Peter Schiff slams calls to raise the minimum wage in this insightful article. You might point out that raising the minimum wage raises the income of many people who are currently making minimum wage. Remember, however, that there are many other effects - unseen effects - of raising the minimum wage. An employer will likely lay off his weakest performing workers. If the minimum wage is raised 10%, he may lay off as much as 10% of his workforce to maintain profitability (maintaining profitability is a prerequisite for maintaining the jobs of the other 90% that didn't get laid off). For those who were looking for jobs, more employers are now laying off instead of hiring. If you didn't have a job when the minimum wage got increased, finding one just became that much more difficult. So, while it is true that minimum wage earners benefit by an increase in the minimum wage, this comes at the cost of job losses among the presently employed and a decrease in the prospects that the presently unemployed will be able to find employment. Sure, there are benefits, but do the benefits outweigh the costs?
Actually, it should have gone to the dogs, but didn't. I'm talking about Leona Helmsley's estate , of course. The contract clause of the Constitution says, "No State shall ... pass any ... Law impairing the Obligation of Contracts..." This means that private contracts cannot be changed by legislative edict. This clause is incredibly important because the willingness of private individuals to engage in profitable enterprise - which is the foundation of social welfare - crucially depends on their belief that they can realize a profit. In turn, their belief that they can realize a profit depends on their belief that they can hold parties to a contract liable to the terms in the contract. For example, lenders must have confidence that they can repossess the collateral for a loan if the loan is defaulted on. Otherwise, they will not take the risk of giving the loan in the first place. When lenders are too scared to lend, everyone is worse off. In the case of Leona Hel...
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