Free markets best for America

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George Hasara – Columnist

What if the idea behind “Fight for 15” was expanded beyond simply raising the minimum wage? There are countless business owners who are also struggling because they can’t keep up with the cost of living. How about showing a little love to these folks by mandating minimum prices for goods and services that the public must pay? After all, payment for goods and services (minus expenses and overhead) is the equivalent of what the rest of us consider wages. If a group of bureaucrats can replace the free market as the mechanism for determining the cost of labor, why not have those same people determine the price of everything? 

According to my extensive (three menus) online research, the average cost of a hamburger and fries in a casual dining restaurant is $10.39. Why not bump that up to at least $15? Think of all the mom and pop operators who would go out of business benefit. If a minimum burger price was enacted, wouldn’t that provide a higher standard of living for everyone?  More money spent eating out surely must be good for the economy. What possible unintended consequences could there be? 

“Now wait a minute,” you might say, “all burgers aren’t created equal.” True enough. The Rainbow Room that overlooks Niagara Falls should be expected to fetch higher fares than a local greasy spoon. Unfortunately the Rainbow Room doesn’t list their prices online and I can’t find hamburger on their menu and it’s Canadian anyway – but you get the point. Pricing is a complicated process that involves a lot of factors.

If the price of a particular item or service is considered too high, people stop buying. If the cost of labor is considered too high, people also stop buying. In the $15 hamburger analogy, some burgers would sell and some would not. I’m pretty sure an Applebee’s or Chili’s would still have customers at $15, but your favorite burger joint might not. And, so it is with labor. Not everyone can find a buyer at $15 an hour and passing a law won’t it make it so. 

Unfortunately too few people think of compensation in terms of productivity. The $15-dollar minimum wage hopefuls are probably not calculating how they are going to boost their performance for their respective employers. Our society has a time clock mentality because most people are paid for time spent rather than for productive activity. Being paid by the hour is not particularly equitable but it is easy to compute and avoids a lot snarky wage disputes.

Perhaps the biggest threat we face from an expanding government is not higher taxes but the very destruction of price discovery.  The old Soviet Union serves as a cautionary tale of what happens when the government manages the economy. Sure, that system worked, until it didn’t. A free market automatically determines what is produced and at what prices, with an immeasurable amount of adjustments based upon an innumerable amount of variables. No matter how tasty it might sound, controlling prices, whether it’s burgers and fries or the cost of labor, is a bad economic recipe.

Contact George at georgehasara@yahoo.com.

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