Matt Trivisonno's Blog

If somebody says to you that we can cure unemployment by repealing the minimum-wage laws so that wages can fall to their equilibrium level, you are either talking to a fool or a slaver. Libertarians like Lew Rockwell fall into the fool camp, and Republican Ann Coulter is an example of a slaver.

First, we already tried this. During the Great Depression (before the minimum wage was adopted in 1938) wages found an equilibrium level below the amount where a worker could purchase enough food to stay alive.

How does the fabulous “invisible hand” solve that problem? Easy, you just let workers starve to death until their numbers are reduced. Eventually, the supply of workers will fall to the point where wages rise to non-starvation levels.

And how long would that take? Well, for all practical intents and purposes, the supply of surplus humans in the world today is infinite. Billions and billions as Carl Sagan used to say. And since the equilibrium crowd is also an open-borders crowd, the USA would very rapidly come to look like Bangladesh – and it would stay that way for a very long time.

As we are seeing in the warehouse industry, we have already entered Grapes-of-Wrath territory while importing a mere 1 million legal immigrants per year.

In the 1930s, Florida deployed law-enforcement officers along its borders to keep immigrants out – its northern borders with Georgia and Alabama to keep Americans out. The state was trying to prevent an explosion of homelessness as migrant workers poured into the state. (California did so also).

Why were the migrants coming if there were no jobs? Because the growers were advertising for them. Since there was no minimum wage, the more workers that showed up, the lower the wages the growers could pay. By increasing the local supply of workers, the growers lowered the equilibrium wage.

Of course, they also created horrible, squalid working conditions where workers beat each other to death to land jobs in order to feed their starving children. The libertarian dystopia didn’t end until the federal government vacuumed up surplus workers and set them to building war matériel.

You and I might be appalled at the state of the nation when thousands line-up to apply for minimum-wage jobs at McDonald’s and Walmart. But do you think our CEOs feel the same way? Or are they drinking champagne and toasting to rock-bottom equilibrium, while scheming to get it even lower?

The historical fact is that the USA grew to the height of its power with the minimum wage, worker-friendly labor laws, strict immigration control, tariffs, Glass-Steagall, etc.

And it wasn’t a coincidence.

None of those things are the poison that the equilibrium-istas would have you believe.

Note: Read more about Florida’s libertarian dystopia during the Great Depression here.

Harvard historian Niall Ferguson just wrote: “Get ready to be a slave in China’s world order.”

But you read it here first six months ago in: “There’s a Sweatshop in Your Future.”

How can I run six months ahead of the Harvard egghead types? Easy question.

Because I can see The Matrix.

And it’s about faith. If you don’t believe in pure evil, you will always be underestimating what the The Matrix has in store for you.

In any case, Ferguson is too worried about the Chinese:

“If China can impose low wages and harsh working conditions in emerging markets, how long before they start doing the same to us?”

So, I have a homework assignment for the professor: Go on a field trip to American warehouses and have a look at the wages and conditions imposed by American managers on American workers. Don’t go to the Costco facilities; they still treat workers like human beings there. And don’t go to the Walmart company facilities; go to their contract facilities instead. You know, the ones where they have plausible deniability.

Ferguson writes about a Chinese-owned mine in Africa:

“A typical monthly wage packet is about £54 — barely enough to feed a family. The Chinese pay Chinese wages for Chinese working hours. That has unnerving implications for everyone who wants to win Chinese investment. If you want the Chinese to put money into your economy, you had better get ready to work as hard as they do — and for as little.”

Foxconn may have its suicide nets, but in US warehouses pregnant women are made to work like dogs in 100 degree heat, with ambulances standing by outside. And many of them are so badly paid that they still quailify for food stamps!

The most thorough reporting that I have seen on the story is from Dave Jamieson at HuffPo: “The New Blue Collar: Temporary Work, Lasting Poverty And The American Warehouse.”