Organized labor, the minimum wage and the money supply

Understanding Your Dollar: Part four of seven


WASHINGTON, January 19, 2015 − Not long ago my wife asked the boys and me what we wanted to have for dinner. We agreed to a prepackaged chicken dish and rice. I was on the couch listening to the news report− something about the Federal Reserve−and my wife came storming out of the kitchen shaking the bag of chicken she had just pulled from the freezer.

“Can you believe this!” she exclaimed. “We used to be able to feed all four of us with one bag! Now I have to use both bags just for one dinner!”

About this same time this incident occurred, the hashtag #LiveTheWage was trending. It prompted President Obama’s political team to throw out a tweet under his name. “A lot has changed in five years – but the minimum wage has stayed the same…,” one tweet read, festooned with a graphic noting that eggs had gone up 23 percent since 2009.

Another tweet pointed out that the last time the minimum wage was raised was five years ago. A graphic showed that milk had gone up by 17 percent since that time.

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It’s an interesting premise, given that the headline rate of inflation is under two percent. If you’ve made dinner lately, I suspect you realize this number is a fiction conjured up by a Gruberian imagination.

But for many families, this is much more than a subject for a political or economic column. It actually has to do with whether kids go to school in the morning well-fed or hungry.

I recently had an online Facebook debate with a critic of mine who railed against the “takers” who depend on government benefits. I responded with a “99/1” analogy an Occupy Wall Street sympathizer would love (or should).

“If you show me 100 people, and 99 of them are indolent, lazy, on the dole and in need of a firm footprint on their rear end,” I said, “but there is one in that 100 who is pounding the pavement every day, doing everything right and still can’t get ahead because their wages are going down in the real terms of what they buy, I would rather make our politics about cheering on that one person than hectoring the 99.”

It’s that one person that Organized Labor also claims to represent. As conservatives, we should be competing for his or her attention. But for that, the rhetoric of “makers” and “takers” simply will not do.

READ ALSO: Understanding your dollar: Whose money is it anyway? – Part 2

Please allow me to revisit once again my rent analogy.  If I can devalue a foot from 12 to six inches, you’ll recall how one square foot will become four and how that will quadruple your rent. So now let’s expand on this analogy and say that you are a dues-paying rank-and-file member of a union.  You get your pay stub like everyone else, and you have a deduction on it for those dues.  You naturally expect value for your money, so you support the union’s effort to get you a contract which represents a better deal than you otherwise would have gotten on your own.  You’re teed up for a 10 percent raise this year.

But I am your landlord, I just devalued the foot and your rent just went up 400 percent.  That great 10 percent raise your union negotiated for you isn’t looking all that great any more.

While I remain a conservative and am troubled by much of what I hear from Organized Labor and the Occupy Movement – can you now see why there is agitation for an increase in the minimum wage?  No one is devaluing a foot, but the political/financial sector is merrily dancing around the chairs with the music playing, devaluing your dollar by constantly expanding the money supply.

The end result is the same.  Anything gained by Labor at the negotiating table is lost to true inflation (which Obama has unwittingly admitted) and then some.  If Labor really wants to support that one person trying to get ahead, raising the minimum wage is not the solution.  It merely allows Grubercrats and Grubericans the luxury of striking a populist – but utterly meaningless – pose.  That one person who is doing everything right, and falling ever further behind for it, is a very real problem.  But the problem is not wages, but the money those wages are paid in.  The single best public policy answer to the disappearing middle class is a sound dollar.

A sound dollar enforces a fundamental equity between the debtor and the creditor. With a strong dollar, creditors would have to reckon with the fact that there will be no more bailouts to rescue them from their recklessness. Debtors would have to reckon with the fact that the value of the dollars they owe will not be inflated away. Where this would leave the “rest of us” is with wages paid in dollars that actually mean something tangible: namely, a claim on our gold held by the Treasury on our behalf−something that, until the early 1970s, was actually the case.

Our money supply can essentially travel in three directions: 1) politically preferred uses, e.g., the public debt; 2) speculation; and 3) objectively productive uses. A truly sound dollar would force the market to set interest rates such that excessive government spending is constrained, even better than it would be by a balanced budget amendment.

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A sound dollar would also eliminate the incentive to borrow money for free to count cards at the Blackjack table of the commodities market. At the end of the day this means the free market will enforce a preference for objectively productive uses of our money – also known as the creation of wealth − as well as its resulting creation of full-time, middle class jobs.

A sound dollar would ultimately results in price stability. A ten percent raise – if you can negotiate such a deal – would then truly be a great deal, because that raise would no longer be consumed by inflated costs elsewhere.

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John H. Horst
John H. Horst earned his Master of Arts in Theology from Asia Pacific Theological Seminary and holds a Master of Divinity from Bethel University. As an active member of his community, Horst is the Treasurer of three organizations including, the Mira Mesa Town Council, the San Diego Chapter of ICS2, and Pacific Lighthouse Christian Fellowship. He is currently an information security engineer and trainer. He resides in San Diego, CA with his wife and two sons. Website: Facebook: Twitter: Google+: CommunityConservative/posts The Secret to Winning the Hearts and Minds of the Next Conservative is available for purchase at Amazon and Barnes and Noble.