Beginning April 1, the minimum wage for employees working in California’s fast food chains and health care industries will rise to $20 per hour and, in some cases, up to $23 per hour. Many employers managing independent restaurants, retail, and other industries will have to match the higher hourly rate to retain employees. And for hourly employees whose wages are indexed to the minimum wage, mostly in California’s unionized public sector, wages will rise proportionately.
There is no national consensus on the impact of minimum-wage laws. It is part of a much larger debate over what constitutes an optimal economic environment to enable, quoting from Franklin Delano Roosevelt, “economic security and independence.”
In January 1944, in his State of the Union address, Roosevelt enumerated what has since been referred to as a “Second Bill of Rights.” Here it is:
1 – The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
2 – The right to earn enough to provide adequate food, clothing and recreation;
3 – The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
4 – The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
5 – The right of every family to a decent home;
6 – The right to adequate medical care and the opportunity to achieve and enjoy good health;
7 – The right to adequate protection from the economic fears of old age, sickness, accidents, and unemployment;
8 – The right to a good education.
For the American Left, this list hasn’t changed much over the past 80 years. From the Democratic Socialists, we have this 2012 list “A Social and Economic Bill of Rights.” From Bernie Sanders a few years ago, we have the following “21st Century Economic Bill of Rights.” An even more contemporary wish list comes from current presidential candidate, Democrat Marianne Williamson’s “Social and Economic Bill of Rights.”
The common thread in all these lists is the assumption that the government can make all of this happen. That hasn’t worked out in practice. Along the way towards fulfilling these objectives, rising government taxes and regulations managed to alienate a sufficient number of voters to prevent their achievement. And if history is any guide, every time governments seize sufficient power to reach for the quasi-utopian dream that socialists share, the dream has turned into a bloody nightmare. So what can be done?
In 1987, towards the end of his two-term presidency, at an Independence Day celebration at the Jefferson Memorial, Ronald Reagan unveiled his own version of “America’s Economic Bill of Rights.” Here it is:
1 – The freedom to work.
2 – The freedom to enjoy the fruits of one’s labor.
3 – The freedom to own and control one’s property.
4 – The freedom to participate in a free market.
It isn’t a puzzle to recognize the difference in emphasis between Reagan’s Bill of Rights, which enumerates freedom from government, and Roosevelt’s version, which requires massive government programs.
In California, the Democratic state legislature has attempted to enforce Roosevelt’s first two “rights,” the right to a “remunerative job” and the right to “earn enough to provide adequate food, clothing, and recreation,” by raising the minimum wage to more than twice the federal standard.
Doing this, of course, will eliminate jobs and increase the cost of living. Companies will either fold, cut jobs, or raise prices. Government agencies, already struggling with deficits, will have to contend with elevated payroll costs triggered by the minimum wage hike. All this means the recipients of pay increases will at best break even as they pay higher prices and higher taxes.
All this begs the question: If we agree on Roosevelt’s desired outcome and Reagan’s desired means, what government policies might achieve both? For nearly all of the outcomes on Roosevelt’s list, there is one economic variable that exercises a decisive influence: affordability. In Reagan’s estimation, the surest guarantee of affordability is to rely on the private sector.
Robert Reich, whose economic philosophy in general is a quintessential leftist blend of naivete, pandering opportunism, and big state solutions that will create more problems than they solve, does get some things right. He is quoted on the website “InequalityMedia.org,” which he co-founded, as saying, “In America, it’s expensive just to be alive.” He is correct. After listing a daunting number of reasons for this, mostly accurately, he goes on to state, “Jobs, the stock market, the GDP—don’t show how our economy is really doing, who is doing well, or the quality of our lives.”
Again, correct. And he’s on a roll. There’s more. Reich proceeds to describe how corporations are monopolizing their markets and how wealth is increasingly concentrated in the hands of the richest one-tenth of one percent. All true. But Reich’s solution, along with most of the American Left, is to blame corporations, impose more taxes and regulations on them, and use that to grow government.
It doesn’t work. Corporations pass the costs on to consumers, making life even more unaffordable, while the higher taxes and regulations eliminate smaller corporations which prevents them from growing and forcing monopoly corporations to compete with them. The answer from the Left grows government at the same time as it further centralizes private wealth, which in both cases breeds greater inefficiency. That is why corporations in America today overwhelmingly support the Democratic Party, and it is why most Republicans are RINOs. They all follow the money, and the smart money knows that leftist rhetoric and leftist policies make them richer and stronger.
Ironically, it is America in the 1930s during FDR’s presidency and California in the 1960s when Edmund G. “Pat” Brown (Jerry Brown’s father) was governor that provide clues to how affordability can best be achieved through government policies. While there is plenty to criticize in both administrations, they both did something of surpassing, multi-generational benefit. They built infrastructure. Not nonsensical, pointless infrastructure. Actual practical public works that yield economic benefits to this day.
Between 1933 and 1939, FDR’s Public Works Administration built educational buildings, courthouses, city halls, sewage treatment plants, hospitals, roads, bridges, subways, dams, aqueducts, and rural electrification, among other things. To this day, Americans still use these public assets. Between 1959 and 1967, Pat Brown expanded the state’s public works projects to build new colleges and universities, freeways and expressways, and the California Water Project, which remains the most extensive system of water storage and distribution in the world. And to this day, Californians still benefit from these public assets.
Times are very different now. The consensus among America’s elite—with California driving the bandwagon—is that the state has grown quite enough, at the same time as literally everything affecting land development, land management, or energy and water policy has to be evaluated through the filter of the climate crisis. Hence “renewables” to the exclusion of clean, ultra-efficient, advanced natural gas power. Hence water rationing instead of investment in practical water supply infrastructure. Hence trains, light rail, and high-density housing instead of new roads and new suburbs. No wonder everything costs so much.
The paradox in all this is how the result is counter to all the human values that American culture purports to cherish. We need extensive infrastructure because it fosters private sector freedom and growth. When the public subsidizes energy and water infrastructure and deregulates land development, ownership is decentralized. When infrastructure is inadequate and prices soar, the only winners are corporations and rentiers, who invest in artificially inflated assets and artificially overvalued commodities, making excessive profits as consumers struggle.
The formula for economic security and independence for American citizens is not more regulations, more taxes, and more government. The irony that Leftists must face is that more regulations benefit corporate monopolies and stifle competition, and without competition between private corporations, the cost of living increases at a rate that can’t possibly be mitigated by government benefits and subsidies to households.
Similarly, right-of-center critics of big government must distinguish between obvious wasteful spending based on fraudulent premises, versus the government sharing the burden of construction costs for infrastructure assets that will yield economic dividends for generations. It isn’t enough to fight against the waste. It is necessary to correctly identify the investments we need in sensible infrastructure and fight for them.
There is a compelling libertarian argument in favor of government spending on infrastructure that provides clear and long-term benefits instead of a permanent drain. When federal and state governments fail to invest on the front end to make life’s essentials within the reach of ordinary households, they will end up spending more public money merely to subsidize, in perpetuity, those millions of low- and lower-middle-income households who can’t pay their rent or their mortgage.
An economic bill of rights for Americans today might include the following: the government will invest in infrastructure that lowers the cost of living, and it will deregulate essential industries to ensure competition between large and small corporations.
This article originally appeared in American Greatness.
Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
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