The father of Capitalism, Adam Smith, had a sustainable view of capitalism but his proponents will utterly destroy its foundation in my lifetime. In Chapter 8 of Smith’s book, The Wealth of Nations he states:
“It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate.”
The New Deal- Relief, Recovery and Reform
During the Lochner Era (1897- 1937) the US Supreme Court consistently invalidated compulsory minimum wage laws as interfering with the ability of employers to freely negotiate appropriate wage contracts with employees. One element of the doctrine sought to uphold the due process clauses of the Fifth and Fourteenth Amendments, which limits the federal and state government from making laws that deprive "any person of life, liberty, or property without due process of law", requires stringent propection for economic liberties, in particular the liberty to "purchase and sell labour".
In response to the great depression, the United States enacted a series of economic programs in the 1930s to restart the economy, but in 1935 the Supreme Court ruled the primary "New Deal" agency (National Recovery Administration), unconstitutional and the national minimum wage established in 1933 was abolished.
The great recession of 2007 also started with reform but recovery and relief are now aliens to market forces. Ultra-capitalists are concerned about lower deficits (spending cuts and tax relief) and austerity measures while cash accumulates on the balance sheets of corporations and millions of people are chronically unemployed. They clearly cannot see that without consumption by the masses the global economy will continue to contract. In their search for higher and higher profits they ship production to cheaper and cheaper labour centres overseas and return finished produts at lower and lower prices with better and better margins to sell to the very same people they deprived of work.
National minimum wage
The unequal distribution of income is probably at the highest level since slavery and the middle class its thinness since the Second World War.
Federal minimum wage in the USA was set at $0.25 per hour in 1933 and re-established at the same rate in 1938. It had its highest purchasing value at $1.60 in 1968. Between 1981 and 1990 it froze at $3.35 and remained fixed at $5.15 from 1997- 2007. The current rate of $7.25 is 30% lower than at its peak in 1968 ($10.50 adjusted for inflation).
The living wage for individual and family of three in New York and Mississippi are $12.75, $32.30 and $8.45 and $21.08 respectively. In 2006 voters in six states approved statewide increases indexed to inflation. Exceptionally, minimum wages are paid by some of the largest and most able corporations in the US; Wal-Mart pays $8.81 per hour and the majority of their wage takers (Associates) works part time hours and will not qualify for health benefits under Obamacare.
In Jamaica, minimum wage legislation was enacted at $20 per week in 1975. Today, at $5,000 it is 23% below the 1975 inflation adjusted value of $6,515. During the period, the most significant advancement has been that the minimum wage is above the tax threshold, unlike 1994 when Dr. Omar Davies announced in his “growth with equity budget” minimum wage of $500 and tax threshold at $432.
Right to work law
There are people who decline to participate in pool buying of lottery at the workplace, but are likely to feel neglected and forgotten if the numbers play and they are excluded from a share of the winnings.
I cannot find a better analogy than this to the “Right to work law” that swept through Michigan on its way throughout North America. In essence, it prohibits unions from requesting dues or fee payment from workers.
Wage takers are going insane believing that what, they can each bargain/ negotiate their own deal. It is a race to the bottom of the unemployment pool where younger and more qualified talents will accept lower wages and more responsibility than others. They should recompose themselves and go read about the labour movements of 1938; maternity leave laws, 40 hour workweek, sick leave, profit sharing scheme, pension plans etc. and all those things taken for granted.
Demise of trade unions
Trade unions have contributed a lot to their current state, but it might be easier to manage them than to manage without them. See Bill 115 by the Ontario Government which curbs bargaining rights, cuts benefits and freezes wages to so call reduce the deficit. If government does this and get away with it, when the private sector get started who will stand for the wage takers?