Labor Must Help Free Markets

If labor wants to fix inequality, fix free markets. If we had less consolidation of markets we would have more demand for labor which would drive up wages. Where is Teddy Roosevelt when you need him and where are the unions?

I am a Republican who has taken a sabbatical until my party gets back to being what George Bush called a compassionate conservative. This is one who believes in free enterprise, competition and having a strong government to control free markets. These conservatives also recognize there are some objectives of society that are better overseen by government rather than the private sector.
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Minimum wage

The problem to address is a lack of free markets. If many industries were not controlled by oligopolies/monopolies there would be more competition for labor which in turn would raise wages. The government needs to do a better job enforcing antitrust laws.

The world is more complex than raising the minimum wage. Competition is international today and raising the minimum wage puts all of us in the United State at a competitive disadvantage. Yes the fast food industry is not directly affected by wages in China, but it is indirectly. If you raise the minimum wage economic forces will require all wages to ratchet up. One reason causing the fall of the auto industry was ignoring pricing oversees. 

Instead of the government must enforce antitrust laws and break up oligarchical control of markets. Fast food is not one of these industries, but if there was a greater demand for labor in other industries it would force the fast food industry to compete for labor while at the same time their profit margins would decrease.

America! Is it too late?

“Should it really matter if some other country is richer and more militarily powerful? Who cares if some other country has economic supremacy as long as your country is prosperous and can manage its own internal affairs. For example the countries of Denmark, Sweden and Norway, each economically advanced, seem to have no qualms about who rules the world as long as they are left alone to be prosperous and peaceful, though their attitude might well change were whoever held the purse strings to start to curb their freedoms and encroach upon their way of life. But until that happens, whether the global financier is China, Russia or America seems, for them, largely irrelevant.” How the West Was Lost Dambisa Moyo

America is losing it and it will take drastic action for us to get back on course. Why has this happened?

  • We forgot, never learned, how to compete. 
  • Consumption 
  • We allowed our government to fail 
  • We put ourselves in too much debt and became over leveraged. 
  • We mortgaged the future. 
  • Education has taken a back seat and thus, so has our future.
Failing to Compete:  We were spoiled by the greatest generation. They won World War II and there was no competition standing after that horrific event. As a result we indeed did prosper;  however, we did not learn to compete globally because there was no one to compete against.

Consumption: We learned how to consume and became addicted to it. We consumed for the sake of consuming without paying attention to the economic progress that was being made by the rest of the world. Eventually we began to distribute our wealth to the rest of the world by our addiction to consumption.

Government Failure: Our Politicians, who in fact are us, also got intoxicated with consumption. They failed to look out for the general welfare of the Union. They have allowed the free markets’ power to create wealth and goods to be destroyed by oligopolies. Our representatives failed to create and enforce rules that would guarantee the freedom of “free markets”. Instead, these oligopolies have bought off our representatives as a result of their addiction to consumption.

Further the politicians bought off many voters by allowing the creation of expensive pension plans, both private and public, that are not totally funded. This shoe has yet to drop.

Over Leveraged:  We borrowed money from future generations and have no plans in place to pay them back. We have not used the money to invest; but rather, we used it it to feed our addition to consumption. The sub prime crisis brought it to a head, but the problem has existed for some time. The problem is further exasperated by the enormous amount of unfunded and hidden costs of future pension benefits that we are obligated to fund.

We are Squandering our Education System: When you have an addiction,  education is neglected. Our education system use to be the best in the world. We are slipping and parts of society do not look at dollars spent on education as an investment. Instead, it is looked at as something that limits our ability to consume even more.

To solve these problems, we must take drastic action; sooner rather than later. I don’t think we have the will to do it. Do You?

    Compassionate Conservative

    I am trying to be detached. I am a Republican who has taken a sabbatical until my party gets back to being what George Bush called a compassionate conservative. This is one who believes in free enterprise, competition and having a strong government to control free markets. These conservatives also recognize there are some objectives of society that are better overseen by government rather than the private sector.

    My Republican party recognizes free markets purpose is to help meet the needs of society. Society is not here to meet the needs of free markets. Therefore, government has the responsibility of being a fair referee ensuring our markets are indeed free and not controlled by a few entities depriving society of the wonders of competition. Many conservatives today forgot what Milton and Rose Friedman in their book, Capitalism and Freedom, said of the role of government in a free society.

    “…But we cannot rely on custom or conscious alone to interpret and enforce the rules; we need an umpire. These then are the basic role of government in a free society; to provide a means where we can modify rules, to mediate differences among us on the meaning of rules, and to enforce compliance with the rules on the part of those few who otherwise would not play the game.”

    My Republican party acknowledges there are some functions better controlled by government than markets operating freely with no controls. These functions are generally those providing benefits to society as a whole including defense, basic research and development, preservation and optimal utilization of our natural resources including its people, education, care for the poor and needy, building and maintaining the countries infrastructure and of course the protection of free markets from corruption and unscrupulous behavior.

    Sometimes both parties lose their way and presently it is my party, the Republican Party, that has gotten too far off track and needs to take corrective action. The Democrats have also made blunders including their handling of health care reform. We needed health care reform but it went too far and the Democrats, and the country, are now paying the price of not allowing sufficient Republican input into the passage of the bill.

    Free Markets Vs Capitalism

    I learned not everyone defines capitalism and free markets the same. I discovered this while writing a blog, freefreemarkets.com, since the economic meltdown of 2008. For me they are the same, markets operating under the model defined in Adam Smith’s book in 1776 called Wealth of Nations. For others the two concepts are different.

    Society selects an economic model based on its objectives, an economic model does not select a society to best meet its goals. I recently got into a fun debate with a young lady attending Harvard where I was defending free markets while saying one the greatest impediments to free markets meeting the needs to society was our government being derelict in its role as the “umpire” to free markets. My debate opponent kept coming back to me and saying by definition a free market does not have a regulator and set of rules to follow and therefore such markets are not bound by the objectives of society.

    At the end of the day, both of us did agree that no matter how we defined it, there must be some regulation overseeing societies economic system in order for that society to succeed. A major reason  for the historically high inequality of income and worth in our society today is that our government is failing in its role as referee to our economic system. More and more our economic system is being run like a NFL football game with amateur referees.

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