WHY LAWS ARE MADE

Do you ever shudder at a law you consider bad and wonder how it came to be?  You’re not alone; this is one of mankind’s perennial questions.  There’s an answer: Laws are enacted to bestow benefits of one sort or another, and invariably the persons who reap the benefits are the ones who enact the laws.  Consider a pair of examples.

Several years ago California enacted Proposition 30, which increased state income tax rates on residents with annual incomes over $250,000.  Currently, a group advocating children’s health proposes the law be amended to impose higher rates for “super-earners” who make more than $2 million.  Although the proponents hope to have a hand in spending the money, it’s unlikely any of them are among the super-earners who’ll pay the tax.

Consider another law just enacted, Senate Bill 358, the “California Fair Pay Act,” which purports to ensure women receive pay comparable to men for doing the same work.  Note that the 1949 California Equal Pay Act, as well as the federal Equal Pay Act of 1963, provides the same guarantees.  Thanks to the effectiveness of current laws, few complaints are heard.  In recent years the California Labor Commissioner received only a handful of complaints: six in 2010, seven in 2011 and eight in 2012.

So why this new law?  It’s that another wrinkle is added to the Labor Code, wherein the employer must “affirmatively demonstrate” how any pay differential is based on work that is “substantially similar.”  These new provisions will make it far easier for claimants to extract favorable settlements from their employers.  And who benefits from this new law?  Consider one of its principal sponsors, Equal Rights Advocates, a San Francisco advocacy group, which derives income by representing women claiming to be underpaid by their employers.  As litigation had dried up, something had to be done to spur business; SB 358 fills the bill.

Criticism of the imperfect workings of the law is as old as civilization itself, with examples found both in Shakespeare’s Hamlet and Dickens’ Oliver Twist.  However, a most poignant observation on the subject may be attributed to German Chancellor Otto von Bismarck, who said: “Laws are like sausages.  You should never see them made.”

 

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/