On January 25, 2008, Michael Greaney writes on Helium:
The whole question of the minimum wage is a diversion from the real issue: how are ordinary people supposed to gain an adequate and secure income through their own efforts? Over the past century and a half, with the growth of the industrial revolution, the answer for the great mass of people is presumed to be solely through the mechanism of wages.
A basic assumption of modern economic and political thought is that ownership of the means of production and the consequent right to derive an income from ownership must be vested exclusively in a small private elite (capitalism) or a relatively small bureaucratic elite (socialism). This necessarily requires that wages be at such a level as to allow the wage earner to support his or her family in a manner befitting the demands of human dignity and meet common domestic needs adequately. Minimum wage legislation is an attempt to address this basic social demand.
Unfortunately, despite endless efforts, raising the minimum wage without a corresponding increase in worker productivity only raises the general price level, an instance of “cost-push” inflation. The fact is that worker productivity by itself does not change, only the human person aided by technology . . . which under both capitalism and socialism belongs to someone other than the worker. The worker and anyone else on a fixed or labor-based income is caught in an endless round of catch-up as the price level increases to more than any increases in the wage level as owners seek to protect their property stake and profit level.
If this were all, then the lot of the worker would truly be hopeless. Socialism, which seeks to take “from each according to his abilities” and to distribute “to each according to his needs” would be the only answer – and socialism has been proven not to work.
All that is necessary to solve this seemingly impossible situation, however, is to realize that workers need not be restricted to gaining an adequate and secure income solely through the mechanism of wages. Wages, in fact, as a widespread thing, are a very recent development. It was only with the growth of industrialization and the need for large numbers of workers that the wage system took hold – and it was entirely unnecessary. Prior to that, most people worked with their own capital or other assets – usually land – and derived their income from owning all or part of a productive asset.
The only reason that ownership of the new technology of the industrial revolution was concentrated
was that the system of financing the formation of capital required that only existing pools of wealth be used. This was true whether the wealth was used to form capital directly, or to serve as collateral for a loan if money was created through a bank of issue or central bank to finance capital formation. Ordinary people, lacking sufficient wealth either to form capital or serve as collateral for a loan, were shut out of ownership of the new technology, and the situation has only gotten worse over the past several generations.
Fortunately, there is a solution. That is to open up democratic access to the means of acquiring and possessing productive assets, that is, assets that will generate an adequate and secure ownership income for their possessors. In the modern age, that means access to capital credit and (to replace the perfectly legitimate demand for collateral by lenders) capital credit insurance to minimize the risk of a bank losing through a borrower’s default.
Several proposals have been developed to address this question, but the most feasible appears to be one called “capital homesteading for every citizen.” Basically, this would allocate a certain amount of capital credit each year to each citizen to be used ONLY for the purchase of assets that pay for themselves within a reasonable period of time.
That is, no consumer goods, not even food, clothing, or shelter could be purchased. Only capital could be purchased with this credit, and then only after a loan officer did “due diligence” and made a determination that it was a sound purchase. That is, the asset would generate enough income to pay back the loan in a reasonable period of time and afterwards provide the new capital owner with a stream of income.
Such an arrangement would let wages fall to their true value, without having to take into account the needs of the wage earner – for he or she would have a “second income” source to supplement and, possibly, eventually replace wage income. This is especially important in that wages have a tendency to have a “downward pressure” from advancing technology and cheaper labor in other areas and countries.
Yes – in those specific instances where workers do not have access to the means of acquiring and possessing productive assets, or where they have not yet reached the level of “capital self sufficiency,” then raising the minimum wage can be justified, but only in individual cases, not across the board, and even then only as an expedient until the workers affected can own enough capital to replace the artificially high wage level.
http://www.helium.com/items/819894-is-raising-the-minimum-wage-a-good-idea
