posted on Feb, 27 2013 @ 09:10 PM
We ALSO get the moral hazard of those now working and those not--why should those working continue to work to see their money taken away and given to
those on the dole ? Black markets form where folks now work illegally (which actually are a postive effect economically), and we then devote resources
to arrest, prosecute, jail, and defend them (which is even MORE money down the drain). This also encourages illegal immigration, etc--especially
because we usually don`t deal with only the damage by our minimum wage but also the other federal mandates which needlessly hike labor costs.
We`re not done with our destruction, though. Look at the area under the curve bounded by your two vertical lines and the middle and upper horizontal
lines. THIS IS THE NET WORK LOST--which is wholly unrecoverable in every way (the mathematical product of price X quantity of a labor market which is
work). Like setting money afire our law has just burned up this work and it is gone forever and cannot be saved--all because of a stupid law. This
also doesn`t include the non tangibles of HAVING a job--learning to work, show up on time, the pride of working, etc--which are the perfect
characteristics for starting jobs for kids still living with their parents. Instead we so kill jobs that experienced adults and college grads are
working at minimum wage jobs and kids are unemployed and not learning trade skills.
Other federal mandates do similar things by artifically hiking labor costs (obamacare, forced benefits, regulations, NLRB decisions, lawsuits, etc.)
-- and this is what we have done to ourselves. THIS is why we have record numbers falling into the poverty level, and THIS is why we have record
numbers unemployed/underemployed and on food stamps. By killing jobs and forcing labor oversupply -- as well as adding burdensome non-value added
collateral costs to everything--people fall into poverty. In fact, we have so overburdened our economy by punishing workers, punishing markets, and
promising and distributing entitlements (which act like drugs and chains to a population) that we are completely unable to meet even the short term
cash obligations without borrowing great sums of money--over 50% of our cash flow--as well as destroying currency, work, and capital by printing money
on top of this.
If we leave market forces alone not only do these markets function at the optimal efficiency, but begin to shift upward as labor supply starts
becoming more scarce (the U-shaped curves are dynamic as well as specifc to markets). This results in a better standard of living for everyone WITHOUT
any government help or mandates (it ALSO can result in a little inflation if productivity gains do not happen--fortunately the two are usually
synergistic). So what we want is the market to NATURALLY equilibrate--without interference--and naturally increase our standard of living. By
artifically meddling with it we ALWAYS cause this not to happen.
Obama`s speech was to INCREASE the minimum wage--which will INCREASE job losses, INCREASE economic inefficiency, and INCREASE the damage we are doing
with our own laws--while at the same time throwing more people out of work and making them dependent on unemployment, food stamps, welfare, and other
state entities. I would certainly have expected this, but it is important to know WHY what we are seeing is happening--I hope this little ditty in
some way accomplishes this.
NONE of this is new; Cicero codified it in 50 BC. Adam Smith put it into perspective (our Constitution being largely written based on this and John
Locke`s -- as well as others` -- phlosophies). Milton Friedman and Art Laffer also put this much better than I ever could.
Point being if ANYONE in a position of public policy is advocating a minimum wage or INCREASING the minimum wage they should be no where near the
public sector. We don`t NEED OR WANT a minimum wage--it always causes harm.
The dirtly little secret statists will not tell you is you don`t NEED their help or protection in the form of a minimum wage--or much else. Labor is a
resource like any other and in a free market companies are forced to COMPETE for your talent. Statists would like to buffalo you into believing that
without their help the evil corporations would screw you; nothing could be further from the truth. In an open market corporations HAVE TO pay you what
you are worth--because they compete for your labor and productivity (and skill level). Labor in all its forms is a finite resource and a huge
investment to a company--if they want to succeed they will have a well paid, well taken care of, and well skilled labor force (and developing and
training this force as a long term investment is all part of the picture). A company which mistreats its employees in an open market fails because the
employees vote with their feet and go elsewhere--and companies know this. The thing an `evil` corporation FEARS THE MOST is an open market.
Unfortunately because of our corruption corporations team up with crooked politicians and pass protectionist legislation which favors THEM--and this
crony `capitalism` cuts out the competition and results in wages falling into the minimum wage. The best defense toward a decent wage is a free and