This is where the discussion of costs and benefits in an aggregate sense runs into issues. The discussion of costs and benefits, MC = MB and all that, that we economists discuss in our textbooks and undergraduate classrooms focuses on the costs and benefits accrued to the single economic actor (the individual, the firm, or the institution). In which case, the economic actor bays both the cost and enjoys the benefit. He/She/It can make a rational decision.** However, when aggregating, the benefits do not necessarily accrue to the same actor as the costs and it can easily lead to poor decisions that make people worse off even if the benefits outweigh the costs!
Here’s Steve Horwitz on entrepreneurship. (While I’m a bit more positively inclined than is Steve toward Joseph Schumpeter’s view of entrepreneurship, I agree that that view too frequently prompts those who take it to adopt, unfortunately, a ‘great man’ theory of entrepreneurship.)
NEW YORK (AP) — In the aftermath of California and New York becoming the first states to raise the statewide minimum wage to $15, some small businesses with hourly workers are rethinking how they can absorb the increase.
The owners of Dog Haus, a chain of about 20 franchise restaurants in the West, may have customers pick up their meals at the counters in two company-owned stores instead of using servers to carry food to tables. The Pasadena, California-based company is also looking at hiring more experienced workers who can shoulder more responsibilities than entry-level staffers who earn minimum wage. For example, a cashier might now take on some administrative tasks. That way, Dog Haus could hire fewer people.
“We’ve known this has been coming for a while, and we’ve been preparing for it,” co-owner Andre Vener says.