Tuesday, December 10, 2013

Wage hikes feel good, solve little

Wage hikes feel good, solve little

(My Clovis News Journal column for November 8, 2013)

I have seen many well-meaning people calling for an increase in the "minimum wage" as a way to fight poverty. If only it were that simple. How much do you raise it? To $100 per hour? More?

Unfortunately, economics doesn't work that way. The higher you raise the minimum wage, the fewer people a business can afford to employ. Many people will be priced out of a job altogether.

A higher minimum wage increases the cost of doing business, which means prices will have to go up or businesses will close. Employees getting the new minimum wage will soon be facing proportionally higher prices for everything they buy- completely negating any benefit they thought they were getting, thus creating a vicious cycle.

The economy isn't a pie; it's a pie that can grow exponentially. A dollar someone else pockets doesn't necessarily take a dollar out of your pocket, unless that dollar is gained through theft or coercion.

Many CEOs are paid a ridiculously inflated amount, but the solution isn't to raise the "minimum wage", it's to eliminate the fiction of the corporation, and get government OUT of the "business" of controlling business. That includes completely eliminating "minimum wages". When businesses are privately owned, but are told by government how they can operate, what they must pay, how much they can charge for their services, and are forced to pay a percentage to the State, that is the socialist economic system properly called "fascism".

But what if the "minimum wage" had simply kept up with the cost of living? Wouldn't that solve everything?

If the minimum wage had "kept up" with the cost of living, unemployment and inflation would have been proportionally higher all along. The reason the cost of living keeps rising is the devaluation- the counterfeiting- of the dollar by the Federal Reserve. Strike at the root of the problem, not the side effects.

Even a minimum wage of $100 per hour or more wouldn't make everyone happy. If the average person brought home the same amount as a vastly overpaid CEO, or what the average plastic surgeon makes, it wouldn't be long before everything cost many times what it costs now. That's just a basic law of economics- supply and demand, and the ability to produce enough to meet demand without a free market. The same number of items will always be out of reach of the average person, no matter how high you make the minimum (or average) wage.

Don't fall for the feel-good solutions which solve nothing.

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2 comments:

  1. The term "fiction of the corporation" is an interesting one. Would you elaborate on it?

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  2. Corporation are not real physical things, and certainly not individuals with rights- they are created by government fiat. They can have no rights, since they are not individual people- yet government makes up "rights" and gives them to the corporations to protect them from the harm they do; they are protected from the consequences of their actions. If a "corporation" pollutes, the individuals actually responsible for the harm are rarely held accountable, and the rules often allow the corporation to avoid most (if not all) the cost of the clean-up.

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