Minimum Wage, the Wealth of Nations and Negative Taxes
Blather like this gem:
Just in case you don’t know, minimum wage is not a free market policy, it’s against free market. In a free market min wage will be determined by supply and demand of jobs not by government policy.
is all too common from those who worship at the altar of Laissez-faire rather than actually wanting to know about economics, much less the economics that Adam Smith actually taught.
Adam Smith believed in a minimum wage equal to twice what it would cost one working person to raise a family with two kids. Did you know that? do YOU know who Adam Smith REALLY was?
AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS.
By Adam Smith CHAPTER VIII. OF THE WAGES OF LABOUR. gutenberg.org “A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. Mr Cantillon seems, upon this account, to suppose that the lowest species of common labourers must everywhere earn at least double their own maintenance, in order that, one with another, they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself: But one half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave. Thus far at least seems certain, that, in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance; but in what proportion, whether in that above-mentioned, or many other, I shall not take upon me to determine. “
he also believed high rewards for labor were a sure sign of increasing national wealth. “The liberal reward of labour, therefore, as it is the necessary effect, so it is the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition, that they are going fast backwards. “
he also believed in challenging monopolies and what we would call today “class warfare” from the same chapter:
“We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate.”
Just for giggles, in between loads of towels, I looked up the poverty line for a family of 4 in the US.
According to Poverty Guidelines it is $26,500/year
so by Adam Smith’s argument, they should make $53,000/year.
or $2,038.46 per biweekly paycheck
Now the greedy fucks in the GQP much less certain Dems, won’t go for that. That’s why I like Milton Friedman’s “Negative Income Tax” proposal from the days of Tricky Dick. You set your limit - Poverty Line or, our case, 2xPoverty Line and when you fill out your tax form if you make less than that limit, you receive a refund that brings you up to that. Payments of the refund can be made lump, quarterly or monthly.
I currently make $12.50/hr. In a perfect year (hah!), I’d get 80 hours every 26 paychecks for an annual income of $26,000. My refund would be $26,000. I’d take a monthly payment and until my next tax return, I’d receive $2000 into my account each month. Someone who makes less, get’s more. Someone who makes more, get’s less. Once you go over $53,000 you start paying in at progressive tax rates similar, I’d want to see, to those after the Kennedy tax cut.
The success of the recent UBI experiment in Stockton CA - California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds shows how much this could help the economy of the nation.
Food, and much else, for thought.