"The minimum wage, the drug war, occupational licensure, income taxation, regulation, and welfare. It’s all one great big racket that keeps the poor in their place. If the poor were ever able to figure out what a scam all this is, it could be the catalyst for bringing economic liberty to our land..."

Welfare and Regulation: The Scam That Protects the Rich
by Jacob G. Hornberger

In yesterday’s blog post, “Are the Minimum Wage and the Drug War Racist?” I pointed out how the federal government wages war against black teenagers with its minimum-wage laws and its drug laws.

Actually, the problem is much worse than that. The entire panoply of programs in the welfare state and regulated economy are an attack against the poor in general, including blacks who lack money and a formal education.

Consider, for example, licensing laws, a subject I have written previously about. Licensing is nothing more than a protection racket, one that protects those who have received occupational licenses from free and open competition.

And guess who gets the licenses. You got it: those with money — those who are able to pay the enormous costs of the educational programs that the state requires to get a license. How many poor people, especially black teenagers, have the thousands of dollars necessary to pay for those programs?

Privilege is the best way to describe the recipients of state licenses. Occupational licensure constitutes a rejection of the concept of natural, God-given rights, including the right to sustain one’s life through labor. It’s based on the notion that the state wields the authority to decide who gets to do what in society. And tough luck for those who aren’t within the privileged class.

There is also the income tax to consider. It’s the means by which the entire welfare-state, regulated-economy way of life is funded. It’s another way to keep poor people in their place.

Without the income tax, the poor would be able to more easily save up the capital nest egg that would enable them to open up new businesses to compete against already established firms. Thus, income taxation impedes the ability of poor people to become wealthy.

Now, it’s true that people who have already made it have to pay income taxes too. But at least they know that the number of new, upstart firms that could out-compete them by serving consumers better is limited. The more money the state takes through taxation, the more secure established firms become.

The principle is the same with economic regulations. The more burdensome the economic regulations, the more difficult it is for the poor to start new businesses. Sure, the regulations are a burden on established firms too but they’re better able to handle the regulatory expense than a new upstart firm, whose capital is limited. So, regulation serves to protect the already established firms from the competition that poor people would bring to the market.

Let’s not forget government welfare itself. All it does is ensure that the poor remain poor. Consider public housing, for example. If a person in public housing earns too much money, they kick him out. What better disincentive to making money than that, especially if the poor person lacks the resources to transition to private housing?

The same principle applies with welfare payments themselves. Oftentimes, the decision to remain on welfare is perfectly rational. Why go to work for $500 if welfare is paying you $300 for not working? Is an 8-hour work day worth the extra $200, especially if you’re having some of it taken away for income taxes?

Thus, is it any surprise that there are poor people who spend their entire lives on the dole and then pass this tradition down to their children and grandchildren? Hardly anyone on the government dole is ever going to become wealthy, unless, of course, he hits the lottery, another government program which, not surprisingly, sucks a lot of money out of the pockets of the poor who dream of becoming wealthy.

One final thought on the minimum wage. It deprives inner city black teenagers — and, for that matter, many inner-city black adults — from starting new businesses in which they hire friends and acquaintances in the neighborhood at a sub-minimum wage. By preventing these new, upstart businesses from coming into existence, the minimum wage serves to protect the already established firms from the competition that would be provided by the poor.

The minimum wage, the drug war, occupational licensure, income taxation, regulation, and welfare. It’s all one great big racket that keeps the poor in their place. If the poor were ever able to figure out what a scam all this is, it could be the catalyst for bringing economic liberty to our land.

Link:
http://fff.org/2013/12/04/welfare-and-regulation-the-scam-that-protects-the-rich/