Thirteen months ago I sent this letter to Bernie Sanders. (Surprisingly, he’s yet to reply.) Below I probe the same issue that I probed in that letter, but from a slightly different angle. And I direct my question not only to Mr. Sanders but to the many other people who propose, as means of helping ordinary people, that both tariffs and minimum wages be raised:
If retailers, equipment manufacturers, hospitals, and other American firms that buy imports will respond to higher tariffs by reducing the number of imports that they buy, why will retailers and other American firms that employ low-skilled workers not respond to higher minimum wages by reducing the number of workers that they employ?
Do profit-seeking firms care about protecting their bottom lines when the inputs whose prices are forced up bear the name “imports” but not when the inputs whose prices are forced up bear the name “workers”? Do firms possess some miraculous power and mysterious willingness to completely absorb increases in the costs of using inputs called “workers” – a power or willingness absent for increases in the costs of using inputs called “imports”? Or do firms that attempt to pass along to consumers, in the form of higher prices, the higher costs of inputs called “workers” enjoy such extraordinary market power that those higher prices cause no reduction in these firms’ sales, while firms that attempt to pass along to consumers, in the form of higher prices, the higher costs of inputs called “imports” lack this enviable power (even when, in many cases – such as Wal-Mart – the same firm uses both kinds of inputs)?
It is one of my guilty pleasures to pose such questions to economic interventionists. It’s surprisingly easy – and great fun! – to ask questions, such as the above, that expose the shallowness and weakness of thought – and, hence, that cast a klieg-light beam on the inconsistencies – that form the typical economic-interventionist’s case for government meddling in the economic affairs of people. Casting such light on these inconsistencies requires no great talent; the weakness of the targets makes this entertaining sport, in many cases, a snap!