It is said that "Nature abhors a vacuum." We can dance around the invisible elephant in the room until pigs fly and we'll get nowhere. Nevertheless, in the following, I am not offering a solution to the illegal immigration problem. I am merely illuminating it.
Humans are very adaptable creatures and act on the basis of incentives, positive and negative. Without getting into a discussion of the merits, if any, of Skinnerian theory, we can look at certain "unanticipated consequences" of government policies. But first, we examine some basic psychology and economics.
Desire is an incentive to take action. To take action requires the power to do so. Until the levels of both the incentive and the power to take action are great enough, the situation will remain static. Desire will remain unnoticed and unfulfilled.
In the sphere of economics, power is measured in units of capital. Desire without capital has no practical meaning. Desire plus capital equals demand (economic demand).
Someone lacks something he desires and is unable to produce it by himself. He sees the way to fill the lack is to obtain it from someone who has or can produce what he desires. Unless he expropriates the object of his desire from that someone else, he must enter into a exchange transaction. In this transaction, he exchanges something he values less for something he values more. On the other side of the transaction, the same thing happens. Thus, each actor negotiates to exchange something he believes is of lesser value to get something he believes is of greater value. In other words, each actor pays what he believes is a "fair price" for what he takes out of the transaction. This is called a "win-win" situation. If either of the actors in the transaction does not believe that is going to happen, he does not complete the transaction. It just does not take place. This is called market pricing. A job is such a transaction.
When government establishes a "minimum wage," it removes, through the exercise of its police power, the ability of the actors to negotiate what represents to them a "fair price" for a unit of labor. This creates a situation of greatest consequence at the lower end of the labor market. This is the area of jobs not requiring significant job skills, i.e., unskilled labor. The saving grace (in a non-socialist economy) is that neither actor is forced to give or take the job. The bottom line is: if a 'win-win" situation is not sensed, the job goes unfilled and the job seeker remains unemployed. Thus, the minimum wage is a major cause of unemployment at the low end. Over time, the unemployment problem is reflected upward in the labor market.
Where did we get the “minimum wage?” It is more than just interesting to note that the original intent of the "minimum wage," or "living wage," originated in the United States during the "Progressive Era" which began in the late 1800s and lasted until the early 1900s. Implementation of minimum wage laws was designed to remove unskilled people from the labor market so they could be put into concentration camps.
Say What????? Read on.
"Reform-minded economists of the Progressive Era defended exclusionary labor and immigration legislation on grounds that the labor force should be rid of unfit workers, whom they labeled 'parasites,' 'the unemployable,' 'low-wage races' and 'industrial residuum.'"
"Progressive economists...believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service of ridding the labor force of the "unemployable."
"A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants [intending to enter the U.S. legally] and also by removing from employment the 'unemployable,' who, thus identified, could be, for example, segregated in rural communities or sterilized." To make the deterrence factor operative, effective immigration controls were assumed to be in place.
"The minimum wage protects deserving workers from the competition of the unfit by making it illegal to work for less." "'We have not reached the stage...where we can proceed to chloroform them once and for all; but at least they can be segregated, shut up in refuges and asylums, and prevented from propagating their kind.'" (See: Thomas C. Leonard, "Retrospectives: Eugenics and Economics in the Progressive Era", Journal of Economic Perspectives, Volume 19, No. 4, Fall 2005, pp. 207-214.)
These days, nobody thinks about chloroforming the "unemployable." Nobody even tries to define the term "unemployable." What we do know is, government policies based on a "minimum wage" actually create unemployables. But, that's only the beginning.
Government can't let the unemployables starve. The fix for that is welfare. Of course, welfare payments comprise capital expropriated from the private sector in the form of taxes or borrowing. And, of course, higher taxes mean more capital removed from the private sector. Obviously, the more capital that is removed from the private sector, the higher unemployment goes. If you don't believe the last sentence, then explain how government stimulus packages designed to "pump capital into the economy to create jobs" work. (These packages don't result in a net creation of jobs, by the way. They merely redistribute jobs. Jobs follow capital. In the area where capital is removed, jobs are destroyed. If any further proof is needed, it is easily observable that businesses and the jobs they represent will move from areas of high-tax to areas of lower-tax.)
So, what does all of ths mean? The answer: Government knows that the minimum wage causes unemployment. The penalties paid by taxpayers for societal unemployables are higher taxes and more unemployables. The minimum wage leads to illegal immigration. Illegals have an incentive to come over the border and fill the "unskilled" jobs that are left unfilled. Why? Because they can. It’s a vicious circle. And, government policies are the progenitors of the problem.
Humans are very adaptable creatures and act on the basis of incentives, positive and negative. Without getting into a discussion of the merits, if any, of Skinnerian theory, we can look at certain "unanticipated consequences" of government policies. But first, we examine some basic psychology and economics.
Desire is an incentive to take action. To take action requires the power to do so. Until the levels of both the incentive and the power to take action are great enough, the situation will remain static. Desire will remain unnoticed and unfulfilled.
In the sphere of economics, power is measured in units of capital. Desire without capital has no practical meaning. Desire plus capital equals demand (economic demand).
Someone lacks something he desires and is unable to produce it by himself. He sees the way to fill the lack is to obtain it from someone who has or can produce what he desires. Unless he expropriates the object of his desire from that someone else, he must enter into a exchange transaction. In this transaction, he exchanges something he values less for something he values more. On the other side of the transaction, the same thing happens. Thus, each actor negotiates to exchange something he believes is of lesser value to get something he believes is of greater value. In other words, each actor pays what he believes is a "fair price" for what he takes out of the transaction. This is called a "win-win" situation. If either of the actors in the transaction does not believe that is going to happen, he does not complete the transaction. It just does not take place. This is called market pricing. A job is such a transaction.
When government establishes a "minimum wage," it removes, through the exercise of its police power, the ability of the actors to negotiate what represents to them a "fair price" for a unit of labor. This creates a situation of greatest consequence at the lower end of the labor market. This is the area of jobs not requiring significant job skills, i.e., unskilled labor. The saving grace (in a non-socialist economy) is that neither actor is forced to give or take the job. The bottom line is: if a 'win-win" situation is not sensed, the job goes unfilled and the job seeker remains unemployed. Thus, the minimum wage is a major cause of unemployment at the low end. Over time, the unemployment problem is reflected upward in the labor market.
Where did we get the “minimum wage?” It is more than just interesting to note that the original intent of the "minimum wage," or "living wage," originated in the United States during the "Progressive Era" which began in the late 1800s and lasted until the early 1900s. Implementation of minimum wage laws was designed to remove unskilled people from the labor market so they could be put into concentration camps.
Say What????? Read on.
"Reform-minded economists of the Progressive Era defended exclusionary labor and immigration legislation on grounds that the labor force should be rid of unfit workers, whom they labeled 'parasites,' 'the unemployable,' 'low-wage races' and 'industrial residuum.'"
"Progressive economists...believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service of ridding the labor force of the "unemployable."
"A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants [intending to enter the U.S. legally] and also by removing from employment the 'unemployable,' who, thus identified, could be, for example, segregated in rural communities or sterilized." To make the deterrence factor operative, effective immigration controls were assumed to be in place.
"The minimum wage protects deserving workers from the competition of the unfit by making it illegal to work for less." "'We have not reached the stage...where we can proceed to chloroform them once and for all; but at least they can be segregated, shut up in refuges and asylums, and prevented from propagating their kind.'" (See: Thomas C. Leonard, "Retrospectives: Eugenics and Economics in the Progressive Era", Journal of Economic Perspectives, Volume 19, No. 4, Fall 2005, pp. 207-214.)
These days, nobody thinks about chloroforming the "unemployable." Nobody even tries to define the term "unemployable." What we do know is, government policies based on a "minimum wage" actually create unemployables. But, that's only the beginning.
Government can't let the unemployables starve. The fix for that is welfare. Of course, welfare payments comprise capital expropriated from the private sector in the form of taxes or borrowing. And, of course, higher taxes mean more capital removed from the private sector. Obviously, the more capital that is removed from the private sector, the higher unemployment goes. If you don't believe the last sentence, then explain how government stimulus packages designed to "pump capital into the economy to create jobs" work. (These packages don't result in a net creation of jobs, by the way. They merely redistribute jobs. Jobs follow capital. In the area where capital is removed, jobs are destroyed. If any further proof is needed, it is easily observable that businesses and the jobs they represent will move from areas of high-tax to areas of lower-tax.)
So, what does all of ths mean? The answer: Government knows that the minimum wage causes unemployment. The penalties paid by taxpayers for societal unemployables are higher taxes and more unemployables. The minimum wage leads to illegal immigration. Illegals have an incentive to come over the border and fill the "unskilled" jobs that are left unfilled. Why? Because they can. It’s a vicious circle. And, government policies are the progenitors of the problem.
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