Tuesday, February 28, 2012

The True Enemies Of Workers

I have updated this post here.

The worker deserves his wages.
~ Luke 10:7

The term "wage slavery" has been employed in such a way as to demonize not just the current system, but the entire (and inescapable) reality of wages themselves. Surely, workers today are, and have been, enslaved. But is it really the wages which are relegating workers to their current status? Just what are wages, anyway? Wages are one of four kinds of economic returns/payments
1. Rent
2. Profit
3. Interest
4. Wages

These returns refer to payments due to the utilization of the factors of production: labor, capital (such as funding, machines, and tools), and land. I explore those further here.

1. Rent: Payment which goes beyond the payment needed to produce a given good or provide a given service at its market price. Put another way, it is payment received due to barriers to entry into the market for whatever the product or service in question. This originally referred to the payments due to the landowners by virtue only of their supposed ownership, and was a literal barrier. It is related to, but is not exactly the same as contract rent, i.e., rent for use (apartment, car, etc). Today, other forms of rent comes from things such as licensure, which is the barrier to entry into whatever market the license is for (plumbing, law, teaching, etc etc.). This makes economic rent incalculable in many circumstances, as there is no way to know how much more a licensed employer makes solely by virtue of his license alone. But what is certain is that a free market would mean a cut in income to these licensees who suddenly have to compete with the people they once employed, their position as employer guaranteed by the law.

2. Profit: The payment received by the owners of capital (money, tools, machines, factories) which goes beyond the wages that were necessary to put that capital to use. Today, the owners of capital are often also the recipients of economic rent through licensure and the like, which blurs the distinction between profits and rent (more detail on that near the end).

3. Interest: Similar to profit, but involves the interest-seeker lending to the profit-seeker. It also meshes with rental and profit income in the current system.

4. Wages: Payment received for labor. This does not need to refer to money. If I pick apples for myself, those apples are the payment for my labor, i.e., my wages.

As economic stratification continues, rental, profit, and interest income eats larger and larger chunks of the market at the expense of wages. All this is due to barriers to entry (Again, land is a huge one, and dealt with here).

Government-instituted licenses were established at the behest of existing businesses. Consider plumbing: In NJ, there are some 15,000 plumbing licenses (if memory serves). In order to do plumbing work, a person much possess this license. All unlicensed workers must be EMPLOYED by one of these licensed plumbers. The pre-requisites for just TAKING the plumbing exam are 4 years of schooling (night) and five years of working. If the plumber fails the exam, he must wait another 6 months to try again. If one is discovered to be working without a license, they face draconian fines and the possibility of never being allowed to receive the license anyway.

Licensing has nothing to do with being a good worker. It has to do with memorizing a seven-hundred-page code. It exists SOLELY to punish workers without it with lower wages and punish consumers with fewer choices and higher prices.

What is this situation? It is called a cartel, a group of businesses that form an association to influence prices and restrict competition. When the government approves a cartel like the Board of Master Plumbers, they have legally restricted the availability of plumbing labor. When there are fewer competitors, prices may be raised to further enrich the established businesses. Of course, the prices for licensed construction firms are totally absurd.

It must be noted that the abolition of the license does NOT mean the abolition of credentials entirely. There are and would be private certification agencies through which workers could apply for that agency's seal of approval. If consumers value the experience and reputation of their plumber, they would have to be insane to not look into it.

Naturally, unlicensed plumbers do side work. This is a mutually beneficial countereconomic arrangement. For the consumer, the prices of work are far below the licensed rates. For the worker, it means far better pay, far better than could ever be received in an hourly wage as an employee. On top of that, the State is denied control (regulation) and funds (taxation). It is a beautiful strategy that is both profitable to the worker and beneficial to the consumer.

As I said above, rent and profit, and therefore interest, become difficult to distinguish when we look at our economy today. In a truly free market, without barriers to entry, i.e., rent, it is not unreasonable to expect that profits and interest would also become far less common, as the worker now owns his capital. Who truly owns the wrench in the worker's hand? If he is, by statute, forced to work for someone else, that wrench belongs to his boss, not to him. But it should belong to him, the worker, and if he is physically able and willing to use it, he ought to be able to, legally. Thus, the notion of profits and wages are essentially merged.

To reiterate Christ's declaration above: "The worker deserves his wages." Indeed, that is true social justice.

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