A (very) Liberal/Progressive friend of mine sent me this article to get a rise out of me. I sent him a quick response, pointing out it would take more time to explain why this author is so terribly misguided. Thankfully, that's why blogs exist.
The author, Eduardo Porto, makes the claim "Elected governments are certainly imperfect. But to address our most intractable ills, they are the better tool." I wonder if this is something he'd have written if Bush were in the White House? Doubtful. More importantly, it's worth noting 'government as a tool to fix ills' is a common Progressive claim. It's also one which is completely misguided since it relies on having 'the right people' in office. If the wrong person or people are in charge, Progressives (and Conservatives) who believe government is a 'good' claim "government is broken" or "the wrong people are in charge." The first claim is most likely true regardless of who is in office. But if these claims are true, does government suddenly get fixed when the 'right' people are in charge? Certainly not!
If your system of righting perceived ills requires having 'the right people in charge', you have devised an awful system of governance. It's unlikely the right people can ever be in charge.
What really galls is his belief that an imperfect elected government is the best resource for fixing any perceived ills. Porto seems to have no problem with the 'right' politicians getting wealthy as long as they strike a stance which he support - opposition to businessmen getting wealthy because they provide consumers with beneficial products. It's easy to ignore that, for the last 6 years, with people I'm sure he considers 'right' being in place, Porto's perceived societal ills caused by business have gotten worse. After 6 years of His Wonderfulness being in charge, this journalist is still writing diatribes about how awful things are, or how awful they are becoming. Why has he not stopped to consider the complete and utter uselessness of our Empty-Suit-In-Chief? The 'fix' he voted for has failed him miserably, and he is miserable because he knows it, so he's complaining that the 'fix' was improperly applied. In fact, it was applied properly and it's just plain unworkable. Government is an ineffective method of generating social change, regardless of the 'right people'.
When it comes to 'fixing' societal ills, it's wrong to compare the current (and unsubstantiated) belief that corporations today are less socially aware or less caring, compared to their counterparts at the turn of the century or even in the early 1900's. There are myths built around Eastman and Ford's payment of higher wages. These stories contemplate the concept that these men weren't concerned with maximizing profit, but they were providing a social good or expanding markets for their products. Actually, both these men realized maximizing profit was the social good, and providing higher wages helped them maximize those profits. Capitalism succeeds because it improves the livelihoods of broad swathes of humanity, not because it squeezes blood from a stone. If there was no good being provided by cameras to capture memories or cars to help people get to places, nobody would purchase those products. Eastman and Ford would have been engaged in producing playthings with little to no value in improving people's lives. That's not what business is about, though. Good business often incorporates a high level of social awareness, often by default.
Higher wages were offered because these businesses could attract and retain high quality workers and reduce training costs. Social awareness is the beneficial by-product of markets and production, a fact not lost on Adam Smith in his An Inquiry into the Nature and Causes of the Wealth of Nations, though more explicitly in his Theory of Moral Sentiments.
Today's corporation, which may want to act in much the same fashion as Ford or Eastman, faces a challenge.
The minimum wage, once designed to assure a level of income for modest living, has become a rallying cry for the left. It is, today, considered a sign of the inability for corporations to care about their workers, or politicians to care about their citizens. Yet the minimum wage was designed for low skill jobs with high turnover. A reason for these jobs being low skill/high turnover was primarily because they were filled by younger people, living at home, without experience. They were summer jobs, they were jobs of convenience, or jobs which weren't desirable and people quickly left once they had some experience or more opportunity. Teenagers typically filled positions of this kind. However, as the minimum wage rose, companies realized they couldn't afford to pay higher wages to people who were likely to leave, they had to start hiring people who were likely locked in to the job itself. The unintended consequence of the minimum wage legislation is that it has created a trap. If there is any need to determine how true this is, simply look at teen unemployment levels through the years. My first job was a dishwasher, at the tender age of 13. My sons didn't get their first jobs until they were 17, because no stores or restaurants wanted the hassle of the paperwork required to hire anyone younger than 16 who wouldn't work through the school year. Today, rather than utilize the market to fix what politics has broken, the Left (and the author) want more politics to 'fix' what politics broke by making claims based on poor analysis.
A challenge today's corporations will face is the need to pay substantially higher mandated wages than Ford or Eastman voluntarily offered in order to attract talent. More importantly, new legislation requires them to provide health insurance (depending on company size). These mandates create a dilemma. Either raise prices, which some have done and caused inflation which goes under-reported, or hire part-time workers, or staff lightly and overwork the employees. The author of the article has not stipulated which solution he is comfortable with, but I'll assume he's OK with higher prices.
The author also discusses how energy companies are fighting anti-climate change legislation. Which makes me wonder if he really would be satisfied with inflation. After all, does he prefer $.10 per kilowatt hour electricity or $.15 per kilowatt hour from clean and sustainable sources? Is he comfortable with providing for the 'public good' if it means a 50% increase in what he pays? He doesn't make that clear, but I'm willing to bet he'd write an article about how the energy companies are 'getting rich off climate change' once they start making money by providing the tools to combat it. The failure of this mindset is forgetting that all the things we want and desire carry costs. The convenient part, for this journalist, is the desire to shrug off these costs by asking to government to tax the wealthy more than it already does.
If indeed we were all comfortable with paying more to make workers happy and provide them with their 'right to a living wage', what might some other unintended consequences be? It will certainly cost jobs. It's worth considering the impact on entrepreneurs. I'm wondering how vibrant Seattle's digital entrepreneur culture will be once their new minimum wage laws are enacted in several years. This imposed cost to start-ups may well cause a shift to a lower-cost region. In fact, it may already be having negative effects.
All these great ideas which government can impose may seem to be great for the 'general welfare'. But there is no explanation why so many negative costs go hand in hand with these impositions. As a result, we can ask whether corporations really are less socially aware. My friend's reply to my short response, "But I will say this. Old fashioned values in general disappeared. People don’t watch out for each other anymore." Really? I know some well-publicized incidents may tend to support his view. I believe there are many more unreported incidents which prove people do look out for each other. Particularly when it comes to corporations looking out for the general welfare.
For example, my office operates a very strong work/life balance program. Many people are allowed to work flex-time hours. Still others, like myself, are allowed to work from home frequently. All of the employees at my office have the same, very generous, benefits package. I have seen other directors let workers leave early, or take personal days off when none were left, for personal matters. These are all very obvious socially-conscious benefits which go unreported and overlooked. Last year, our office sponsored a playground clean-up and I volunteered for a day, while 2 weeks ago I drove 2 hours to build a playground in a blighted neighborhood. My company supports 'sustainable' and 'green' initiatives. I may laugh at the concept and the cost, but the company does it because management feels it 'sends a good message' (at the very least).
I know the author of the article didn't work in my last 4 companies, all of which implemented 'green' technologies and programs. However, I know people like him protested in front of 2 of these companies for their 'lack' of social conscience. These corporations often engage programs quietly and journalists like this tend to ignore them.
Today's corporation is much more socially aware than those of Ford's or Eastman's. We have a much higher standard of living, longer lives and we are all generally better educated. If untrammeled Capitalism provided these three points by itself, that should be enough to refute the assertions of this misguided and poorly informed journalist. But when you add in all the other 'stuff' corporations do today - well, Progressives like these need to go back to school.
