Cummins: Setting Your Wage

February 18, 2015

by Ryan Cummins

A decade ago, I wrote an editorial titled “A Fair Field with no Favors” to point out the tremendous costs that are shifted to taxpayers when a city engages in what we commonly know as corporate welfare. It struck me as I prepared to testify before a legislative committee this week that the very same argument exists regarding the Common Wage.

Both are interventions in the market by government, both allow government to pick winners (thus ensuring there are also losers), and both are ultimately destructive to the wealth and prosperity of the community — including, eventually, the supposed winners.

Such results are the opposite of what we in local government were seeking. Corporate welfare has never made economic sense and neither does the Common Wage law.

When property-tax caps were implemented, there were only a few of us in local government who applauded. Spending has always been a problem at the council level, and, without the discipline imposed by the caps, the hard decisions are just put off for another day.

That day is now here. And it is hard enough to make choices regarding spending without also dealing with an intervention like the Common Wage that forces capital-project costs higher than they otherwise would be.

Property-tax caps are protection for the financial condition of the taxpayer; eliminating the Common Wage is protection for the financial condition of local government.

As a business owner, everything I sell is also sold by everyone from giant national retailers to other local businesses to half the people on Craigslist. Every time I turn around I have a new competitor — and on top of that, both my local and state government seem to fall all over themselves to force me to subsidize some portion of my competitors’ operations.

I understand as well as anyone how difficult it is to be successful in the face of tough competition. But in business, there are two ways to deal with that competition:

The first represents the economic means to success. The second represents the political means. The economic means is the only way to long-term prosperity and opportunity for everyone in my city, my state and my country. It is the only way in which everyone has an equal shot at sharing in that success.

The political means, well represented by the Common Wage law, is based on force and coercion. It may have winners in the short term, but there always is a much larger group of losers. It is the path to decline.

As the owner of a small family business and as a member of a financially strapped city council, I have had to learn a fair amount about markets. Lew Rockwell of the Mises Institute, writing in his book Speaking of Liberty, sums it up well:

“Free-market economics asserts that every government intervention in the market generates consequences that are deleterious for prosperity and human liberty. However much such interventions may assist one group in the short run, everyone is made worse off in the long run. Government intervention destabilizes economic life in artificial ways, and ultimately does not work to bring about the results that its proponents claim to desire.”

I have always strived to determine what works and what doesn’t — both in business and in politics. Using that guideline, it is clear to me that markets work and intervention by force does not. In respect to the Common Wage, I urge the Indiana Legislature to vote for markets.

Ryan Cummins, an adjunct scholar and owner of a family business, served two terms on the Terre Haute Council, including a year as chairman of its appropriations committee.

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