Everybody Wins In Free Enterprise; H. G. Thuesen

Before the exchange took place, there was an evalua tion at the point of exchange by each of the participants. If either person had concluded he would not have prof ited, an exchange would not have taken place. The reason that everybody wins in free enterprise is because of the evaluation at the point of exchange. Suppose that, in a system of free enterprise, there are a number of competing private concerns making potato chips. In this system, let us consider an individual con cern in light of the economy of exchange explained above. A farmer who has more potatoes than he needs may seek to exchange his potatoes with the potato chip con[ 110] cern for cash. Before the exchange will take place, there is an evaluation at the point of exchange to determine the prospective advantage for each person. If an ex change takes place, it is prima facie evidence that each gets out more than he puts in.

The workman who seeks employment with our potato chip firm will not accept employment unless he deter mines through evaluation at the point of exchange that the burdens of working are more than offset by the advantage of the wages and other benefits he receives. Consider now a man who has an item of equipment that can be used in potato chip manufacture. He will exchange it only if the dollars he receives for the item have greater value for him than the equipment he sur renders. Suppose our potato chip maker needs money to finance expansion. A banker who has idle dollars will surrender a number of them after his evaluation at the point of exchange assures him that he will receive a return of a suitably larger number of dollars later. Now consider the customer. He comes with money in hand and perhaps an appetite for potato chips. But be fore he surrenders his money he, too, makes an evalua tion at the point of exchange. If, and only if, he values potato chips more than the money he must surrender for them is an exchange consummated.

Note that a private concern in a system of free enter prise is an entity of such characteristics that all people who d~al with it, material suppliers, equipment dealers, money lenders, workmen, and customers, contribute [ III ] what they value less and receive what they value more. There is a net gain for each person. Also, where there are several competing enterprises, each per~on is free to deal with the organization that returns the ·most for what he contributes. Thus there is a natural selection of those firms who are capable of operating so that each person, whether he be a material supplier, equipment dealer, a workman, a banker, professional man, or cus tomer, receives the most for his contributions. Any firm that cannot compete under these conditions fails. Fundamental Flaws Socialistic enterprises have two fundamental charac teristics that lead to inefficiencies. First, since there is only one entrepreneur, the inefficient social operation cannot be weeded out by the forces of competition.

Inefficiency is not distinguishable from effiCiencyif there is no competition to serve as a basis of comparison. Second, in social enterprise there is rarely an evaluation at the point of exchange. The person who pays his in come tax has no practical way of evaluating what he receives in return for his tax dollars. He receives nothing at the point of exchange, the tax window, in return for his contribution. Similarly there is no evaluation at the point of ex change at the time the products of a social enterprise are distributed. Since no direct payment is required in exchange for such products, people will naturally de mand them so long as they are of any benefit. Thus the [112 ] products of a social enterprise are accepted by people, even though the benent they receive from the product may be much less than its cost to others. No system of enterprise has given so many people so much for so little as has free enterprise. Increasing effi ciency is inherent in it. The productivity of the most capable operators automatically becomes the goal toward which all may strive-a goal which allows everybody to win.

[113 ] INHUMANITY OF THE MINIMUM WAGE tg paul of. poirol THE REPUBLICAN President of the United States believes that no person should be allowed or required to ··work for less than 90 cents an hour. The Democratic Governor of New York urges raising the minimum wage to $1.25 from its present level of 75 cents. Except for such differ ences in detail, fixing a minimum wage by law has come to be a bipartisan project. That may indicate good poli tics-but it is no assurance that a minimum wage law will accomplish what is claimed for it. Beginning with the truism that "the laborer is worthy of his hire," proponents of the minimum wage interpret it to mean that anyone who works thereby establishes a valid claim against his employer, or against society, for a wage sufficient to assure an· adequate standard of liv ing. Though it may be difficult to say precisely what constitutes an adequate standard of living, the opinion is widely held that such a standard lies somewhere be tween the prevailing extremes of wealth and of poverty; underlying this opinion is the assumption the poor are poor because the rich are rich; that is, that employers exploit their employees. It is supposed that employers [ 114 ] withhold as much as they can of what the workers have produced-that the so-called "wages fund» is not fully disbursed as wages-and that this is a crime against workers in particular and society in general. And if crime is being committed, it is the duty of government to inter vene; hence, a minimum wage law.