On the Free Market...

I will acclaim, up-front, that I am a free market capitalist, BUT…  I also believe that freedom comes with some sense of responsibility.  What does that mean?

Most people would say that they believe in “freedom”, and yet…most people do not believe in “unlimited freedom”.  Unlimited freedom goes by another term:  “anarchy”…where everyone is free to do anything they wish without the constraints of law.  The close brother to anarchy is pure “democracy”…where the majority is free to do anything they wish without the constraints of law…because the majority rules and creates/alters the law.  The point is that, in a Republic, another ideal, “justice”, is a natural constraint upon our freedoms, especially where interactions with other freemen are concerned.  We are free, but we are not free to exploit others.

Likewise, most Americans believe in capitalism and in a free market economy, and yet…most would not approve of an unconstrained free market.  For example, we would not accept “slave labor” or “child labor”.  We would not tolerate a needlessly dangerous workplace just because the company wants to save a few dollars.

While we believe that there should be a high degree of freedom in the marketplace, we also believe in having some basic fair labor standards.  Some people believe that wages should be more fair and equitable and seek to impose things like minimum wage standards as a solution to perceived oppression in the labor force.  Some people believe that executive salaries are obscenely high and are calling for maximum salary restrictions.

The real question may be:  How can we best impose constraints that require fair treatment of the labor force while not punishing success?  For example, executives that do an excellent job of growing their company should be rewarded, but not if they grew the company’s bottom line by exploiting/oppressing employees.  It doesn’t take a genius to improve the bottom line by firing employees, moving the factory overseas, and hiring workers at $2/day.  It doesn’t take a genius to convert your full-time staff to all part-time staffers, cutting all insurance and benefits.  Executives who use such strategies should not be rewarded as though they ARE geniuses.  The genius is the executive who creates good paying front line jobs, expands the work force, and still guides his company to make good profits.

Granted, this is only my personal “value judgment”, but… I don’t believe that any man is worth 1,000 times as much as the front line employees who work for him.  I’m not completely convinced that even a sharp executive is worth 100 times their average employee.  As a outflow from this belief, I take a different approach to wage equity.

Proportional Wage Constraints:

First, I would do away with minimum wage and other wage restrictions.  There are some types of businesses that simply cannot support the needed number of employees at even a minimum wage level.  Farms employing migrant workers might be one example.  Eliminating minimum wages would allow farmers to do, legally, what they are already doing, illegally:  pay what the market will bear.  This would allow them to continue their business without forcing a drastic increase in overhead, and thus…an inflationary rise in food costs.  This may hold true for other labor-intensive businesses, as well.

In place of minimum wages, I would institute comparative wage restrictions – links between the annual salaries of workers at various levels of the organization.  For example, the salary of the top executive in an organization would be tied to the salaries of the lowest paid worker and/or the average worker.  If an organization had only full-time, well-paid workers, the ceiling for that executive’s salary would be significantly higher than in an organization where there were part-time, poorly-paid workers.

One advantage of a Proportional Wage Constraint is that a start-up business has the option of hiring workers at a very low wage, reducing costs during start-up; of course, the executive salary during that time would have to be proportionately low, as well.  Then, as the business grows and becomes successful, in order to reward that executive for the growth and performance of that business, the company would have to also raise the minimum and average employee’s salaries, effectually allowing them to share that reward for success.

We recognize and expect that some executives would try to find loopholes and other ways around such a law, thus, we would have to impose safeguards against finding creative ways around the wage constraints.  For example, we would include in the constraints all forms of benefits and compensation, including health care, bonuses, stock options, company car (or jet), and so on.

These constraints would also have to apply to any company related to the original company.  For instance, a ABC Company could not have low-paid workers then hire a separate, high-paid XYZ “management firm” to run the ABC Company.  Nor could an executive group (XYZ) hire some cheap labor through some temp company (ABC) to skirt around the Proportional Wage Constraints.  Any company connected to the original company (such as a management firm, a “parent” company, a consulting firm, or a temp agency) would also be forced to comply with the company Proportional Wage Constraints.

This kind of Proportional Wage Constraint does not restrict executive salaries.  It only ensures that the rewards for success are shared by executives and front line workers alike.  It also ensures that executives are not rewarded for oppressive treatment of their other employees.  Lastly, it allows a flexibility for start-ups and for labor-intensive type companies that minimum wages don’t allow for.

On Consumer Politics...

So... Why do we bother with this whole “Constitution” thing?  Isn’t the Constitution out-dated and archaic?  Maybe we should forget about having a Republic and just become a strictly Democratic nation.  If you accept that notion, then perhaps you should consider the outcome of “Consumer Politics”...voting for who/what gives you the most, regardless of the ethics or Constitutionality of the matter.

When a consumer goes to the store to buy a particular item, he will usually consider the features of that item.  Once he decides on the desired features, however, the savvy consumer will usually select the least expensive among the comparable items.  A few consumers may pay more for “perceived” better quality.  A few consumers may pay more out of brand loyalty.  A few consumers may pay more for better service.  But…all things being equal, who would pay more and expect nothing more in return?

Businesses often operate in a similar way.  Conscious of the bottom line and a competitive market, businesses will seek to reduce the production costs of their product.  Using cheaper parts or cheaper labor often means either, a better profit margin or a bigger market share…as long as quality doesn’t suffer significantly.  So, of course, businesses will resort to using illegal aliens or cheap foreign labor if that option presents itself.  And, of course, they will buy parts from a foreign manufacturer if they can meet the specs.  If they don’t, then they fall behind their competitors who are finding a cheaper way to produce their goods.

We see a similar thing happen with respect to entitlement programs and other social services.  We are all forced to pay various taxes – income taxes, social security taxes, etc. – but almost no one pays more than they have to.  And, if there’s a government benefit available to us, we tend to accept that benefit.  To not take advantage of those benefits would mean losing money (as compared to our fellow citizens).  If you’re eligible for food stamps, not accepting those food stamps would just be money lost to you.

This tendency to take advantage of benefits also happens at the corporate level (…to the Nth degree).  You can hardly blame a company for taking full advantage of any government hand-out or bail-out or tax break that’s available to them.  If they refuse, then they are put at an economic disadvantage (as compared to their competitors).  How long will any business survive if they constantly have significantly higher costs than their competitors?

I’ve said all of this to help explain that local/state/national politics offers a similarly insidious problem.  All individuals and corporations in each city and state are taxed by the federal government.  That money is taken out of the local economies and sent to Washington.  If we are “lucky”, Washington may send some portion of that money back into our city or state…with strings attached, of course.  Those strings impose federal rule upon those “free” cities and states in matters that the federal government would otherwise have no right to dictate.

And yet…the city or state will accept the federal money (which is really their own money) and accept the federal restrictions (which the federal government has no right to impose) because failure to do so would result in a drain on their economy and put them at a disadvantage as compared to their neighboring cities and states.  This would, over time, result in an impoverishment of that city or state…

It is, politically, very difficult for a city or state to refuse this federal tyranny because such refusal would also mean accepting an on-going economic drain which would ripple through the city or state, depressing business revenues, raising unemployment, lowering home values, and so on.

The more serious problem with this relatively new strategy for imposing federal tyranny is that it is all blatantly unconstitutional!  Article 1, Sections 8 and 9 lay out the general principles involved.

From §8:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises… but all Duties, Imposts and Excises shall be uniform throughout the United States…

From §9:

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken. (Note: This paragraph was altered by the 16^th Amendment.)

No Tax or Duty shall be laid on Articles exported from any State.

No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

The Principle:

The principle at work, here, is the idea of fairness and equality…not showing any favoritism toward some states at the expense of others, whether in the method of taxation, or in the allotment of funding, or in the regulation of businesses or industry.

And yet, this very tyranny and favoritism has become the way Washington works.  we saw it a generation ago with the imposition of a so-called “national 55mph speed limit”.  Now, we constantly see it in the blackmailing of cities and states to accept federal control in other areas in order to receive back their own money, confiscated through over-taxation.  We see it in federal education funding and other similar spending which are clearly states rights issues.  We see it in the added taxes paid for oil being piped from Alaska.  We see it in the way the government “picks winners and losers” as with Solyndra-type scandals.

All of these common practices violate basic Constitutional principles and every Congressman, Senator, and President who engages in such practices should be rightly labeled as a subversive and a traitor to our country.  Is that extreme? …Radical? …Harsh?  Maybe it’s high time for extreme, radical, and harsh in the reclaiming of our nation from a ruling elite that has violated its sacred oath to uphold our Constitution.  If we are unwilling to be extreme, radical, and harsh in defense of our Constitution, then we are nothing more than “just another Democracy” on the road to tyranny…and oblivion.