Originally posted by theovermensch
One World Goverment is the only solution.You could enforce a global minimum pay,then upward moblity would actually work and corporations would not be
encouraged to exploit workers in third world countries.
OWG might be inevitable, and it might even be a good thing....but not without built-in constraints to keep its economic policy:
- free of ideology and based solely on sound economic scientific theory,
- constructed to be reactive instead of predictive, and
- committed by law and design to strive for minimum impedance to commerce
For instance, you mention enforcing a global minimum pay, or a Global Minimum Wage. Minimum Wage sounds like a good idea, but looking at such a
policy through the science of economics has shown that it has far-reaching, complex consequences, which compound over time, and snowball into major
problems.
Minimum Wage is actually a form of price control, akin to Rent Control laws such as those in NYC. Such policies usually have good
intentions--reasonable wages for unskilled labor, reasonable rent prices for housing. But historically it has been proven beyond a shadow of a doubt
that any time a government enacts a price control, things spiral out of control very quickly, and often the result is the opposite of the intended
effect of the control.
Minimum Wage is a control known as a Price Floor. The cost of wages may not drop below a specific value. (Rent control is a Price Ceiling.) Thus,
two things are immediately apparent from the economic perspective: One, the demand for labor at the low wage end will drop significantly, as does
demand for any product or service that goes up in price. Two,
the real minimum wage is $0.
So, in arbitrarily raising the minimum cost of labor to a fixed point, the demand for that labor is lowered accordingly, as less employers will be
able to afford to hire such people, or will only hire one, instead of two or three. True, those that do get hired enjoy a higher wage than they
otherwise may have received, but only at the cost of many others receiving no wage at all.
This demonstrates the key tenet of the study of Economics: all resources, no matter what kind, be they materials, skilled or unskilled labor, land
and property, currency or capitol--all of them are finite in supply, some more than others. This scarcity results in competition for those resources.
Money, and prices, are the vehicles we usually use to enable this competition for scarce resources. Most resources have multiple ways in which they
can be used--timber can be turned into furniture, or pencils, or the framing of a house. Economics, therefore, is
the study of the allocation of
scarce resources that have alternative uses.
When resources are allocated to those places or businesses in which they will result in the generation of much wealth, they have been allocated
economically. If they end up somewhere where they do not generate wealth, or even left to rot and not used at all, then they have not been allocated
economically.
So when looking at the minimum wage idea, it should be kept in mind that a higher wage results in fewer jobs of that type, and therefore increases
competition between those workers applying for that job. The higher price results in fewer jobs because the employer has a finite amount of money
with which he can apply only so much to purchasing labor for that job. This means that he must pay more for less work completed, which results in the
employer having fewer products to sell, and those he does have to sell are more expensive than they would have been. Consumers who absolutely must
have his product, despite the higher price, must therefore buy less of some other thing somewhere else. I could go on, but you get the idea. The
effects of price controls are like ripples in a pond...they travel ever outward, and bounce around, and cross each other.
The higher wage of the lucky worker who manages to get hired will not benefit long, as the prices of everything will inch up in response to the rising
cost of labor, and soon his buying power is no more than it would have been had no minimum wage been set. Whereas those that are on the REAL minimum
wage of $0 have an even more difficult time, because the cost of everything went up and they can't find work.
In fact, Minimum Wage was actually used purposefully in the post-civil war south in the U.S. as a method of keeping the newly freed slaves out of the
job market, by raising the lawful wage above what most employers could afford to pay them. The ex-slaves were hesitant, illiterate, uncomfortable and
unused to their new status, and had little or no skills to offer at first....and many of them never got a chance to begin learning job skills--which
would have increased their value in the job market--because of the "Minimum wage".
So, please.....let us have good economic policy in this OWG thing.