The Political Hoax Exposed
It's political season again, and what a show it is. Politicians specialize in this. They affect a know-it-all posture and carry a bag of solutions to every problem, natural, human, and divine. They work to perfect the ability to fob off their solutions as sound reasoning even when they are snake oil or sheer poison. Still, one can only marvel at how successful they are at bamboozling the population.
Every once in a while, however, their cover is exposed and the truth comes out. The truth is that most of them are economic ignoramuses, proposing bad law that not only fails to achieve its aims, but actually ends up spreading human suffering.
A case in point is the minimum wage. FULL ARTICLE
Comments (8)
Someone recently wrote an article on how France went from a dominance of free market thinking to one of socialism. The author concluded that the problem was the stae hired lawyers to teach economics. I think we have a similar problem with lawyers. Aren't most politicians former lawyers?
Published: September 8, 2006 4:17 PM
I was looking for an old quote from Milton Friedman, apropos of this topic. Friedman, of course, argued strenuously against the minimum wage. At one point, however, Friedman said it is no longer politically worth the trouble to do so.
Published: September 9, 2006 10:57 AM
I understand Lew Rockwell's point regarding raising the wage floor and how that can effectively undercut somes ability to provide enough utility to an employer for them to earn the minimum. But to me, and I do not see it addressed in Mr. Rockwell's article, the real issue is that a minimum wage hike is nothing but another tax on us all. As the minimum wage rises, the cost of production rises. These costs will be passed onto consumers in the form of higher prices. If enough consumers do not see the value in paying a higher price for certain prodcuts or services, then the provider of these may in effect be bankrupted by the governments artificial raising of the cots of production. But more likely than not the wage increase will lead to minor price adjustments across most services and products and we consumers will continue consuming and paying for this welfare program through indirect taxation.
To me, that point is too critical to not have been addressed in Mr. Rockwell's article.
Published: September 9, 2006 11:16 AM
It is certainly true that living on a minimum wage level is very difficult, as most demagogues infer. That is, however, no reason to try to legislate wage rates.
Couldn't much of the hardship experenced by these workers and their families be ameliorated by repealing the taxes that, firstly, eat up 30-40% plua of the wage-earners paycheck and secondly act to increase the costs of almost everything that the worker has to buy, often by substantial amounts.
If the well being of people of limited earning ability was really the goal of supporters of the "minimum wage" (really a mandatory unemployment law), wouldn't these considerations be issues of paramount importance, especially if one considers that the poorest among us are being taxed for the benefit of people who are politically well-connected, and who are much mor prosperous than they, and also that they are being taxed, and their already low wages are being CUT, for government "services" that they are unlikely to have any use for, or any access to!
PEACE AND FREEDOM!!
David K. Meller
PS--As a rule, envy is an extremely destructive social and psychological force, with nothing to recommend it. However, it might be nice to exploit this issue to release some of it on the side of supporting economic freedom for a change!!DKM
Published: September 9, 2006 12:01 PM
Kevin, I think the point you raise is indirectly addressed in the article. Businesses can't just "pass on" to consumers the costs of this or any program; if they could, why weren't they charging these higher prices before?
The way in which prices may rise in response to the minimum wage is less obvious: marginal outfits will be driven from the field as a result of the increased costs it forced them to bear, and the correspondingly reduced supply of goods in the absence of these marginal producers will be responsible for the higher prices. This, if I am not mistaken, is Rothbard's analysis in Man, Economy and State of the idea that taxes can just be passed on to consumers.
Published: September 9, 2006 12:03 PM
Absolutely, I agree. I assume that minimum wage is the key fact responsible for the unemployment of most Austrian ecomists.
Published: September 10, 2006 7:14 PM
I assume that minimum wage is the key fact responsible for the unemployment of most Austrian ecomists.
Maybe - depends on what is an ecomist.
Published: September 13, 2006 12:49 AM
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Published: September 15, 2006 2:18 AM