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The World-View Behind Minimum Wage Advocacy – Ludwig von Mises Institute Canada

The World-View Behind Minimum Wage Advocacy – Ludwig von Mises Institute Canada.

British Columbia, why do you hate the poor?

It’s at times like these, with minimum wage laws suddenly in vogue again, that one realizes that having the evidence on one’s side is not enough to win public policy debates.  The intellectual framework that people use to order their experience of the world must also be taken into account. How people interpret the facts is actually more decisive than the facts themselves.

Yes, I realize that there are studies purportedly showing that minimum wage legislation does not reduce employment. But these are significantly outnumbered by studies demonstrating the opposite that such laws give rise to job losses among the least skilled workers in society, precisely in line with the standard economic theory of wages (see hereand here). As William Watson tells us, even the panel that the Ontario government convened to study the issue noted that in Canada, “researchers have generally found  an adverse employment effect of raising minimum wages especially for younger workers … those studies find that teen employment would drop by 3-6% if the minimum wage is raised by 10%”. Yet the Ontario government brushed all this aside and went ahead this week to raise the province’s minimum wage by 75 cents to $11 per hour.

So why doesn’t this evidence register with the advocates of minimum wages? Much of it, if not all of it, reflects the powerful human tendency to make sense of things in terms of one’s moral priors. Jonathan Haidt’s The Righteous Mind is the most recent work to recognize this feature of the human mind. This propensity towards the moral interpretation of reality is not irresistible — indeed, it must be overcome if one is ever to arrive at the truth. But it is very difficult to thoroughly bracket one’s deep moral convictions, especially in trying to understand the social universe, where ethical issues pervade just about every inch of the entire scene. It’s a trait rarely to be witnessed, even among the most celebrated intellectuals, whose renown in fact is often predicated on their consistent application of a widely held moral view.

Supporters of minimum wage laws, being mostly on the political left, believe that the overriding aim of government policies should be to improve the condition of the less advantaged. By itself, this goal does not dictate any particular means of achieving it, but the passion with which that goal is espoused clearly predisposes its advocates to favor the most forceful means that immediately presents itself.

In other words, if you feel very strongly that poverty needs to be reduced, you are apt to choose the most direct route — which is have the government compel higher wages for those currently earning the least. You are not going to have much patience for someone claiming that high wages cannot be coerced into existence. Nor will you give much credence to someone pointing to a less direct route to the alleviation of poverty involving relatively abstract forces like supply, demand, capital, and productivity. You are liable to come away viewing someone like that as a mouthpiece for the employers whose stinginess you see as the problem.

Buttressing this set of beliefs is a more comprehensive theory of society. Naturally, it offers an interpretation favoring political over market solutions to social problems. The theory pays short shrift to the idea that individuals can interact voluntarily with each other in exchanging goods and services. Instead, society is portrayed as an intricate web of power relations, all of it ultimately reducing itself to the operation of two distinct groups — with the one holding more power having the advantage over the other with less power. Society comes to sight as a  battle between oppressors and the oppressed. Morality, then, summons us to side with the oppressed by calling on the state to deploy its power to force the hand of the oppressors.

Ever since Marx, this has been the essential thread in the left’s understanding of society. All that has varied is the definition of the basis of power. With Marx, of course, it was the ownership of the means of production. Since about the 1960′s, a more culturally oriented left, the post-modernist left if you will, has tended to emphasize race, gender, and ethnicity in its conception of power.

The case for minimum wages basically takes us back to the Marxist identification of power with property. The underlying premise is that the relationship between companies and workers is not consensual. Since workers have less leverage, the state must be brought in to make up for the power imbalance.

Such is the constellation of ideas that classical liberals and libertarians are up against, not just on minimum wages but on a much wider range of issues in which questions of power are apt to arise. Evidence from ordinary experience, history, and the social sciences can be helpful in waging this intellectual struggle. To more effectively sway minds, though, the job will have to emphasize moral and political philosophy in addition to the elaboration of more correct theories of the economy and society. Mindsets need to changed more than facts need to be adduced. That is the lesson to be taken away from this latest rage for minimum wages.

Tomas Salamanca is a Canadian Scholar.

oftwominds-Charles Hugh Smith: The Real State of the Union: The Erosion of Community

oftwominds-Charles Hugh Smith: The Real State of the Union: The Erosion of Community.

The Central State and its core directives, central planning and ever-widening control of every aspect of life, is eroding the human essential: community.

Rather than the rah-rah phoniness of the President’s State of the Union speech,which was predictably filled with Soaring Rhetoric ™ and promises of more central planning and state expansion, let’s consider the real state of the union.

Two related truths are self-evident: that community is essential to human progress, communication, development and well-being, and that the current global systems of the central state (socialism) and cartel-state capitalism (capitalism) actively dismantle community.

These basics inform the view that the only way forward is a community-based economy that recognizes and restores community as the foundation of human life.
On the most fundamental survival level, if humans were isolated, solitary hunter-gatherers, humans would likely have gone extinct long ago, as we simply aren’t as capable as our competitors. If the species did endure, it would be equivalent to other solitary Great Apes–small in number and isolated to small pockets where it could survive.

Our dominance (“success” if you prefer) as a species flows directly from our social nature and the development of ways to spread better techniques, i.e. knowledge and cooperation, via spoken and eventually written language.

Yes, opposable thumbs boosted our toolmaking abilities and year-round fertility boosted our reproduction rates, but these advantages would be marginal were we a species of isolated individuals. Indeed, the fundamentals of sociobiology support the notion that human longevity results partly from the genetic advantages
bestowed by grandparents, i.e. a generation of elders who can aid in child-rearing and serve as a repository for experiential knowledge/wisdom that would be lost to short-lived species.

In our current system, the impersonal state replaces the core value created by participating in community with welfare checks; there is no need to bother cooperating and working with others once the state provides the basics of life.

A similiar dynamic is implicit in corporate capitalism, which assumes that large corporations dedicated to pursuing profit wherever such profits might be greatest can successfully replace communities with corporate “communities” of workers and supervisors.

In The Strange Disappearance of Cooperation in America (submitted by correspondent Cheryl A.), The author proposes that social cooperation waxes and wanes with wealth inequality: as inequality rises, so too does polarization. People become less cooperative and socially engaged as polarization increases.

The correlation between loss of community and wealth inequality is only the first step. This sociological perspective misses the political point, which is the structure of our centralized state-dominated economy leads to both wealth inequality and the loss of community from the same dynamic: the substitution of the state/corporation as the organizing/controlling structure for society, displacing community.

Want to Reduce Income/Wealth Inequality? Abolish the Engine of Inequality, the Federal Reserve (January 28, 2014)

Our state-cartel system creates aimless armies of unemployed people who receive just enough from the state that the incentive to rebel is eroded, but this does not fill the gap left by the destruction of community with anything positive or fulfilling: it simply maintains the void via bribery.

The entire notion that corporations pursuing maximization of profit for their shareholders can organize society to benefit everyone is nonsensical; how could organizations dedicated to reaping profits replace multi-layered communities that meet needs that cannot necessarily be commoditized for a profit?

Longtime correspondent Bart D. cogently summed up these issues:

“When boiled down to real world conditions, for a society and economy to operate sustainably and successfully, people have to do things for and with each other, and BE SEEN to be doing it.

From an evolutionary perspective a community would form the basis of the economy in which individuals lived their lives. Each participant would have known, in social terms, every other participant to some degree.
In such a ‘traditional’ system, individual participants were heavily incentivised to be valued by others. Being valued for your good works and deeds increased your chances of having other individuals help you out when you were individually unable to support yourself for some reason (sickness, old age, personal disaster).

In economies of small and local scale you really strived to have others feel they owed you something based purely on their sense of fairness and conscience, because people interacted economically and socially with the same people. This creates a pool of good will that functions as ‘social security’ (This has since been transmuted into the Frankenstein of ‘debt’ and ‘taxes’ both of which are grudging rather than volunteered.)

That type of interaction has been and is continuing to be eroded away in the modern economic system that seeks desperately to separate social relationships from economic relationships.

Thus we have the disconnect between small business taxpayers and welfare recipients that sets up the perfect conditions for corporatocracy and the bizarre ever-expanding debt economic models of the west.

What the architects of these current systems have lost sight of is that the illusion they created by pumping free credit into the system only works on some parts of the economic system and at the cost of GREATLY undermining the social component of the system.”

Richard Dawkins makes much the same point in this interview published in The New Republic:

“Now, there is another kind of altruism that seems to go beyond that, a kind of super-altruism, which humans appear to have. And I think that does need a Darwinian explanation. I would offer something like this: We, in our ancestral past, lived in small bands or clans, which fostered kin altruism and reciprocal altruism, because in these small bands, each individual was most likely to be surrounded by relatives and individuals who he was going to meet again and again in his life. And so the rule of thumb based into the brain by natural selection would not have been, Be nice to your kin and be nice to potential reciprocators. It would have been, Be nice to everybody, because everybody would have been included.”

This is not to suggest there isn’t a role for the state and profit-seeking organizations in society or the economy; it is simply to state the obvious that the wholesale replacement of community by the state has eroded an essential of human life that cannot be filled by impersonal states and corporations. States and corporations cannot “fix” what’s broken with the model of state-cartel capitalism/socialism because the model itself is the problem.

This essay was drawn from Musings Report 46 (2013), one of the weekly reports sent exclusively to subscribers and major contributors (i.e. those who contribute $50 or more annually).

Venezuela About To Run Out Of Food Despite Fresh All Time High In Its Stock Market | Zero Hedge

Venezuela About To Run Out Of Food Despite Fresh All Time High In Its Stock Market | Zero Hedge.

Venezuela can be proud: while the US stock market has gone exactly nowhere in 2014, the Caracas stock exchange of the socialist paradise has continued kicking ass and taking names, just today printing a fresh all time high.

.. And the performance over the past year has been nothing short of breathtaking.

However, as everyone knows, there are trade offs to soaring stock markets in all socialist countries, be they paradises or not. By now everyone knows that Venezuela has had a rather systemic issue when it comes to procuring toilet paper, and from what we understand, the local population is still forced at times to wipe with stock certificates.

Alas, things are about to get worse. As a result of Maduro’s recent policies which have Lenin, Stalin and Engels positive beaming from the grave, the country may soon add another shortage to its growing list of daily product in short, or no, supply. Food.

Bloomberg reports that Empresas Polar SA, Venezuela’s largest privately-held company, said in an e-mailed statement that foreign suppliers of food, packaging, and equipment have closed credit lines because of the government’s delays in giving the company dollars at official rate. Empresas added that dollar delays are now the longest since the introduction of currency controls in Feb. 2003.

In other words, with the country doing everything in its power to allocate dollars “fairly” (while making sure nobody has profit margins higher than 30%), very soon the biggest distributors of staples are about to run empty.

Oh well, at least they have their stock market and the “wealth effect”…

And now, in praise of socialist paradises everywhere, let’s all sing along:

America Is Plunging Into Kafka’s Nightmare

America Is Plunging Into Kafka’s Nightmare.

There is a certain level of dishonesty in the common study of history. We look back at the tyrannies of the past, the monstrous governments, the devastating wars and the unimaginable crimes, and we wonder how it could have been possible. How could the people of that particular generation let such atrocities come to pass? Why didn’t they do something? Why didn’t they protest? Why didn’t they fight back?

We wonder all of this as we absorb the lists of dates, names and actions in books written by other men who memorized other lists of dates, names and actions. We are taught to study and wonder without ever actually applying the lessons of the past to the developments of today. We are conditioned to assert our own narrow spin on yesterday, instead of placing ourselves in the shoes of our ancestors or recognizing that their struggles remain our struggles. The modern method of viewing history detaches us from it, making it seem distant, alien or surreal.

Perhaps many societies fail to prepare or act in the face of tyranny because they had forgotten their own histories, making the demise of their culture appear so schizophrenic they would not believe what their eyes were telling them.

Often, the only way to grasp the more complete truth of the present is to examine it through the lens of the absurd. Sadly, our Nation, our culture and most of the world around us have become so backward, ugly, feeble and twisted that the only adequate comparison is to the nightmares of surrealists.

When I examine recent U.S. legislation, the exposure of classified documents, and the openly admitted criminality of political leadership, I am consistently reminded of Franz Kafka’s The Trial.

Kafka was a self-styled socialist back in the days when socialism was thought to be the next revolutionary movement for the downtrodden masses. It was, of course, controlled opposition created by global elitists attempting to exploit the natural rebellious tendencies of the general public within a false paradigm — using the masses to achieve greater power for a select few, while making the people think that they had won. It is ironic that Kafka would write The Trial, one of the greatest condemnations of totalitarian surveillance society, while at the same time supporting the socialist political vehicle that would eventually be used to implement unrelenting bureaucratic despotism.

The Trial is commonly labeled a “surrealist” piece of fiction, but I wonder now if it was actually far more literal than the academics of the past actually gave it credit for. The problem is that most of America, and much of the Western world, has forgotten what it is like to experience true danger and true suffering. We read about it now and watch movies about it like it’s entertainment, but few people have the slightest inkling how to deal with the real thing. We don’t even know how to recognize it. Because of this, Americans tend to pay more attention to fictional representations of tyranny rather than legitimate tyranny taking place right under their noses.

With that sad fact in mind, watch this clip from Orson Welles’ cinematic version of The Trial. See if you recognize your own world in this work of “fantasy”:

The main character of The Trial, Josef K., finds his apartment invaded by police in the early hours of the morning. Josef responds with anger but also fear, attempting to defend his character without actually understanding the nature of the police visit. The police answer his questions with more accusatory questions, only later warning him that he is being watched and that he is under arrest. The police do not, however, take him immediately into custody; nor do they ever tell him what his crime was. It is implied, in fact, that Josef is not allowed to know what he is being charged with.

This episode in The Trial has been played out in the real world over and over again, from the Soviet Cheka, to Adolf Hitler’s SS and Brownshirts, to Benito Mussolini’s Organization for Vigilance and Repression of Anti-Fascism (OVRA), to the German Stasi, to Mao Zedong’s Central Security Bureau, etc. In the United States, the culture of surveillance and intrusion has (for now) taken a more subtle approach through the use of technology. We do not yet have agents physically rummaging through all our homes and asking for our papers (though we are not far away from this). Rather, we have the National Security Agency, which rummages through our electronic communications while using our own computer cameras and cellphones to watch us, listen to us and track us. All of this, mind you, is done on a massive scale without warrant.

We have the Authorization for Use of Military Force and the National Defense Authorization Act, which give the President the centralized authority to detain and even kill those Americans designated as “enemy combatants” without trial, without due process and without public oversight.

Our government now uses secret evidence to charge citizens with crimes they are not allowed to discuss with the public on the argument that to do so would “threaten national security.” That’s right; the government can arrest you or assassinate you based on evidence they never have to disclose to you, your family, your lawyer or the citizenry.

In the U.S. today, the kind of establishment terror Kafka imagined is indeed a reality. We are not on the verge of a total surveillance state, we are there. It exists. And if we do not accept that this is our social condition, there may be no historians tomorrow to look back on our era and wonder: “Why didn’t they do something? Why didn’t they fight back?”

The revelations brought by Edward Snowden on the NSA and its PRISM mass surveillance program are still only partially understood by the public. Even many self-proclaimed “cypherpunks” and “techno-warriors” don’t really grasp the pervasiveness of the all-seeing NSA eye. Recent documents leaked to German news source Der Spiegel by Snowden reveal an Internet almost completely dominated by the NSA, where even total encryption would be a mere temporary stopgap, according to tech researcher and journalist Jacob Appelbaum. The TAO group, sanctioned by the NSA, has been using technologies for years that startle even the most avid tech experts. To make matters worse, many of the intrusive mechanisms have been implemented — likely with the direct aid of American software and computer companies.

With NSA access to the backbone or core of the Internet, there is no digital privacy anywhere. The cypherpunks lost the war for the Web a long time ago, and they don’t seem to know it yet.

Beyond the undeniable prevalence of government surveillance, what would our American Kafkaesque experience be like without kangaroo courts designed to defend the criminal establishment instead of the victimized population? The latest Federal court decision on the NSA’s methods is that they are perfectly legal and “necessary” to protect Americans from national security threats. If you are a student of Constitutional law, this decision truly boggles the mind.

One of the most powerful incidents in The Trial is Josef’s speech to his court of accusers. In this moment, Josef argues with concrete logic and impassioned reason. His position is supported with beautifully crafted merit and truth. But what he does not realize is that the court he is trying to convince does not exist to discover the truth. The court is a sideshow, a piece of elaborate theater. The participants are there to make Josef, and the society at large, feel as though justice has been given a fair chance. Josef’s pleas are met with fake cheers, scripted jeers and even engineered distractions. Finally, he comes to understand that the system’s purpose is to destroyhim. Everything else is an illusion.

The Web cannot be made free or private from within; our courts cannot be made fair and just from within; neither political party can be forced to represent the common man from within; and our government cannot be made honest or transparent from within. To play games of activism within establishment dominated systems is to play make-believe within a surrealist nightmare; a piece of “Alice in Wonderland” political quackery. Like the audience at Josef’s trial, the elites simply laugh at such activists, or feign applause, while continuing forever with the same corruption and the criminal status quo.

America has long presented itself as the ultimate alternative to the torturous mechanisms of oligarchs; and a long time ago, it was certainly a noble effort. However, our heritage of liberty — the faint memory of it — is all that’s left today.  There is a contingent of men and women in our country, millions of us, that steward over this memory and seek to make whole once again, but the road ahead is long, with struggles beyond all reckoning.

Some people may ask how this could have occurred. How did we become the monster we were supposed to fight against? What happened to the good side and the bad side? Have they become exactly the same?

Those of us who have looked beyond the standardized veil of history know that this is not by accident. Those of us who decipher the surreal know that there is a method to the madness and an ultimate goal. To explain further, I leave you with another piece of fiction, a clip from the British TV series “The Prisoner.” While not written by Kafka, it was definitely inspired by him. It carries a message I would have liked to have warned him about concerning the disturbing path of duality, the mask with multiple faces that tyranny uses to subvert and enslave…

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