CD8 candidate Jesse Kelly’s and Tea Party’s economic platform similar to Communist nationsby tcguestblogger on Sep. 16, 2010, under Politics
By Sarah Spieth, MPACS
In this current struggle for American identity, the Tea Party movement and many of its sympathizers are operating under the notion of America needing to get ‘back’– back to its fundamentals, back on track, back to freedom, back to a strong military focus, back to defending free markets and capitalist interests, and away from large government, socialism, free riders, hand-outs, and an entitlement culture. Somewhere along the way, however, we are all missing the point that some of the suggested economic provisions are also actually kind of anti-American.
Case in Point: Jesse Kelly, candidate for Arizona representative to the US Congress, and much of the Tea Party ideology are in favor of taking “steps to lower and eventually eliminate the minimum wage”. (Saddlebrooke Candidate Forum: http://www.youtube.com/watch?v=8WewLDR05G0).Evidently, no one has truly considered the profound implications of such a notion and acknowledged how counter-indicative they are to everything the ‘back’ weltanschauung stands for.
Sergeant Kelly deserves profound respect and gratitude for the way that he has served this nation’s interests during his deployment in Iraq as a Marine as well as for the way in which he has shown that he possesses the necessary skill set to be a successful business man for Don Kelly Construction company. Indeed, he truly embodies all the principles that so many Arizonans are yearning for at this time: strong leadership, drive, and discernment.
Still, before we cheer his white chariot of patriotic ideals and leadership towards ‘backwards’, we may want to consider that Mr. Kelly’s bio yields no indication of the fact that his single year at Montana State University and his subsequent enlistment in the U.S. Marine Corps exposed him to any amount of economic schooling at the higher education level. Arguably, you say, but why would it need it to when he has shown that he can be a leader, a successful business man, and an entrepreneur? Well, because some of his suggested economic reforms should really raise a few eyebrows in regards to how they reflect policies of today’s Communist countries…
So, Mr. Kelly, I have decided to break down for you, why the minimum wage elimination concept can be perceived is a one-way-track to practices used by Communist nations.
First off, it is no secret that you are a supporter of the neoclassical economic school of thought and that Milton Friedman is your number one man. You favor a hands-off approach by the federal government in economic policy, you believe markets should regulate themselves freely, and that the supply and demand relationship between consumers and producers motivated by their respective self-interests maintains to be the only way to political freedom.
As you know, the wage represents an exchange between sellers (workers) and buyers (business owners) as is the case with any other good or service and everyone is trying to get a deal. The business owner is seeking the lowest possible price and the laborer the highest possible price. This is where, in theory, free market economics settles in at the fair price point that sets a society’s general prices of consumer goods, cost of living, and, of course, the minimum wage in a blissful synergy where everyone is happy. So, why are some left unhappy?
Well, because there is another issue. It is in a business owner’s self-interest to, duh, minimize costs and maximize profits and so one might be inclined not to settle for the fair market price of labor. Instead, one can hire from within a group of individuals that is in some way marginalized or segregated and thus willing to sell its labor for less than the fair price – enter ‘made in Thailand’, outsourcing, maquiladoras, slavery, and, of course, employment of illegal immigrants.
As this leaves those that offered their labor at the initial price sitting on their hands, this is what is recognized as the unequal power relationship between business owners and workers.
As all these groups provide labor for less than the market price in ample abundance it drives that price and its minimum wage down and this is why, as you say, one “cannot afford to pay a 15-year-old $7.50 an hour to put together a tuna sandwich at Subway. It does not pencil out that way business wise.” And, frankly, why should one, if that 15-year-old could be replaced with a highly skilled, lower paid mother in her 30s who happens to be illegal? Note that the teenager is competing with the market price of the marginalized group even if the employer has no intention of hiring from within that group. This is because competitors who do hire from within that group can offer products at lower prices thus driving down the fair market price for labor. Both, the worker and the business owner are hurting.
So, this is where we are today and this is why you may be left feeling that the minimum wage is too high and that it is a worn out concept altogether. Understandable…
The old notion of the minimum wage came from the realization that the market can push the price for labor below what it takes for a person to support themselves and that this fact contradicts with the idea that a person who works 40 hours per week should be able to live. But in all reality, that is a guarantee the minimum wage ceased to provide long ago.
While the minimum wage has increased in its numeric value over the last years, inflation has caused its real value to decline by 26% since 1979 which means that, really, a minimum wage earner of $7.25 per hour only has the purchasing power of $5.36 (National Coalition for the Homeless).
2009 Poverty Guidelines for the 48 Contiguous States and the District of Columbia*
Persons in family Poverty guideline
*Institute for Research on Poverty (http://www.irp.wisc.edu/faqs/faq1.htm)
Mr. Kelly, I give you the 2009 Poverty thresholds for the 48 Contiguous States and the District of Colombia. For yourself, and your household of four, that would put you into the $22,050 per annum bracket for what the federal government believes will provide your family’s minimum living standard. Please feel free to adjust for inflation and subtract 26% at your leisure.
However, living at the poverty threshold, one might just be a winner after all, since currently in Tucson 18.4% of the population lives below it. Of those, nearly half earn an income of less than 50% of the poverty threshold. Arizona wide, the percentages are 14.2% and 6.6%, respectively (Citidata.com).
A widely used mantra states that lowering the minimum wage will decrease unemployment and it is absolutely correct! A sandwich shop could finally pay that 15-year-old, say, $2.00 per hour and hire ten more 15 year olds to ‘put tuna sandwiches together’, but what is a job if one is left starving anyhow? Yes, unemployment would be down, forget the fact that people in service jobs would not be earning anything close to a living wage, because, finally, it will all ‘pencil out business wise’.
Frankly, this is a policy that has worked very successfully in Chinese Gulags for a long time and China is not only Communist but widely known to have rejected the notion of human rights altogether. Is it feasible that once we have eliminated the minimum wage, our productions costs would be so low that it would be us exporting cheap goods to China reversing the trade deficit? Who knows…
Point is, Mr. Kelly, the elimination of the minimum wage can be perceived as equivalent to institutionalizing an entire layer of society that will never have the opportunity to lift itself out of poverty and never get a shot at the American dream, because when one works 40 hours per week at $2.00 an hour, one never gets an education, one never affords health care, and one can’t afford to repair the car which one could drive to the job that pays just a little more. No Sir, a person may afford rent and may eat and that is all they do for the rest of their life. There’s no need to consider how this degree of institutionalized poverty violates the Convention of the Rights of the Child, because, hey, ‘it pencils out business wise’.
Mr. Kelly, I maintain my profound respect for your achievements, but I plead with you to please contemplate the profound human suffering your proposed reform would bring to Arizona and the nature of the governments that resort to such policies. Eliminating the minimum wage would be the death blow to people who are already not meeting the poverty threshold. Please feel free to consult with the Economics department at the Eller College of Management at the University of Arizona, an aggregate of wonderful bright minds that may be able to give you an unbiased perspective and shed some more light on this for you.
Sarah Spieth holds an MA in Peacebuilding and Conflict Resolution and a BS in Management from the University of Arizona’s Eller College of Management and has worked with organizations in Sydney and New York City in the areas of disaster response management and community bridge building, Ms. Spieth consults on business efficiency and building sustainable solutions to conflicts.