The Chicken, the Egg, and the Minimum Wage. Obamas promise to raise the minimum wage for government contractors brings to mind the old chicken and egg question. Will mandated higher wages bring more prosperity, or will it simply devalue the dollar? Which comes first higher wages or greater prosperity? Lets examine this question logically (liberals can skip this part). A dollar in itself has no intrinsic value. Its just a piece of paper that represents something of value, for example a period of productive labor. That labor can be anything from rotating all four tires on a car to performing surgery to remove an appendix. So that we can track the value of each of these tasks to society, we have assigned them a value in dollars. No matter what dollar value we attach, the tasks will still have the same intrinsic value and the relative worth of rotating tires and surgery will always be the same. For arguments sake, lets say rotating tires is worth $1 and surgery worth $10. So now Obama comes along and says tire rotation is worth $2, will surgery also be worth $10? No, because these tasks have real relative worth, surgery will now be worth $20. Raising the minimum wage just made the dollar buy less. Before the change, Joe Average was happy making $3 an hour, and he could afford to have his tires rotated and surgery when he needed it, but now, his $3 will only buy $1.50 worth of real service or goods. Is raising the minimum wage going to be good for him? So who gains anything out of this? Until paychecks have time to catch up to the new (lower) purchasing power of the dollar, no one will get their tires rotated, and companies that hire mechanics will fail, or at least stop hiring. Elective surgery will be curtailed and those who have emergencies will go bankrupt trying to pay. Again, who gains? Politicians who make wonderful but meaningless promises, thats who. If raising the minimum wage to $10 an hour will keep us all out of poverty, why not raise it to $1000 and make us all rich?
Posted on: Wed, 29 Jan 2014 13:25:07 +0000
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