Inert Detritus The Internet's dust bunnies

17 August 2008 @ 9pm

The Folly of Minimum Wage

I just watched Min­i­mum Wage on Hulu, linked from Mike Ziray on Twit­ter. If there’s one thing I learned in school, it’s to take your knowl­edge and apply it in the real world. We did­n’t cov­er min­i­mum wage in any depth, but we did cov­er price floors and ceil­ings, and it’s easy to make con­clu­sions about the mar­ket’s behav­iour from there. I’m assum­ing basic eco­nom­ic ter­mi­nol­o­gy, which isn’t the eas­i­est if you don’t know it before­hand, but I’m lazy, so my apologies.

Briefly, when a price ceil­ing is enact­ed on some­thing, and is priced below the equi­lib­ri­um price, two things hap­pen. First, sup­pli­ers aren’t being paid enough, so they pro­duce less. Sec­ond, since the price is so low, con­sumers demand more. Think of rent con­trol: land­lords are only allowed to charge, say, 600 bucks for a flat in Mis­sion. Well, for $600, every­one wants to live there! They might live in one room, and rent anoth­er, and 12 peo­ple want to live there. If the price were able to change, the land­lord might sud­den­ly decide he’s bet­ter off mov­ing out of his apart­ment in the build­ing, and rent­ing two rooms at 900 bucks per. Less peo­ple will be will­ing to pay 900 bucks for the place, and so those who are will­ing and able to pay for it will be able to live there.

A price floor is equal­ly odd. If a min­i­mum price is set for some­thing, and it’s above the equi­lib­ri­um price, you get this:

Price floor - Wikipedia, the free encyclopedia

In short, there’s a lot of peo­ple who would love to work for 6 bucks an hour, but not so many com­pa­nies will­ing to pay that much. This isn’t to say that this is the sit­u­a­tion across the Unit­ed States, but it is in some places.

Min­i­mum wage isn’t a cut-and-dry issue, not by any stretch. But in some cas­es, it breaks things.

Now, I’ve nev­er thought of a rea­son for a price floor, a com­pelling rea­son. If you can think of one, leave it in the com­ments. This is some­thing best under­stood by bounc­ing ideas off someone.


Posted by
Simone Manganelli
17 August 2008 @ 10pm

As I men­tioned briefly on Twit­ter, and as you men­tioned your­self, noth­ing is as easy as Econ 101.

Cap­i­tal­ism, and eco­nom­ics, applied as a strict ide­ol­o­gy can be very ruth­less. When you apply sup­ply and demand to a prod­uct, as you did with rent prices in SF, usu­al­ly every­thing’s fine and dandy. But when you apply sup­ply and demand to peo­ple, things can get pret­ty shit­ty pret­ty quickly.

In the­o­ry, accord­ing to Econ 101, when you imple­ment a min­i­mum wage (i.e. a price floor), employ­ers should be less will­ing to hire work­ers at that wage, and there will be more work­ers will­ing to go to work at that price, lead­ing to an excess of work­ers and a lack of jobs to be filled (i.e.: unem­ploy­ment). But this naive appli­ca­tion assumes that there aren’t any oth­er fac­tors at play.

Even though a com­pa­ny may not be will­ing to pay work­ers at a cer­tain wage, that does not mean that it does­n’t have the finan­cial resources to do so. A com­pa­ny could be pay­ing exec­u­tives mil­lions of dol­lars in com­pen­sa­tion (e.g.: prac­ti­cal­ly every major U.S. cor­po­ra­tion does this), a com­pa­ny could be using exces­sive­ly over­priced mate­ri­als in their oper­a­tions (e.g.: Web­Van, back in the day when it still oper­at­ed, was using ridicu­lous­ly good paper for the receipts that they deliv­ered along with your gro­ceries), or there might be gross inef­fi­cien­cies in the prod­uct dis­tri­b­u­tion sys­tem (e.g.: Dell pio­neered the direct-to-cus­tomer dis­tri­b­u­tion mod­el which cuts out mid­dle­men as well as the cuts that those mid­dle­men take off the top).

The point is, even if a min­i­mum wage is imple­ment­ed, com­pa­nies should be able to find mon­ey else­where in the sys­tem to off­set the dif­fer­ence between the min­i­mum wage and the wage the com­pa­ny is will­ing to pay. The min­i­mum wage ensures that low-paid work­ers are not screwed over in favor of exec­u­tive pay, exhor­bi­tant oper­a­tions costs, inef­fi­cien­cies in the com­pa­ny, or oth­er areas where mon­ey is wast­ed. It injects a bit of human­i­ty into the sys­tem of capitalism.

With­out min­i­mum wages, Econ 101 sup­ply and demand cap­i­tal­ism quick­ly devolves into cor­po­ra­tions pay­ing work­ers as lit­tle as pos­si­ble in order to sup­port rich fat cats at the top of the cor­po­rate pyra­mid. This has been demon­strat­ed time and time again in the his­to­ry of the Unit­ed States; cor­po­ra­tions will use young chil­dren as work­ers, they will skimp on sick leave, they will not give over­time pay, etc. etc. Cor­po­ra­tions have demon­strat­ed over and over that unless the gov­ern­ment reg­u­lates how they treat their work­ers, work­ers will be treat­ed sim­ply as objects. Min­i­mum wage is anoth­er form of this type of reg­u­la­tion. (It should be not­ed that this is just as applic­a­ble to the envi­ron­ment as it is to workers.)

One con­crete exam­ple is in the restau­rant indus­try: restau­rants will often force wait­ers to live entire­ly off their tips. If their tips at the end of the week or month do not add up to the min­i­mum wage, the employ­er fills the dif­fer­ence, but then records that they had to “fill up” the work­er’s wages to the min­i­mum wage. If dur­ing the next month, the wait­er gets enough tips such that they add up to above the min­i­mum wage, the employ­er recoups his loss­es from the last month by sub­tract­ing enough to get the wait­ers wages back down to min­i­mum wage. The employ­er is doing as lit­tle as pos­si­ble to meet gov­ern­ment stan­dards but as much as pos­si­ble to screw over the work­er. Imag­ine the effect on these work­ers’ wages if the min­i­mum wage were repealed entirely!

It’s true that in a glob­al econ­o­my, the side effect of out­sourc­ing can occur as a result of min­i­mum wage. But there are so many jobs in this coun­try that can­not pos­si­bly be outsourced—service jobs (such as restau­rants and stores), jobs in the trans­porta­tion sec­tor (such as truck dri­vers), jobs in the agri­cul­tur­al indus­try, etc., etc.—such that the effect of out­sourc­ing is more than off­set by the wage increas­es that the low­est-paid work­ers get as a result of min­i­mum wage. And out­sourc­ing often comes back to bite com­pa­nies any­way, such as Dell, whose tech sup­port cen­ters in India had work­ers with accents that were so incom­pre­hen­si­ble that Del­l’s rep­u­ta­tion for cus­tomer ser­vice tanked. The effect? Dell brought the jobs back to the U.S.

The entire point of the min­i­mum wage is to pro­tect work­ers from cor­po­ra­tions. There are some that are high­ly dis­trust­ful of the gov­ern­ment and any reg­u­la­tion what­so­ev­er, but if I’ve learned some­thing dur­ing my years of inter­est in pol­i­tics, it’s that there’s one enti­ty that is deserved of even more skep­ti­cism than the gov­ern­ment, and that’s the corporation.

Posted by
Christopher Bowns
17 August 2008 @ 10pm

Simone, thanks for the reply. That’s a good list of things I had­n’t thought about. I think min­i­mum wage obvi­ous­ly only pro­tects those at the very edge of things; I can’t real­ly say it was on my mind after I start­ed college.

I think a lot of my dis­com­fort comes from what I see as solv­ing the wrong prob­lem. For min­i­mum wage, the real prob­lems are being an unskilled work­er, which does­n’t let you dif­fer­en­ti­ate from oth­ers, con­tribute more to the com­pa­ny’s prof­its, and there­by earn a high­er wage (with a big aster­isk about monop­o­lies), and an inabil­i­ty to move with high­er wages, out of, say Colum­bus, Ohio, in the case of the show on Hulu. But as always, the ide­al solu­tion, in this case I think it’s in mak­ing changes to the edu­ca­tion sys­tem, the ide­al solu­tion isn’t easy to relate back to sto­ries about the work­ing poor. So a stop­gap solu­tion is bet­ter than none at all.

And I think you’re wrong on that last one: I don’t trust either a damned bit :P. Incom­pe­tence and active mal­ice are hard to tell apart sometimes.

No doubt, Econ 101 (or 2005 and 2006, as it was as Tech) assumes enough things to make the world a hap­py place all on its own: no exter­nal­i­ties, iden­ti­cal goods, lots of small firms, a com­plete­ly liq­uid mar­ket for every­thing from wid­gets to peo­ple, and the list goes on.

We went over a lot of gov­ern­ment reg­u­la­tion this past spring in Antitrust and Reg­u­la­tion. My biggest take away was: it’s hard to tell if com­pa­nies are doing some­thing out of active mal­ice, or just seek­ing prof­its, and run­ning a few peo­ple over on the way. Reg­u­la­tion of any­thing is a tricky busi­ness, and reg­u­la­tion done wrong is worse than none at all some­times. It’s all caveats and “yes, but”, it seems.


Posted by
Simone Manganelli
17 August 2008 @ 11pm

I agree that a good way to help solve the prob­lem is by encour­ag­ing work­er mobil­i­ty, so that as need­ed jobs shift away from one sec­tor or to anoth­er (or start van­ish­ing, as is the case with tech­nol­o­gy replac­ing work­ers), work­ers won’t remain unem­ployed and live off gov­ern­ment handouts.

And I also over­whelm­ing­ly agree that over­haul­ing the edu­ca­tion sys­tem would be a great solu­tion to the work­er mobil­i­ty prob­lem (as well as to a host of oth­er prob­lems which are not the purview of this con­ver­sa­tion, at least not yet). But I don’t think it will nec­es­sar­i­ly solve the prob­lem of cor­po­ra­tions being preda­to­ry in regard to work­ers or the envi­ron­ment. No amount of edu­ca­tion will be able to teach every sin­gle per­son eth­i­cal behav­ior, and it will cer­tain­ly not be able to elim­i­nate uneth­i­cal behav­ior in an entity—the corporation—which has a frame­work which tol­er­ates and some­times encour­ages preda­to­ry practices.

Case in point: your jux­ta­po­si­tion of “active mal­ice” or “just seek­ing prof­its”. I believe these are dif­fer­ent sides of the same coin. The whole idea of cor­po­ra­tions exist­ing in order to make mon­ey is, in my opin­ion, com­plete­ly mis­guid­ed. Cor­po­ra­tions should exist to enhance the qual­i­ty of human life, first and fore­most. Prod­ucts that cor­po­ra­tions make should increase hap­pi­ness, pro­mote good health, cre­ate new oppor­tu­ni­ties for peo­ple, etc., etc. If a com­pa­ny is “just seek­ing prof­its”, then it’s already 90% of the way towards “active malice”.

That’s not to say that cor­po­ra­tions or exec­u­tives or work­ers should­n’t be allowed to make mon­ey. And I’m def­i­nite­ly in favor of those who cre­ate excel­lent prod­ucts being reward­ed more than those who come up with only mediocre prod­ucts. But cor­po­ra­tions should­n’t sac­ri­fice every­thing for short term prof­its, espe­cial­ly when it short-changes work­ers, con­sumers, or the envi­ron­ment. And reg­u­la­tion, such as a min­i­mum wage, helps to ensure that cor­po­ra­tions don’t do this.

Posted by
Mark Hughes
18 August 2008 @ 1pm

Simone, your asser­tion that “Cor­po­ra­tions should exist to do the things Simone likes” is false.

If you want to start a non-prof­it orga­ni­za­tion to increase human hap­pi­ness, you’re free to do so, and in fact we have a gov­ern­men­tal sys­tem that encour­ages this with tax breaks.

A cor­po­ra­tion, on the oth­er hand, is cre­at­ed by peo­ple who want to com­bine their mon­ey and tal­ents to make some prod­uct or ser­vice, and there­by make more mon­ey. Just as a coin­ci­den­tal, inter­est­ing side-effect, some also often orga­nize and encour­age the best and bright­est to inno­vate and cre­ate things that improve the world. See: Apple, Google, Toy­ota, Boe­ing, Vir­gin America.

But they are under no oblig­a­tion to any­one except their stock­hold­ers, and cer­tain­ly not to arm­chair philoso­phers demand­ing obe­di­ence to rules they did­n’t sign up for, and may find odious.

Some basic lev­el of gov­ern­men­tal over­sight can keep cor­po­ra­tions with uneth­i­cal direc­tors from engag­ing in harm­ful prac­tices (pol­lu­tion, abuse of work­ers, child labor), with­out elim­i­nat­ing the good they do in build­ing our economy.

You’re free to do as you please with your own mon­ey and time, but cre­at­ing the world order you want is far more active­ly evil: it requires killing or enslav­ing every­one who has dif­fer­ent ideas. This sys­tem has been tried mul­ti­ple times, and the result is always mil­lions of dead peo­ple, a police state, and a demol­ished econ­o­my. No thanks.

Posted by
Simone Manganelli
18 August 2008 @ 2pm

What an enor­mous straw man, Mark. “[W]orld order”? Haha­ha­ha­ha­ha­ha. Rii­ight. That’s exact­ly what I want to do. “Cor­po­ra­tions should exist to do the things Simone likes”?! Haha­ha­ha­ha, where’d you get that one? OMG CAPITALISM IS SO GREAT OMG OMG OMG RAH RAH RAH CAPITALISM! OMG ANYBODY WHO THINKS THAT CAPITALISM EVER GOES WRONG IS COMMUNIST AND BAD!!!!111eleventy!!

Give me a freakin’ break. My stat­ed pur­pose “to enhance the qual­i­ty of human life” is pur­pose­ly broad that it encom­pass­es almost all prod­ucts that exist today. Com­put­ers allow peo­ple to do more stuff (i.e.: enhance the qual­i­ty of human life). New foods allow peo­ple to enjoy new sen­sa­tions (i.e.: enhance the qual­i­ty of human life). Tech­nolo­gies like new med­i­cines are new hos­pi­tal inno­va­tions allow lives to be saved and less suf­fer­ing to hap­pen in the world (i.e.: enhance the qual­i­ty of human life).

Obvi­ous­ly you can’t leg­is­late cor­po­ra­tions to make their pur­pose fit this def­i­n­i­tion in all cas­es. And I nev­er sug­gest­ed that it should be leg­is­lat­ed. What I want­ed to illus­trate is the fact that cap­i­tal­ism places all its empha­sis on mak­ing prof­its and being respon­si­ble to the share­hold­ers, and it’s such com­plete bull­shit it’s not even fun­ny. It means that ana­lysts think that a cor­po­ra­tion is bad when it does­n’t give mon­ey back to its share­hold­ers, and instead invests it to ensure the long-term via­bil­i­ty of the com­pa­ny. It means that cor­po­ra­tions are sup­pos­ed­ly stu­pid when they invest in sus­tain­able ener­gy and sus­tain­able prod­ucts because it costs more up front, even though it has very tan­gi­ble ben­e­fits down the road. Cap­i­tal­ism encour­ages a very short-sight­ed approach to the econ­o­my (i.e.: preda­to­ry lend­ing prac­tices that led to the cur­rent hous­ing cri­sis), and tol­er­ates cor­rup­tion (i.e.: Enron).

There are so many numer­ous exam­ples I can cite that illus­trate that ram­pant, unchecked cap­i­tal­ism is such a bad idea.

And then you claim that there should only be “[s]ome basic lev­el of gov­ern­men­tal over­sight”. Haha­ha­ha­ha­ha­ha­ha. If you think that min­i­mum wage, child labor laws, over­time laws, envi­ron­men­tal pro­tec­tions, account­ing laws, etc., etc. are all just “basic” reg­u­la­tions, then you’re a lit­tle more delud­ed about cap­i­tal­ism than you think. The exist­ing reg­u­la­tion that we have, in the Unit­ed States any­way, is so sub­stan­tial that we’re so far from unchecked cap­i­tal­ism. And, by and large any­way (ignor­ing the past 8 years or so), we’ve not had “mil­lions of dead peo­ple, a police state, and a demol­ished economy”.

In fact, the past 8 years has been dic­tat­ed by the cur­rent admin­is­tra­tion’s “free mar­ket rah rah rah less reg­u­la­tion” stance, and guess what we have? Tens of thou­sands of dead peo­ple in Iraq (Iraqis are peo­ple too!), war­rant-less wire­tap­ping that has been left unchecked by Con­gress (and which is sup­pos­ed­ly not a big deal at all to you, Mark, because it’s sup­pos­ed­ly part of a “larg­er Oba­ma agen­da” that allows shit like this through), and, oh, that’s right, a tank­ing econ­o­my too.

So wait, let me get this straight. Cap­i­tal­ism rocks. Dead peo­ple, a police state, and a demol­ished econ­o­my don’t rock at all. But poli­cies that push us more towards pure cap­i­tal­ism hap­pen to cause more dead peo­ple, push us more towards a police state, and cause a demol­ished economy.

Why is unchecked cap­i­tal­ism so great again?

Posted by
Christopher Bowns
18 August 2008 @ 10pm

Behave, you two. Civ­il dis­course, this is not. I don’t know what past dis­agree­ment you two have had over this or some­thing sim­i­lar, but frankly, I don’t fuck­ing care for it.

My take on cor­po­ra­tions and is sim­ple. A com­pa­ny exists for one rea­son: to take peo­ple’s mon­ey and make more mon­ey out of it. Any respon­si­bil­i­ty to their employ­ees, the envi­ron­ment, any­thing else, it all comes sec­ond after their respon­si­bil­i­ty to the share­hold­ers. Reg­u­la­tion, in an ide­al world, exists for one rea­son: to put the prop­er restraints on com­pa­nies to pro­tect out­siders that are sub­ject to a com­pa­ny’s neg­a­tive exter­nal­i­ties dur­ing their prof­it-seek­ing behaviour.

Any­thing above and beyond either of those def­i­n­i­tions is one of two things. For com­pa­nies, it’s a fluffy bonus. The com­pa­ny hap­pens to think that envi­ron­men­tal pro­tec­tion is in their best inter­est? Fan­tas­tic bonus! But hard­ly required to jus­ti­fy their exis­tence. For reg­u­la­tion, any unnec­es­sary reg­u­la­tion is a bur­den on com­pa­nies, and inter­feres unnec­es­sar­i­ly with the course of dai­ly busi­ness and their attempt to be profitable.

I think, on the sur­face of it, those def­i­n­i­tions are hard to find fault with.

The real dis­agree­ment is which side of that, cor­po­ra­tions or reg­u­la­tion, to give the ben­e­fit of the doubt to. I lean towards the com­pa­nies, but not heav­i­ly: good reg­u­la­tion, done right (a focus on results required, not how to accom­plish it) is fan­tas­tic. Bad reg­u­la­tion, spec­i­fy­ing a spe­cif­ic approach and solu­tion, and fail­ing to keep up with tech­ni­cal improve­ments which often obso­lete the reg­u­la­tion, those are worse than no reg­u­la­tion at all.

It’s pret­ty easy to see where each of you fall, and I can’t say I agree with either of you entire­ly, though you both have valid points.

Posted by
Simone Manganelli
18 August 2008 @ 11pm

While I dis­agree with you that the ben­e­fit of the doubt should be giv­en to com­pa­nies over government—I would argue it should be the oth­er way around, but also only lightly—I agree with you over your state­ments about reg­u­la­tion. Good forms of reg­u­la­tion are those that apply not only to today’s sit­u­a­tion, but are for­ward-think­ing enough that they can encom­pass future unfore­seen cir­cum­stances, such as the pro­lif­er­a­tion of the internets.

The rea­son I trust the gov­ern­ment over cor­po­ra­tions is sim­ple. The rea­son for being of gov­ern­ment is to pro­tect cit­i­zens in a soci­ety. We col­lec­tive­ly decide to live by cer­tain rules in soci­ety, in exchange for oth­ers doing the same, so that con­flict is min­i­mized between any group of cit­i­zens with­in that soci­ety. The whole pur­pose is to make our lives bet­ter, to take it far­ther away from anarchy.

In con­trast, a cor­po­ra­tion’s rea­son for being is entire­ly self-serv­ing. I would like cor­po­ra­tions to exist to bet­ter the qual­i­ty of human life, but in cap­i­tal­ism that is almost nev­er the case (even when most or all of the employ­ees of that cor­po­ra­tion do believe their cause is in the bet­ter inter­est of human­i­ty). As you said, a cor­po­ra­tion exists “to take people’s mon­ey and make more mon­ey out of it”. It’s self­ish and self-serv­ing. While I per­son­al­ly ascribe a (rather bad) moral val­ue to this, the terms “self­ish” and “self-serv­ing” in this case are intend­ed to be entire­ly descriptive.

When you have two com­pet­ing enti­ties, one whose fun­da­men­tal rea­son for being is to pro­tect cit­i­zens, and one whose fun­da­men­tal rea­son for being is self­ish, I tend to trust the for­mer more. That is not to say that the for­mer nev­er over­steps its bounds, ever. On the con­trary, there are numer­ous exam­ples in the his­to­ry of the U.S. (e.g.: the Water­gate scan­dal dur­ing the Nixon admin­is­tra­tion, the DMCA and the Child Online Pro­tec­tion Act which was passed by a Repub­li­can Con­gress and signed by Demo­c­ra­t­ic Pres­i­dent Bill Clin­ton) where the gov­ern­ment has over­stepped its bounds. But I think there are more exam­ples where cor­po­ra­tions mis­treat cit­i­zens, work­ers, and the envi­ron­ment more than exam­ples where the gov­ern­ment does the same.

My rea­son for treat­ing Mark’s com­ments with such dis­dain is that we have had dis­cus­sions about this over Twit­ter before, and Mark tends to view my opin­ions entire­ly in black and white terms, such that if I point out exam­ples where cap­i­tal­ism fails, I am paint­ed as being com­plete­ly anti-cap­i­tal­ist. Also, Mark tends to believe that com­mu­nism is inher­ent­ly evil and inher­ent­ly tends to cre­ate oppres­sive gov­ern­ments, even when I point out that com­mu­nism is an eco­nom­ic sys­tem (not a form of gov­ern­ment) and, as such, is not inher­ent­ly authoritarian.

In fact, the Unit­ed States is large­ly cap­i­tal­is­tic, but does have com­mu­nis­tic qual­i­ties (such as reg­u­la­tion, pro­gres­sive redis­tri­b­u­tion of wealth in terms of the income tax, etc.). And I am large­ly in favor of the cur­rent sys­tem of the Unit­ed States, and if forced to label myself as a cap­i­tal­ist or a com­mu­nist, I’d prob­a­bly be a cap­i­tal­ist first and fore­most. But there are instances when cap­i­tal­ism com­plete­ly fails cit­i­zens in the Unit­ed States. And I don’t par­tic­u­lar­ly care for Mark’s opin­ions when he asks why I’m not mov­ing to North Korea since I believe that pure cap­i­tal­ism fails.

I admit that I prob­a­bly paint Mark’s views as a bit too pro-cap­i­tal­ist than they actu­al­ly are. Com­par­ing our views, Mark’s are prob­a­bly more cap­i­tal­ist, mine are more com­mu­nist, and yours, Christo­pher, are some­where in between. But even my views are on the cap­i­tal­ist side of the line. And I’d bet we agree on more things than we disagree.

Posted by
Simone Manganelli
18 August 2008 @ 11pm

I sup­pose, in the inter­est of fur­ther­ing this dis­cus­sion in a con­struc­tive man­ner, I should ask you, Christo­pher, the under­ly­ing log­ic for your larg­er dis­trust of gov­ern­ment over cor­po­ra­tions. Why do cor­po­ra­tions, whose entire rea­son for being you admit is self-serv­ing, deserve more trust than the gov­ern­ment which was cre­at­ed to pro­tect citizens?

I real­ly don’t under­stand this line of think­ing. I’d like to think it’s more than just a gut feel­ing of big gov­ern­ment being bad, but I’m not sure I can come up with a rea­son­able line of think­ing that ratio­nal­izes this belief.

Posted by
12 November 2008 @ 10pm

Cor­po­ra­tions are self-serv­ing, but they have a respon­si­bil­i­ty to their share­hold­ers, and share­hold­ers have pow­er through their shares. If a cor­po­ra­tion acts in a way that los­es the trust of its share­hold­ers, the gov­ern­ing struc­ture of the cor­po­ra­tion can be removed.

Whether gov­ern­ments exist to serve the com­mon weal or not, they often do not. And the kinds of “ser­vices” they pro­vide are often of the coer­cive nature. The same mech­a­nisms (and more) by which gov­ern­ments reg­u­late cor­po­ra­tions may be used to oppress their respec­tive cit­i­zen­ries, and to per­pet­u­ate those hold­ing power.

A cor­po­rate work­er, in con­trast, is free (in the­o­ry) to leave the cor­po­ra­tion. While the same is true (in the­o­ry) for an oppressed cit­i­zen of a nation, it is much hard­er and oppres­sive gov­ern­ments have his­tor­i­cal­ly had (coer­cive) mech­a­nisms to pre­vent this. Cor­po­ra­tions (in the­o­ry) can only use incen­tives to pre­vent work­ers from leav­ing. Giv­en the fun­gi­ble nature of many jobs, in many cas­es cor­po­ra­tions have no incen­tive them­selves to do so. (I recall read­ing a rebut­tal to Ehren­re­ich that not­ed that there are extreme­ly few min­i­mum wage jobs to be had because peo­ple have incen­tive to train to get bet­ter jobs, so employ­ers must raise the pay on jobs that would typ­i­cal­ly pay min­i­mum to above-min­i­mum rates.)

Spe­cial­ized work, such as oper­a­tional knowl­edge, exec­u­tive deci­sions requir­ing knowl­edge (one pre­sumes) of cor­po­rate goals, assets, and capa­bil­i­ties, are jobs that cor­po­ra­tions are will­ing to pay mil­lions to keep from mov­ing. It’s not a mat­ter of screw­ing the under­class as serv­ing the cor­po­rate inter­ests: the low­est-paid work­ers are not paid much because there’s always some­one in the labor pool who is will­ing to work for that price. Not so with peo­ple who can make C*O decisions.

Min­i­mum wages, how­ev­er, mean that cer­tain jobs will not be done, and reduces the num­ber of over­all jobs. Beyond stop­ping cor­po­ra­tions from exploit­ing work­ers, it hurts labor­ers because they can­not sell their labor for low­er than that cost; a work­er must find a skill that they can sell for high­er than the min­i­mum wage.

Simone, I would not use “Com­mu­nist” in label­ing your views so much as social­ist. Com­mu­nism is a polit­i­cal ide­ol­o­gy in which a gov­ern­ment is set in place to imple­ment (coerce) a social­ist econ­o­my, soci­ety, and cul­ture. The sys­tem of incen­tives in cap­i­tal­ist economies evolves, and in many cas­es has evolved more social­ist ten­den­cies, organ­i­cal­ly, with­out using coer­cion, and has dis­trib­uted wealth in ways unimag­in­able to the social­ist the­o­rists of the 18th and 19th cen­turies. Noth­ing sim­i­lar can be said about Communism.