Un-Impreza-ive Economics

by Don Boudreaux on May 4, 2015

in Hubris and humility, Reality Is Not Optional, Seen and Unseen, Work

Here’s a letter that I sent on Saturday to the office of U.S. Rep. Don Beyer (D-VA), who represents a district adjacent to the one that I live in:

Rep. Don Beyer
Capitol Hill
Washington, DC

Dear Mr. Beyer:

You’re one of nearly 200 Congressional co-sponsors of the Raise the Wage Act. This legislation would raise the federal minimum wage from $7.25 per hour to $12.00 per hour – an increase of 66 percent.

Please reconsider.

You own a Subaru dealership here in northern Virginia. Among the models that you sell is the Impreza, Subaru’s lowest-priced offering. What do you think would happen to sales of new Imprezas if the government, in an attempt to raise the incomes of sellers of low-end automobiles, enacts legislation forcing you and other car dealers to sell no new vehicle at a price of less than $30,204 – a price 66 percent higher than the current price of a new Impreza? Do you believe that such a mandated price hike would not reduce the quantity of Imprezas demanded by car buyers? Do you suppose that nearly all car buyers would respond to this forced price increase by simply forking over the extra cash for low-end models rather than switching to other transportation options, such as buying used cars, repairing and holding on longer to their current cars, or – given that they must pay at least $30,204 for a new car – opt to buy new Outbacks and other more luxurious models rather than the modest Impreza?

If you cannot honestly tell your constituents in the 8th district that you believe that a government-enforced hike in the price of new economy cars (especially a price hike of 66 percent) will not discourage the purchase of such cars – that is, if you understand that such a mandated price hike will cause many new Imprezas and other economy cars to go unsold – you should withdraw your support for a higher minimum wage. Just as a government-imposed minimum car price would result in fewer low-end cars being sold, raising the minimum wage will result in fewer low-skilled workers being employed. Please, please do not subject the most vulnerable workers in the economy to such an awful fate.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030


It’s appalling how eager people are to put at risks the livelihoods of poor strangers.  The ability to conjure up stories, no matter how far-fetched, that explain how social-engineering interventions will help the people whose livelihoods are put at risk combines with (1) raw political opportunism and (2) the greedy itch to perform on a public stage acts that make the actor appear to be a caring humanitarian, to generate government policies that worsen or even destroy the lives of untold numbers of innocent people.


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