Episode 1 features Moshe the Anarcho-Capitalism Libertarian - where we debate the merits of minimum wage, independent security firms in a free society and whether or not governments are inherently capitalist or not.
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(Intro Music: “Noise in my Head” by Clarknova from the album “Annexia”)
(Outro Music: “Your Kettle” by Portal from the album “Blood Red Tape”)
Moshe is a friend of mine from school. We shared an Environmental Economics class together. He complained that there was little to no actual economics involved in the class.
We had discussions and debates. He earned my respect in that he never let emotions get in the way of a solid, rational, logical debate of ideas. Even if we could not disagree more on the subject at hand (and we often didn’t agree). I only wish I could keep emotions uninvolved as well as he does.
We start by going over the following mini-essay that he wrote to me in advance of the show (emphasis added by me):
"The employment rate is currently about 60% in Canada, meaning 40% are not working, even though the official unemployment rate is only 7%. You also have to consider that part time workers, and qualified doctors driving taxis are considered to be "fully employed". The amount of real wealth in a country is directly related to the amount of labor employed. The wage rate, in contrast, is a nominal rate; meaning it’s just the number of sheets of paper people are rewarded. The only way that people can become more wealthy is by the amount of real production increasing. If someone is unable to earn the arbitrarily set discriminatory cut-off point of $10.25 an hour, they are forced to be unemployed. As hard as it is to get by on $10.24/hour or less, it’s considerably harder to get by with $0/hour. These people aren’t even part of the 7% unemployment rate, they are completely removed from the labor force. If they were working, they would be adding wealth to society, and increasing the standard of living for everyone. By creating the cut-off wage, or “minimum wage” as they call it, the government is both preventing these people from creating wealth, and preventing them from earning it. As a result, it generates poverty.
Here’s where it gets worse. In normal conditions, a person hired to work for a lousy wage, like $5/hour, would be able to gain experience, and learn on the job. Later, after gaining some on the job skills, they could earn much more than $10.25. If the employer is forced to pay them $10.25 before they have these skills, then why would they hire them? They’d be taking a loss, as they could just as well hire someone who’s already qualified to the point that justifies for the higher wage.
Then, the total amount produced is less, and the rate at which the outputs of labor increases is less. This means that not only will the person who can’t get hired at the minimum wage be hurt, but the rest of the population will lose out as well. Other people’s money will not go as far because there will be less available to buy, so prices would go up. They would then demand a higher minimum wage, because $10.25/hour would still be far too little to live on. Then the increased minimum wage would force more people out of work, which would cause there to be even less wealth available, which would lead them to ask for a higher minimum wage… that’s why I called it a self perpetuating poverty generator.
I would get to why the welfare state is fascist here, but my comment is already way too long. I’ll just say that it gives the government the ability to decide what “welfare” is. It goes far deeper than that. Anyway, what’s more fun to podcast about than an argument?”
My responses are contained within the episode but for convenience they are here in brief (each point corresponds to a highlighted section above):
1. If the minimum wage was abolished, I think many (most?) companies in a capitalist society, would gladly drop wages while not accordingly dropping prices (thus earning more profit, while the workers would then have less money to spend to buy such products to perpetuate the economy).
2. Just because you are not working at a paying job does not mean you cannot create wealth.
3. I’d argue that any job that pays as low a wage as $5/hr would not provide enough skill learning as to allow a worker to gain the skills to eventually earn more than the minimum wage people presently do. People in very low paying jobs tend to be immigrants and few of them ever move up in the workforce.
4. While I would admit that this would probably happen eventually, I also believe the opposite would happen initially, it would create a tug of war.
For the middle section of the show, we discuss the contents of this video:
Finally, we end up in a discussion about the purpose/role of government, and whether or not governments are inherently capitalistic or not (you can guess what his stance is vs mine)