“The economy” is nothing more than the exchange of goods and services through monetary units like the Euro or dollar between human beings. The more transactions there are, the larger the economy; the fewer transactions, the smaller it becomes.

But when ministers introduce new laws or taxes, they restrict transactions and, as a result, slow down economic growth. In some cases, they can completely destroy it.

They do this for three main reasons:

• Political – “I promise to give you this or that, so you know who to vote for.” These are promises made to gain electoral support, often without considering the long-term consequences for the economy.
• Ideological – Ministers think or believe this or that policy would be better based on their personal beliefs or the ideology they represent.
• Lobbying – Special interest groups push for laws that reduce competition or secure contracts/tenders that provide them benefits without any accountability or fear of financial losses.

Related: How to Bring Politicians Back to Reality

How to Divide and Conquer 

The center and the left, as always, argue that they will introduce policies for workers’ rights. However, these rights often lead to unemployment, business closures, reduced competition, and the empowerment of corporations — or as we might call them, “monopolies” in the private sector, or oligarchies.

Every company, whether large or small, has a cash reserve where it collects profits. These profits are used to cover business operations — whether for buying and selling products to make a profit, paying workers’ wages, or covering other expenses.

Politicians’ goal, in many cases, is to get their hands on this cash reserve. They often achieve this by pitting management against workers, promoting a utopian socialist vision to gain votes through populism. At the same time, they use their power to pass laws or grant contracts that favor special interests and benefit them personally.

Policies on workers’ rights, including minimum wage laws, equal pay for equal work (assuming women are paid less than men; more on that below), overtime pay, the creation of labor unions in the private sector, weekend breaks, 8-hour workdays, paid annual leave, health insurance, and pensions, often have these effects of:

• Controlling businesses by imposing restrictions and influencing how they operate.
• Gathering votes through populism by addressing workers’ demands to gain political support.
• Destroying competition, an effect that often benefits special interests and large corporations by making conditions harder for small and medium-sized businesses.

While these policies are presented as protections for workers, they often create unintended negative side effects that harm the economy and competition.

One should always ask: Does the boss have the money to pay for all these benefits? Nothing is free; someone has to pay, and most of the time, it is actually the worker who bears the burden.

Here’s how. A worker’s wage and benefits paid by management, as well as management’s salary and business operating expenses, always come from the sales of products or services, which ultimately fill the business’s cash reserve.

When politicians, by law, reduce working hours and days or impose unnecessary expenses, it is not the manager who loses out but the business’s cash reserve — the source of all payments and operations. More expenses from this reserve mean fewer opportunities for other spending, including investments, improvements, or even worker salaries.

The effects of workers’ rights policies often lead to unemployment and business closures. Unemployment happens because when politicians increase wages and benefits for workers, management is forced to assess whether it is worth keeping a particular worker. The more skilled a worker is, the higher their chances of retaining their job. In contrast, new and inexperienced workers risk unemployment because management may decide they are not worth the higher wages.

In some cases, management ends up losing so much money that they are forced to lay off workers, shut down the business, and become employees elsewhere. The more businesses that suffer this fate, the higher unemployment rises, as people have nowhere to go when businesses are in decline.

Additionally, when the law reduces working hours, management will often pressure workers to complete their tasks faster, as time is limited and they have only 160 hours per month to generate enough revenue to cover wages, benefits, and other operating expenses.

Gender Equality in the Workplace

Another issue is wage equality, which often turns into a dilemma. For example, should a 40-year-old worker with a family be paid the same as a 21-year-old worker without family responsibilities? Minimum wage laws often raise the pay of entry-level workers to the same level as experienced employees, who may be more qualified and have greater responsibilities. This can lead to unfairness and resentment among workers.

This also affects the employment of women in the private sector. When social democrats or feminists enforce equal pay laws, they often do so under the false assumption that women are being exploited and discriminated against solely because of their gender, while the reality is much more nuanced. (Just consider the chart below, which shows that, for example, women comprise 93.9 percent of dental hygienists. Then ask yourself if would-be male dental hygienists are being discriminated against.)

MALE VS. FEMALE JOBS: JOBS DOMINATED BY ONE GENDER

There are many reasons why women earn less on average in the workforce, and most of them have nothing to do with patriarchy. (Perhaps patriarchy has a minimal influence.)

Feminists compare the lives of men and women while ignoring the fact that their lives differ drastically by gender. If I were to highlight the biggest obstacle for women in the workforce, it would be pregnancy. Giving birth and raising a child is not easy, and pregnancy and childcare are often the biggest obstacles for a woman to advance in both the private and public sectors.

Also, women often have more responsibilities outside of work, leading to absences and unpaid hours or part-time employment. Full-time employees who do not take absences naturally earn more than those who work part-time.

But that’s not all: Women seem to choose different types of jobs compared to men. We can observe a pattern in that chart above, where women seem to prefer jobs related to caregiving.

So, we can conclude that a big part of the reason women statistically earn less is due to some combination of:

• The potential for pregnancy
• Family responsibilities outside of work
• The choice to work in caregiving-related fields

These natural differences explain wage disparities between men and women better than discrimination.

But here’s the thing I really want to emphasize: Absolutely none of that — zero of it — means that women are worth less than men, that they’re somehow inferior. And anyone who interprets it that way ought to take a long, hard look in the mirror. They’re the ones trying to sow division between the genders.

In reality, I can’t think of a more worthy, honorable responsibility than child rearing, homemaking, and caregiving.

No, to return to the start of this article, it’s just that those skills are not as clearly or as well reflected as some others, in our definition of the economy: “the exchange of goods and services through monetary units like the Euro or dollar between human beings.”

Instead, as Ludwig von Mises wrote in Human Action, “The values that are not reflected in any monetary exchange ratio are, on the contrary, by this very fact lifted … No complaint is less justified than the lamentation that the computation methods of the market do not comprehend things not vendible. Moral and aesthetic values do not suffer any damage on account of this fact.”

To put it in simpler terms, say you were raised in a very traditional household. Say your father worked in an office from 9 a.m. to 5 p.m. and was the “breadwinner” of the family, while your mother was a stay-at-home mom. As a kid, long before you had any real understanding of budgets and finances, whose work would you be more likely to notice and appreciate? Your father, whose effort resulted in a higher number on the bank statement that arrived once a month? Or your mother, who literally put food on the table and held you when you cried?

Are you a student interested in getting involved in pro-liberty activism? By applying to join Students For Liberty’s Local Coordinator Program, you can be supported in promoting the ideas of liberty while also developing your skills and meeting many like-minded students from across the world. Click on the button below to find out more and get involved!

This piece solely expresses the opinion of the author and not necessarily the organization as a whole. Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a variety of opinions.