no third solution

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An Open Letter to Mark Brewer

July 29th, 2009

[Note: revised addressee to read “Mark Brewer” instead of “John Brewer”. I’m not sure how that one slipped by me. Cheers!]

Mr. Brewer,

There are a lot of things I love about Michigan, like the vast wilderness in our midst (or, within a few hours’ drive). Last week, I went to the Upper Peninsula. I hiked around the Tahquamenon State Park and, save for the mosquitoes, I thoroughly enjoyed myself.

But there are a lot of things I hate about Michigan, primarily the politics, and the nonsense that comprises the politics. While I was on vacation last week, you and your party proposed, among other measures, a 35% increase in the state’s minimum wage — raising it $10 an hour. This is insanity, for a number of reasons.

In the real world, businesses are going under faster than anyone can count, and workers are losing their jobs at an equally alarming pace. Raising the price of the single largest cost for many businesses can’t possibly solve either problem. By what math (or mysticism) do you figure that increasing the cost of head-count will save businesses (which employ workers), or keep businesses from laying off even more workers?

I will assume for the sake of argument that the otherwise immutable laws of economics simply don’t apply here in Michigan, and that the objection I outlined in the preceding paragraph without merit. Fine. If the laws of economics don’t apply (and in order to propose a mandatory 35% wage increase, you must believe that said laws don’t apply) why don’t you instead propose that we raise the minimum wage to $100 an hour — anyone working full-time would instantly be on pace to earn $200k per year!

You know as well as I do, that in the real world, it simply doesn’t work that way. Raising the minimum wage simply redistributes jobs from one area to another, or redistributes the amount of capital investment (as businesses make tradeoffs between capital and labor). Go to any large chain grocery store, and you can witness the effects of the last minimum wage hike: U-Scan machines are replacing checkout clerks at the grocery stores.

When the wages due to labor are held artificially high, a few lucky employees are able to reap the benefits, but the rest of them are out of luck.

Mr. Brewer, you claim to be “on the side of people who are suffering,” but a proposal like this one (and the other talking points I’ve seen) can only, ultimately cause even more people to suffer.

Sincerely,

David Z

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no third solution

Blogging about liberty, anarchy, economics and politics