Re: tax cuts and minimum wage!

Actually, it is much more simple than that. Wage is a cost. Raising the
cost lowers demand. Therefore, raising the min wage will decrease the
demand for workers, which translates into more unemployment. In addition,
the higher costs are passed on in the prices of goods and services,
increasing inflationary pressures.

The minimum wage also acts as an artificial floor to the value of labor.
This artificial floor causes a disparity between wages here and wages
elseware, namely Mexico. Illegal immigrants come here as a result of this
disparity. If wages were allowed to lower themselves to the true value, the
disparity would cease, and it would not be worth the extra effort for
illigal immigrants to come here.

With regard to tax cuts: taxes are a cost. Lower the cost, and you
increase the supply; supply in this case being productivity. Tax cuts raise
productivity, which in turn raises government revenue. This is the basic
dynamic model of supply side economics.

Your Keynesian analysis is equally flawed. There is no absolutist model.
Each supply/demand model is a curve. Each curve has an elasticity
component. Some supply/demand models are elastic, some inelastic. Your
flaw is based on a static approach to economics, instead of a dynamic one.
This is common.

Bush's tax cuts are working. There is a direct correlation between the tax
cuts and economic growth. You mention capital investments, but this is only
part of the equation. You forget about the multiplier effect. That is,
money in private hands multiplies faster than money in government hands. So
by definition, tax cuts, which takes money from the government and gives it
(back) to the private sector, will increase economic output.

I agree that a pure free market system requires some government control to
avoid a tragedy of the commons. However, wages, like prices, are too
fundamental to be largely controlled by government. The minimum wage has
been turned into a living wage by liberals, which is not the intended
purpose of the minimum wage. Like the so-called safety net, which has
become a hammock, government control has become so great as to become a
detriment to the free market. Balance needs to be restored to government
interference in the free market.

[P.S. It is nice to have an intelligent discussion on this newsgroup
instead of the usual flame war.]


.

Loading