President is Pushing Another Failed Policy

A couple of weeks ago, I received an email update from President Obama which discussed his signing of the Executive Order raising the minimum wage to $10.10 an hour for federal contract workers.  Within his remarks the President stated his belief that, “It’s the right thing to do”, raising the minimum wage for federal contract workers.

Naturally the President used the news of the Executive Order as a segue to lobby Congress to raise the federal minimum wage from $7.25 to $10.10 an hour for all American workers.  He claims raising the minimum wage “would move millions of Americans out of poverty”.  In fact, Obama indicated that, “Raising the minimum wage would grow the economy for everyone”.  The latter remark is based on his undying Keynesian dogma that more spending is the key to growing the economy.

There’s only one big problem with the President’s position on raising the minimum wage.  It’s called the Law of Demand.  According to this law of economics, with all other factors being equal, when the price of a good or service increases, demand for that good or service decreases and vice versa.

In the case of minimum wage laws, the service in question is the labor offered by workers.  Since minimum wage laws make the price of labor artificially higher the demand for labor decreases per the law of demand.  Consequently, some workers will receive pink slips and others will not be hired.  Higher unemployment will result.

In fact, a Congressional Budget Office report last week confirmed just that.  It indicated that Obama’s proposal to raise the minimum wage from $7.25/hour to $10.25/hour would result in the loss of possibly 1 million jobs.

And there are other reports issued by economists who know the laws of their science, which have found that minimum wage measures cause higher unemployment.  It’s also important to understand that that higher unemployment will result in greater income inequality between rich and poor.

At the end of the day, the President’s belief that raising the minimum wage will grow the economy is ridiculous.  In the first place, the law of demand tells us that less people will be working.  In the second place, the president is assuming that the money businesses earn which does not go to higher wages for their employees, somehow gets sucked down a black hole.  Does he not understand that that money could be channeled into productive enterprises like plant expansions, training for employees, and research and development?  All are enterprises which ultimately lead to job creation and higher pay for workers.  Even my 8^th grade economics students understand this.  They also understanding that raising the minimum wage is not the right thing to do.

Don’t Prepare Your Kids to be Slaves of the State

As we all know, the jails are full of victimless criminals in America.  Whether they are street walkers, gamblers, or drug users, many are serving time not for hurting anyone, but as protection against themselves or because they committed an act considered immoral by society’s moral elite.

However, adults are not the only ones punished for not hurting anyone.  Young children are usually placed in time out, spanked, or have their toys confiscated by their parents for committing the victimless crime of not sharing.

Picture this, little Jonny has a friend over to play, but refuses to give him a turn with his slinky.  After much quibbling between the two young lads, Jonny’s dad intervenes by taking the slinky away from Jonny and giving it to Jonny’s friend while Jonny is placed in time out on the couch to think about what he did.

But, what did little Jonny do?  He did not hurt his friend or violate his friend’s rights.  After all, he didn’t steal from or hit him.  What he did was obnoxious and inhospitable by societal norms, but no crime worth punishing was committed.  Little Jonny’s toys are his property and it is his decision whether or not to let others play with them.

If you disagree, then consider why adults are held to a different standard?  If my neighbor wishes to borrow my hedge trimmer, but I don’t loan my tools out to anyone, does some authority figure come along and take it from me and give it to my neighbor while I am placed in time out in a ten by ten cell?  Most people would say that is a preposterous example that would never happen.  Agreed, then why are kids punished for not sharing their toys?

Like adults, kids have a choice to make.  If they don’t share their things, when they are at a friend’s house, that friend may not share his things with them.  Worse yet, a child who doesn’t share may not have any friends even if he wanted them.  The bottom line is that the natural world has a way of working these issues out.  There are plenty of incentives for little Jonny to share.

But, let’s return for a moment to the example about the neighbor who wanted to borrow my hedge trimmer – the example is not so far-fetched upon closer consideration.  In America, it has become all too commonplace for our neighbors to ask for authority figures (government) to make us share our income with others or face time in prison.  Whether it is big bank bailouts, the military industrial complex, public employee unions, corporate and individual welfare, or foreign aid, Americans are constantly required to share their money with others or face jail time.

And that is really the lesson to be learned about punishing kids for not sharing their things with others.  It teaches them at a young age that property rights equates to selfishness and prepares them to be subservient slaves to the state which takes their property through taxation or price inflation and gives it to others.

At the end of the day, sharing should come from the heart not because you will be placed in time out or put in a cage.  Parents should teach their children empathy for others while respecting their property rights.  In an age of massive public assistance spending and “too big to fail” bailouts, property rights have taken a back seat to political expediency.  It is time property rights were once again respected. Parents can begin that process with their young children.