Monday, October 03, 2011

Hyperwage Theory vs. Cause-Oriented Groups

What is the difference between Hyperwage Theory and the wage increase demanded by cause-oriented groups?

I have been asked this many times, and I think it is time to write down this reply for the convenience of those conducting research on Hyperwage Theory.

1. The main difference is in the theory: The theory behind the demand for higher wages by cause-oriented groups is social justice while the theory behind Hyperwage is economic wealth creation.

Social justice is a concept of entitlement. Labor is entitled to a certain portion of profits.
Hyperwage is based on economic principles: Higher wages causes higher demand, then higher sales, then higher production, then higher employment, then even higher purchasing power of the newly employed who purchase more goods.

Hyperwage, therefore, is not based on social justice, but on the concept of demand and supply. Higher purchasing power increases demand which requires more employment, and also more taxes collected by the government.

2. For example, the cause-oriented groups demand an across-the-board P125 daily wage increase in the wages (for both minimum wage earners and non-minimum wage earners).

3. Their demand is not based on economic theory (at least until they began changing their tune when they read Hyperwage Theory in 2002 and 2005). It is based on the concept of social justice: that workers should share in the fruits of business.

4. The amount demanded by cause-oriented groups are targeted at obtaining a living wage.

5. Hyperwage Theory rests on a different foundation: That economic wealth creation for the entire economy is based on one single variable -- the minimum wage.

6. Hyperwage Theory is not anchored in social justice, although, lo and behold, social justice is a necessary results of implementing Hyperwage Theory.

7. The cause-oriented groups recognize that increasing wages threatens the survival of the businesses and for this reason, their demand is only for such an increase to attain a living wage. This is why until now, no cause-orient group has come out in the open to support Hyperwage Theory. They themselves are not convince of hyperwage salaries.

8. On the other hand, Hyperwage Theory starts with including domestic helpers in the coverage of the minimum law. Hyperwage Theory proposes that the higher the wage of the domestic helpers the better for the economy.

9. Why are the cause-oriented groups demanding for a different minimum wage for janitor and a different minimum wage for domestic helpers? It is because the leaders of cause-oriented groups have domestic helpers and that the former do not want to give P20,000 per month to the latter?

10. As you can see, the cause-oriented groups are half-hearted in their demand for wage increases because their advocacy is not anchored on economic principles but on the concept of social justice. Their demand is limited because they are not Hyperwagers at heart.

They have not yet appreciated the idea that Hyperwage Theory automatically includes social justice,  economic wealth creation, and the solution to insurgency, crime rates, mendicancy, inefficiency, brain drain, etc.

11. How does Hyperwage affect the economy beneficically? This is answered in the book. Read it.

12. Hyperwage rests on one economic variable - the minimum wage and the higher it is, the better for the economy.

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