informationliberation
The news you're not supposed to know...




Austrian Economics: Understand Economics, Understand the World
The Century of the Self: The Untold History of Controlling the Masses Through the Manipulation of Unconscious Desires
The Disappearing Male: From Virility to Sterility

The Obama Deception: The Mask Comes Off
Operation Gladio: The Hidden History of U.S. Sponsored False Flag Terrorism in EuropeThe New American Century: The Untold History of The Project for the New American Century
(more)
Article posted Dec 31 2013, 1:51 AM Category: Economy Source: Ron Paul Print

Ron Paul: How Government Policies Hurt Low-Wage Workers

by Ron Paul

Fast-food workers across the county have recently held a number of high profile protests to agitate for higher wages. These protests have been accompanied by efforts to increase the wages mandated by state and local minimum wage laws, as well as a renewed push in some states and localities to pass “living wage” laws. President Obama has proposed raising the federal minimum wage to ten dollars an hour.

Raising minimum wages by government decree appeals to those who do not understand economics. This appeal is especially strong during times of stagnant wages and increased economic inequality. But raising the minimum wage actually harms those at the bottom of the income ladder. Basic economic theory teaches that when the price of a good increases, demand for that good decreases. Raising the minimum wage increases the price of labor, thus decreasing the demand for labor. So an increased minimum wage will lead to hiring freezes and layoffs. Unskilled and inexperienced workers are the ones most often deprived of employment opportunities by increases in the minimum wage.

Minimum wage laws are not the only example of government policies that hurt those at the bottom of the income scale. Many regulations that are promoted as necessary to “rein in” large corporations actually hurt small businesses. Because these small businesses operate on a much narrower profit margin, they cannot as easily absorb the costs of complying with the regulations as large corporations. These regulations can also inhibit lower income individuals from starting their own businesses. Thus, government regulations can reduce the demand for wage-labor, while increasing the supply of labor, which further reduces wages.

Perhaps the most significant harm to low-wage earners is caused by the inflationist polices of the Federal Reserve. Since its creation one hundred years ago this month, the Federal Reserve’s policies have caused the dollar to lose over 95 percent of its purchasing power—that’s right, today you need $23.70 to buy what one dollar bought in 1913! Who do you think suffers the most from this loss of purchasing power—Warren Buffet or his secretary?

It is not just that higher incomes can afford the higher prices caused by Federal Reserve. The system is set up in a way that disadvantages those at the bottom of the income scale. When the Federal Reserve creates money, those well-connected with the political and financial elites receive the newly-created money first, before general price increases have spread through the economy. And most fast-food employees do not number among the well-connected.

It is not a coincidence that economic inequality has increased in recent years, as the Federal Reserve has engaged in unprecedented money creation and bailouts of big banks and Wall Street financial firms. As billionaire investor Donald Trump has said, the Federal Reserve’s quantitative easing policies are a great deal for “people like me.” And former Federal Reserve official Andrew Huszar has called QE "the greatest backdoor Wall Street bailout of all time.”

Many so-called champions of economic equality and fairness for the working class are preparing to confirm Janet Yellen as next Chairman of the Federal Reserve. Yet Yellen is committed to continuing and even expanding, the upward redistributionist polices of her predecessors. Washington could use more sound economic thinking and less demagoguery.

By increasing unemployment, government policies like minimum wage laws only worsen inequality. Those who are genuinely concerned about increasing the well-being of all Americans should support repeal of all laws, regulations, and taxes that inhibit job creation and economic mobility. Congress should also end the most regressive of all taxes, the inflation tax, by ending the Federal Reserve.
_
Former Congressman Ron Paul's weekly column first appeared here at his website The-Free-Foundation.com. He also runs theRonPaulChannel.com and the RonPaulInstitute.com





Latest Economy
- Tax Freedom Day, 2015
- The Bankster War on Cash; JPMorganChase Begins to Prohibit the Storage of Cash in Its Safety Deposit Boxes
- Faber: The Biggest Bubble Is Belief In Central Bankers
- The Unconventional Ideas Of Marc Faber
- EPA and CA Drought: State Flushed Over 1.2M Acre-Feet Of Water Into SF Bay To Help 'Endangered' Fish
- There Is No Real Increase In Insured Under Obamacare
- Americans Will Spend More On Taxes In 2015 Than They Will On Housing, Food, and Clothes [Pic]
- The Six Too Big To Fail Banks In The U.S. Have 278 TRILLION Dollars Of Exposure To Derivatives









Comments 1 - 2 of 2 Add Comment Page 1 of 1
Nickel's 2bits

Posted: Dec 31 2013, 8:50 PM

Link
7147 Increase in wage decreases demand for labor?

Okay, let's take the opposite approach: Let's pass a law setting the MAXIMUM wage at $1.00 per hour. That will increase demand for labor immensely, and everyone will immediately be employed!

Oh wait: Economics will interfere. No one will have any money anymore so no one will be buying anything and ...
Anonymous

Posted: Dec 31 2013, 9:11 PM

Link
24118 Straw Man argument. Dr Paul would also be against the maximum wage as well.


Add Comment
Name
Comment

* No HTML


Verification *
Please Enter the Verification Code Seen Below
 


PLEASE NOTE
Please see our About Page, our Disclaimer, and our Comments Policy.


FAIR USE NOTICE
This site contains copyrighted material the use of which in some cases has not been specifically authorized by the copyright owner. Such material is made available for the purposes of news reporting, education, research, comment, and criticism, which constitutes a 'fair use' of such copyrighted material in accordance with Title 17 U.S.C. Section 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. It is our policy to respond to notices of alleged infringement that comply with the DMCA and other applicable intellectual property laws. It is our policy to remove material from public view that we believe in good faith to be copyrighted material that has been illegally copied and distributed by any of our members or users.

About Us - Disclaimer - Privacy Policy



Advanced Search
Username:

Password:

Remember Me
Forgot Password?
Register

"F*ck This Court": Woman Who Took AK-47 To Jailbreak Pens Epic Rant Against Judge - 04/26Dashcam Video Shows Cop Shoot Man 'Armed' With Cell Phone - 04/24Police Cadet Turns in Cop for Turning Body Cam Off Just Before Pummeling his Victim - 04/26Innocent Man Convicted After FBI 'Expert' Analysts Confused his Hair with the Hair of a DOG - 04/26Student Accused of Rape By 'Mattress Girl' Sues Columbia U., Publishes Dozens of Damning Texts - 04/26Four Swedish Cops on Vacation in New York Just Showed Americans What REAL Policing Looks Like - 04/24Average Americans Finding Out They Live In A Police State - 04/26Cop Ruptures Man's Spleen, Fellow Cops Laugh, Take Pics, As He Lays Dying, Begging For Help - 04/24

Man Follows Speeding Cop, Finds Out He Was Speeding To Buy PeanutsMission Creeps: Homeland Security Agents Confiscate Women's Panties For 'Copyright Infringement'Cop Shoots Couple's Dog, Threatens Jail For Trying To Save Dog's LifeSWAT Team Shoots Teen Girl & Her Dog During Pot Raid On Wrong HomeDurham, NC Cop Testifies Faking 911 Calls To Enter Homes Is "Official Policy"Indiana Sheriff Says US A "War Zone" To Justify New MRAP Military VehicleTampa Cops Surveil Pot Dealer, Catch Him Selling Pot, Raid His Home & Kill Him"You Just Shot An Unarmed Man!": Witness Says Police Shot His Friend With His Hands Up
(more)

 
Top