The 'evil' rich

Okay … While surfing around Blogger the other day I happened across the blog of a young college student. She was studying Political Science and wrote a piece on the misconceptions of where our economic problems lay.

In short her conclusion was that the economic problems were not caused by ‘cheap undocumented labor’ or ‘over ambitious Jews’ but rather on the greedy corporations and rich people who fight against minimum wage increases … who increase their prices while trying to pay less for labor. All of our economic problems stem from these ‘evil’ rich people. (No, those are not her words, but it is in essence what she was saying.)

Why do I sense that this is a Poly Sci major that would whole heartedly agree that this country should operate under the auspice of the quote “From each according to their ability, to each according to their need”?

I hate to break it to people … but a business … any business … exists for one single purpose – to make a profit. They are going to do whatever is in the best interest of succeeding in that goal. If a worker wants more money than an employer is willing to pay for a set of skills then the worker can look elsewhere for employment. The problem you run into is minimum wage laws …. Minimum wage laws artificially inflate the wages of entry level positions (and thereby everything above them as well) often leading to a situation that we’re seeing in the US economy now … Companies moving non-skilled positions to other countries where they can pay a lower wage.

(Oh, and quit with the “They’re shipping our jobs overseas!” nonsense … they are the employers jobs, not yours. You have skills to offer employers to fill jobs … you don’t have jobs to offer employers … if you had jobs to offer, you’d be an employer. You do not have a ‘right’ to those jobs.)

Okay … a couple of things real quick. We live in a capitalist economy. That is an economy in which people build wealth by capitalizing on the laws of supply and demand. Everything falls into that model. I have skills … the more people that have those skills, the less they are worth (Greater supply = lower value … the Law of Supply) The more people that need the skill the more the skill is worth (Law of Demand) … so if you have a very common skill and there are only a few jobs you have a High Supply, Low Demand situation … and you will be lucky to give your skills away.

In the US we have a situation where a large part of the workers have, over the years of economic ‘boom’ priced themselves out of the market. One field this has hit particularly is the Computers field … early on this field was growing rapidly, much more rapidly than skilled workers could be found to fill the need. The result was huge salaries and great benefits. However, as economists predicted, the field could not maintain that rate of growth as the market began to saturate. Combine this with the fact that, due to the large salaries and benefit packages a large number of college graduates were entering the workforce … the result … the boom went bust and people who had once made six figure salaries were thrown back into the job pool … where they were competing with more people than there were jobs. (This is the danger of chasing the current trend in search of riches.)

Remembering that a business exists to make a profit, if I can hire 3 people to work 10 hours a day for $4 an hour (thus getting 30 man hours for $120) or 1 person to work 10 hours at $6 an hour (10 man hours for $60) which is the better value? Am I ‘evil’ for preferring to hire the 3 workers at $4 an hour to the one that wants $6? Am I exploiting them in their willingness to work? If I don’t employ them then they remain unemployed, doing no one any good and helping neither themselves nor the economy. If I offer the job to the guy that wants $6 an hour at the $4 an hour rate, and he declines to work for that amount that is his choice.

Any increase in minimum wage increases a company’s expenses (both in terms of pure payroll increases and in terms of higher payroll taxes) this, in turn, causes a raise in the cost of the company’s product. Since a minimum wage affects all employees in the country that means an increase in the cost of all products … this helps neither those who work for minimum wage, nor does it help those who are already making more than minimum wage.

As for companies raising their prices … well a company may raise its price on goods for several reasons. Increased taxes, increased wages due to increase in the minimum wages or general cost of living, increased material cost, increased utility costs, etc. Just because a company is increasing its prices does not mean that the company is making more profit.

The ‘Evil’ rich are the ones in this country creating jobs. If you want to raise their taxes, then expect them to create fewer jobs … if you hit them hard enough, expect them to stop creating jobs, or worse, fold their companies and close all those jobs. Do they become richer as a result of this? OF COURSE THEY DO. I’ll give you a little hint about life out there … if they didn’t (say it with me now) THEY WOULDN’T DO IT. Should the ‘rich’ give up the pursuit of wealth simply because they have more of it than others? Should the government take their wealth and distribute it to those that have less? (“From each according to their ability, to each according to their need”) Heck … why don’t we just do away with the who concept of private ownership and give everything to the government … we’ll all live in government housing, collect government paychecks, eat government rations and stand in government lines for them….

There is a sound reason that socialism doesn’t work on a large scale … if I’m going to get X whether I work for it or not … WHY would I ever WORK for it? Socialism/Communism can work in small groups that are in relatively small areas. Like in villages where everyone knows one another and relies on each other for the things that they can’t make themselves. Once you start getting to a point where you have more people than are needed or that don’t have a ‘job’ that are living off the work of others it begins to fall apart.

No, thank you. I’d rather live in a country where I can work hard, earn money, and own private property. I prefer a country where I can be free to speak my mind without fear, where I can invest MY money into businesses and in return receive a profitable return on that investment. Sadly there are many in this country that would rather live off the government and would prefer that the government just give them everything so that they don’t have to work for it.