worker
may be valued at $6 to the company. The government can push the
minimum wage law to a million dollars an hour, but any push in the
minimum wage will not change the value of a worker. Instead, when
the minimum wage is raised, unemployment occurs. The company will
not pay $8 for something it values at $6.

Let's take
this back to the consumer perspective. Say you are going to the
grocery store and you want to buy a tuna steak. You value the tuna
steak at no more than $6. You like tuna steak but not so much that
you would pay over $6. You are happy to accept any price up to $6,
and the lower the better. Now you get to the grocery store and see
the tuna steak is $8. You don't value the tuna steak at $8, so you
don't purchase it. You most likely acquire an alternative. Similarly,
a company will not employ a person at $8 if they are only worth

Consumers do
not pay more for a product than they value it. Yet companies are
expected to pay more for an employee than the employee is worth.
"When it's a company, it's u2018evil'; when it's me, it's ok",
is the logic. Wage advocates are telling us that a person is "evil"
if they desire to pay no more than they value a particular good.
A person is immoral because they do not purchase a tuna steak at
$8 even though they value it at $6. This idea is absolutely ridiculous!

The role of
raising wages is always placed on corporations despite the fact
that consumers also control the outcome. This same mentality is
applied to taxpayers. Plenty of socialists talk about the "public
good" and the "collective." The productive members
of society should pay high taxes for the "public good"
so that the unemployed can have a better standard of living through

Once again,
why must it be the taxpayer who takes the action for the "public
good"? Could I not also say that the unemployed person should
get a job for the "public good"? If he or she finds a
job, the burden on the rest of society is lifted. But I have never
heard a socialist advocate the unemployed finding employment for
the "public good." It seems that all actions that require
benefiting the public good should be placed in the hands of taxpayers
and corporations. The responsibility of an individual for the public
good and, most importantly, his own good is out the window.

The actions
are equal. One action requires a taxpayer taking the action. The
other action involves the unemployed person taking action. However
when we examine this situation closer, it is obvious that the two
sides are not equal actions.

When the taxpayer
has his money stolen by the government, he only benefits the "public
good" and the fairyland "collective." When the unemployed
person gets a job, he benefits himself as well as the "public
good" and the fictitious "collective." There clearly
seems to be greater gain in choosing the latter option. The latter
option has two benefits while the first has only one.

Looking at
the two suggestions, it is necessary to analyze how these policies
would be implemented. The socialist nut cases supporting these absurd
ideas want to tax the rich. There is no asking going on here. The
idea is to forcefully and coercively tax individuals for the "great

are not coercive or forceful in their suggestions. Libertarians
advocate natural market incentives without government subsidies.
No libertarian, for example, suggests forced work farms for the

The nature
of the two suggestions is entirely different in this aspect. One
group advocates force while the other does not. Would not forced
work farms also be solutions to unemployment? Sure, they would.
But Libertarians believe that the only "collective" good
worth preserving is freedom and liberty. On the other side, freedom
and liberty are sacrifices to the bloodthirsty gods of egalitarianism.

comes back to human action. You don't pay $8 for a tuna steak you
value at $6. You don't pay a worker $8 and hour if you value them
at $6 an hour. It is plain, simple, clear human nature. We cannot
expect others to take actions that we ourselves would not do. To
call these people immoral is to call ourselves equally immoral.
The only way to realize such action is through force and coercion;
no person will buy overpriced tuna steaks naturally.

What is best
for each individual in voluntary trade is best for the market economy
as a whole.

24, 2006

Vuk [send him mail] is a student
of Economics at Loyola University of New Orleans, and a 2006 Summer
Fellow at the Mises Institute.

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