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:

• Focus on yourself and your company, constantly striving for ways to make yourself better, smarter, more efficient, have lower prices, higher quality, faster service, a bigger selection or provide more convenience.
• Enlist the power of government to hinder or eliminate your 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.

djv

Our Site

Full use of this site, including access to the search function and the archive of past articles and journals, is now available to everyone.

Connect with Us

 

Our mission is to marshal the best thought on governmental, economic and educational issues at the state and municipal levels. We seek to accomplish this in ways that:

• Exalt the truths of the Declaration of Independence, especially as they apply to the interrelated freedoms of religion, property and speech.
• Emphasize the primacy of the individual in addressing public concerns.
• Recognize that equality of opportunity is sacrificed in pursuit of equality of results.

The Indiana Policy Review Foundation is a non-profit education foundation focused on state and municipal issues. It is free of outside control by any individual, organization or group. It exists solely to conduct and distribute research on Indiana issues. Nothing written here is to be construed as reflecting the views of the Indiana Policy Review Foundation or as an attempt to aid or hinder the passage of any bill before the legislature or to further any political campaign.

The foundation's white papers are intended to make scholarly research on Indiana issues more widely available to policy analysts and researchers. White Papers represent research in progress and are published to invite comment and discussion as preparation for their submission to academic journals and other professional publications. The authors are solely responsible for the content of their research and analysis.