Is this more proof that Democrats don't grasp fundamental economics?

Question

http://news.yahoo.com/s/ap/20070124/ap_on_go_co/minimum_wage

Dems are committed to raising the minimum wage (an insanity in and of itself, but that's an argument for another question), yet they don't seem to grasp that doing so will have an impact on small business, which accounts for over half of all jobs in the US. Small businesses are not General Motors or Wal Mart. They have no way to pass along the additional cost to the end consumer. Sen. Ted Kennedy even refers to tax breaks to small businesses to help offset the cost of a minimum wage hike as "giveaways for the powerful". I don't know about you, but I don't consider the guy who owns and operates the local hardware store as particularly "powerful".

Nomo: That's great for those people who will retain their jobs, but small businesses feature finite capital. If you artificially raise their labor costs 40% per worker, by definition they will have to either raise prices or decrease employment to offset that cost. Considering Wal Mart is right up the street, raising prices is impractical. Therefore, your scheme to raise the income of the lowest paid workers will cost many of them their jobs. How many of the newly-unemployed will be eating at Burger King?

Collateral: In what way is this "circular reasoning"? Perhaps if Dems had stayed awake during Econ 101, we wouldn't be having this debate today.

Nick: That's fiscal policy, not fundamental economics. Thank you for making my point for me. Fiscal policy affects, and is turn affected by, fundamental economics. If you'd like to discuss the potential economic ramifications of that policy, I'm all for it. Think of it this way: policy is the cause, whereas economics are the related effects.

Collateral: If you believe that, there's no point in discussing anything with you, as you're too dense to learn anything.

Answer 1

the worst part about it is that they understand it in the microcosm of American Somoa but when you spread it out to the 300 million business across the country that understanding goes away.

Answer 2

The (well, another) funny part about all this is that the minimum wage is typically earned at small businesses, not at the Wal-Marts. Anyone who thinks that raising the minimum wage is "sticking it to the man" should understand that beginning pay at Wal-Mart and other giant corporations already exceeds the minimum wage (and was raised last year in response to market demands), and already easily exceeds the new proposed minimum wages.

Answer 3

Ever consider that the employees getting the higher minimum will have more to spend in the economy?

Trickle up!

Maybe they could even afford to eat at a Burger King, or shop at Walmart.

Rick N - If small businesses cannot afford to pay a living wage, then they should be out of business and their workers and clients can go somewhere else where they serve the market better. Can never understand. Compassion for the the small businessman, compassion for the corporation, but none for the people working hard, making it all possible, and just trying to get by.

And again. What's wrong with trickle-up?

Your point......we should have a permanently poor underclass in the wealthiest nation on earth because that's best for the poor. I disagree with your logic. And motives.

Answer 4

Circular reasoning - like the vast majority of economic quack theory. It all depends on what side you view it from and what you expect it to accomplish.

I can argue all day that any theory is right or wrong - and they all accomplish the same thing. Jack.

- What don't you understand? Any economic theory is quackery. I can argue quadrupling the minimum wage will make the economy zing - and you can't disprove any of it.

Answer 5

you mean kind of like building up a monumental deficit while simultaneously lowering takes? I didn't realize paying bucketloads of interest to foreign countries counted as "fundamental economics"

actually having a balanced budget is "fundamental economics", your income needs to balance the outflow, too bad bush never learned fundamental economics

Answer 6

What local hardware store....you mean there are some left???