About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Thursday, December 5, 2013

I'm Sorry, Barack Obama, You're A Dumb Ass Too!

Yesterday, President Obama exposed his economic ignorance. (Either that or he exercised his penchant for telling shameless, bald-faced lies.) According to reports, Obama said:
"There's no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth," he added.
Mr. Obama likes to use the phrase "research shows." In truth, research of every size, shape and quality is ubiquitous today. In short, you can find empirical social research to "show" anything you want if you look hard enough.

Here is the undeniable, economic truth:
Raising the minimum wage above the level that would otherwise obtain in the free market will tend to create unemployment for those currently earning less than that minimum. Setting the minimum wage to a level at or below that which would otherwise obtain in the free market will have no effect on the rate of unemployment.
Put more simply, if the lowest market wage in a particular job category is $10 per hour, raising the minimum wage to $12 per hour will result in increased unemployment. Setting the minimum wage to $9 or $10 dollars an hour would have no effect at all.

If you doubt this, ask yourself why politicians never advocate raising the minimum wage to $50 per hour, a sum undoubtedly higher than the lowest wage that would obtain in the unhampered, free market. Isn't it obvious, that such an increase would unquestionably result in increased unemployment? Now ask yourself why this is.

I defy anyone to logically refute this truth. Note I said logically. I'm sure it is possible to find some obscure research study that "shows" that this economic law was, in fact, falsified in some small city in Massachusetts in the last century where the study proved an increase in the minimum wage "raises incomes for low-wage workers and boosts short-term economic growth." Of course, to rely on such an obscure study one would have to discount literally thousands of mainstream studies which "show" results predicted by the law. Or one would have to believe that economic laws are true everywhere but in Massachusetts. Or that only research done in Massachusetts is able to uncover economic truth. Or that the "short-term economic growth" observed was more in demand by consumers than the short-term economic growth that would have obtained if the minimum wage had remained unchanged. 

No matter. As I've written many times here before, economics is not a empirical science like physics or chemistry. Economics is an analytical science like mathematics. It's laws are developed and proved not by empirical research but by logical reasoning. Thus, empirical research is unable to falsify economic truth. Why? The short answer is that there is no way to isolate variables in human action.

Now, is it too much to expect the smartest President in history to know or understand what I have just written? Do you understand it? Do you agree with it?

If you don't, refute it...by means of logic and reasoning.

Or do not. Continue on your unthinking, merry way , and you'll be like Obama, a dumb ass too!  

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