President Obama obviously has a distorted view of achievement and appears to believe that somehow social justice can be accomplished by giving to some from the achievement of others. This is in fact a corruption of nature and true justice at the most elemental level. The unintended but actual consequences are the opposite of what is intended as verified by every redistributive effort in history.
Our Creator grants us skills and abilities in ways that we do not comprehend. Some appear to be more gifted in some areas than others in terms of musical ability or athletic ability or abstract thinking ability. For example some appear graced with superior coordination; some with superior mechanical aptitude.
Our Founders realized that we are each endowed by our Creator with certain inalienable rights that among these are Life, Liberty, and the Pursuit of Happiness. The essence is that while we may each have different innate abilities, we each have the inalienable right to develop or pursue what it is that makes us happy (as long as it doesn’t infringe on the rights of others). Equal opportunity to pursue is a guarantee: equal outcome of the pursuit is not.
We have a right to the fruits of our labor; and no one is empowered to unilaterally decide for another the manner in which he must labor or how much he must labor. The true value of our labor is determined by the service our labor provides, as can only be determined by the consumer of that service.
A high-demand service that can be provided by anyone is necessarily of lesser value than a high-demand service that requires highly specialized training, facilities and experience that can be provided only by a very limited number of providers. At the same time, a highly specialized service for which there is no demand has no value.
In a free market controlled only by natural law, the reward or value of labor (physical, mental, or entrepreneurial) is determined strictly by the consumer. As a result the market is very efficient in supporting those services it values; and in eliminating those services that are not valued.
Henry Ford was the most revolutionary producer in history. He created the Middle Class by creating products of high consumer demand using processes to assure high quality at ever reducing costs by eliminating wasted resources in the processing. The ever reducing costs were applied to reducing the price of the products and thus expanded the available market; and permitted a wage sufficient that those who built the product could afford the product-expanding the market still further. Ford also revolutionized manufacturing by cutting the average laborer’s work week from 60 hours to 40 while doubling the daily wage which he accomplished by maximizing the value of the laborer’s effort by eliminating all waste of the worker’s effort.
We know from the unmatched results he produced that Henry Ford’s principles of labor and value are valid and worthy of replication.
Ford grew up on a farm and was motivated in his mechanical pursuits primarily to eliminate the drudgery of farm labor. Specifically he identified plowing as the most rigorous of labor; a task made much less so by using one of his tractors. However, Ford noted that farmers expected 12 months of income for four months of work concentrated during planting and harvesting. Since the market garners no service from farming during the other 8 months, such expectations are unreasonable.
Individuals encounter problems when the value of their labor doesn’t support their desired lifestyle. In a free market the individual has to adapt continually as market demands change, though this is counter to human nature that prefers unchanging routine over constant change and adaptation.
There are always unintended consequences when attempting to alter natural law because natural law is self-policing.
The forces shaping the free market are in a constant state of change and are as diverse as the number of consumers; the number of providers; and the work environments that comprise it. Therein lays the unconquerable obstacle to controlling the free market: interactive complexity beyond the ability of mortals to alter any part thereof without the high probability of severe unintended consequence outweighing any benefit of the original alteration.
Government interference in the free market always leads to failure because government regulations always attempt stagnation in an incessantly dynamic market. Such regulations always attempt to artificially force an unnatural outcome; usually to favor a political contributor or political point of view. Invariably they attempt to control a segment of the market process independently of all the other forces impacting the market, causing systemic imbalances that eventually disastrously rectify themselves.
For example, when Chris Dodd and Barney Frank forced banks to lend to un–creditworthy borrowers, and the Fed increased the money supply and kept interest rates artificially low (rather than naturally dynamically competitive); the result was explosive growth in borrowing for ever-increasingly bloated and otherwise bad investments (in real estate and it’s derivatives this time) that naturally creates an unsustainable bubble to disastrous results.
Government interference in free markets is no different than a poorly designed and incorrectly constructed dam on a fast moving stream. It initially may do what is desired and create a pond, but since it’s design is incomplete and it’s structure insufficient it eventually fails like a bursting bubble, creating great destruction to everything down-stream. That is exactly what happened in the recent financial collapse.
Another example of unintended consequences: Minimum Wage laws exist solely to increase the cost of labor above the natural value of that labor. This is clearly unsustainable. If there is no free competition in the market, only the consumer loses by having to pay more for the product or service than it is naturally worth. At a minimum this reduces the consumer capital available to create and sustain truly valuable products and services.
If there is free competition, the producer required to pay elevated Minimum Wages must produce off-setting cost reductions elsewhere in his processes to compensate for the overpayment of wages. Rather than using those cost reductions to reduce the selling price and expand the market and increase employment, they are used to simply maintain the existing level of employment.
Automation is an early choice to reduce costs and most likely eliminates the jobs most impacted by Minimum Wage laws. Affected employees not only don’t realize an improved income intended by the Minimum Wage laws, but lose their income completely.
If automation cannot provide a viable cost reduction, frequently the worker must have more abilities, experience, or training in order to do more of the work. This too most likely eliminates the job of the less experienced, less capable Minimum Wage worker; accomplishing the opposite of what the Minimum Wage was intended to do. It also makes it more difficult for new workers to get a start in employment without a higher level of education or training than is typical for new workers.
If increased automation and increased employee capabilities is insufficient to produce a competitively priced product or service, the provider looks for markets unencumbered by Minimum Wage laws (or other regulations) that results in all jobs in the Minimum Wage market being lost.
The veracity of this scenario has been playing out in America for 40 years as we respond to ever increasing costs of government regulations, taxation and ever increasing competition from less encumbered providers in China and India.
President Obama is apparently being guided by mentors who have no real-world job-creating experience; who have no appreciation or understanding of the free market; and who wrongly believe that government intervention and control can result in a compassionate employment market. History confirms that violating the natural laws of man and markets always leads to failure.
This explains why no jobs are being created in America today; and won’t under Obama’s policies.
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