It would be easy to raise the minimum wage and pull millions from poverty. There is, however, an unintended consequence that comes with doing this: a small percentage of the people who need the most help would be hurt as some jobs would be eliminated. There's enough Prima facie evidence for us to admit that low wages and depressed living standards are a structural part of our capitalists economy. Many industries are dependent on the supply of low-wage, unskilled and immobile labor. It's not a coincidence that the rise of capital markets occurred in coordination with the demise of labor markets.
As Americans, we tend to ignore the plight of the developing world. When we think of capitalist countries we rarely consider Mexico or Nigeria. The developing capitalist countries and the Asian countries who practice a mix of capitalism and communism have benefited from the offshoring of our manufacturing base. The relaxed labor laws combined with overall poverty levels have made those countries very attractive places to do business. As we continue the 30 plus year run of Neoliberal and Neoconservative economic policies I wonder: what's left for America? The move from an agrarian economy to an industrial economy wasn't a smooth one, but teaching farmers to work in factories has proven to be easier than teaching factory workers to work in information technology.
With so many multinationals feeding off of the poverty in the developing world, it's conceivable to think one day everything produced by companies with a few hundred million dollars in market capitalization will be made offshore.
Karl Marx was right in the Philosophic Manuscript of 1844. We have elevated the market to idol status. At the highest levels of a manufacturing and production based economy the function of money is to produce more human labor, who produce more goods, which leads to more capital. This isn't the case for investment banks and equity firms. The function of money is to produce more money. The interests of workers have been replaced by the interests of investors.
Just today I was watching international news. Parts of Spain are experiencing severe civil unrest and disobedience. I wonder: how long before this hits our shores? The idea that we can continue on this path without a negative reaction is as big a daydream as believing the market forces at play can be contained under the constraints of our current system. This monster is out of the cage and without any viable alternatives or remedies to fix this system, we could be living in the last days of the capitalist economy.
The sad actuarial truth is that a hike in the minimum wage would lift millions out of the category of the working poor, but it would also hurt smaller businesses with fewer resources. If the decision were made under utilitarian principles alone, the choice to help many over the few is a no-brainer. The tragedy of our current economic reality is that millions are working their fingers to the bone with no chance of getting out of poverty. The minimum wage can't keep up with inflation, but every little bit helps.