In the end, after all of the political posturing and all of the speeches and exhortations for Congress to “do something,” a $2 trillion “coronavirus stimulus” bill landed on the president’s desk for The Donald to sign. And sign he did, uttering all of the platitudes and everything else that comes with “historic” spending legislation that never should have seen the light of day.
Generally I think people who advocate for minimum wage laws mean well but likely have a fundamental misunderstanding of the topic. Pleas for a living wage are not new by any means. Saint Thomas Aquinas believed that commodities (farm products) should demand a fair price and that workers should be paid a sufficient income to support themselves. In his time period, however, this was unachievable, as the majority of people lived very minimally and often survived on their own food production.
It is clear that arbitrary minimum wage laws are not only ineffective, but actually detrimental to real wage growth. So what type of action results in increasing wages in the United States, or any country for that matter? The only way to raise real wages is to increase the per capita amount of capital invested by increasing capital accumulation. To accomplish this it is first important to understand what is meant by capital accumulation.
There are many reasons why socialism fails everywhere and every time it is tried. One primary reason is the propensity of socialists to confuse the cause and effect relationship. Due to this confusion, the remedies put forth by socialists and Keynesians try to solve the effect instead of tackling the cause. It is analogous to treating symptoms instead of the disease.
In this article, I will highlight this tendency with a few examples and show how government does damage to society through misguided actions arising out of this confusion between cause and effect.
As grappling with COVID-19 has required rapid and difficult decisions by world leaders to protect the public, it has been easy to overlook some of the lessons basic economics can teach us about prices. I taught economics for several years, and this topic that we covered in the first few sessions of each semester comes to mind as I watch today’s events unfold.
On October 17, 2019, civil protest erupted in Lebanon. The reason for the eruption was a proposed tax on the popular WhatsApp app.1 The tax served as only a spark to ignite the uprising. Over the years the economy of Lebanon has been steadily worsening. Of course, the usual suspect is the state, and the preferred method is interventionism.
