If you are campaigning for an increase in the federal minimum wage, chances are you are interested in reducing poverty levels in the United States, which currently sit at 15 percent. I would advocate for this, but perhaps there is a better solution.
For example, consider the concept of rent-seeking. As defined by economist Gordon Tullock, “rent-seeking is the use of resources for the purpose of earning an economic profit, where the profits themselves have negative social consequences.”
In 2013, $3.21 billion was spent on rent-seeking and lobbying (OpenSecrets.org). So, if more than $3 billion were spent rent-seeking in order to protect profits through government-granted special privileges, then certainly many of these firms possess the resources to pay their workers a better wage. Sadly, however, they are not.
Rather than increasing the minimum wage, shouldn’t we outlaw rent-seeking and lobbying? This would free up resources to increase productivity, thereby increasing workers’ real wages, in turn making society generally better off.
Actually, all of the media attention garnered by minimum-wage laws is a direct result of rent-seeking and lobbying interests who seek to gain at the expense of poverty-ridden Americans.
So, if you really want to lift the poor out of poverty, consider who is lobbying for these policy changes. They are the substitutes for minimum-wage workers, who will see an increase in their income as a result of an increase in the minimum wage. Walmart, for example, already pays its workers above the minimum wage. Consequently, in low-wage areas, a minimum-wage law will raise the cost of business to its competitors, but not to Walmart’s – thus making it in their self-interest to support an increase to the minimum wage.
And while the probability of outlawing rent-seeking is less than the chances of discovering Bigfoot, it is important those who wholeheartedly want to solve poverty issues in America understand resources are readily available to increase real productivity and pay workers better wages – without increasing the minimum wage.
Beau Kiklis
Durango
