What Do You Have Against the Poor?
SEPTEMBER 01, 1972 by LEONARD E. READ
Whenever he hears someone demand a minimum wage law or any other impediment to freedom in transactions, my friend asks in all seriousness, "What do you have against the poor?" His point is well-taken. Unquestionably, many sponsors of welfare schemes — the long-run effect of which is to kill the goose that lays the golden eggs — are well-intentioned. Their hearts, if not their heads, are in the right place. The idea that they are doing offense to the very persons they wish to help is a shocker — hopefully, an eye-opener.
Perhaps the first shock would stem from the thought that a minimum wage law might do injury to anyone at all. Possibly to the wealthy employer, but surely not to the poor! The fact, however, is that those who have little to offer in the way of marketable skills are marginal producers at best; their services are wanted by others only at very low wages. Indeed, the total disappearance of such marginal producers would scarcely affect the over-all economy. So my friend is quite right. It is primarily, if not entirely, the poor who stand to lose if wage rates are pegged artificially high; those who sponsor minimum wage laws behave as if they hold a grudge against the poor.
The fact that a fair share of these sponsors act from motives of sympathy or pity — that they bear no grudge — in no way changes the consequences of their actions. Nonetheless, they victimize the poor. They hurt most the ones they love — and all because they fail to recognize these simple facts:
1. The eternal problem of economics is to overcome scarcity.
2. Plenitude is achieved by the application of human energies to natural resources and to the exchange of the numerous specializations.
3. The value of anything to anyone is always a subjective judgment — whatever one is willing to give up or trade for something else.
4. Freedom of production and trade — the free market — is the goose that lays the golden eggs and all impediments to this process, to the extent of their force and coverage, are destructive — obstacles to plenitude.
5. Minimum wage laws of say $2.00 leave unemployed all persons whose services are not of that much value to others.
6. To the extent of the productive potential thus unemployed, to that extent is the number of golden eggs reduced. But far worse: to that extent is everyone who cannot produce up to $2.00 an hour decreed waste and relegated to the economic scrap heap.
Wage Floors Hurt the Poor
Nearly all who think of themselves as professional economists, regardless of their differences on some matters, agree that minimum wage laws inflict injury first and foremost on the poor. Even the avowed socialist, Gunnar Myrdal, the celebrated Swedish economist, turns thumbs down on this economic monstrosity.’ The writings of economists in support of this point are plentiful, indeed. However, not all sponsors of minimum wage laws are "good guys" lacking in economic sense. There are countless thousands, perhaps a majority, whose motivations are mercenary. The first type is to be found in labor union "leadership." The motivation here is to keep these low-wage, marginal producers off the labor market, that is, to eliminate them from competition. Permit no one to wait on table for, say, $1.00 an hour, even if he wishes to do so, and the union gains a monopoly of waiters’ jobs. Call this crass materialism or what you will, it is not inspired by sympathy or pity.
The second type is to be found in political "leadership." The motivation here is to climb on the bandwagon of labor union popularity in order to get elected to office. Sympathy? Hardly!
As a novelist says of one of these characters, "He had learned to love the poor, profitably!”
Minimum wage laws generally call to mind only those legislative edicts bearing the label. In 1938 the minimum was 25 cents; in 1945, 40 cents; and since has risen step by step to $1.60. Presently, the proposal is $2.00. These edicts, however, are only the obvious. Every arbitrary wage coercively imposed by labor unions, over and above whatever the free market wage would be, is really a minimum wage. The minimum wage for a captain of a 747 jet is $57,000 annually. Try to get the job for less! But stop not here. The tariff and all other restrictions to free and unfettered exchanges are, in a strict economic sense, minimum wage laws. Those who condemn minimum wage laws, so called, and lend support to other infractions of the free market such as wage and price controls are proclaiming their inconsistency. Every one of these fixities and rigidities — these closures of the market — wreak their hardship on consumers; and the poorer the person, the greater the hardship!
A More Helpful Approach
What is the alternative? What advice shall we give the person who earnestly desires to help "the poor?"
First of all, he must recognize and respect as an individual the one he would love — which means to encourage but in no way to interfere with that person’s capacity, will, and effort to help himself. In other words, afford him every opportunity to earn his way. How earn it? By serving others, of course. How else does anyone earn anything! And what is the most likely opportunity for a poor man to earn his way? By selling his services to the highest bidder in open competition. Let buyers compete for his services — which means, in general, that the highest bidder will be the employer who can most profitably use that person’s services. That employer will earn a profit, not because he is exploiting anyone, but because he is most efficiently using scarce resources for purposes that consumers want and can afford. And "the poor" will reap benefits both as employees and consumers as they move upward out of poverty.
The question is this: how can these countless thousands in the labor union and political categories so flagrantly abuse the poor and be applauded rather than condemned for their actions? The answer is that labor union people and politicians who sponsor this nonsense are doing precisely what most citizens believe to be right. The overwhelming majority of citizens, operating on good intentions, fail to recognize that impediments in the market must frustrate their objective. Were the consensus free-market oriented, the political meddlers would not get to first base with their schemes; they would be thrown out of office.
The next question is, what shall be done to bring more light into this darkness? Perhaps it boils down to this: more individuals than now learning to respect the preferences of others as well as their own. If I prefer to wait on table for $1.00 an hour, why should not this disposition on my part be as much honored as that of another who prefers to be President of the U.S.A.? Maybe you prefer teaching for the sheer joy of it — psychic gain — to running a cannery where you might make a fortune — monetary gain. I say, blessings on you and on all others whatever their preferences, so long as you and they are peaceful. This is no more than simple justice, and anyone who acts to the contrary dons the robes of a dictator, intending to run the lives of others.
A Fount of Wisdom
This simple justice and the aforementioned simple facts would seem to be within the grasp and the practice of a majority of citizens. It is my contention that these are attainable achievements in the moral and economic realm. By and large, however, they are not attained. Why? What is the impediment that hinders us from actually attaining the ends which in fact are within our power to attain? A priceless answer if it can be discovered! Let me share a thought that is becoming more and more a conviction. The essence of this thought was expressed by Ralph Waldo Emerson:
We lie in the lap of immense intelligence, which makes us receivers of its truth and organs of its activity. When we discern justice, when we discern truth, we do nothing of ourselves, but allow a passage of its beams. (Italics mine)
I have quoted this before, certain that it expressed an important truth. However, it took the remarks of a recent acquaintance to help me realize its full meaning. This individual, as we met for the first time, acknowledged how helpful my writings had been, and then added, pointing to ‘the head, "It is all here. You have merely helped me put together and to better understand that which is already within me." This is an insight that rivals Emerson’s!
Emerson’s point now seems clear to me and it helps to explain what stands between the attainable and its attainment: a failure to realize one’s potential or an unwillingness to discover and to heed the truths within.
As Emerson so eloquently phrases it, we do, indeed, "lie in the lap of an immense intelligence." As with all radiant energy, this intelligence is in constant movement and it flows through all life. The problem of gaining understanding is one of arresting "its beams," of intercepting or appropriating that which already is within us or is passing through us.
We can be helpful to one another, not by posing as this intelligence but by using, expressing, sharing such of this mysterious energy as we may be fortunate enough to intercept. Once this way to enlightenment is perceived and practiced — a near reversal of present methods — then we may befriend the poor, not merely in proclaimed intentions but in reality. Our hearts and heads will be working in harmony.
No church has ever gone into politics without coming out badly smirched. Individual Churchmen may be, and ought to be, if they are well informed, interested in schemes of social legislation; but to advocate a sloppy socialism under the name of "Christian politics and economics" is, in my opinion, an impertinence….
Christianity aims at saving the soul — the personality, the nature of man, not his environment. In direct opposition to Marxian socialism, we are taught that from within, out of the heart of man, comes all that can exalt or defile him.
WILLIAM RALPH INGE