Progressive Irony

Paul Jacob

8/18/2013 12:00:36 AM - Paul Jacob

The left’s war on Walmart ramped up a notch a few weeks ago, when a higher-up in the Bentonville, Arkansas, company let loose with an email defending the big box store’s wage policies.

As reported at The Daily Beast, Steve Restivo, “a senior director of communications at Walmart,” took umbrage with an online campaign at the progressive magazine The Nation, blurbing an email with the subject line “people in glass houses.”

Restivo effectively deflected a few stones.

The Nation’s campaign was designed to rally protest against the low wages paid at Walmart — to bring up the average wage way above the national minimum. Restivo’s email noted, on the other hand, that wage policies at the august journal suffered a bigger embarrassment:

The Nation — “America’s leading progressive print and online magazine”— recently encouraged its readers to sign an open letter demanding that Walmart increase wages to $12/hour and this article called our company one of the “biggest abusers of low-wage labor.”
In an ironic twist, ProPublica recently reported that starting this fall, “interns at the Nation Institute will be paid minimum wage for the first time in the history of the 30-year-old program.” As ProPublica noted, The Nation has been paying its full-time interns a weekly stipend of $150 per week — less than the current federal minimum wage rate of $7.25 per hour.

Furthermore, Reason’s Katherine Mangu-Ward archly noted that the foundation funding The Nation’s internship program, in planning to up the compensation for said interns, expects to employ two fewer than previously. Exactly. When prices and profits remain unchanged, but one input’s costs rise, you make do with less of that input. This is a classic case against the minimum wage: artificially raise the wages and fewer workers will be employed at the higher rate.

Something’s gotta give. Businesses don’t run on magic and wishful thinking.

At Common Sense I made two additional points against The Nation’s oh-so-typical swipe at the big box store:

  1. The Nation writes as if Walmart employees are victims of stinginess. But these workers choose to work at the big company because that company offers them the best deal. If some other company were offering more, they’d work elsewhere. Are they victims or victors? After all, what would Walmart workers’ wages be if Walmart hadn’t employed them? More? Not plausible. Plus, Walmart’s mom-and-pop competition typically pay lower wages. Almost never do leftist critics mention the possibility that Walmart, if forced to pay higher wages by law or social pressure, might choose different (perhaps higher-skilled) workers. Like in most discussions of the minimum wage, leftists (and even left-leaning centrists) blank out on the issue of opportunity cost, supporting policies that might as well be designed to hurt most the people they say they aim to help.
  2. The Nation makes much of the concept of a “living wage,” focusing on the idea of a Walmart worker supporting a typical “family of four.” If you imagine yourself as benevolent overlord, this perspective can seem awfully persuasive. Then you realize that you aren’t an overlord, your benevolence is probably more fantasy than reality, and the whole perspective is ineffectual. Markets aren’t run by overlords. After all, whose responsibility is it to feed “a family of four”? The employer of one family member? No. The parents in the family, who might be morally compelled to develop more lucrative skills or a plan for contraception or abstinence. Of course, many Walmart workers are single, or have spouses or parents who work as well — thus obviating the alleged compulsion that Walmart set wages that would, in every case, allow one person to support three dependents.

Lurking behind the critique of Walmart is a strange view of business. . . . very old-fashioned. It is almost as if progressives see big businesses as little different from slave plantations. When the masters treat the slaves well, then left-leaning critics might give them a pass. But when the masters don’t meet up to some imposed standard, then the masters are said to be evil.

To the left, employers remain “masters.” And workers remain “slaves.” The terms of the wage contracts that would prove otherwise get little or no respect. You can tell by progressives’ willingness to override or prohibit any contract they don’t approve of.

This weird institutional bias seems to dominate leftist imagination. The institutions are there to employ workers, and they are under obligations more specific than merely living up to their contracts. The reason to treat workers well is entirely a matter of “morality,” of “humanity,” and not business sense or contract. That is, the only reason businesses do not drain and drink the blood of their employees is because governments, urged by well-meaning activists, prohibit such acts.

Not mentioned? The business reasons contra-indicating the draining of employee blood.

The bias assumes radical inequality: Workers have few obligations; employers have many. And yet every wage contract is between two parties. Both have some negotiating room. Both can reject offers. It is commonly said that businesses have more options than workers do, considering competition amongst laborers, but that depends on skill levels, and time and place. Generally, the higher the skill set of a worker, the higher the pay — and the more options. It’s related to productivity, to something economists call “marginal product,” but apparently no wants to talk about that. Even ignoring productivity, just looking at the numbers game of supply and demand competition, the more employers there are the more workers will bid up wages (that’s one reason why most wages aren’t as low as they are at Walmart, or its competitors).

So you might think that those who say they want higher wages would try to minimize the obstacles to business formations and capital accumulation.

But you’d be wrong.

Indeed, they take the opposite approach: attack successful big businesses as a sort of compensation to help more struggling businesses. Whether from the desks of The Nation or the geniuses in the District of Columbia’s ruling body (who have recently been favoring some big box stores over others), the demand of the moment is for the bigger outfits to pay wages substantially higher than smaller businesses would be forced to pay. This, they reason, might help favor the small at the expense of the big.

Maybe. But it’s not the only effect of the policy.

Raising the costs to the successful stores means that the lower prices offered by those stores will not so effectively reach the mass of consumers, many of whom are poor. Indeed, considering the effects on consumer prices of the left’s obsession with big box stores, I have to wonder: who really is being served by all this?

As near as I can make out, only the progressives themselves. Their desire to interpose between producer and worker, consumer and producer, shows no consistency other than that of a meddler, a puritanical scold who “always knows best.”

But does fewer people working at higher wages paying higher prices for goods make any sense?

Not if you’re poor.

But it does feed the eternal “progressive” love for progressively larger government.     [further reading]