Concerning the topic of Obama's proposal to raise the minimum wage to $10.10, I wrote the following comment on another forum devoted mainly to economics.  There are not many serious economists today who argue the subject from a Traditional Catholic point of view, so I wanted to introduce some of that philosophy over there. I'm happy to report that it has been generally well received.

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In contrast to the quite dynamical and now ubiquitously received modern method of viewing markets as analog computers of price discovery, the Scholastic philosopher (that would be me) employs the concept of the natural price. On the natural price theory, the value of a finished product is worth precisely the cost of its inputs and factors of production, no more and no less. The producer, who in a sense is selling his labor along with his product, is entitled to take a profit based on the amount of labor that he put into it--this is his compensation. The natural price of the product is its input costs plus its labor costs, and this is the price it must be sold at.

It is impossible to argue that the natural price is not the correct price of the product. The natural price is "what it's worth"--literally, ontologically, metaphysically. But the presence of a market, i.e. this chimerical mixture of a poker game and an auction which is supposedly a mechanism of price discovery, disturbs the natural price by introducing the human passions as pricing coefficients. It is not uncommon to hear economists and other semi-learned people today repeat the idea that "a product is worth as much as somebody is willing to pay for it." That simply is not true. If a speculator or some other passionate buyer is willing to bid up the price of something just because he wants it more than the next guy, he actually wounds the functioning of the economy. He who sells at inflated prices, sells something he does not have; and he who buys at inflated prices, buys something he does not get. The difference between the sale price and the natural price is equal to the amount of unreal value in the economy, the ghost-value which is nowhere represented by any actually existing good or service. It is precisely this ghost-value which modern economists call liquidity, which all admit to be synonymous with debt. Money was created to give it some kind of tangible form; banks were created to govern its flows; and businesses, no longer suffered to remain merely the organs of civil existence, must scheme to capture it and soak it up.

With the advent of machine industry and other technological advances having by now been long established in the West, it should be clear that the natural price of life's necessities has dropped to nearly nothing. By all rights we should be living in an age of stupendous deflation and general contentment. But this deflation would have been crippling to the financial sector, for without an ever-billowing thunderhead of debt to service there is nothing for a financial sector to do. Through their techniques of credit creation and usury, acting in concert with the greed, small-mindedness and concupiscence of ordinary people, the banks prevented deflation from materializing. Instead, everybody now needs to work as hard as they can and borrow as much as they can simply to avoid being trampled out of the onrushing herd and losing their ability to hold their own in the world. When my neighbor borrows money and spends it, he inflates the price of everything for me. Now I must borrow money to make up the difference, and so on ad infinitum.

This massive distortion in the value-field has gone to subsidize the many bizarreries in the culture we see around us. This is what pays for the bloated budget of the Federal Government, for example. And the ordinary citizen has not been without his benefits either, if one can truly call them benefits, for the refined fruits of a cosmopolitan existence have been placed within his reach; but he pays for this cosmopolis through the inflated price of his necessities, which amounts to an unlevied, unacknowledged tax on his consumption. What would the undistorted cost of an average man's living be today? A carton of eggs might cost only a few pennies, merely a fraction of what it currently does. A cell phone or an airline ticket should probably cost many times more than it does now and these would have retained their old status as luxury items. But instead of a natural system of prices related to one another through an organically derived hierarchy of values and social classes, what we have is a massive imputation were everything is simply assigned a value based on a political algorithm the source code for which nobody now remembers.

The argument over the minimum wage is simply an argument about rearranging the imputation for those on the lower end of the social spectrum. Economic rationales are perfectly inapplicable here, for economics per se has left the building long ago. This is more about caste structure, social cohesion, and political economy than anything else. No matter where you think the minimum wage ought to be set, I will take the first step and say that we need protectionist tariffs and closed borders before any solution can even begin to take shape.

How is the natural price of labour determined?

That's where the social hierarchy comes in. The natural price of labor performed within any given grade, is set by the degree of compensation a man laboring in that grade would need to receive in order to afford the lifestyle and honor appropriate to his grade. A man's rank within the polity determines what he is entitled to expect in return for the discharge of his duties.

Unquestionably the precise ordering of social ranks and compensation will differ from time to time and from place to place, since it is in part set by social consensus and environmental conditions. Furthermore, misfortunes such as war or famine, not to mention human wickedness, will disturb the order and require sacrifices to set it aright. There will be times when not everyone will get what he deserves. There is no perfectly clean analytical solution, but this is the generally correct way of approaching the problem.

So when does the minimum wage in increase in china, Mexico, India. For their workers who for American companies.  

Obama never worked a real job.  

What are you talking about? Don't you know that going to elite schools like Harvard Law, Columbia, and Ivy League by means of affirmative action is a "real job"? Don't you know that being a Saul Alinsky social worker who rustles up food stamps is a "real job"? Don't you know that being a cog in the Daley political machine back in good old Chicago is a "real job"? Don't you know that having no executive experience is a "real job"? Don't you know that being a member of an anti-white, black power church under the Rev. Jeremiah Wright shows you have a "real job"? Don't you know mocking rural folks who cling to their guns, Bibles, and "prejudices" to get a laugh out of his liberal elite buddies shows you have a "real job"?

Shame on you! :wink:

Good comment MOTW, and I most agree with ...

The argument over the minimum wage is simply an argument about rearranging the imputation for those on the lower end of the social spectrum. Economic rationales are perfectly inapplicable here, for economics per se has left the building long ago. This is more about caste structure, social cohesion, and political economy than anything else. No matter where you think the minimum wage ought to be set, I will take the first step and say that we need protectionist tariffs and closed borders before any solution can even begin to take shape.

Edit... Actually the best part of the comment is man's greed which engineers fake value, thus, causing inflation, and the evils of usury being tied into it, too; but the quote above is great.

I wish the President would push for a European model of labor/executive pay.

Quote from: Graham

How is the natural price of labour determined?

That's where the social hierarchy comes in. The natural price of labor performed within any given grade, is set by the degree of compensation a man laboring in that grade would need to receive in order to afford the lifestyle and honor appropriate to his grade. A man's rank within the polity determines what he is entitled to expect in return for the discharge of his duties.

Unquestionably the precise ordering of social ranks and compensation will differ from time to time and from place to place, since it is in part set by social consensus and environmental conditions. Furthermore, misfortunes such as war or famine, not to mention human wickedness, will disturb the order and require sacrifices to set it aright. There will be times when not everyone will get what he deserves. There is no perfectly clean analytical solution, but this is the generally correct way of approaching the problem.

The depth of knowledge and imagination it takes to mount a fundamental critique like this (whether of economics, politics, or cosmology) is intimidating. Not only must one understand conventional economics as well as any market analyst, one must in addition be able concretely to imagine the social, political, and economic workings of the fundamentally different model one is proposing.

When the critique runs diametric to the prevailing common sense, only a minute number of people will ever be able to understand it, let alone appreciate it.

I think this speaks to a deep difficulty tradition faces today, several centuries into the Revolution. The Social Reign of Christ is so different from what we are used to that those of us of more average ability cannot really begin to imagine how it might look, other than divorce and abortion being illegal.

To take an example that relates to your OP. "The forgotten middle class" has become a political catchphrase in the era of the "great recession". And I would imagine that your average traditionalist - especially your average American traditionalist - agrees with the conventional wisdom that "a healthy middle class" is the load-bearing pillar of a prosperous economy. But the middle class only exists in a world where 'social rank' is a factor of income, rather than one where income is a factor of social rank. It is simple enough to understand "the natural price of labour is decided by the social hierarchy" as an isolated sentence, but the chain of consequences which follows it is so immense that almost nobody can follow you. So - and I don't mean to poke fun at anyone - the rest of us wind up talking about Obama's lack of business experience, as though business experience is something a political chief in a Catholic state would definitely have.

Speaking of that, what is your view of that contention, of the essentiality of the middle class?

I don't think that anybody should be trying to figure out how "The Economy" works. It's more arcane than the Apocalypse. All you need to know is that Satan is running it through his pawns, the Jєωs and Masons; The Economy itself really doesn't matter as it isn't the root of the problem, it is a chimera that bankers and politicians use to frighten the masses with. Personally, I don't believe that The Economy exists, I think that it's a diabolical temptation.