Mises Daily: Friday, June 18, 2010 by Aaron Smith
In our society of victims, entrepreneurs are blamed for many of the hardships that ail our economy. Whether it is because of high prices, low wages, or substandard economic conditions, they are often accused of exploitation in their quest for profits.
The real victims in our economy, however, are usually not workers who voluntarily enter contracts to sell their labor nor consumers who voluntarily purchase products and services but instead entrepreneurs who are involuntarily subjected to the not-so-invisible hand of our government caretakers. Somehow, it seems completely reasonable to overtly exploit entrepreneurs for their resources in the name of preventing the potential exploitation of anyone else.
Price floors and price ceilings are two sides of the same coin; both of them are economically irrational and morally unjust.
Legislators often garner popular support for measures that exploit entrepreneurs by citing ostensibly alarming data: Exxon Mobile made $45.2 billion in profits in 2008 when gas prices eclipsed $4.00; they’re price gouging! The average compensation of Fortune 500 companies in 2009 was $9.25 million, yet they’re paying unskilled workers only $7.25; the minimum wage is too low!
While drawing such illogical conclusions wouldn’t score a teenager any critical-reading points on the SAT, it does help legislators get bills passed in Congress.
A recent victim of the government’s crusade against entrepreneurs is American Samoa, where in 2007 Congress dictated a 61% increase in its minimum wage as part of the Fair Minimum Wage Act, despite forceful pleas to the contrary from the island of 65,000. As the Wall Street Journal recently reported, StarKist, one of Samoa’s largest employers, will reduce its Samoan workforce 60% by 2011, which they directly attribute to the new wage floor. Unfortunately, they are not the only ones scaling back in Samoa; Chicken of the Sea closed its operations last September, forcing over 2,000 additional Samoans into unemployment. Read the rest of this entry »
