More on the Minimum Wage and Obama’s attempted Christmas tree tax
I should think if I make a post on the minimum wage, I should acknowledge the most common argument for it. It’s not that the minimum wage can’t raise wages, but rather that it generally can’t do so without causing unemployment.
In a free and open market, wages tend toward the workers’ respective MRPs (what they contribute). If a worker’s wage is less than their MRP, that means their employer is receiving a profit; these profits invite more firms in until the profits are non-existent. Therefore profits tend toward zero while wages tend toward MRP.
Obviously though, there is a possibility that a worker’s wage will be lower than their MRP. If the government institutes a minimum wage of 7 dollars, for example, there are people whose wages can be raised, perhaps if they’re earning $6.50 while being able to produce $7.50. Meanwhile though, all workers unable to produce $7.00 will be unemployed.
The problem with the minimum wage is that, in addition to unemploying these specific workers, is that it will reduce the previously mentioned tendency of wages tending toward MRP. This is because the minimum wage is a harmful regulation. Businesses will be unable to hire specific people that would help contribute to a successful business. By mandating that employers must pay all employees a certain amount, certain employees will be not be hire-able. New businesses will have tougher start-ups, and therefore the tendency for wages to equal MRP will be diminished. I call this the interventionist paradox. An imposition of the minimum wage is created (supposedly) to raise wages, but ends up causing unemployment and lower wages.
Anyway, found this hilarious post over at the EPJ about the Agricultural Department trying to institute a 15-cent charge on Christmas trees. Apparently the reason for the tax is to run a ““program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)). And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States””. It’s apparently now being delayed, but it’s hilarious nevertheless.