September 29, 2010

There are minimum wage laws in most developed countries. Is it a good thing ? Austrian school of Economics argues it is not as this means there are some jobs which are not created which otherwise would. This would  drive unemployment level down, though of course lowest paid jobs would pay a lot less than is needed for  comfortable lifestyle.

Why do people would not allow the free capitalism work allowing people to sell their labor freely for any  amount they wish ?  This is because there is an assumption of imbalanced relationship.  There is a feeling if you’re low skilled and looking for job competing with many people of the same skill you will accept job with any pay and if there is no minimum wage people will be forsed to accept jobs for virtually no pay.

Do you see the problem with this logic ? As long as slavery is gone nobody can force anyone to accept any job he does not want to.  The critical assumption made here is accepting the job is the only choice  individual has if he is to make a living.  This is not really the case. You do not have to work for anyone you can be self employed!   It is not minimal wage but your income generating abilities as self employed person should define wages for lowest paying jobs.  If everyone can make at least $10 an hour as a self employed individual when there would not be jobs paying less than this amount.

One may think you need capital to make money… I do not agree, especially on the low end you can start work with little capital, little skill, you just need energy and may be a bit of creativity.   There is a free internet access in the library and you can make some money selling things on ebay,  you can do some art and  crafts (though you may be competing with people in third world for labor cost), you can provide some service for people such as washing windows or doing haircuts for their dogs.

I’m not saying everyone has to be self employed,  on the contrary I believe for most people working for  someone else would be the best choice, however I think everyone should be ready to work for yourself if
you do not find a good job.  The feeling you do not really need a job can be very empowering.

If you think about world in this way the unemployment insurance becomes not the issue too.  If you’re  let go and you can’t find job quickly enough to avoid burning all your saving away you can get to the  self employed track.  This would look horrible for people who has made a choice early in their life to specialize, so their worth as employees is so much more than they could make as self employed. This was their choice however to do so – if your carreer is risky in this sense you may consider having excessive savings to allow you to spend more time looking for job or re-train for different industry if your job no more exists.

All of this comes from my basic belief what government does not own you anything, well, at least you should not relay on it providing anything. This goes back to my upbringing in at the times Soviet Union was transitioning to somewhat capitalist Russia and many people who were counting on Government keeping their promises and taking a good care of them were burned badly.

So how about helping people who can’t help themselves ?  There are abandoned children or people who are so sick they can’t take care of themselves.  This is called Charity and it existed well before government started to engage in it.  I belive people become less charitable and more rigid if they feel this is  government job to be a charity. “I had paid my taxes, what else do you want from me” Yet government may  not be the most efficient in this allowing for abuse with resources wasted on people most familiar with the system rather than those who needs help the most.   Moreover counting on government deemphassises  a lot of family and social functions. Parents are not counting on children to take care of them in their old age and investing in their good upbringing, it decreases children responsibility for their aging parents, it does not motivates us to invest into building relationships with network of friends and  local community to be able to count on in times of hardship.

So what Education has to do with it ? Well I belive education is defines how we view life at significant extent.  I think it teaches us to grow up and become employees but not really highlights this is only one of the choices.

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