Why You Don’t Have the Right to a Minimum Wage

But surely you do?!  Don’t you?  I mean, you work hard, and if there wasn’t a minimum wage than your boss could just pay you whatever he wanted, in theory; even 50p per hour, and how could you live on that?  No, surely the easiest thing, the fairest thing is just for the government to make sure that all employers are forced by law to pay everyone a wage that meets a certain level which is deemed ‘enough’ for any person to manage on.

Well, that depends on how you define certain words like ‘fair’ and ‘rights’, that is, if you define them at all.

Let’s start with ‘rights’.  Rights are, to quote Ayn Rand, “a moral principle defining and sanctioning a man’s freedom of action in a social context”.  In essence, rights are the rules and principles that all men must adhere to if they are to live together in society in peace.  Their existence follows logically from our nature as rational beings; one does not have a right to something because he thinks or says he does, no matter how loudly and passionately he shouts.

Rights are hierarchical.  They start with the right to life, which in its most basic form means the right not to be killed.  The most obvious action this right would prohibit is someone taking a gun and shooting you dead, and it does, but there’s more to it than that.  The right to your life also means the right to sustain your life through productive work.  For example, if you are in a plane that crashes on a lone, tropical island and several of you have to survive there until you are rescued, you might find a section of land and grow vegetables there to eat.  Just as the other islanders have no right to kill you and eat you to sustain their own lives, they also can’t take the vegetables you’ve grown either, because if you keep growing them and they keep taking them all, you’ll die – which violates your right to life just as shooting you would have.  This fundamental right, the right to keep, use and dispose of the goods you have worked to produce in order to sustain your life, is what we commonly refer to as property rights.  Without property rights, there is no way to practically implement your right to life.

That essentially is all there is to it.  You have the right to live, and to sustain your life through the acquisition of property by work and trade.  The only thing this means for everyone else, the only thing that anyone else needs to do in order for your rights to stay in tact, is to not kill or harm you, and to not steal or damage your property.  In fact, as your body is your property, the latter pretty much covers it all.  And it is all you have to do to respect the rights of others.  The quickest way to summarise that, is that you must not initiate force against another human being.

Incidentally, the term ‘equal rights’ is a tautology, rights are equal by definition.  Rand, again, “since Man has inalienable individual rights, this means that the same rights are held, individually, by every man, by all men, at all times. Therefore, the rights of one man cannot and must not violate the rights of another.”  What this means is that a right cannot impose an obligation on another man.  This is why you cannot have the right to, for example, a house.  You can buy a house, or even build one, but if you have the right to be ‘given’ a house then it means someone else has to buy it or build it for you, and that is a violation of their rights.

Ok, so what do we mean by ‘fair’?  Most people, in the context of something like the minimum wage, mean the socialist kind of ‘fair’, i.e. wealth sharing.  It’s not fair, they say, that the rich business owner has more money than his employees and therefore he should be forced to pay them a certain amount for their work.

The key word in that last sentence was ‘force’.  Remember what we said earlier about not using force?  That is exactly what the minimum wage is – force, used by the government to control, manipulate and expropriate a man’s property.  It is a flagrant violation of his rights.  And that’s the only thing that is unfair, violating rights.  There will always be rich people and poor people, sometimes people have the wealth they deserve and sometimes they don’t.  Those who are poor despite their best efforts are certainly unfortunate, but that does not give them a right to the property of others.

Now, the common response to the case for individual rights is “no man is an island”.  We all have to work together as society, and that means doing what’s best for society, they say.  Well, we certainly do have to live together in society, but society is just a collection of individuals, who still have rights.  Society does not have rights.  It can’t, because rights pertain to life, thought and action, and as a society is not alive, doesn’t think and doesn’t act, it can’t have rights.  You may think that society does act as an entity, but it doesn’t, its actions are only the sum of the actions of individuals.  The way to do what is best for society is to protect individual rights; look after individuals, and societies look after themselves.

So how do we interact in society while respecting individual rights?  The answer is trade.  Trade is the exchange of values to mutual benefit, and it is, literally, the trademark of civilisation.  The thug uses his fists to assault and steal, the man uses his mind to appeal to the minds of others to trade freely and voluntarily.  Trade functions on the foundation of freedom, meaning nobody can force you to sell something you don’t want to sell, nor buy something you don’t want to buy.

For example, let’s say I have a car that I want to sell, which I paid £2,000 for one year earlier.  You’re interested in buying it.  You offer me £2 for it.  I say I want £200,000 for it.  You’re not going to pay the latter and I’m not going to accept the former.  The beauty of trade is that neither of us has to do anything, we can either find an acceptable price in the middle that we’re both happy with, or walk away.  Most people think that trade always has a winner and a loser, but actually the buyer and seller are both winners.  If you end up paying me £1,000 for the car because we agree on that price, we’ve both won.  The car is worth more to you than £1,000, and £1,000 is worth more to me than the car, so we’ve both effectively profited from the trade.

What if, though, we agree on the price of £1,000 for the car and, just as you’re handing me the cash, a policeman walks up to us and informs us that a new law has just been passed forbidding the sale of any car under any circumstance for less than £1,500?  It’s my car, I protest, it’s up to me what price I sell it at.  I can only afford £1,000, you say.  The policeman tells us that if we finish the deal he’ll be forced to arrest us both.  Would you be outraged?  If so, then what makes you feel any differently about the minimum wage?

Employment is trade.  You provide a service to your employer, and in return he remunerates you with an agreed wage, a payment for each hour of your time.  When broken down to its key structure, it’s no different from buying a car; it is the exchange of values to mutual benefit.  The government enforcing the minimum wage is the policeman who turned up to spoil the car sale.  The minimum wage is a violation of rights, not just the employer but the employee’s too – it is a violation of your right to trade your property freely.

So, that is the philosophical argument against the minimum wage, but what about economically?  Well, for one thing, every time the minimum wage is raised by the government businesses just tend to put their prices up by at least the same amount if not more, so it often gets effectively cancelled out anyway.

Even aside from that, the minimum wage is a form of price fixing, and the consequence of price fixing is always a restriction on competition which is the fuel by which capitalism flourishes.  Most people understand the way this works more easily if it’s seen a bit higher up the chain.  Let’s say two rival automotive manufactures both have an opening for a production manager in their respective plants.  Let’s say that company A is bigger and more successful and they’re offering the job at £43k per annum, whereas company B is only offering £38k.  Although there are no guarantees, most people understand and accept that as a rule, the bigger, better company offering the higher salary will recruit a stronger, more experienced and/or better qualified candidate, who will then contribute to them continuing to be a bigger, better company and allowing them to continue offering higher salaries for future positions that become available.  My question is: why should this principle be any different when applied to cleaners, bar tenders or other low wage jobs?  It shouldn’t!  It’s the same, the hotel that offers higher wages for bar staff will recruit better quality candidates, who will contribute to the hotel being more successful and allow them to continue paying competitive wages, and so on.  The hotel down the road that scrimps on wages for bar staff will face the consequences, i.e. the old saying, if you pay peanuts, you get monkeys.  This is why it’s absurd to argue that people would end up being only paid pennies per hour.  Just as I refused to accept £2 from you for my car, nobody would accept such a low wage (and if they did, it would be their choice and they would be free to refuse and walk away).  For this reason it’s essential to understand that employment is trade in every sense of the word; you always have the freedom to walk away from your employer.

So, the market allowed to run free without interference from the government rewards the players accordingly, but the minimum wage prevents this.  Because all of the hotels have to pay at least the minimum wage, it artificially raises the going rate for bar staff and leaves few able to afford, or willing to pay, any more.  A de jure minimum nearly always become a de facto maximum.

It also can have a negative effect for the employee.  For example, a woman in her late fifties who has taken early retirement from a long career in office administration may wish to get a part time bar job as a hobby.  She doesn’t especially need the money and so she intends to offer to work for extremely low wages as an incentive to hire her, compensating for her age and lack of experience.  The minimum wage law prevents her from doing this, it paralyses her ability to compete with other prospective bar staff for business.

Capitalism is a political system that works on the principle of freedom and individual rights.  The minimum wage, like all forms of government interference with economics violates the rights of all individuals concerned and stagnates the market.  It is philosophically, politically and economically wrong, both in theory and in practice.

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Posted on July 18, 2011, in Uncategorized. Bookmark the permalink. 8 Comments.

  1. I’m all for equality – equal pay for equal value!

    • So long as you don’t expect us all to accept your definition of “value” and “equality” – then we agree.

      One person’s insufficiently low wage is another person’s acceptable wage – value is relative to the valuer. There is no such thing as an “intrinsic” value associated with anything – as the concept of value presupposes the questions: of value to whom and for what purpose?

  2. I agree that minimum wages stalls competition at the lower wage jobs.

    Using the same logic of not forcing anything on anyone, I also don’t agree with working benefits forced by law – here in Brazil, we have, forced by law:
    – 1 full month extra payment at the end of the year (the government assumes you won’t be able to save for the holidays, so he’s kind enough to force you to do it)
    – 1 month paid vacation
    – 1/3 extra salary on top of that paid vacation (because the government assumes you won’t save enough to be able to enjoy said vacation)
    – forced payment of pension, accident, and related funds (because you are an idiot)
    – forced payment of funds you may need if you get fired or build a house (you guessed it)
    – forced payment of eating tickets
    – forced payment of commute tickets

    The employee has to pay close to 100% more then the price he hires you for.

    The sad effect of this is that in fields that have worker deficits (like IT), employees have to compete for workers by hiring them as ‘Consultants’, who must open a private company that provides services to the hiring company. Your company is of course one person, working 8 hours a day, that answer to a boss at the other company – not a company at all and completely illegal. And the saddest thing is – the companies that WANT to stay legal and do the right thing will have to pay MUCH more to get the same level employees.

    It quickly turns into a Game Theory problem – Prisoner’s Dilemma, Use of performance-enhancing drugs in sports, and all those well known problems.

  3. And what do you think of progressive income taxes? You should be against them by the same logic of not forcing anything on anyone? You should be against all forced taxes, come to think of it.

    I find the argument “don’t force anything on anyone” harder to buy when I think of taxes – which is also my problem with libertarianism (I assume by what I read that it has become you political leaning?). Maybe these were also some of your initial problems with Objectivism? A full post on taxes would be nice.

    • First of all, “forced tax” is a tautology. By definition, tax is compulsory, never voluntary. To answer your question, yes, the same path of logic leads me to oppose all forms of taxation. I may well get to a post on tax in general, but to be honest I pretty much covered it in this article, where I explained about property rights. There’s no middle ground with property rights, you either have them or you don’t. You can’t say, “it’s your property and you can do what you like with it and nobody can take it from you, except when the government decides to take it from you, distribute it elsewhere to beneficiaries of whom you may or may not approve, and call it tax”. A proper government only has three functions: the police, the army and the judicial system. There are other ways to fund this minimalist government, but even if there weren’t, how would that make tax ok? Beware of justifying means with ends.

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