All's Fair in Love and Politics.

Ever since the implementation of a minimum wage in the early 1900's, Americans have been trying to raise it. Jennifer Avilez in her post Minimum Wage & Inflation seeks to promote this view by claiming that raising the minimum wage in Texas, which is equal to the mandated Federal wage of $7.25 per hour, will bring "more spending power" to the "6.3 million Texans" who receive that. In short, Avilez asks whether this is "fair" to those who do make that much seeing as the price of living is rising.

I'm here to claim that it is completely fair. Why would it not be? Do people deserve a certain standard of living no matter the type of job, no matter my previous experience? The true unfairness would be to force businesses to raise wages when they do not think it is economically viable.

Raising the minimum wage goes against much of basic economic theory, that is, the more you forcibly increase wages the less ability on the part of business owners and managers to higher more workers. So in effect, the people already hired do receive more income, however, less people are hired, creating more unemployment. Some do disagree with this view and report, as show here, that raising minimum wage has little to no negative effect overall on a city's unemployment. However, as explained here, the study that calculated the effects of the minimum wage increase in New Jersey in 1994, did not take into account the very small businesses and instead focused more on already established businesses that had more weight to throw around and little to lose with a slight increase in wage costs. The metaphorical David's of the business world were not so lucky though. When my current employers first established their businesses, they didn't even pay themselves, and they were working at a deficit for the first few years. A mandatory wage increase would have destroyed them. Avilez also points to inflation as being a problem. Stating that it should be regulated or at least have the minimum wage be gauged to correlate with inflation. I'm no economist, but inflation isn't something that is a causeless, controlling it isn't a matter of simple legislation, and increasing wages as inflation increases can only exacerbate the problem. For example, if the minimum wage was truly beneficial, then it would be reasonable to force businesses to have $100/hour salaries.

Lastly, this, like all other issues in politics and economics, is inseparable from a moral theory. Force is fundamentally antithetical to freedom and making rational, long term decisions. The average business owner is not trying to oppress their workers with poor wages and poorer work conditions. They know if you try to sell a minimum wage job you better have some extra benefits to back it up, e.g. HEB. I do not disagree that wages should be raised in order to be more competitive, especially in metropolitan areas where city living expenses cannot be managed solely by a minimum wage job. However, the means of raising them is where I stand firmly on free-market principles. Businesses raise wages in order to be more competitive. At my job, I was hired well above minimum wage with little experience and have worked my way up to what many consider a comfortable income for one person. All because my employers relied more on gaining competitive advantage by enticing good workers rather than placating a government mandate.

How Laissez-Faire is Texas?

Texas is often described as a limited government, pro-business heaven. But looking at the evidence of the government's hand in the economy reveals that Texas is not as Laissez-Faire as it would like to seem and I think that continually praising Texas' pro-business efforts have made it harder to see this and have a real, free-market economy.

A major component of a capitalist economy is the drastic separation between the State and Economics, that is, the government and business. However, Texas politics and legislation have had their hands in the economy from its earliest beginnings. In fact, in 1889 Texas was the second state in the union, Kansas being the first, to create Antitrust legislation, i.e. legislation that prevents large corporate mergers and "anti-competitive" actions. Antitrust laws seek to dismantle "monopolies", an over-generalized term that applies to any business or company that has a "large market share." Texans created these laws in order, they believed, to protect business interests in the state as well as enshrine competition. But by trying to "promote competition" they took away what really makes a competitive market, freedom to act and protection of individual rights. Now the person who could have been making the best product at the cheapest price, or the two businesses that wanted to merge, are now restricted by law from doing so because these actions are labeled as "monopolistic."

As Erica Grieder states in her book, Big, Hot, Cheap and Right, which was summarized in the article we read, Texas is not so much "pro-business", rather its actions have been "pro-Texas-business." This idea is enumerated in the Texas Politics online textbook in chapter 9, Section 2, The Politics of Political Economy, where it cites the Texas Enterprise Fund and the "rhetorical nods to the preeminence of markets and competition." Apparently, shortly after the Rainy Day Fund was established, Texas used around 100 million dollars to create an incentive for tech businesses to do come do their thing in the lone star state. This was followed by the 200 million dollar Emerging Technology Fund, "designed to encourage the development of high tech public-private partnerships." Now, I don't know about you, but if that's the often lauded free-market capitalism in action, then call me a Bolshevik.

It was put succinctly by Carine Martinez-Gouhier in this post on Economic incentives in Texas. Gouhier states that a handful of tech companies denied the monetary incentives by the City of Austin, claiming the regulations that would follow from accepting such an incentive is antithetical to promoting their business. Yet many, like Dropbox, said they still wanted to continue to expand into Texas precisely because of its greater economic freedom and that the "short-term" benefit of incentive funds cannot be the deciding factor for long term business. 

My whole point here is not to criticize Texas' efforts to create a firm, limited government and a positive business climate. Instead, my hope is to bring to light that we are not as capitalistic as we may seem; we are much more entrenched in a mixed economy, like the rest of the union, than I believe we'd like to think. The first step to creating a more Laissez-Faire environment is to assess what we are doing now, be honest with what is going on, and try to reel back regulation and incentives on business, offering, instead, a free-market as incentive enough for growing Texas business.