Eating cake and affording it too

It is against reason to lower prices while raising the minimum wage. What’s the government thinking?

February 15, 2011 22:43
4 minute read.
Gasoline prices [illustrative photo]

Gasoline prices gas tax 311. (photo credit: Marc Israel Sellem)


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Last week, Prime Minister Binyamin Netanyahu, succumbing to public pressure, raised the minimum wage and cancelled the tax on fuel prices. This move was widely acclaimed as a triumph of the people. What has been mostly overlooked, though, is that this alleged victory paved the way to a definite defeat against a much more formidable force than government: reason.

A government has laws, and these laws can be rejected, revoked, debated and changed. Reason, too, has laws, but these are immutable, inflexible, and not open to negotiation. Unlike our prime minister, the laws of reason do not and cannot zigzag. They are fixed – and when war is waged on them, they always prevail.

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One of these laws is captured in the common-sense idiom that we cannot have our cake and eat it too.

The call to reduce prices while raising the minimum wage is a stark example of an attempt to violate these laws.

If we want to lower prices, we first need to create more wealth – increase production, innovation, supply. And if we want to do this, we need to free the market, not impose further restrictions on it.

One does not need a Nobel Prize in economics to understand that with higher minimum wages, fewer people will be employed, and as a result fewer goods will be produced.

And in a welfare state like Israel, those without employment receive government handouts, which will require more taxes and therefore higher prices.

Higher taxes will be imposed on fuel, water, bread, cars and homes.

How else can the government pay for those in need? The government, after all, does not produce anything – it only takes from those who do.

THE IDEA that we cannot have our cake and eat it too is at the root of Western freedom and prosperity.

The philosopher Aristotle brought about the Renaissance, the rebirth of the mind. His most important contribution was the principle of contradiction – that something cannot be not itself. For example, a “horse” cannot be a “not horse”; a “person” is not a “not person.”

A cake that has been eaten cannot be a cake that has remained uneaten.

Aristotle’s laws of reason helped humanity emerge from the Dark Ages. Ignoring these laws today will take us back to a dark age, similar to the one that well-intentioned socialists brought upon millions of people in the 20th century.

For the rich as well as the poor to prosper, more wealth has to be created. The producers of wealth – the creators of affluence – are the business people, manufacturers and inventors, not the union leaders and politicians, and what these producers and creators need more than anything is freedom.

The best a union leader or politician can do – for the good of all they represent whether here or elsewhere – is to get out of the way of the producers and creators.

Very few people can remain indifferent to the suffering of those in need. And when the empathic public looks around and sees the rich, it feels right to take from those who have and give to those who don’t.

Given these sentiments, it seems that raising the minimum wage is a small, insignificant price for the wealthy to pay so that the poor can afford their daily bread.

But reason, unlike people, does not have feelings. All of us – not just philosophers – must accept the implications of the principle of contradiction; failure to recognize – and act upon the recognition – that something cannot be not itself can lead to dire consequences.

Regardless of their intentions, those activists who demand to eat the cake and leave it whole will lead to skyrocketing prices.

Everyone will benefit – rich and poor – if the government takes a step back and limits its interference in the market. There is a fundamental dissatisfaction with the notion that people have to pay increasingly higher prices to cover government spending.

People are rightly threatening to rebel.

At the same time, a large part of the dissatisfied population is asking for a higher minimum wage, and other laws that will inevitably raise taxes. The emotions of the people, while certainly understandable, should be curbed by reason – with a basic understanding of the principle of contradiction.

Otherwise we the people may win a battle against the government, and lose the war against reason.

The writer lectures at the Interdisciplinary Center in Herzliya. He is the author of the international bestseller Happier which has been translated into 25 languages. He graduated from Harvard with a degree in philosophy and psychology.

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