Plano Texas Politics

June 13, 2009

Problems with the Minimum Wage

Many of you have probably always thought of the minimum wage as being good but have you ever considered the problems that are caused because of the minimum wage.  Adam Smith said this about minimum wage:

“The whole of the advantages and disadvantages of the different employments of labor and stock must, in the same neighborhood, be either perfectly equal or continually tending to be equal.  If in the same neighborhood, there was any employment evidently more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that it’s advantages would soon return to the level of other employments.”

Translated into normal English he is saying that if we allow the free market to work, wages will be fair because that is the only way a company can survive. His case stated that if one company has more advantageous employment (pays better, has nicer working conditions, etc) people will flock to it so the other companies will have to raise their pay to be able to compete, while the first company will have to lower it’s wages to be able to support the amount of new labor. Thus the free market works.

Many politicians will argue that the minimum wage helps the poor, but it has been proven that most people (59.7%) below the poverty line don’t work.  A higher minimum wage then will help only those who get jobs creating more inequity, even among the disadvantaged.  Even if the minimum wage was raised to $100 people who don’t work don’t get paid so it doesn’t help the poor. In reality it just prevents the poor from getting a job, because if a company has to pay more than a less skilled worker would be willing to take to an employee, then the company will hire a more skilled worker, and most poor people are not skilled, or they probably wouldn’t be so poor.  Also, the minimum wage is a socialist idea. This comes from Karl Marx’s dictum; “To each according to his needs, from each according to his ability.” The minimum wage is an attempt to make our society more “equal” and “equality” is at the root of socialism. Don’t get me wrong I like equality but the Declaration of Independence reads:

“All men are CREATED equal” NOT “All men are created EQUAL”

We all start out equal but we will not be equal forever. I’ll leave with this quote from the article “Minimum Wage Socialism”:

“While the minimum-wage rhetoric may sound good, the reality is quite different”

If you are interested please visit the links below

The Case Against a Higher Minimum Wage

Problems with Raising the Minimum Wage

Minimum Wage Socialism

Thank you for your time,

-James Dalley

June 8, 2009

Introduction to Adam Smith

Filed under: Adam Smith — jdalley @ 9:45 pm
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Adam Smith is considered one of the first economists. He wrote his most famous book The Wealth of Nations in 1776, around the same time as the Declaration of Independence. In this book Adam Smith explains some of the basic principles that require a civilization to work. I will be writing posts about the different subjects that he discusses in his book, for the next couple of weeks, in a hope to expand your knowledge of economics from someone besides the government.