Tuesday, March 08, 2005

Living in the Twilight Zone

Reading the news this morning makes me feel like I woke up in the Twilight Zone.

The Senate just defeated a minimum wage increase, but is likely to pass legislation stripping the poor of bankruptcy protections.

Meanwhile, the President of Venezuela says, "The world should forget about cheap oil" and warns that "any bid to kill him would result in the halting of Venezuela's oil shipments to the United States, which imports 15 percent of its crude needs from the Latin American nation."

I think I'll go back to bed and try getting up on the other side.


Tig said...

I can't begin to describe the insanity of New Mexico's legislature this year. It's just finish out this year and next year, retire if I have a retirement left and do something else. I always thought I would teach for another 10 possibly 15 years, but the politicians have so screwed up public education that you can't teach anymore.

Phil K. said...

Now, now. Let's not be hasty. It's not like they're shooting down the min. wage increase because they're heartless. If you do some simple research on this subject you'll find that even the most liberal economists say that a federally mandated increase would further INCREASE unemployment. I don't want to explain all of it here but let's just say that a better solution would be to eliminate the payroll tax for persons making less than $6/hr. THEN, you'd see what compassion is all about. Do the math. As for bankruptcy stuff - this is a simple case of people loaning money (i.e. - credit card companies) not wanting to continually get burned. Remember, it ain't their fault you're in debt. It's yours. Don't spend what you don't have.

Dr. Bruce Prescott said...


As we speak, I have a child researching the ways credit card companies intentionally rip off the gullible poor. I've arrested con artists who had more heart.

The argument that raising the minimum wages leads to unemployment is also bogus.

Having ample experience adjusting the cost and salary structure at a church run daycare center the last time the minimum wage was raised, I know that it causes nothing more than a brief headache for managers and administrators.

America has the wimpiest managers and administrators on the planet. They'd rather subject their minimum wage employees to real economic hardship than roll up their sleeves and do a little work themselves.

Anonymous said...


The answer as to whether increasing minimum wage leads to unemployment is: It all depends.

In a global economy manufacturing will chase the lowest cost labor - for US companies that means going overseas. Anyone who has called for computer connection support and reached India, checked to see where their software was written or looked at where their shirt and furniture was made will know this is happening. However, if US business is robust enough in creating new intellectual property and services then the business climate can still be sufficient for full employment. Whether this can continue indefinitely, considering the sorry state of our school system, is problematical. However, a high minimum wage does mean giving up more US manufacturing in a globally competitive market.

Phil K. said...

Bruce, et. al. -

After doing some further reading on the BAP and CPA of 2005, from both it's supporters and opponents, I've concluded that politics is complicated. : )

Essentially, it could be looked at as a bone thrown to MBNA, largest contributor to the GOP, or it could be seen as a strike against those who are suffering under the weight of medical bills, unemployment, etc.

Understand that I'm a very left-thinking when it comes to social/theological things, but still very much a Free Market supporter. I definitely see where Big Business wants to protect themselves and I can also see how this bill failed in protecting the weakest and poorest. They definitely could passed the many amendments that Democrats stuck out there that would've provented credit companies from preying on the poor.

As for min. wage, this is simple economics, fellas, backed by LAWS of economics. The higher the price goes, the lower the demand goes. Companies will hire less people, lower hours, hire higher-skilled people (i.e. - unions), and the lower-skilled worker is forced out of the marketplace, thus increasing unemployment. It's a non-starter. Let the market decide wages, not the government.

I've seen many, many studies proving both sides "bogus," and let me assure you, overall, increases in the min. wage prove to be disasterous (see: early 90s wage increases and unemployment numbers). I'm very confident in this. We're already seeing it now in the tech sector. Anyone who's had a problem with their computer and called Tech Support, most likely got ahold of Bangalore or Hyderabad, India. 'nuff said. One microcosmic case of cost/salary structure at a church doesn't put a dent in this theory.


Dr. Bruce Prescott said...


The days when the American economy was based on manufacturing are over. Even Mexico cannot compete with the low cost wages in China.

The U.S. is moving to a service economy. Raising the minimum wage in a service economy does not lead to unemployment.

The Daycare Center at my church was providing a service. When the minimum wage was increased, I had to increase rates. The people paying for services paid a little more for the services they received. In the end, the raise they got from the minimum wage increase was more than adequate because the price of manufactured goods did not increase -- those costs declined as corporations moved manufacturing jobs first to Mexico and then to China.