There was an interesting article in the NY Times about the Koch brothers and the beginnings of their involvement in right-wing politics in the 1970s.
My intent here is not to criticize the article, it certainly has useful information for social change advocates. However, there was one point in it I wanted to explore here. Whether it was simply an attempt to convey the view of David Koch, or whether it reflected the writer's assumptions is not what I want to focus on.
The article refers to the Kochs' strong opposition to Nixon's "price controls". No doubt, that was how the Kochs conceived of it in their twisted heads. However, the regulations being referred to were known as "wage-price controls". Of course, most business people didn't object to the wage control part of the program. Since the Kochs' objections were supposed to be based on libertarian beliefs - an ideological opposition to government involvement in more or less any aspect of the economy - one might think they would find government dictates about wages and prices equally bad. To be honest, I don't know what the Kochs said on that question back in the 1970s. Libertarians vary, I would not count on the Kochs being consistent on this point.
There are a couple of directions this exploration will take. First, let us consider the Nixon wage-price controls. As presented by the Nixon administration (and many in the business community at the time), both wages and prices were to be similarly restricted from rising. However, that is not how it worked or how it seemed to be designed to work. Even if there were no other biases in the program, there was one fact that insured a biased outcome. Wages don't go up unless the boss hands out more money to workers. But when the government declares that wages (and supposedly prices) can't be increased by more than a certain amount, the boss can simply tell the workers it's the law that makes higher raises impossible. And the company is more than happy to do that - and the government will back it up. On the other hand, the employees don't get to say the law forbids price increases and refuse to allow the company to raise its prices. So, in reality, wages were strictly controlled while prices were more loosely controlled.
That fact made the description of the program as "price controls" less true to life than it could have been otherwise. We continue to face systemic biases such as this, so it's worth being clear about it.
The other issue with the program was that the only controls even mentioned were on wages and prices - not profits. Of course, limiting prices will have some effect on profits. Still, if both wages and prices are limited to 5% increases, that does not mean profits can't rise more than 5%. And if there was a good reason to limit income in the form of wages, there should have been good reasons to limit income in the form of profits.
The significance of this is even greater than merely having a double standard between these two forms of income. Libertarians and pro-business conservatives are fond of claiming they follow the tradition of the economist Adam Smith. Yet, even back in the 18th century Smith made a number of points that are in direct conflict with pro-business claims. (See my diary on Adam Smith quotes )
Particularly relevant here, Smith wrote:
In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.
So, according to the libertarians' preferred economist, it should be
more important to control the rise of profits than the rise of wages - if the objective is to limit inflation. And that was precisely the official goal of Nixon's wage-price controls.
The program was biased in this second way favoring business over working people. But that's irrelevant to the Kochs, and is at least overlooked in the Times article.
As odd as it may sound considering his reputation, because Nixon was President in the 1960s and 1970s, he was actually pretty liberal by 2014 standards. Let's face it. Neither Obama nor Congressional Democrats want to raise the minimum wage to a level even close to what it was 50 years ago adjusted for inflation - even without taking increases in productivity into account. It's like wage controls without a pretense of price or profit controls. If the GOP won't pass a miserly increase in the minimum wage, one might as well say how much he thinks the minimum wage should really be raised.
Many progressive laws were passed during Nixon's administration with Nixon's signature on them. The question of the biases of those wage-price controls have nothing to do with a Republican who is conservative by today's standards. These are the kinds of double standards we can expect from any administration in the current era - so it's important that we be aware and prepared.
By the way, Switzerland allows citizen-initiated nation-wide ballot propositions, as some American states allow on a state-wide basis. There is currently a Swiss ballot proposition pending which would raise their minimum wage considerably. There can be advantages to having ways to enact social change when the major parties are too influenced by big money.