ONLY in the United States in 2015 would this be the lead story in the newspapers and on the media. Workers in fast-food restaurants were protesting again this past week for a raise in their wages. They are asking for an increase to $15 per hour which is from 50 percent to 70 percent more than these workers now earn.
Here is a quote from Reuters.com about the situation: “Jumal Tarver, 36, said he cooks and cleans at a franchised McDonald’s in Manhattan but cannot make ends meet on his pay of $8.75 per hour. He said he must rely on public assistance on top of his wages. ‘It’s hard for me to provide for my daughters with $8.75,’ he said.”
The nonsense that we hear from the leftists—and the elitists which are one in the same—is that the situation of Mr. Tarver is a result of “evil” capitalism and therefore we need a more egalitarian economic system to avoid this. When applied in the context of the Philippines, one expert recently called for an “Economic Edsa” to solve this problem. Presumably that means going into the streets and stealing from the “rich” to give to the “poor” and then paying everyone the same “living wage.”
My generous use of quotation marks is because of the movie The Princess Bride. The character Inigo Montoya says to the villain Vizzini, “You keep using that word. I do not think it means what you think it means” for misusing his words.
A free market system acknowledges the fact and the need for the business cycle in the same way the farmer knows there will be years of bountiful harvests and years of near-famine. Properly understood and taken advantage of, these cycles can be a stair step to more wealth. If a farmer—or a business owner—is cautious during the downtrend or famine, he can greatly expand his crop, business and wealth when times are good.
The business cycle provides economic mobility, both up and down, for those that are smart or foolish.
Karl Marx and those of his thinking believe the cycle should be stopped to prevent some people going down the economic ladder during the bad times. In order to get people to buy in to his ideas, everyone would be paid a living wage with wealth equality for all.
This is nothing more than a return to the feudal system.
The lord made sure that all the serfs had food to eat during the famine. Everyone received a living wage all the time. But when the harvest was abundant, it was only the lord of the manor that saw an increase in wealth, not the peasants. For most of the last decades, that has been governments and their banker friends.
When I worked in a fast-food place—about the time Edison invented electricity—all the line employees were part-time high-school or college students. Only one of the three assistant managers was not a student, having completed two years of college and wanting some work experience. Both of the store managers, in their late 20s, were gaining their experience with the intent of owning their own McDonald’s franchise one day. No one ever conceived back then that flipping burgers was a full-time career for a man with two kids.
Studies have shown that upward economic mobility is still a reality in the US but not as before. Now, an American born in the bottom 20 percent of the economic wealth chain has about an 8-percent chance of rising to the 20 percent at the top. The odds are twice that in Denmark. With the massive multitrillion dollars spent in the US on the “antipoverty” program in the last 40 years, upward economic mobility has decreased.
Economic growth led by allowing the free market to flourish is the only way to end poverty, as studies over the last 40 years have repeatedly shown. But those calling for an Economic Edsa always cite China raising 50 million out of poverty. Their argument is all nonsense.
Poverty in China never got better until the early 1980s, after decollectivization of agriculture, opening the country to foreign investment and allowing people to start businesses. China’s economy grew by 14 percent in 1993 and has averaged 9 percent since 1989. Urban Chinese citizens had virtually no increase in living standards from 1957 until Mao Zedong and communism died. Rural Chinese had no better living standards in the 1970s than in the 1930s.
High economic growth causes poverty to go down. But also as the poor get richer, everyone else also gets richer. In other words, the best place to build personal wealth is in a “poor” country getting richer than in a rich country getting poorer.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter
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