Economic arson

Be it on Saipan or in Washington, liberals (socialists) on both sides of the Pacific are apoplectic at the notion that people can actually own their own labor, instead of the government owning it. Their secret weapon, the minimum wage, hasn’t gathered too much steam lately, but it’s always boiling on the back burner, ready for an opportunity to scald workers and burn economies.

Let’s get one thing straight, and I’m talking real economics, not political chicanery: An increased minimum wage will reduce, not increase, the amount of jobs AND (note this big, hairy “and”) the total wages paid in an economy. There is no ambiguity on this note. No room for argument. It is plain, simple, supply-and-demand market economics.

Decreased jobs and wages paid means decreased economic output, again, no argument. Decreased economic output means decreased capital creation, again, no argument. And decreased capital means decreased labor productivity, which, in turn, means even less, not more, jobs. Again, no argument. This stuff is best expressed in math, not words, but a newspaper is not an academic journal.

Anyway, why all the minimum wage stuff?

Because there is a cynical philosophy behind this. If the government can set wages, then the government, not the worker, owns the labor. If you, as a laborer, can’t work for the price you set, then you don’t own your labor. Period. The government owns it. End of story. And beginning of a bigger story, since here we see the slippery idea behind socialism: Government control of labor.

The gullible like it, which is why it’s such an easy sell to the masses. Free Money! All from the magic wand of Big Brother! A worker’s paradise.

Can you name one “worker’s paradise” that you’d care to live and work in? The former USSR? North Korea? Cuba?

Not me, sport. You first. Better yet, ship your socialist econocrats there, Saipan, before they poison the economy any more.

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I’m not some fat cat who hasn’t worked hard, low-paying jobs, by the way. I worked sub-minimum wage jobs in Illinois as a kid, for cash, just so I could make some money. If the liberals (socialists) had their way, I would not have been able to make that money; good thing they couldn’t enforce every aspect of everything in everyone’s life. But it was a terrifying concept to me looking for work as I sought my entry into the labor market…and socialism is nothing but cynically delivered economic terrorism. No doubt about it.

And, having worked for a living, having earned every darned dime I’ve got then and since, I am on the side of the worker.

But, deferring to the fantasyland of the socialists, if a minimum wage creates wealth out of thin air, then why not have a $100 an hour minimum wage? Huh, tell me that. You can’t have it both ways.

I will concede that there are some well-meaning people, without nefarious schemes, who view an increased minimum wage as a ticket toward financial relief for CNMI residents. Yes, they are well-intentioned, but, no, they have no background in economics, so they’re using their homespun theories to confront an issue that is more complicated than they realize. This is the kind of childish behavior that has landed the Commonwealth in so much trouble, has created so many bad policies, and has scared off so many businesses. It’s playing with matches.

Look where it got you, half the economy has been burned down. Do you really want to torch the other half? It’s already smoldering. Isn’t that cute.

If you want to grow wages, you have to grow the business sector, or, more precisely, let the business sector grow itself without government shenanigans. No, that’s not an “easy answer,” but it is the only answer. It’s not the “populist” solution, but it is the valid one.

If the Commonwealth keeps making up economics as it goes, based on “gut feeling” and “intuition,” or keeps taking advice from its fraudulent econocrats, it will continue its slide and will become a U.S. supported welfare state, much like the bleak Indian reservations of the American outback.

Think you’ll have better wages then? Ha!

(Ed Stephens Jr. is an economist and columnist for the Saipan Tribune. E-mail him at Ed@SaipanEconomist.com.)