Thursday, January 11, 2007

WaPo: Minimum Wage, Maximum Myth - WaPo: Minimum Wage, Maximum Myth -

Steven Pearlstein: - Minimum Wage, Maximum Myth argues that Sen. Max Baucus of Montana is wrong headed in his opposition to a hike in the minimum wage. But his arguments intentionally misstate currently accepted economic theory. For one, the author blythely assumes that the increase in wages will more than offset any losses ensuing from the forced rise in wages. Somehow, we are led to believe, this money is going to come out of thin air. At best, it would be zero-sum transfer from those with a bit more money to those earning the minimum wage. But, of course, it isn't zero-sum, since the reason that people are earning less than the proposed new minimum wage is because their marginal unility is less than that to their employers. So, Pearlstein seems to think that Congress can magically suspend the law of supply and demand through legislation.

Typical liberal wishful thinking economics.


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