Updated with Historical Theory and Facts -- How to Create a Terrorist: The Welfare State

By

Martin Cowen

        Since I first wrote this essay I have discovered something Ludwig von Mises wrote in Socialism: An Economic and Sociological Analysis:

       "Unemployment in the capitalist countries is due to the fact that the policy both of the governments and of the trade unions aims at maintaining a level of wages which is out of harmony with existing productivity of labour. ... Permanent mass unemployment destroys the moral foundations of the social order. The young people who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited."

          Mises's statements are the exact point of my essay.

          Also, we have learned that "some of those involved in Paris and Brussels attacks were collecting unemployment in Belgium." The Wall Street Journal, August 4, 2016.

           The conclusions of my essay, following, are supported by economic theory almost 100 years old (Socialism was published in 1922) and by the actual facts of the particular case cited.

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           All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

         Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianism.

Updated with Historical Theory and Facts--How to Create a Terrorist: The Welfare State

Updated with Historical Theory and Facts -- How to Create a Terrorist: The Welfare State

By:

Martin Cowen

            Since I first wrote this essay I have discovered something Ludwig von Mises wrote in Socialism: An Economic and Sociological Analysis:

          "Unemployment in the capitalist countries is due to the fact that the policy both of the governments and of the trade unions aims at maintaining a level of wages which is out of harmony with existing productivity of labour. ... Permanent mass unemployment destroys the moral foundations of the social order. The young people who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited."

          Mises's statements are the exact point of my essay.

          Also, we have learned that "some of those involved in Paris and Brussels attacks were collecting unemployment in Belgium." The Wall Street Journal, August 4, 2016.

           The conclusions of my essay, following, are supported by economic theory almost 100 years old (Socialism was published in 1922) and by the actual facts of the particular case cited.

-------------------------------------------------------------------------------------------------------

           All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

         Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianism.

Indentured Servants: Student Loans Defraud Millenials

Indentured Servants: Student Loans Defraud Millennials

By

Martin Cowen

                        No one reading this essay can obtain a signature loan for $100,000 on the free market. Yet over one million people are burdened with student loans in excess of this amount. The only reason that people, who are financially unqualified to receive free market signature loans, get student loans anyway is government interference in the free market.

                        The specific statute that is the core of the interference is Federal bankruptcy law that forbids discharge of student loan debt, 11 U.S.C. § 523 (a)(8):

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for

(A) (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

     (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

                        Why on earth should one be able to bankrupt medical bills and credit card debt and not student loan debt?

                        Government programs have a reason and a rationale. The reason for the program is the truth. The rationale for the program is a lie. We are only told the rationale for government programs. In the case of student loans, the rationale (the lie) is to help young people obtain higher education and thus be able to earn more during their working lives. The reason (the truth) is to benefit moneyed constituencies, in this case by subsidizing student loan lenders, colleges, universities, other “schools,” administrators, professors, teacher assistants, researchers, and unions working for these institutions (hereafter called “Leviathan Education”). The government subsidy supports these preferred groups by turning our young people into indentured servants. An online definition of indentured servant is: “A person under contract to work for another person for a definite period of time, usually without pay but in exchange for free passage to a new country.” Studenloanhero.com reveals that about 43.3 million Americans hold student loans. The total student loan debt is about $1.26 trillion. The delinquency rate is 11.6%.

                        Some people believe that people ought to pay their debts. (The author is a lawyer who has never practiced bankruptcy law for this very reason.) But when a person is defrauded, the legal system ought to provide a remedy to the victim.

                        Our young people are being defrauded by the Federal student loan subsidy program. The subsidy is designed solely to benefit Leviathan Education and to turn the poor, gullible students into indentured servants. Here is the fraud: The young people are led to believe that if they will agree a decade or more of indentured servitude, then, after 4 years of higher education, they will get a well-paying job and easily pay their student loan debt. A $100,000 10-year fixed loan at 5% interest requires monthly payments of $1,060.66. A mature, financially astute Libertarian can see through this fraud immediately. Trained from youth to trust her government, the state-educated teenager is not so insightful. She signs her young life away to a bank on the fraudulent representations of her greedy, lying government-paid advisors.

                        Any truthful person within the bowels of a university will have many anecdotes about the negative effects of government education subsidies. One common theme is the employment of people who are biased in favor of the Socialist policies of our government. One source claims that Liberal (i.e. Socialist) professors outnumber Conservative (i.e. liberty leaning) professors 5 to 1. There are hundreds of thousands of highly educated people who will argue in favor of government subsidies for Leviathan Education precisely because they are paid from those subsidies.

                        A few of the systemic horrors of government subsidized higher education are these: the pervasive political correctness movement, the presence among the faculty of teachers like the raging, red-faced University of Missouri professor who called for “muscle” to remove a journalist on a public sidewalk photo-documenting an incident, and the uproar on the Emory University campus when someone wrote “Trump2016” in chalk on a sidewalk prompting Emory’s President James W. Wagner to vow to review security camera footage and prosecute those responsible for the chalking! The Emory incident resulted in the invention of the appellation “snowflakes” for the students “traumatized” by such scribblings. One can imagine the enthusiasm of business people when considering Emory snowflakes for employment.

                        One hopes that many taxpayers would resent subsidizing higher education in its present state, if not under any circumstances as a matter of laissez faire principles.

                        One might ask—other than raising the salaries of the academic shills who argue in favor of government subsidies for Leviathan Education—what are we getting by subsidizing Leviathan Education and thus, as a matter of economic law, raising the tuition. The University of Alabama has aquatic facilities that include multiple swimming, a water slide, and a lazy river. Louisiana State University (LSU), Notre Dame, and Rutgers have climbing walls. High Point University as a first-run movie theater with free popcorn, drinks, and snacks. The University of Maryland has a recreation center with two large gyms, an indoor track, a ropes course, and a beach volleyball court.

                        No one reading this essay dislikes luxury facilities. Few reading this essay can afford luxury facilities on demand. No one should mortgage the rest of her life in order to enjoy luxury facilities for the four years immediately following high school (or ever for that matter). Those of us who very occasionally enjoy luxury facilities save for decades to do so. The enjoyment of luxury facilities should be the result of years of an individual’s work, planning, and savings, not the result of a government fraud perpetrated upon trusting, naïve teenagers.

                        The simplest solution to the student loan crises would be to repeal the Federal law disallowing the bankruptcy of student loan debt. There is no difference in principle between a debt for consumer goods, medical care, and education. With student loan debt bankruptable, lenders would be more careful in their lending practices and victims of the current student loan fraud could escape from their unfair burdens.

                       What about higher education? A lazy river, a climbing wall, and free snacks at the movie theater having nothing to do with higher education. Socialist professors indoctrinating teenagers in the ways of Marx have nothing to do with higher education. Emory snowflakes are not educational ideals at which to aim.

                       A classical education in the Great Books is the core of higher education. For those who insist upon STEM (science, technology, engineering, math), a free market in higher education would have thousands of options for everyone. In the absence of government interference, a higher education could be had by all for less than $5,000 per year. (The actual in-state tuition at public universities is $9,410 in 2016.) Thirty students paying $5,000 per year is $150,000 which would be more than enough to employ and house a professor. A college with 300 students would have 10 professors with a student/teacher ratio of 30 to 1.

                        The simple free market principle that should not be forgotten is that subsidies increase the price of the good subsidized whether the good is corn, sugar, consumer goods generally, healthcare, or education. Government subsidies are always bad, morally and practically. They are bad morally because government takes money by force from people and gives it, against the will of the consumers who are spending their money otherwise, to a favored constituency for political reasons (power and more power). They are bad practically because they do not achieve the end sought. For example, in the case of education, the stated goal (the stated rationale is always a lie) is to help high school students achieve a higher education, yet the result has been to create a large number of unemployed and underemployed indentured servants.

                        The Federal Government should get out of the business of subsidizing higher education and stick to its only proper business which is national defense. (According to Libertarian theory the three functions of government are national defense, the police, and the courts. State and local governments can provide all the police and courts that we need. National defense is the sole proper function of the Federal Government.)

Seattle Bans the Poor from their Emerald City

Seattle Bans the Poor from their Emerald City

by

Martin Cowen

            Beginning April 2015, Seattle has mandated a minimum wage of $15 to be phased in over time. Employers with fewer than 500 employees will reach the mandated rate in seven years, large employers in three years. This feel-good measure is bound, by economic law, to impair full employment. This essay explores the hidden motives for imposing systemic unemployment.

            No principle of economic law is more fundamental than the relationship between price and demand. The principle states that when the price of a commodity or service rises, the demand for the commodity or service declines. Wages are prices. The wage rate is only one component of the total cost of employment. Federal and state income taxes, Social Security taxes, Medicare taxes, worker’s compensation, unemployment insurance, government mandated health insurance, retirement benefits, other voluntary employee benefits, regulations concerning the hours of work, overtime, mandatory vacations, sick pay, maternity and paternity leave, conditions of discharge, and reams of paperwork are all costs of employment. When the cost of employment rises, demand for employment declines.

            The principle makes common sense. The principle comports with our everyday life experience. We might buy a McDonald’s hamburger for $1. We will not buy a McDonald’s hamburger for $10. Economics writers including Adam Smith (The Wealth of Nations), Ludwig von Mises (Human Action), F.A. Hayek (The Constitution of Liberty), Henry Hazlitt (Economics in One Lesson), Milton Friedman (Free to Choose), and Thomas Sowell (Basic Economics) teach this economic law. Ludwig Von Mises said in Chapter 20 of Human Action says: “Catallactic [voluntary] unemployment must not be confused with institutional unemployment. Institutional unemployment is not the outcome of the decisions of the individual job seekers. It is the effect of interference with the market phenomena intent upon enforcing by coercion and compulsion wage rates higher than those the unhampered market would have determined. The treatment of institutional unemployment belongs to the analysis of the problems of interventionism.”

            America and Europe both suffer from institutional unemployment at astonishingly high rates. The sole cause of institutional unemployment is government intervention in the labor market.

            Why, therefore, are socialist leaning cities inclined to raise their minimum wages despite basic economic theory?

            The first thing to notice is that politicians do not care about the common good. The common good is the good of the whole of the people the politician rules or participates in ruling. Politicians care about being elected and re-elected. Any action a politician takes is self-interested and not altruistic. We might say that the politician is engaged in Altruism Theater. Obviously, the political action must appear to benefit the common good. Necessarily, the political action is intended to benefit the politician by advancing his chances for re-election. The political action almost always benefits a moneyed constituency.

            So what moneyed constituencies benefit from an increase in the minimum wage?

Unions

            Unions, whose members generally make more than the minimum wage, support increasing the minimum wage. Why?

            First, some union contracts tie union wages to the minimum wage. Thus, an increase in the government mandated minimum wage will increase the wages to which some unionize employees are entitled.

            Second, non-union workers compete with unionized workers for jobs in states where unions do not have a legal or coercive (union thugs beat up scabs and the government looks the other way) monopoly. A large differential between the wages of the two groups makes employment of non-unionized workers more attractive than a small differential. Think of highly taxed cigarettes in New York City. The difference between the high retail price of cigarettes in New York City due to taxes ($5.85 per pack) and the low retail price of cigarettes from Virginia with a lesser tax burden (30 cents per pack) encourages the smuggling of cigarettes from Virginia into New York City.

            Third, unions have been known to threaten to support the minimum wage in order to coerce a union-resistant employer to unionize. This tactic was apparently used during efforts to unionize the employees of Seattle-Tacoma International Airport. In a variation of this tactic, unions in Los Angles seek exemption for union employees from the minimum wage in order to encourage employers to agree to union representation.

            Fourth, union support of minimum wage appears to be altruistic and thus raises the esteem in which unions are held by low wage workers, politicians, and socialists generally.

Low Wage Workers

            Economic education in America is non-existent. Even college educated folk are economically illiterate. Ludwig von Mises explains why: “Tax-supported universities are under the sway of the party in power. The authorities try to appoint only professors who are ready to advance ideas of which they themselves approve. As all nonsocialist governments are today firmly committed to interventionism, they appoint only interventionists.” Human Action, Chapter 38, Section 4, “Economics and the Universities.” Von Mises wrote this in 1949. Now, 67 years later, virtually no government school or university has any (out of the closet) free market teachers.

            While being conservative is no guarantee of economic literacy, only about 20% of university professors identify as conservative or far-right. The ratio of Democrat professor voters compared to Republican professor voters is 9 or 10 to 1. Being a Liberal and voting Democrat is a practical guarantee of socialist or, at least, interventionist, leanings. On the other hand, voting Republican or being Conservative is no guarantee of economic literacy. President Richard Nixon, a Republican, imposed wage and price controls in 1971. President George W. Bush, a Republican, increased the minimum wage to the current level of $7.25 per hour in 2007. Both Nixon and Bush were economic illiterates. Bush attended Yale and the Harvard Business School where he earned an MBA degree. Clearly, he did not read (or did not understand) the economists referenced in this essay. Hold on! Remember that which is written above: “Any action a politician takes is self-interested and not altruistic.” Bush and Nixon might well have known the economic harm which wage and price controls and the minimum wage would inflict and enacted both anyway hoping to benefit themselves politically in spite of the common good.

            Back to low wage workers, it is, therefore, no particular insult to say that low wage workers are economically illiterate on the whole and for the most part. The low wage worker does not understand, on the whole and for the most part, that a minimum wage does not help her. The minimum wage merely deprives her of the right to work on terms to which she might agree.

            Some low wage workers support the minimum wage in the hope that their economic circumstances will be improved. They are mistaken.

Established Businesses

            Wal-Mart, the largest employer in America, does not oppose the minimum wage. Why? Here are a few reasons:

1.      Wal-Mart employees generally earn more than the minimum wage. The average rate is $13.38 per hour for full-time employees. A minimum wage does not hurt Wal-Mart.

2.      The minimum wage will harm Wal-Mart’s competitors and make it more difficult for startup entrepreneurs to compete with Wal-Mart’s economies of scale.

3.      Cooperation with socialist and interventionist programs will endear Wal-Mart, it hopes, to the socialists and interventionists in power and reduce political targeting of Wal-Mart, at least for the moment. America’s largest employer cannot hide from the socialists and the interventionists for long.

4.      Agreeing to superficially beneficial employment laws will endear Wal-Mart to its employees, it hopes. There are reports that some employees who were already above the minimum wage and who did not benefit from the increase are disgruntled that others lower on the pay scale did.

            All established businesses in Seattle, including Wal-Mart, will benefit by laws, like the minimum wage, that render competition more difficult. Not all businesswomen take pleasure in crony capitalism, though. There are some moral businesspeople who believe in free trade.

What is Going on in Seattle?

            In 2014, the median household income in Seattle was $71,273. The national median household income was $53,657. The city with the highest median household income is Washington, D.C. at about $90,000. San Francisco is next around $80,000. Boston is next around $72,000.

            Per capita income in the Seattle-Tacoma-Bellevue, Washington Metropolitan Statistical Area (MSA) is $39,322, third from the top. Per capita income in Washington-Arlington-Alexander, D.C.-Virginia-Maryland MSA is $47.411, number one. Per capita income in San Jose-Santa Clara-Sunnyvale, California MSA is $40,392, number two.

            Seattle is a very rich city. Starbucks has more stores in Seattle per capita (1 for every 4,000 people) than any other city. Tiffany & Co. has three stores in Seattle. A real socialist sits on the city council, party designation Socialist Alternative. The other eight members of the council are Democrats. A rich city can afford to be socialist for a long time. As Margaret Thatcher said: “The trouble with socialism is that eventually you run out of other people’s money.” When the city is the third richest city in America, running out of other people’s money will take a long time.

            People are employed because their labor is worth more to the employer than the money she pays them. A laborer works because the money she is paid for working is worth more to her than her leisure. When the employee’s labor is not worth the wage, then the employee will be discharged or not employed in the first instance. Socialists and interventionists, at least the ones who pretend economic thinking, love to observe that determining the marginal cost of labor is difficult. And it is. But determination of the marginal cost of labor is impossible for the democratic totalitarian who wishes to impose his will upon all employers and employees within his grasp. It is up to the employee and the employer, in arm’s length negotiations, to determine an agreed upon price for the employee’s labor. If the businesswoman errs by paying too much, then she will lose profit and might go out of business. If the businesswoman errs by paying too little, then she will lose her employee when he discovers he is not being paid what he is worth. The presumption of the democratic totalitarian to make this decision for the parties to the transaction (employer and employee) is hubristic and immoral.

            Some of the consequences of Seattle’s new minimum wage law are these:

1.      Any employee who does not produce value for the employer at least equal to the cost of employment will be discharged. The “studies” commissioned by the Seattle city council admit this fact. Note that these “studies” were performed by “professors” and “scientists” who are working for socialist and interventionist institutions.

2.      Entrepreneurs and startups who are not well funded (most) will avoid starting new enterprises in Seattle. This consequence will not be “seen.” The businesspeople and the opportunities they might bring will just never show up. Established Seattle businesses will be happy about this.

3.      The low wage earners will go outside of the city of Seattle to find employment. The “poor” will effectively be “evicted” from the Emerald City. The Starbucks customers will not be disturbed by this consequence. The Tiffanies customers will not lose sleep. They prefer not to see the poor in their tony neighborhood, not even as employees in marginal businesses. (As good progressives, though, they would never admit this.)

4.      Marginal businesses that cannot afford the high minimum wage will close. These businesses, according to the Starbucks-Tiffany crowd, are unsightly in any event.

5.      The socialist government of Seattle will bask in the glory of their socialist “achievement.” They are celebrated by the Mainstream Media and the overtly socialist media.

6.      No one in Seattle will make the connection between Socialism and Puerto Rico, Venezuela, and Greece. Seattleite: “Food riots in Venezuela? Who cares? Not my fault.”

            The citizens of Seattle are certainly good people. Like most Americans, though, they have not been taught basic economics. Seattleites have absorbed Marxism from our culture and from their progressive, socialist, and interventionist teachers and professors. (Forty-seven percent of Seattleites have bachelor’s degrees, the highest percentage of all American cities.) On the whole and for the most part, the citizens of Seattle have not read (or at least not understood) Adam Smith, Ludwig von Mises, F.A. Hayek, Henry Hazlitt, or our great contemporary Thomas Sewell, despite their higher educations.

            Seattleites will continue to enjoy their coffee and their fine stores. Seattleites will not miss the few poor people who will have to move elsewhere to find work. Seattleites will not recognize the logical connection between Socialism and institutional employment in the United States, because, being rich, their unemployment rate is relatively low and the city thriving. Seattleites will not bother to wonder what happened to Greece, Venezuela, and Puerto Rico. Seattleites will live out their lives in lovely, green bliss, above the clouds, like the inhabitants of the flying island Laputa in Jonathan Swift’s Gulliver’s Travels (1726).

            The Capitol of Panem of the Hunger Games could exist in the midst of poverty in the hinterlands. So can Seattle.

How to Create a Terrorist: The Welfare State

How To Create A Terrorist: The Welfare State

By

Martin Cowen

            All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

            Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianisms.

How to Create a Terrorist: The Welfare State

How To Create A Terrorist: The Welfare State

By

Martin Cowen

            All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

            Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianisms.