By Jim Bowman
Ask a tax-and-spender, usually a Democrat, how much tax is too much, and he will hem and haw. Ask how high a minimum wage should be, and he will react the same way. The answer he is groping for, of course, is whatever the traffic will bear. The market, that is. He will put his finger to the wind and decide what will sell. He's in the business of getting elected, after all.
Congressman Danny Davis (D-7th) said he did not care how much ObamaCare would cost. That was when it was still in the legislative hopper. He still doesn't care.
Rep. LaShawn Ford recently said in an e-blast that it's better to meet the (immediate) needs of his constituents than pay down the state's debts. The debts to vendors are past $4 billion by now, per the ratings company Fitch, and climbing.
It's always two things with tax-and-spenders: meet the immediate pressing need and put off the big problems.
Take the minimum wage, which satisfies for the moment a certain quantity of low-income earners — those with jobs — but penalizes many others who can't find jobs.
"Raising the minimum wage is a formula for causing unemployment among the least-skilled members of society," said Pepperdine U. economist George Reisman in an April 4 open letter to Secretary of Labor Thomas Perez.
It works this way: "The higher wages are, the higher costs of production are," Reisman wrote. "The higher costs of production are, the higher prices are. The higher prices are, the smaller are the quantities of goods and services demanded and the number of workers employed in producing them."
These are all "propositions of elementary economics" that government officials should know, says Reisman, author of Capitalism: A Treatise on Economics (Jameson Books, 1996; Kindle Edition, 2012).
Those who keep their jobs profit from the "government-created monopoly" that eliminates competition from those who can and will work for less. They are propped up by government.
Whence comes the money for this propping up? From "reduced expenditures … elsewhere in the economic system, which must result in more unemployment," says Reisman.
It's a mug's game, he's saying. You muck about with the competitive system without considering consequences baked into the situation, indeed into human nature.
The market price is the fair price, argued the Salamanca Dominicans and Jesuits of late 16th- and early 17th-century Spain, when the free market was taking off as a wealth-producer theretofore unheard of.
All that rises will converge, as the better-skilled displace the lesser-skilled, with the result of "still more unemployment among the least-skilled."
Not to mention the spiral effect, as this minimum wage paves the way to very bad unintentional consequences, says Reisman.
"The unemployment directly and indirectly caused by raising the minimum wage will require additional government welfare spending and thus higher taxes and/or greater budget deficits to finance it."
That sounds familiar, doesn't it? Moreover, it's terribly unfair, being "fundamentally anti-labor and anti-poor people" and benefiting those enjoying "the status of government-protected monopolists," even as it "impoverishes the rest of the economic system."
This fellow is trashing the Social Democrat position on the matter — a new name for the Democrat party? — not to mention that of Democratic Socialists, for whom this sort of thing is mother's milk indeed.
Answer Book 2017
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