Why Republicans Are Useless In The Battle Against Crony Capitalism---Witness The Michigan GOP Sell-Out To The Restaurant Lobby

Michigan's purportedly conservative governor just signed a 25% increase in the minimum wage---a move guaranteed to destroy jobs within the state and which is as clean a repudiation of free market economics as any Republican state legislature could possibly enact. Why? Can you say restaurant lobby?

The Michigan Restaurant Association, which staunchly opposed the petition drive and other efforts to raise the tipped wage, praised the Legislature for reaching a compromise. "The MRA has made it clear from the beginning that the total elimination of the tipped minimum wage as proposed in the ballot initiative was gross negligence and would result in the closure of countless full-service restaurants – especially independent 'mom & pop' places least capable of absorbing a nearly quadrupling of their labor costs," spokesman Justin Winslow said in a statement. "The compromise legislation sustains a 38 percent ratio that will require adjustments by the full-service sector of the industry, but should prevent mass closure of restaurants."

That's it in a nutshell.  The minimum wage is one of the most pernicious forms of statist intervention there is because it attacks society's most vulnerable citizens. That is, it outlaws jobs that have low economic value, thereby condemning the young, poor and marginally skilled to unemployment, dependency and deprivation.

Yet when push came to shove, the Michigan restaurant lobby cast its lot with the special privilege it obtains under current law---the so-called tip credit----in order to avoid a voter referendum that would have put restaurants on par with everyone else. Yes, the proposed referendum's plan for Obama's "$10.10" minimum wage would have been onerous for the state's restaurateurs---especially the moms and pops. But why didn't the industry stand-up and fight on principle?

The answer is simple. They didn't have to because the GOP offered to bail-out their chestnuts via the so-called bipartisan compromise. Admittedly, that capitulation is not going to garner Gov. Snyder a corporal's guard worth of extra votes next November. There's about 80 years of history that prove minimum wage workers mostly don't vote, and almost never for the GOP.

No matter. The Michigan Republicans' craven maneuver wasn't about a few thousand votes; it was about tens of millions of campaign funds and the vast campaign resources of the restaurant industry. More specifically, the Michigan GOP threw free market principles to the wind because it did want the restaurant lobby's massive campaign resources diverted out of the GOP coffers and into a life-and-death fight against the Obama minimum wage referendum.

To be sure, the sacrifice of principle for political expediency is an endemic fact of life in a democracy. But doing so should at least require that heavy duty electoral considerations are involved----not merely the slight inconvenience that the Michigan GOP would have had to work a little harder to fill its war chest.

But after decades of betraying free market principles through endless compromise, expediency, rationalizations and short-term ploys, the Republican party is no longer capable of making wise and productive tradeoffs.

In the state of Michigan in particular, the abandonment of free market principles by the GOP has been especially endemic and long-standing. It goes all the way back to the first bailout of Chrysler in 1979 when Michigan had a large GOP delegation, and all voted for it except your writer.

Back then, I also voted against every one of Jimmy Carter's proposals to raise the Federal minimum wage and suffered no electoral setback from either stance.  In fact, 40 years ago the Republican rank and file in Michigan---the restaurant industry included----would have been appalled at this weeks spineless action by the GOP.

In the decades since, the Michigan GOP delegation has gone on to vote for nearly every Federal energy boondoggle which came down the pike including he lunatic "cash-for-trash" tax credit for junk cars; most of the Freddie/Fannie/FHA housing subsidies and market manipulations; the abominable Wall Street bailouts of 2008; and then the utterly uncalled for rescue of GM, the UAW and Chrysler for the second time.

In short, the GOP has become as statist as the Democrats. It is no wonder that the free market is fast fading in America, and is being replaced by a crony capitalist regime in which both parties play the game. Needless to say, the GOP does so while pathetically denying its own destructive actions:

I’m going to do this with a heavy heart because I don’t believe government has a place adjusting wage in our society,” Rep. Peter Pettalia, R-Presque Isle, said. “I step up and support this bill because the alternative is terrible. The proposals that are in front of us outside of Senate Bill 934 will lose many more jobs in northern Michigan.”

By Eric Morath

Michigan Gov. Rick Snyder signed a law late Tuesday to lift the state’s minimum wage to $9.25 an hour by 2018, making it the seventh state to approve an increase this year — but the first lead by a Republican.

The state legislature, also Republican-controlled, approved the gradual increase from the state’s current minimum wage of $7.40--setting one of the highest pay floors in the Midwest — just a day before a restaurant workers’ group was expected to deliver a petition seeking to place a $10.10 minimum-wage proposal on November’s ballot. Gov. Snyder also faces re-election this fall. “I commend my partners in the legislature for finding common ground on a bill that will help Michigan workers and protect our state’s growing economy,” Snyder said in a statement. Republicans who supported the bill say it will render the ballot proposal moot. The new law repeals Michigan’s existing minimum-wage rules and replaces it with new language. The ballot proposal sought to amend the old law. Backers of the ballot proposal have said they’ll continue to fight for the $10.10 wage, an amount endorsed by President Barack Obama. The minimum wage in Michigan would be raised in four steps starting in September. After reaching $9.25 an hour in 2018, the rate will be adjusted annually for inflation. A major difference between the new law and the ballot proposal is the amount mandated for tipped employees, including restaurant workers. Tipped employees in Michigan would be paid 38% of the minimum, or $3.51 an hour in 2018. The ballot measure sought to put restaurant employees on par with other workers. That would require the wages of tipped workers to nearly quadruple from the current $2.65 rate. Last week, Hawaii became the third state to approve a $10.10 wage floor this year, following Connecticut and Maryland. Minnesota lawmakers set a $9.50 level and West Virginia and Delaware approved smaller increases from the federal minimum of $7.25 an hour.  

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