Sunday, July 13, 2014

The Economic Realities Politicians Rarely Talk About

How does a producer decide whether to employ additional units of a resource? This question is posed in the 6th edition of a textbook titled "Economics: Private and Public Choice". We (the collective labor force) have been reduced to "units of a resource".

Another midterm election cycle is upon us and candidates from both parties have "on schedule" started repackaging the same truncated arguments from the last dozen or so election cycles. While our economy has added jobs for 52 straight months most of those jobs are low paying and offer no benefits. As summer turns into fall our television screens and mail boxes will once again be filled with partisan political rhetoric offering solutions to our current economic situation. Tragically, most of the solutions offered won't address the root cause of these problems: the labor force (at all levels) has been relegated to being nothing more than an appendage. This problem is systemic and can't be solved from Washington D.C.

One political party is offering wholesale deregulation: get rid of the minimum wage and cumbersome regulations and watch the economy grow. I'm sure the unemployment rate would be close to zero if the minimum wage was $2.00 an hour. Just think of the money that could be saved on hard hats and safety glasses in the manufacturing sector of our economy.

The other party is calling for unrealistic wage hikes and regulations that most small businesses can't afford. Sure it would be nice if the minimum wage was $15 dollars an hour, but how many businesses would be able to stay open? Who would take the risk of starting a business if your labor force is going to make more money than you?

I believe that we are at the tail end of a fundamental shift in business ethics. The same middle class Americans who would have led the marches and protests are now sitting on their hands and keeping their mouths shut. Their fear is rational in context to their eroding status in our society. In the professional sector productivity is at an all-time high due to the 70 plus hour work weeks; while low skill jobs have seen their wages stagnated for the better part of a decade. We have lived for 30 plus years with a business ethic in place that reduces work in all of its forms. Seeing labor (people) as "units of a resource" who exist for the sole purpose of generating revenue is a problem that I'm almost certain we won't see addressed in the majority of the political ads coming our way.

My fear is that we (as a country) are too distracted by the spectacle of pop culture: Duck Dynasty, Real Housewives of (insert your favorite city) and technology, and too fragmented over social issues: abortion and same-sex marriage to correctly identify and work towards solving the economic issues we are facing. So remember this fall when candidates A and B are "debating" the issues, the odds are they are both competing for the same campaign dollars from people who view you as "additional units of a resource".