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Government Transforms Proportional Economic Gains into Winner-Take-All

Human beings are complex, and unequal in their qualities. This is obvious and to deny it is insane. Some individuals are better than others at math. Some individuals have more social skills than others. Some individuals are physically bigger and stronger than others. Some individuals are hard workers, whereas others are lazy. This is obvious and undeniable.

In free-market capitalism, there is a place for everyone. Those who are more productive earn more, and those who are less productive earn less, but everyone has a place. One couple might care about money more than anything else, so both husband and wife work seventy hours a week and they become wealthy. Another couple might care more about their children than they do about their money, so the wife works forty hours a week and the husband stays home and raises the children. They live in a small house, or maybe a little apartment, and the whole family shares one car, but the parents have multiple children whom they raise well. The second family produces less than the first (of course the second couple produces children, who grow up to become good adults, but for simplicity sake we shall not consider that type of production.) If the second family produces only 28% as much as the first couple, then they could be paid 28% as much as the first couple. If both the wife and the husband in the first couple earn $80,000 annually, for a total of $160,000, then the second couple would earn $44,800 annually. The second couple could not live in luxury, but they could live comfortably, and they would probably live well if the stay-at-home dad frugally spends the money his wife brings into the family.

In highly-regulated, pseudo-socialist capitalism, there are winners and losers. One worker might be only half as productive as another, so it would make sense to pay him/her half as much, but government regulation would not allow that. If the minimum wage is raised too high, for example if it goes up to $15 an hour, then it would be unprofitable to hire anyone who produces less than $15 each hour. If extra costs related to employing someone are added onto wages, then employers would be even less likely to hire anyone who is not highly productive. Likewise, if laws make firing a worker difficult, then a prudent employer would not hire anyone if the person’s productivity is doubtful.

Imagine this situation: there is a physically handicapped worker who has recently graduated college and is now looking for employment. It is obvious that s/he is handicapped, but it is not clear if that handicap will make him/her less productive. The average employee would produce $20 an hour of value. Looking at the handicapped person applying for the job, it is not known if s/he will produce as much as an average employee, or less. The employer wants to make a profit, and very much wants to avoid a loss. The average employee is paid $15 an hour, which leaves $5 of profit for the employer. Since the handicapped worker might be less productive than the average employee, the employer could either hire him/her temporarily, paying the usual $15 an hour, and then fire him/her if it becomes apparent that s/he is not productive enough to merit $15 an hour, or the employer could hire him/her with a starting wage of only $10 an hour, and then raise it to $15 an hour if the handicapped worker proves to be as productive as others, or keep the wage at $10 an hour if the handicapped worker proves to be less productive than others. So, no matter what happens, the employer earns a profit, and the handicapped worker has a job. In highly-regulated pseudo-socialist capitalism, the minimum wage would be $15 an hour, so the employer could not hire a handicapped worker with a starting wage of only $10 an hour. Also, firing a worker would be difficult, so hiring a handicapped worker temporarily to test his/her productivity, with the intention of firing her/him if s/he is not productive, would not be feasible. Finally, the mandated extra costs related to employment might add $3 an hour to the cost of employing a worker, meaning that added to the minimum wage of $15, the total cost to employ someone would be $18 an hour. If the average worker produces $20 of value each hour, then anyone who produces somewhat less than average would be unprofitable to an employer. If someone produces 90% of the normal value each hour, then s/he would be worth $18 an hour to an employer, which would be equal to the cost of employing him/her. If a worker produced less than 90% of the norm, then s/he would be a loss for the employer. If anyone looks like s/he might produce less than 90% of the average, then none would hire him/her because it would be imprudent and anyone who routinely does such things will go bankrupt, at which time all those less-than-average workers will be unemployed again.

This highly-regulated pseudo-socialist capitalism makes winners and losers. Those workers who are average, and look productive, get jobs with good wages that can never fall below $15 an hour, benefits mandated by law, and job security because firing them is very difficult. Those who are less productive, or who appear to be less productive, cannot obtain employment, so they survive in abject, humiliating poverty. Degeneration, similar to that portrayed in the movie “Idiocracy”, ensues.

Returning to the two couples described in the second paragraph. The first couple is very productive, so they get jobs and earn high salaries. The second couple are not handicapped, but they are less productive because they have other priorities. If an employer thinks that the wife in the second couple will be less productive than average, because she has other priorities, then she will not be hired. In free-market capitalism, if someone is only 60% as productive as the average worker, then it would make sense to pay her 60% as much as the average worker. In highly-regulated pseudo-socialist capitalism, however, paying one worker less than others is forbidden, so less productive individuals are perpetually unemployed. No matter how frugal the stay-at-home dad is, a couple with zero income cannot survive. So they fall into abject, humiliating poverty. They do not die, because welfare keeps them alive, but they are psychologically damaged, and they are unable to provide anything more than the physical necessities (food, clothing and shelter) for their children. The children are therefore not raised well. The first couple, in which both wife and husband work seventy hours each week, would probably not have any children, or if they do have a child they will not be able to raise it well because they are both too busy working. Handicapped people would be unable to obtain employment and thus support themselves and live with dignity. Welfare would keep them alive in misery, and if they are physically capable of it they might have many children, because they have nothing else to do besides having sex. Since these unemployed handicapped adults do not live dignified lives, their children would not honor them. Children who do not honor their parents rarely grow up to be good adults. So, highly-regulated pseudo-socialist capitalism creates a generation of winners and losers, followed by a generation of total losers.

Politicians say that more government is always good, especially for the poor, but history shows that that is a lie. Politicians are wealthy, and they control the government, so it is not credible that giving them more power to control the economy will benefit the poor. If it benefits anyone, it is the wealthy politicians. They gain power, fame, and increasing wealth, meanwhile their supporters gain because they are the winners after the economic system is transformed into one in which there are winners and losers. The poor are the most harmed; more than anyone else.

Recent history shows all this. In 1990, the United States passed the Americans with Disabilities Act, which highly regulated the employment of handicapped people. After that, for at least five years, it was almost impossible for handicapped people in the United States to obtain employment. Countries such as India and France made it difficult to fire a worker, and they both suffered high unemployment because of that.

Some of those who advocate increased government control claim that without such government control there is a lack of equality. They are correct; people are not equal unless the government tries to make them so. The error is in assuming that all people should be equal. Equality is a term appropriate for quantities. 5 + 4 = 9. Equality is inappropriate for beings that are qualitatively very different. Is a tree equal to a car? Is a good book equal to a delicious meal? Is an old man equal to a young woman? Every person is unique, qualitatively different from all others, therefore it is nonsensical to think that all people should be equal. History shows that the egalitarian ideology is very exclusionary: “Such is Athenian democracy, the narrowest and fullest in history. Narrowest in the number of those who share its privileges, fullest in the directness and equality with which all citizens control legislation and administer public affairs,” (Will Durant, The Life of Greece, chapter 19). Citizens in Athens were very equal, but most of the population of Athens were excluded from citizenship. Only free adult men both of whose parents were Athenians could be citizens. Women, children, slaves, and immigrants could not be citizens. That scenario has occurred repeatedly throughout history, and it cannot be otherwise. Equality is only possible when the things being compared are qualitatively the same. Equality can only exist in a society if the population is homogeneous. We see in Scandinavia today that socialism has brought more equality than in any other part of the world. It should be recognized that the populations of the five Scandinavian countries are very homogenous: they are almost all White, in each country they all speak the same language, and they are almost all non-believing and non-practicing Lutherans without Christian Faith but with vestiges of Christian morality. Their lands are small and their populations are also. Sweden, the biggest of the five, has less than ten million people, and all five Scandinavian countries combined have fewer people than Texas. Government-imposed equality works in Scandinavia only because almost all the people there are very similar. When larger countries have tried to impose equality, the governments have had to murder unusual individuals to make the populations less heterogeneous. The French revolutionaries called for “Liberty, Equality, Brotherhood”. They murdered tens of thousands to prepare the way for their great society. When the Communists took over in Russia, China, and Southeast Asia, they murdered millions to prepare the way for a world in which everyone would be equal. Those who call for equality, and want to empower government to make us all equal, should be aware of what they are demanding. Equality among qualitatively different human beings is unnatural, and only extreme violence can impose it on any large country with a heterogeneous population.