Conscious Commitment: Free Competition and the Living Wage

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The change has happened slowly, but its effects are visible everywhere. The economic rebound our country is supposedly experiencing no longer carries with it the promise of prosperity for anyone willing to work; prices of everyday items are rising as salaries remain stagnant; upward mobility is severely limited by the scarcity of jobs; and the very existence of the middle class is threatened. Last night's 20/20 broadcast "My Reality: A Hidden America" examined the growing problem of income disparity by following the lives of several working-class individuals and families, and posited that a $12 or $15 minimum wage would help solve these problems. However, though this may temporarily ameliorate the desperate conditions faced by many workers, it does nothing to address the underlying flaws in our national policy that allowed this climate to develop.

Two interlinked forces have shaped the modern economy to the greatest degree. Untrammeled consolidation and collusion between corporations has artificially raised the cost of living and reduced the number of available positions; while injurious trade deals such as NAFTA have outsourced the remaining opportunities to foreign factories and rendered the traditional image of middle-class careers - manufacturing jobs paying enough for employees to purchase a home and support a family - obsolescent.

The reduction in the number of open jobs affects employees in two ways. Firstly, it lowers salaries outright by increasing the number of willing candidates for even the least desirable positions, and denying applicants the opportunity to work for a rival company that was either transferred overseas, acquired entirely, or driven out of business by these national trends of monopolization and outright exodus. Secondly, in the absence of free competition, the emerging conglomerate has almost complete control over the prices of its products, decreasing the purchasing power of already meager wages.

While these conditions exist, statutory increases in the minimum wage will fail to materially better our current predicament. First, drastic inflation will quickly ensue as noncompetitive industries remain the same, but the prices consumers will pay for their products rise; second, small enterprises with modest profits bear most of the burden but only receive a disproportionately small amount of the additional commerce produced by workers' augmented earnings; third, as long as tariffs on imports from Asia remain relatively low and trade with Mexico remains free, far more jobs will be created south of the border for $3.88 a day than here at home for $15 an hour. If our antitrust laws are enforced and protective tariffs are established, natural competition will raise wages and lower prices until our past prosperity begins to reemerge; but artificial salary hikes create as many problems as they solve.

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This page contains a single entry by Katrianna Brisack published on January 14, 2017 5:35 PM.

Bayer Beware - Monsanto Merger Moves Ahead was the previous entry in this blog.

A New Tariff in Town? Not a Bad Idea is the next entry in this blog.

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