"Conservative" Christian intellectuals blame the market for what the state did

 

Unsplash/Pepi Stojanovski

President Biden’s proposal to raise the nation’s minimum wage to $15 per hour has been upstaged by his stimulus and infrastructure spending proposals, but the administration hasn't given up, and some well-meaning but historically and economically naïve Christians are on board.

All the missiles from economics launched against a minimum wage because it harms poor minorities bounce off the minds of statists (socialists, progressives, fascist, liberals, etc.) like Hamas rockets hitting Israel’s Iron Dome. Facts don’t move them. Consequences don’t faze them. Socialists reject the most developed of the social sciences, economics. Self-righteousness demands a minimum wage because they have declared it to be the moral thing to do regardless of the damage it will inflict.

Honestly, is it as moral as socialists claim? After all, minimum wages became popular in the early 20th century as the less violent way to promote eugenics. American progressives taught eugenics to Germans before Hitler and he merely took the ideology to its logical, violent conclusion. Progressives in the US wanted a non-violent way to suppress undesirable races and a minimum wage offered its services. 

In his review of Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era, by Thomas C. Leonard, Art Carden wrote, 

“Leonard recounts the ways in which Progressive Era economists argued that minimum wages were good policy precisely because they reduced employment opportunities for those workers. Social scientists in the thrall of the eugenics movement enthusiastically endorsed policies that excluded ‘unfit workers’ from the labor market lest those workers’ earnings enable them to continue polluting the gene pool.

“Foreigners and other non‐Caucasians could ‘under‐live’ American workers because they were accustomed to lower standards of living. Nonwhite workers would thus win the race to the bottom, ultimately culminating in ‘race suicide.’ In this view, Darwinian and competitive forces were dysgenic, meaning that unchecked reproduction among the fecund and ‘swarthy’ would overwhelm the genetically superior, leading ultimately to the degradation of the human race."

In his review of the standard textbook on economics of the US Progressive Era, Principles of Economics, by Frank W. Taussig (1917), Jeffrey Tucker wrote that the purpose of a minimum wage would be to regulate the labor market to exclude workers whose productivity was too low:

“Some people are simply unemployable, he [Taussig] says, for example ‘those who are helpless from cases irremediable’ due to ‘old age, infirmity, disabling accident’ and also those suffering from ‘congenital feebleness of body and charters, alcoholism, dissolute living […] irretrievable criminals and tramps.’

“This class, he opines, ‘must be stamped out’ and should not ‘be allowed to breed.’ Ideally, he says, we should ‘proceed to chloroform them once for all’ but that might have a bad look. Instead, ‘at least they can be segregated, shut up in refuges and asylums, and prevented from propagating their kind.’"

Tucker added that Princeton University’s Royal Meeker, Woodrow Wilson’s commissioner of labor, held the same ideology. “It is much better to enact a minimum-wage law even if it deprives these unfortunates of work,” Meeker argued in 1910. 

“Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind.”

“If we are to maintain a race that is to be made up of capable, efficient and independent individuals and family groups,’ Seager continued, ‘we must courageously cut off lines of heredity that have been proved to be undesirable by isolation or sterilization.’”

One of the most famous socialists of the early 20th century, Sidney Webb, summed up the consensus of the time in his 1912 article The Economic Theory of the Minimum Wage:

“Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available.”

Who were the unemployable workers that progressives wanted to freeze out of the job market? They targeted blacks, Chinese, Hispanics, Eastern Europeans, and Jews. Progressive/socialist eugenicists were white supremacists who feared that inferior humans would destroy all that whites had built. Eugenicists were also responsible for Jim Crow laws.

What changed? Hitler followed Taussig’s advice but used a deadlier gas than chloroform. When Americans witnessed the concentration camps and gas chambers in Germany, any thought of oppressing minorities became repulsive. So socialists flipped the narrative and insisted that a minimum wage would benefit the same groups they had assaulted with it before the war. And they’re still pedaling that lie. Christians are required to care for the poor, not just to put on a political mask which pretends they do care, but actually advocates policies which were designed to harm them.

Why racists pushed, but theologians rejected, wage controls

 

In this Oct. 7, 2009 photo, a cashier gives change to a customer at Best Buy in Mountain View, Calif. | (Photo: AP Images / Paul Sakuma)

The minimum wage law is more popular today than ever. In my last post, I demonstrated the racist origins of modern minimum wage laws in the progressive eugenics movement of the early 20th century. Today, socialists ignore their earlier arguments that such laws hurt minorities and insist they help the poor. Every intervention into the market by the state benefits some at the expense of others. 

A minimum wage impacts mostly entry level, low skilled jobs, for the most part the jobs that teenagers with no work experience begin their careers in, such as hamburger flippers, ditch diggers, and shelf stockers. According to one of the best economists of the past 50 years, Dr. Thomas Sowell, minimum wage laws benefit whites. Who does it hurt? Minorities.

Dr. Thomas Sowell grew up poor in Harlem, New York but earned a doctorate in economics from the University of Chicago. Since 1980, he has worked at the Hoover Institution at Stanford University, where he serves as the Rose and Milton Friedman Senior Fellow on Public Policy.

Dr. Sowell is black. His race is important for two reasons: 1) Socialists insist that “lived experience” trumps all other knowledge, and 2) socialists insist that whites must remain silent when a black person speaks. In his 2007 book, Basic Economics: A Common Sense Guide to the Economy, Dr. Sowell traced the impact of minimum wage laws:

“Another group disproportionately affected by minimum wage laws are members of unpopular racial or ethnic minority groups. Indeed, minimum wage laws were once advocated explicitly because of the likelihood that such laws would reduce or eliminate the competition of particular minorities, whether they were Japanese in Canada during the 1920s or blacks in the United States and South Africa during the same era. Such expressions of overt racial discrimination were both legal and socially accepted in all three countries at that time.
[...]
“The history of black workers in the United States illustrates the point. From the late nineteenth-century on through the middle of the twentieth century, the labor force participation rate of American blacks was slightly higher than that of American whites. In other words, blacks were just as employable as the wages they received as whites were at their very different wages. The minimum wage law changed that. Before federal minimum wage laws were instituted in the 1930s, the black unemployment rate was slightly lower than the white unemployment rate in 1930. But then followed the Davis-Bacon Act of 1931, the National Industrial Recovery Act (NIRA) of 1933 and the Fair Labor Standards Act (FLSA) of 1938 – all of which imposed government-mandated minimum wages, either on a particular sector or more broadly.

“The National Labor Relations Act of 1935, which promoted unionization, also tended to price black workers out of jobs, in addition to union rules that kept blacks from jobs by barring them from union membership. The NIRA raised wages in the Southern textile industry by 70 percent in just five months and its impact nationwide was estimated to have cost blacks half a million jobs.
[...]
“By 1954, black unemployment rates were double those of whites and have continued to be at that level or higher. Those particularly hard hit by the resulting unemployment have been black teenage males.”

How should Christians respond to low-paying jobs such as those affected by the minimum wage? First, Christians should have an attitude of humility. No one knows what the right wage for entry level jobs should be. Church theologians kicked around Aristotle’s notion of a just price, including wages, for over a thousand years. Then in the Reformation they concluded that only God knows a just wage and he hasn’t revealed it to us. The closest humans can come is the wage arrived at in a free market in which neither party coerces the other.

So, if Walmart doesn’t coerce young job applicants and the applicants don’t pressure Walmart, the wage the two agree on is a just wage. Those Godly theologians rejected minimum wage laws because they knew such laws would cause greater unemployment among the poor and make them worse off than if they had kept the low-paying job. 

Second, responsibility for taking care of the poor falls upon the whole community, not just employers. Placing that burden only on employers advertises laziness and envy on the part of the community. If someone is trying to support a family with a low-wage job and can’t, the whole community must step up and provide the charity to support the family.

Jesus' parable endorses market wage versus wage controls

The Christian Post/Hudson Tsuei

Economists have proven that a minimum wage above the market rate for unskilled entry-level workers will harm the people that socialists intend to help, but socialists don’t believe them or don’t care. Socialists insist that a minimum wage is moral and should become law regardless of the consequences. In this and this article I showed that a minimum wage is immoral from two perspectives. Here is another.

In the parable of the day laborers and the vineyard found in Matthew 20:1-16, the owner goes to the marketplace several times in a day to hire laborers to work. The point of the parable isn’t a minimum wage. Jesus told the parable to illustrate salvation by grace and not works. But to do so, he relied on common law regarding labor. 

According to Alfred Edersheim in his book The Life and Times of Jesus Messiah, the market had established a range of wages and an employer was required to pay the average wage for a day laborer if he had not negotiated one with the workers. Some workers trusted employers to do the right thing. Others would negotiate a wage with prospective employers, and once they agreed, that wage was binding on both the employer and the laborers and was considered a fair rate. Metaphorically, we might view the workers who negotiated a wage as Jews who had a covenant with God, and those who had no agreement as gentile believers.

But a few employers would hire workers and not pay them, or withhold pay for long periods of time while the money that should have gone to the workers was invested and earning a return. When the Bible condemns employers for oppressing workers, it usually refers to that and not to how much employers paid. 

In Jesus’ parable, the vineyard owner negotiated with only the first group he hired early in the morning: “He agreed to pay them a denarius for the day and sent them into his vineyard.” A denarius was the usual wage. The owner didn’t negotiate a wage with the other groups he hired. They trusted him to pay a fair wage. 

When the sun had set, the owner began paying his workers, but he gave them all a denarius regardless of how many hours they had worked. Normally, owners would pay workers by the number of hours they had put in. None of the short-term workers had negotiated a wage and accepted their pay as fair. But the workers whom the owner had hired first complained that they had endured the hottest part of the day and received the same pay as the others. 

To that, the owner responded, “I am not being unfair to you, friend. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as I gave you. Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?”

Of course, the early workers were consumed with envy, but the economic point here is that Jesus relied upon a common law principle to support his illustration of salvation by grace. It’s unlikely that Jesus would have used that principle if he thought it unfair or in any way evil. And that law said that any wage agreed to by the laborers and the employer was a fair wage, regardless of what others thought. 

Theologians at the University of Salamanca, Spain, during the Reformation relied on the same principle when people insisted that Spain institute a minimum wage. Not only would it cause unemployment and make poor workers poorer, they wrote, any wage agreed upon by two parties was a just wage if one didn’t coerce the other. Theologians had spent centuries trying to discover just prices, including wages, and had finally determined that the closest humans can come to knowing a just wage is in a free market. 

Today, socialists argue that labor markets aren’t free. Employers have all the power and laborers must take the crumbs that businesses offer because there are always far more people applying for jobs than jobs available. But notice it was the same in Jesus’ day. The reason day laborers stood around in the marketplace, sometimes all day, was because there wasn’t a lot of work to go around. When large projects ended, such as building the temple, the supply of labor would greatly exceed the demand. Day laborers were among the poorest people in the land not counting beggars. And until recently, working on another man’s property instead of one’s own made the laborer not much better off socially than a slave. At the same time, an owner of even a small vineyard would have been relatively wealthy. 

Socialists insist that they know how much an employer should pay for unskilled labor. But they don’t. They are merely arrogant in claiming to know something they can’t possibly know. The great economist F. A. Hayek wrote that the main purpose of the science of economics is to convince us of how little we know about the things we think we can control. Jesus would agree. 

Socialists don’t know what any job should pay. Those who claim they do merely advertise their ignorance and arrogance. The principle of free market wages that Jesus employed applies to unions as well. Unions coerce employers with explicit threats of strikes and implicit ones of violence and so violate Jesus’ principle of freely negotiating wages. 

According to the principle that Jesus used, every worker has a right to negotiate a wage rate with his employer and the wage they agree on is just and fair. No one has the authority to substitute their opinions in place of a laborer and employer’s right to negotiate wages, least of all arrogant socialists. 

Seattle proves economics is not physics

The ongoing fight about min wage in Seattle magnifies some of the things wrong with mainstream economics. In 2014 the city council voted to phase in a $15 wage over the next few years and in 2015 increased the wage floor from $11 to $13 per hour. Recently, the University of Washington conducted a study that showed the increase caused low-wage workers’ annual pay to go down and overall low-wage jobs to also shrink.

Keep in mind that mainstream economists cling to their gods, guns and economic models because, as they insist, math makes economics a science like physics. Yet with all of the veneration of the math and statistics, I have seen no econometric study such as this one change anyone’s mind or change mainstream economics in my 40 years of watching the game. The usual suspects in economics greeted the study in the same old way they have met with similar studies for the past half century: the right (free market) celebrated and the left (socialists) poo-pooed it.

No one sees such behavior in the truly math oriented sciences such as physics. There aren’t five schools of physics that dispute gravity or the speed of light as there are five different schools of macroeconomics. But why aren’t the econometric analyses of economic data more convincing? The problem lies with the subject matter. Physics is child’s play compared to economics because gravity and light and electrons always act the same way under similar circumstances. Humans, the subject of economics, don’t. And the number of relevant variables in a physics problem is small compared to those in economics, not to mention the complex interactions.