My intrepid Mercatus Center colleague Veronique de Rugy exposes the detachment from reality of those who believe that government-mandated minimum wages will only help and not harm low-skilled workers. A slice:
It’s important to understand that these distortions are the byproduct of government intervening to raise wages. The fact that mandated minimum wages are bad for some workers who will lose their jobs as a result doesn’t mean that all wage increases are bad. In fact, when wages go up naturally as a result of economic growth, improved productivity and more competition between firms for workers, wage hikes don’t come at the expense of other workers. That’s why we can expect a sustained rise in wages resulting from a decrease in the corporate income tax rate — a tax cut that increases capital investment and productivity, and then wages.
If Americans are unwilling to match immigrants’ lower wages, it means they have alternatives that are better than the immigrants’ wage. That means if Americans pick raspberries, more is given up compared to immigrants picking the berries. Giving up more of other things to achieve an objective means having less of other things. In addition, the presence of the immigrants will put downward pressure on the price of raspberries. Uses of raspberries deemed uneconomic because of the price (for example, an extra scoop of raspberries on vanilla ice cream) become economic when they’re less expensive.
Beijing has sped up financial liberalization in recent months, seeking to attract foreign capital and revive an anemic stock market.