FREE-LUNCH LIBERALISM

By Charles Krauthammer

Throughout 1993 and 1994, when Democrats controlled Congress, President Clinton was mum about raising the minimum wage. In fact, he derided it as "the wrong way to raise the incomes of low-wage earners." What a difference an election year makes. Clinton has now made raising the minimum wage a test of political virtue.

It is a Democrat's destiny to traffic in compassion, but this transaction is particularly cynical. Why? Because raising the minimum wage will redistribute income not from rich to poor but among the very poorest workers.

Teachers, doctors, policemen, columnists are not affected by the minimum wage. Raise it, and no middle- or upper-class worker loses her job. But it is an iron law of economics--even Democrats cannot repeal it--that when you increase the price of something, you reduce demand for it. Raise the price of minimum-wage labor, and there will be less of it.

Result? Those who keep their minimum-wage jobs will be better off. And those who lose their jobs will be desperately worse off. It is the pay of those unlucky poor--not your pay, not mine--that will in effect be taken away and redistributed to those lucky co-workers who stay on.

Moreover, in this triage of minimum-wage workers, who do you think will keep his job and who will lose it? Those likely to win out are the more desirable, educated workers--the young college student paying his way through school. Who will lose it? The less-educated, less-skilled, less-privileged minority kid struggling to get on the job ladder.

Not exactly the kind of Robin Hood redistribution liberals like to boast of. But as the night follows day, it will happen.

How, theoretically, could we raise the pay of the minimum-wage worker without costing the job of his less-fortunate co-worker? Simple: with a direct government subsidy. Instead of ordering employers to give their workers an extra 90' an hour, the Treasury gives it. This approach would not cost the job of a single minimum-wage worker. And it would enrich the poorest workers with tax money taken from the nonpoor: middle-class and rich taxpayers.

Now, that's compassion. And the Democrats, I assure you, won't touch it with a 10-ft. pole. Why? Because a government subsidy is transparent. You can't hide the cost, in tax money, from the electorate. Forcing the employer to give the raise, on the other hand, has the politically felicitous appearance of a free lunch.

The minimum-wage free lunch is a perfect example of the decadence of modern liberalism. In its heyday, liberalism didn't hide. The classic redistributionist programs of the New Deal and the Great Society--Social Security and Medicare--were open about the cost and about government's role: You pay the tax; government will deliver the goodies.

Modern liberals are as afraid of invoking government and levying taxes as they are of using the very word liberal. But they remain addicted to compassion. They want to give like F.D.R. and L.B.J., but the Treasury is empty. How to give when you have nothing left to give? If you are a politician, it's easy: you force someone else to do it. Example:

1. Family leave. A nice idea; parents should not have to choose between a job and a sick child. But unlike in Europe, where government helps subsidize the cost, here it was simply imposed on employers.

2. Worker retraining. Another good idea--except Clinton wanted to force employers to create their own programs, on penalty of having to pay a new, mandatory 1.5% payroll tax. Political error! The tax threat exposed the attempted sleight-of-hand a bit too nakedly. It was never enacted.

3. Health care. The famous Clinton plan promised universal coverage--37 million new patients--with no tax increase. A miracle! Alternatively, a classic of free-lunch liberalism. People complained about the complexity and opacity of the President's 1,342-page plan. They missed the point. The very purpose of that complexity and opacity was to obscure the way regulation and employer mandates would foist the higher costs on private business and individuals (in the form of higher insurance premiums). It took a while for that part of the story to get out. When it did, the plan died a swift death.

And now the minimum wage, another hoax, but marvelously sold. More hands-free compassion.

The new conventional wisdom--advanced in several books and bolstered by Clinton's polls--is that liberalism is back. I doubt it. What is resurgent is not liberalism--a bold creed of government activism, long dead--but its shadow, a stealthy social parasitism that has just enough nerve left to force private enterprise, the golden goose of American prosperity, to do government's work.

But it cannot last. Not just because you cannot keep heaping burden after burden on business without killing it. But because you cannot keep hiding burden after burden from the electorate without insulting it. Yes, you can fool some of the people some of the time. The minimum-wage hike will undoubtedly pass. But hungry as the American people are for a free lunch, serve it often enough, and they will ask to see the check.