Maria’s Note: Today, we bring you a special Labor Day edition of Bill Bonner’s Diary. Below, our editor reveals the problem with a one-size-fits-all national wage. And he proposes a “fairer” way to solve income inequality in America.
But as Bill says, his proposition is just a starting point. So, Dear Reader, give it a read… then let us know how you would solve it…
POITOU, FRANCE – Today is Labor Day.
Most of the world pays homage to its sweating, busing, trucking classes, its poor huddled masses… yearning for a cushier seat and a better deal… on May 1.
But President Grover Cleveland chose the first Monday in September.
Of great interest to people in America on Labor Day – as indicated by the newspaper headlines – is how much the laborers earn.
No one – or almost no one – writing in the editorial pages works at McDonald’s or earns the minimum wage. But practically every one of them has an opinion about how much people with low wages should earn.
A “living wage” is what they say they want. Thirty thousand dollars a year is the amount we’ve seen discussed.
Of course, a national living wage is absurd. It costs far more to live in Manhattan than it does in the Ozarks. And it is far less expensive to live with Mom and Dad than to have a place of one’s own.
But we are not so much concerned with the practical details as with the theory.
If well-educated, well-liquored, and well-paid employees can decide the wages of McDonald’s workers, surely the burger-flippers should have the right to fix the wages of the chattering, meddling, and improving classes.
Were that to happen, our guess is that the well-paid know-it-alls would take a pay cut.
We walk into McDonald’s, and a minimum-wage worker serves up our order. We get what we pay for and are content with the transaction; we do not begrudge the worker his recompense.
We read the paper, on the other hand, and we get bilge and nonsense.
Logically, there are only two possibilities. Either wages are determined by a free give-and-take between those who offer their labor and those who want to buy it… or someone else sets wages according to his own standards.
The do-gooders want to use other people’s money to raise the wages of the least well-paid, but they make no mention of their own wages. Nor do they offer to pay more for their hamburgers so that McDonald’s can pay its workers more.
And what about the poor people who cannot find jobs at all?
If the minimum wage were raised, there would surely be more unemployed people – either because McDonald’s could not afford to hire so many people at higher salaries or because it had replaced its minimum-wage employees with machines!
But the price-fixers are so self-satisfied on the high road – driving along comfortably in their Subarus and Priuses – that they can’t be bothered to look out the window. If they did, they would see that setting prices always – always! – makes people poorer, not richer.
Nevertheless, we will give them the benefit of the doubt, if there were any, by trying to imagine how the world could be improved by setting wages for other people.
A Jolly Undertaking
So let us begin with a modest nod to fairness: If it makes sense to set the wages of the least among us, why not do likewise for the most, too?
If people not involved in a labor transaction can know better than the participants what the terms should be, why not set the salaries of editorialists? Publishers? CEOs? Sports celebrities? Movie stars?
And if it makes sense to raise the wages on the low end… wouldn’t it make just as much sense to lower them on the other?
If one side should be fixed, why not both?
You can see what a jolly undertaking this would be for a bureaucrat with a sense of mischief.
So instead of allowing the market to set prices, we will set them ourselves.
Yes, we will not stop at rigging the stock market. We’ll rig the labor market, too – by assigning salaries where we think they should be.
So, let’s have a go. We have taken the lead to propose annual salaries for the following trades according to the good we think they do society…
Entrepreneurs (including your editor), poets, inventors, and whacked-out metaphysicians – $100,000 per year
Priests, teachers, mathematicians, scientists, pilots, nurses, and filmmakers – $85,000
Corporate CEOs, prostitutes, writers, bartenders, and hedge fund managers – $75,000
Drivers, laborers, clerks, salesmen, farmers, firemen, and policemen – $50,000
Psychologists, bone-crackers, doctors (including witch doctors), and financial planners – $40,000
Government employees (those not included in the groups above), politicians, drug dealers, world improvers, economists, counterfeiters, psychiatrists, sociologists, political scientists, pollsters, and flimflam artists – $30,000
We do not mean this list to be comprehensive or final. It is just a suggestion – a point of departure toward a “fairer” distribution of national income.
Readers are invited to make their own contributions. Write to [email protected].