A perennial weakness of the progressive Left is that, while they recognize the problem of maldistribution of wealth, they consistently fail to understand its root causes, and therefore their proposed solutions usually miss the mark. Take, for example, the current fixation on raising the minimum wage. This issue has become a virtual litmus test for the Left in the United States. Anyone who resists the minimum wage orthodoxy is considered an ideological enemy and an ally of the capitalist class. But what the Left refuses to even consider is the possibility that raising the minimum wage might not have the effects that they believe it would have.
I'm bothered by the contradiction between "Therefore it seems obvious to them [Leftists] that the proper remedy is for government to step in and dictate to employers that they must share the proceeds of enterprise more equitably" with the next paragraph, "The reason why labor is perpetually underpaid is not because of selfish, unethical behavior on the part of businesses. After all, businesses simply attempt to maximize profits under the existing framework of laws and institutions. That is exactly what they should be doing."
The second part 100% explains the first part; changing the 'framework of laws' so that when businesses 'attempt to maximize profits' it can NOT result in 'labor [being] perpetually underpaid.' So why doesn't it seem obvious to everyone?
I do agree that raising the minimum wage is a blunt instrument, which with some unintended bad effects. There are other finer instruments available. Raising the Earned Income Tax Credit, which Republicans seem to support, is one. Leveling the ground so that labor unions can become stronger is another. Again I cite Denmark:
"The Danish model is a decentralized system in which pay and working conditions are established by collective-bargaining agreements between trade unions and employers’ organizations. Our unions are strong, mostly because employers and employees both gain from the relationship. If the labor agreements are not respected, workers have the right to go on strike and, conversely, the employers have the right to lock out workers. The state interferes only if negotiations break down. They rarely do."
Excellent writing! Definitely something to think about. The minimum wage is definitely a complicated issue. The recent Freakonomics podcast episode 460 is worth listening if you want to know more.
“Every attempt thus far in human history to implement the free-market system has failed to deliver on its promise of general prosperity”
As a member in good standing of the progressive left I must object to the above statement. I believe that there are some countries in which the free-market system does, in fact, deliver on that promise. Denmark, which is by some surveys deemed the happiest country in the world. The solution in these countries is welfare-state capitalism. Denmark stands, in my view, as a proof of concept for welfare state capitalism
“Denmark has one of the highest tax rates in the world, which is often mentioned as one of the biggest objections against the Danish welfare model. The average annual income in Denmark is about 39,000 euros (nearly $43,000) and as such, the average Dane pays a total amount of 45 percent in income taxes. Danish income taxes are based on a progressive tax system, so if you make more than 61,500 euros (about $67,000) per year, an additional tax rate of 7 percent is added over this threshold.
The key to understanding the high levels of happiness in Denmark is the welfare model's ability to reduce risks, uncertainties and anxieties among its citizens and prevent extreme unhappiness. (My italics)
The Danish welfare model provides opportunities for its citizens to pursue their happiness from advanced starting positions disregarding economic, social, gendered or cultural backgrounds. Let me give you some examples.
Education is free and even at university level, there is no tuition fee. Meanwhile, every Danish student receives around $900 per month from the state. This means I won't have to worry about how to finance my kid's education. It will be their talents and dreams that shape the path of their careers, not the size of my wallet.
According to several scholars, the welfare model's ability to alleviate risks and insecurities in people's lives is one of the keys to understanding why Denmark does well in the happiness surveys. “
Interestingly, in light of current discussions, Denmark corporate rate is 22%, but is top marginal personal income rate is 56%. This high tax rate pays for a ‘cradle-grave’ welfare system, which, I argue, does “deliver on the promise of general prosperity”
I find your argument that our flawed monetary systems contributes to capitalism’s short comings to be strong. But your solution is not the only one, as the Denmark example, where the people live far from “poverty and misery”, I believe, shows.
there is no reason for the government to issue bonds because (wink wink) they don’t actually fund anything. It’s simply something we’ve done since we got off the gold standard, issue bonds in an amount equal to the deficit.
Bond issuance does lower the overnight inflation rate tho
I'm bothered by the contradiction between "Therefore it seems obvious to them [Leftists] that the proper remedy is for government to step in and dictate to employers that they must share the proceeds of enterprise more equitably" with the next paragraph, "The reason why labor is perpetually underpaid is not because of selfish, unethical behavior on the part of businesses. After all, businesses simply attempt to maximize profits under the existing framework of laws and institutions. That is exactly what they should be doing."
The second part 100% explains the first part; changing the 'framework of laws' so that when businesses 'attempt to maximize profits' it can NOT result in 'labor [being] perpetually underpaid.' So why doesn't it seem obvious to everyone?
I do agree that raising the minimum wage is a blunt instrument, which with some unintended bad effects. There are other finer instruments available. Raising the Earned Income Tax Credit, which Republicans seem to support, is one. Leveling the ground so that labor unions can become stronger is another. Again I cite Denmark:
"The Danish model is a decentralized system in which pay and working conditions are established by collective-bargaining agreements between trade unions and employers’ organizations. Our unions are strong, mostly because employers and employees both gain from the relationship. If the labor agreements are not respected, workers have the right to go on strike and, conversely, the employers have the right to lock out workers. The state interferes only if negotiations break down. They rarely do."
https://www.washingtonpost.com/outlook/2021/03/08/denmark-minimum-wage-mcdonalds-aoc/
Excellent writing! Definitely something to think about. The minimum wage is definitely a complicated issue. The recent Freakonomics podcast episode 460 is worth listening if you want to know more.
“Every attempt thus far in human history to implement the free-market system has failed to deliver on its promise of general prosperity”
As a member in good standing of the progressive left I must object to the above statement. I believe that there are some countries in which the free-market system does, in fact, deliver on that promise. Denmark, which is by some surveys deemed the happiest country in the world. The solution in these countries is welfare-state capitalism. Denmark stands, in my view, as a proof of concept for welfare state capitalism
“Denmark has one of the highest tax rates in the world, which is often mentioned as one of the biggest objections against the Danish welfare model. The average annual income in Denmark is about 39,000 euros (nearly $43,000) and as such, the average Dane pays a total amount of 45 percent in income taxes. Danish income taxes are based on a progressive tax system, so if you make more than 61,500 euros (about $67,000) per year, an additional tax rate of 7 percent is added over this threshold.
The key to understanding the high levels of happiness in Denmark is the welfare model's ability to reduce risks, uncertainties and anxieties among its citizens and prevent extreme unhappiness. (My italics)
The Danish welfare model provides opportunities for its citizens to pursue their happiness from advanced starting positions disregarding economic, social, gendered or cultural backgrounds. Let me give you some examples.
Education is free and even at university level, there is no tuition fee. Meanwhile, every Danish student receives around $900 per month from the state. This means I won't have to worry about how to finance my kid's education. It will be their talents and dreams that shape the path of their careers, not the size of my wallet.
According to several scholars, the welfare model's ability to alleviate risks and insecurities in people's lives is one of the keys to understanding why Denmark does well in the happiness surveys. “
https://www.usnews.com/news/best-countries/articles/2016-01-20/why-danes-happily-pay-high-rates-of-taxes
Interestingly, in light of current discussions, Denmark corporate rate is 22%, but is top marginal personal income rate is 56%. This high tax rate pays for a ‘cradle-grave’ welfare system, which, I argue, does “deliver on the promise of general prosperity”
I find your argument that our flawed monetary systems contributes to capitalism’s short comings to be strong. But your solution is not the only one, as the Denmark example, where the people live far from “poverty and misery”, I believe, shows.
there is no reason for the government to issue bonds because (wink wink) they don’t actually fund anything. It’s simply something we’ve done since we got off the gold standard, issue bonds in an amount equal to the deficit.
Bond issuance does lower the overnight inflation rate tho