Do you support global warming and the $15 minimum wage?
Global warming is based on computer modeling of weather patterns and temperatures using historical data. Meteorologists and computer programmers created programs that can forecast future weather patterns and their affects based on what has occurred in the past. It’s used to track hurricanes and predict long-term patterns. Think El Niño. The computer models tell us the affects of global warming are real.
Computer modeling has become a reliable way to predict possible outcomes. It’s applied to most things that affect our lives, from the food we eat to our financial systems.
Historical events and the laws of nature applied to the weather seems a sound method to arrive at a conclusion.
Laws of Economics, like the laws of nature, have been observed throughout history. Earliest civilizations would gather or hunt to provide for survival. Better hunters and gathers created surpluses. Surpluses were bartered for needs that a single individual’s efforts could not meet.
The barter system worked well on a small, local scale. Over time, however, it became too cumbersome; the capacity to trade was limited by the ability to transport product. Eventually, a system developed that allowed hunters, gatherers, farmers, and craftsmen to trade together using a substitute for the actual goods they produced. Money is an exchange unit for to trade goods or services.
Buyer and seller fix the relative value of the money. Buyers offer a price, and a negotiated transaction takes place. Shoppers buy items for which they are willing and able to pay. Prices of items that don’t sell are reduced to attract buyers. The customer, in an open market, sets the price by her choices. These basic economic laws have not changed.
The Law of Unintended Consequences now becomes relevant.
Understanding the basic laws of economics will help predict results. Economists and programmers can create computer programs forecasting the future. The effects are real and more immediate than global warming. Sometimes the results that are 180 degrees different from the ones intended.
Labor laws changed over time. Working condition, hours and employee rights are hard fought gains for labor. The minimum wage, settling a base wage for labor, is also a gain.
The labor unions understand that all labor is not equal. The apprentice programs, with graduated wage levels from beginner to journeyman to master, support the idea. Workers add value to the company and its products from their efforts. More experienced workers are expected to produce more and earn higher the wages as a result.
Entry-level jobs for young, unskilled workers are lost as an unintended consequence of rising minimum wage pressures. Training and wage costs are becoming too much for a business to absorb. Alternatives are sought to meet company needs: machines, computers, or a move offshore.
Businesses large and small work for the consumer. The consumer sets the price they are willing to pay. It is from this price that all costs to produce the product or service must be paid. Also, the business needs to survive, which requires reinvestment in the business. The investment requires a return. Why be in business if there is no return on capital invested and reinvested?
Labor should be rewarded, but when they are not they move to a better paying job. Taking the skills learned to better their life.
It is a duty of society to teach the next generation of workers to produce and survive. That bond also needs the next generation of workers to learn.
A solution must be found or the number structurally unemployable will grow. This generational problem will not go away without action. The rates of unemployment in our young is unacceptable.
The solution is not a minimum wage that violates the law of economics.