On Wage Labor and The Invisible Tax

When signing a contract for wage labor, always consider inflation. The work force tends to lean fiscal conservative when they talk about about what's apparent and visible. It's so easy to say there are many unnecessary taxes and red tapes that hurt the working class — but what about the tax we can't see?

The Philippine central bank has declared or, in my opinion, downplayed inflation to 3.5% which is of course on the low end of their target of 3 to 5 percent (source). As misleading as these values may be, it shows the immorality behind this issue.

For example, let's say you've signed a one-year contract. The earnings of your first month, the money traded for your time and efforts, will not have the same value or purchasing power in the coming months. Inflation withers away your savings. And the reason I say inflation is a tax is because the government, having a monopoly on money, have a direct impact on inflation — the rise in prices merely an effect.

The idea here is that, no matter how high you think your salary is, as you spend for the rising prices in services and commodities you need to sustain work (transportation, food, lodging, bills, etc.), in the long run, your fixed income will lose because of inflation.

And when even the most conservative of econometricians explain the concept of the government having a control over this "basket of goods" in our market, you'll see that, no matter how noble their intentions are, this merely creates a monopoly. A monopoly of the government (sorry to be redundant). And we all know the evils of a monopoly: so what more then a monopoly of this magnitude?

An easy and apparent solution, according to many interventionists (aside from the misconstrued concept of artificially raising the floor on wages), is to continue and even push the limits of depreciating the currency. The single and monopolized currency that settles all contracts. This system hurts hard-working laborers the most and enriches those in the top of the food chain of crony-capitalism cleverly disguised as a free market.

That which is seen and that which is not seen, Bastiat said about it. We dwell merely on what is apparent and fail to see that prices fall and wages rise naturally in a market where money is sound and competitive. There will be no need to intervene.

When experiencing this firsthand, it becomes so apparent that the government truly has a monopoly on the goods and services we consume instead of the market competing to make sure prices fall and quality of service and innovation increase.

And I do believe that there's no other way of looking at this but legalized theft, a willing society suffering from Stockholm Syndrome whose individuals are metaphorically held at gunpoint.

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