01 August 2006

Executive Salaries and the minimum wage (1)

Towards a well-defined problem

In his Metaphysics, Aristotle says (and I happen to think he’s right), “For those who wish to get clear of difficulties it is advantageous to state the difficulties well; for the subsequent free play of thought implies the solution of the previous difficulties, and it is not possible to untie a knot which one does not know” (III, 1).

In the epigraph of the first chapter of his Miracles C. S. Lewis translates the first clause as, “Those who wish to succeed must ask the right preliminary questions.” Either way you translate it, the point is well made. Before you set out to solve a problem, it is well to be clear on the problem you are attempting to solve. And for my money there is no sphere of human activity where there are more people working will-nilly to solve more problems, having at the same time no precise statement of the difficulty they are attempting to get clear of.

Byron Dorgan was on Charlie Rose, recently, talking about the minimum wage. During the conversation Congressman Dorgan claimed that if the minimum wage had been keeping pace with the rate of growth of executive salaries then it would be $23 per hour. Maybe. It doesn’t really matter, because the solution to the problem should still have shot him right between the eyes. If he, and others, were not so busy trying to solve a poorly stated problem (i.e., the minimum wage is too low), he might have noticed that the real solution to the problem he thinks exists just about came out of his own mouth.

Note that executive salaries have increased without any help from Congress. Hmmmm. What explains this, I wonder. To listen to Democrats and quite a few Republicans you’d think that executives set their own salaries, or, alternatively, that executive salaries are the result of someone’s greed. There is a big difference between hourly wages and executive salaries; and I’m not referring to size. Now, either Byron Dorgan has no idea what that difference is or he does know what that difference is. (That’s logic!) In the former case, he is an ignorant politician, opining like a sage on topics he knows nothing about. In the latter case, he is a devious, lying politician, capitalizing on the general public’s general ignorance of economic realities for the advantage of himself and his party. (Just like many Republicans. I know.)

Rather than just out and tell you what is that significant difference between the minimum hourly wage and executive salaries, which would be fun, of course, let me just ask you two questions: (1) Which of the two is set by Congress? and (2) Which of the two is determined by the market?

Is it of no importance that the income set by Congress is the income with which Congress iteratively finds fault? Is it of no importance that the income determined by a freely operating market is the income which many think is “too high”?

I think one reason that many people don’t like conservative, capitalist, free market economic positions is that those positions are counterintuitive. They seem to go against most people’s intuitions. These positions require more thought than most people really have time for. Most people have time only for superficial examinations; and on the basis of those examinations it just seems to make sense that if people are not making “enough” then it is because employers just are not paying “enough.” The obvious solution to the problem is that the government ought to make employers pay “enough.” And yet, without any legislation from Congress on the matter, executive salaries increase exponentially in comparison to the minimum wage, salaries which are, ostensibly, more than “enough.” If the claim is true that businesses won’t “enough” unless Congress makes them, then why do many of those same businesses pay more than “enough” in executive salaries without being made by Congress to do so? (That was one of those “right preliminary questions,” if you follow Lewis’ translation.)

The asking of that question raises the possibility (perhaps even the probability) that the greatest problem with the hourly wage is Congress itself. After all, with respect to income, what Congress leaves alone flourishes; what it legislates stagnates.

Before going on, I really need to point out that one does not always have a right to one’s beliefs. People may believe that businesses won’t pay a “decent” wage unless forced by Congress to do so. But they may not have a right to that belief such that they may use that belief as the basis for certain legislative acts.

But surely, in America, under the protection of freedom of speech and so forth, we all have the right to our beliefs? We do. The sort of “right” that I am talking about is an “epistemic right.” So when I say that some people have no right to their beliefs, I mean that they do not have an “epistemic right” to those beliefs. And this is especially true, I think, if these beliefs are going to serve as the reason why the government is going to tell people what to do with their money.

Now, what do I mean by the phrase, “epistemic right”? An epistemic right is a bit like a legal right in that the issue is justification. In theories of knowledge, justification is a normative activity; in other words, there are rules to follow in justifying one’s beliefs. When one has followed these rules, one has“epistemic right” to one’s beliefs.

When C. S. Lewis first met his tutor, William T. Kirkpatrick (whom he called The Great Knock) for the first time, in attempt to make small talk, he said something like, “It's a nice day,” and The Great Knock said, "What do you mean by ‘nice’ and on what grounds do you attribute those qualities to this day?” My step-daughter (to whom I was a tutor myself during her high school years) will tell you that having an interaction with me can be much like Lewis’ experience with Kirkpatrick. (That last sentence was plot exposition.)

Now, when Kirkpatrick asked Lewis to present the grounds for his belief that the day was “nice,” he was asking Lewis for a justification of that belief. He was questioning whether Lewis had an epistemic right to his belief that it was a “nice” day.

So when I question whether people have an “epistemic” right to the belief that business will not pay a certain wage unless forced to do so by Congress, I am asking to be told what justifies this belief. Frankly, I don’t think there is a justification: most of those trying to solve the problem seem unaware that their beliefs about both the existence and the nature of the problem require any justification in the first place.

That justification, if and when it is given, must explain why it is that increases in executive salaries do not require Congressional interference but increases in minimum hourly wage do require such interference. While they complain about the minimum wage, Congress has yet to offer this explanation.

And the reason that Congress is not quick to give us this explanation is that, as I’ve already insinuated, Congress is the problem. Before I offer an explanation of how this is the case, I must digress in order to clarify what I’m up to.

II

A certain Christian organization, on whose email list I placed myself, recently emailed me (and everyone else on the list, of course) to ask that I call my Congressional representative and urge him to vote in favor of the minimum wage increase (to $7.25/hour). I was urged to say something like this:

As a person of faith, I believe that people who work hard and play by the rules should not be living in poverty. I ask that you vote in favor of legislation to raise the minimum wage to at least $7.25 an hour.


I cannot possibly do as requested. First, I was offered no justification for the belief that “people who work hard and play by the rules should not be living in poverty.” Second, I’m really not certain, for analytical reasons, that I truly understand what the proposition asserts.

Although, I changed my major, my initial academic training was in Philosophy. As a consequence, I cannot help but ask about the truth value of just about any proposition I read or hear. (Ask my wife.) Is it really true that “People who work hard and play by the rules should not be living in poverty”? How might one demonstrate that “People who work hard and play by the rules should not be living in poverty”? Supposedly, I am to believe this as a “person of faith.” My faith, I guess, instructs me that God has spoken on the issue and has said, somewhere, that “People who work hard and play by the rules should not be living in poverty.”

Much as I’d like to believe otherwise, I do not believe that my faith instructs me that “People who work hard and play by the rules should not be living in poverty.” Christians are taught many things about the poor. One of the things that the Scriptures do not teach is that those “who work hard and play by the rules” should not be among the poor. (Now, I suppose that someone could argue that while the faith does not explicitly teach that “People who work hard and play by the rules should not be living in poverty” the natural law does. But even if I grant that, which I won’t, while “the faith” and “the natural law” may overlap and intersect each other, they are not identical. This Christian group invoked “the faith,” not the “natural law.”)

The proposition (i.e., “People who work hard and play by the rules should not be living in poverty”) begs for analysis. Being an “analysis wonk,” I will give it the analysis that’s wanted.

There are at three concepts involved here: (1a) Hard (with respect to work) as opposed to non-hard, I guess; (1b) work; (2a) Playing; (2b) the rules; (3) poverty.

When you break it down like this (and I’m taking it easy on myself, because I’m extraordinarily busy) several important (preliminary!) questions emerge. And these are questions which I think ought to be answered before these people try to get anyone to act:

1. Why is it that only those who both (a) work and(b) play by the rules are entitled not to live in poverty? Why not those who merely work (hard, or not) but still play by the rules? Why should only those who work hard (and play by the rules) be entitled one to a ticket out of poverty?

2. What separates those who work hard from those who merely work? Does the phrase “work hard” mean “engage in physical labor”?

3. It’s clear enough what work is, I suppose. But what exactly do we mean by “playing by the rules”? “Playing” what, by the rules? The “Game of Life”? Is it possible to work hard, but not play by the rules? (I don’t deny the logical possibility, of course: it’s possible for a mobster to be as hard working as any executive.) If so, do those people have a right not to live in poverty? Or must they both a) work and b)play by the rules? Or is it really that “playing by the rules” is synonymous with “working hard”? If so, then why add the bit about “playing by the rules”? Why not just say that, “People who work hard should not be living in poverty”?

4. What are these rules the rules? In other words, if we are going to speak meaningfully about those “who play by the rules” we have to ask, “The rules for what?” Clearly, they are not the rules for basketball, baseball, football, or (heaven forbid!) soccer. So, what are these rules, the playing by which entitles one not to live a life of poverty?

5. Whatever these rules are, who wrote them? Where can we go to read them?

6. And just how did employers come to be bound by these rules? In football, baseball, and so forth, participants agree beforehand to abide by the rules, which are written, and which can be agreed to by all before play begins. Both teams agree to be judged in accordance with these previously agreed-to rules. In contract law both parties to a contract agree to the terms of the contract. So, even if I accept as true the proposition that “People who work hard… should not be living in poverty,” how did employers come to be responsible for ensuring that those who work hard don’t live in poverty? Is there a contract somewhere, signed by all employers and employees which stipulates something like, “Party A, hereinafter referred to as Employer, agrees inter aliathat Party B, hereinafter referred to as Employee, working hard and playing by the rules is entitled at Employer’s cost to a life free from poverty”? Or is this one of those things that we are all supposed to “just know,” like I “just know” that I am incredibly hot.

7. What is poverty? Who decides this? And why is the decision of these people normative for everyone else? (An assumption I have on the matter is that if people of faith are going to decry poverty and demand that government do something about it, then they should decry poverty as God defines it, and not as the government of the United States defines it.)

To avoid looking like I’m just playing games, I need to explain why those questions are so very important.

III

1. I happen to know a few things about the group who sent me the email. They don’t believe that anyone should live in poverty. They believe that poverty can be done away with and that Christians should work hard, and use the government, to bring about this happy result. So when they say that those who work hard, etc., should not be living in poverty, they are not being very honest. The purpose of this question is to get the problem well-stated. If you believe that no one should live in poverty, but you say that those who work hard shouldn’t, then you haven’t stated well the problem that you really want to solve. You are, in fact, being dishonest.

2. Use of the adjective hard may give the impression that there are those who do not work hard and that those who do not work hard, despite playing by the rules, may deserve to live in poverty. Use of the adjective confuses things a bit; it doesn’t elucidate.

3. This question must be asked because a well-stated problem shouldn’t specify two conditions, “a… and…b” which really are not two different conditions. Use of the conjunction and seems to indicate that people are entitled not to live if poverty if they satisfy two conditions: (1) working hard, and (2) playing by the rules. If one must meet the condition (in addition to working hard) of playing by the rules, it must be clear what, exactly, constitutes playing. It must be clear what is being played.

4. If following the rules entitles one not to live in poverty, it must be clear what is the connection between these rules and living in poverty. The identification of this connection must also include specification of the rules themselves.

5. We need also to understand the pedigree of these rules: rules which create a right and/or create an obligation should not come from nowhere; the “creator(s)” of these rules should have the authority to promulgate them and require obedience to them. (For example, Congress’s authority to legislate comes from the people (through the Constitution) of the states which form the union.)

6. Typically, if someone truly has a right, the enjoyment of that right does not cost others. My right to free speech does not obligate you to pay for me to have a platform from which to make my speech. My right to keep and bear arms does not require you to purchase my weapons and ammunition. If those who work hard and play by rules are entitled not to live in poverty, we should have an explanation for why they get to enjoy this right at the expense of their employers.

7. We can’t just assume an understanding of poverty. Poverty is different things to different people. There are people in the world who might prefer living in poverty in the U. S. rather than the poverty they live in presently. It isn’t enough just to say, in addition to all else, that people, for whatever reasons, are entitled not to live in poverty. We must distinguish, first of all, whether we are talking about absolute poverty of relative poverty. The former is defined as “the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.” The latter is defined as having “significantly less access to income and wealth than other members of society.” Unless this Christian group is going to base its positions on the politics of envy, it may be best to assume they have in mind absolute poverty. On their view, then, what they are saying is that people who work hard and play by the rules (whatever all of that may mean) are entitled to live above that “threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.” But even if this is what they mean, we still really don’t have a well-defined problem. For what they want, on this view of things, is for employers merely to supply a lack. When one supplies what another lacks, that is charity. These people seem really to be saying that people who want charity must work for it. Now, I just happen to know that this is not what these Christians really think, which is why I assert that they don’t have a well-defined problem. Hence, they won’t be getting a solution any time soon. (Moreover, your employer will start treating you like he’s doing you a favor—charity—by giving you a job in the first place.)

That last parenthetical point hints at why we free market people tend to view employment in terms of market thinking. It isn’t because we don’t care about the poor. It’s because we draw a distinction between a job and an act of charity. These Christians—and certain politicians—confuse the two. On a market view, a job isn’t a bit of charitable giving on an employer’s part. My employer isn’t doing me a favor in giving me a job; and I do him no favors by working for him. The real truth is that I have a skill which my employer needs very much; and right now the market is not flooded with people who do what I do. It’s not that my employer can’t do the job that I do; he can. However, he cannot all the work that he has. He simply has more work than he can do himself. It is to both of our benefits that he hired me. That is what, among other things, markets exist for: to enable both the seller (i.e., me) and the purchaser (i.e., my employer) to benefit from the transaction. He “purchases” my labor at a price determined by the market for my skill-set. Right now that market is such that I make good money. But I digress.

In the absence of the clarity which would be derived by answering my seven question-sets, how now are we to understand the following?

As a person of faith, I believe that people who work hard and play by the rules should not be living in poverty. I ask that you vote in favor of legislation to raise the minimum wage to at least $7.25 an hour.


It isn’t as easy as all that, is it?

In my next post, I’ll explain why Congress is actually the problem. It’s going to be exciting.

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James Frank Solís
Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
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