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There seems to exist, among a certain set, the idea that government can make our lives better, by taking our money from us. Or, by making some people get paid more than the job is worth. This, of course, is patently silly... But, it requires comprehension of basic reasoning to understand... something few seem to grasp.
Then, there's those who develop the theories that you can manipulate the economy without bad results. You have to demonstrate to them why they're silly... Since reality is introduced as a child, and most of us learn it then, for those who don't grasp it, you have to get a little elementary.
Let's imagine, for a minute, a remote village, with its various occupants. Farmers, sheep herders, etc. And they trade by means of stamped metal "coins".
The barber, the doctor, the wheat grower, the milk producer, the repair shop, the dressmaker... all trade these coins with each other to get what they want. Over the years, some have argued that those who do less valuable things are getting the short end of the stick. And, to make it up, some rules were introduced that said that you could not be compensated in coins less than 3 per hour.
Which was great, since those who were the least paid got about 2 coins per hour.
The first thing that happened was they bought more "stuff". But, then, those with more coins started to pay more to get their share. Eventually, the major, who made the coins, decided there weren't enough to go aorund, so he asked the blacksmith to make a bunch more.
Everyone was happy, because they had more coins.
But the next year, it became apparent that things weren't quite working as planned. For one, the street sweeper was still unable to buy additional things. He still had to struggle growing a garden in order to eat decently. And his clothes were still tattered and he still could not pay to buy new ones.
Finally, one of the old sages in the town pointed out that while everyone had more coins, the dressmaker still only produced 2 dresses a week. The guy growing wheat still planted 200 acres and harvested the same amount of wheat as last year.
In fact, exactly the same amount of stuff was made as was made before. Nobody had actually had 'more'. The old sage shook his head at the consternation of the town meeting. Some argued that instead of paying the sweeper more, he should just be given coins taken from others. That, surely, would make everyone have enough wheat, milk, beef, shoes, and so on.
That was tried and again, the next year, it was the same. The sage got up and pointed out that last year, the farmer brought in 8 wagonloads of wheat and this year, too. The butcher slaughtered exactly the same number of cows and pigs as last year.
Finally, one of the brighter members of the audience spoke up. "So, how do we get more wheat?"
Indeed. Manipulating wages is pointless. The wealth we all enjoy is due to PRODUCING it, not wages.
Money is the means of trade... It isn't how much money we have that matters... It's what we can trade it for that matters.
Manipulating the numbers does no good at all. We don't need more manipulation, we just need more stuff produced. Unemployment exists because we obstruct employment. A lack of housing and food and basic goods can only exist if we don't produce it.
The sage in the town meeting gazed on the audience for a bit. "Why not let the farmer decide how much of his land to farm? And let him keep all he produces to trade with us?
The audience erupted in anger "blasphemy!" some cried. A few began plotting to get the sage thrown out of the meeting. "Such simplistic ideas of feeding people's selfishness!" they muttered to themselves. "The farmer is just selfish!" some hollered. The sage wandered out into the cool night air. "I wonder if the next village over the mountain is like this one?" he wondered to himself...
Not exactly. There are a bunch of people out there who believe that government can make THEIR LIVES better - not "our lives better".
People who support regressive tax shifts, for example (say, cutting property taxes in exchange for a sales tax hike) believe that THEIR LIVES will be improved, even if every it makes renters worse off. Workers who support a higher minimum wage believe it will improve THEIR LIVES even if it makes other people worse off.
Then, there's those who develop the theories that you can manipulate the economy without bad results. You have to demonstrate to them why they're silly... Since reality is introduced as a child, and most of us learn it then, for those who don't grasp it, you have to get a little elementary.
Focusing here. I like your village example, but it's much simpler than that if one simply recognizes that human behavior, particularly in regards to energy, is as predictable and immutable as any physical law of the universe. Since human behavior is the foundation and driver of economics, the laws of economics become similarly predictable and immutable.
An airplane does not repeal the Law of Gravity, it simply acts against it in a predictable way that allows faster travel. Turn of the engines at 35,000 feet, and it will not take too long to understand that gravity never went anywhere.
Loving and wanting to protect your child by placing plastic covers over your electrical outlets repeals none of the laws of electromagnetism. Let the child pry the cover off with some metal scissors and then jam those scissors into the light socket for a reminder of the law going nowhere.
There are tons of examples of how the natural world doesn't much care how humans feel, and refuses to repeal its laws to please us. Economics is just one set of laws that simply does not care, and can seem quite cruel in that lack of caring, but it's no more cruel than gravity, electromagnetism, or trigonometry.
Supply & demand is immutable. It can be acted against same as gravity, but it doesn't go away. Minimum wage laws act against Supply & Demand, period. If both the supply of workers and demand for that work stays the same, the price should not move. If the supply of workers goes up, and demand stays the same (as in giving amnesty to a bunch of un/low skilled workers with executive order amnesty, for instance), price (wage) should go down. Minimum wage law opposes this by applying opposing force to the natural direction of price.
What ends up happening is that demand for the product in question goes down. This is manifested with fewer employees, fewer hours, etc. If the employer does not wish to lower demand, they raise their prices to compensate, which simply shifts the supply demand curve to a profitability graph that fits, but now the purchasing power relative to their product has gone down, making every currency unit worth less measured against what they sell. Simultaneously, the demand for their product goes down, since price increases on products the government isn't forcing you to buy result in lower demand.
For more on this, see "rise of Internet retail" and "why US companies lower cost by moving manufacture to the 2nd/3rd world countries the product's market is in, to save on both labor and transportation costs."
Capital always, now and forever, until the stars burn out....will follow the path of least resistance, same as any other form of energy. Over time, you will see that supply & demand never went anywhere and was working just fine.
Sure it is. You keep thinking that like a good little corporate citizen. I mean hey, its GOOD that the government subsidizes the minimum wage folks, yup, thats just good business!
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