Real Democrats™ & Minimum Wage

Steven Pearlstein is a Real Democrat™, and he has this to say about economic theory and the minimum wage:

Most [economic theory] is nonsense.To begin, both economic theory and history suggest that small business will, in time, pass on its increased costs to its consumers. Small businesses that pay low wages tend to compete with other small businesses that pay low wages, so they will all face the same cost pressures and respond in similar fashion. The worst that can be said is that a higher minimum wage will add, very modestly, to overall inflation.

There is also general agreement among economists that a higher minimum wage, at the levels we are talking about, will have a minimal impact on adult employment. Slightly higher prices might reduce, slightly, the demand for Wendy’s hamburgers, cheap hotel rooms and dog-walking services. But largely offsetting those effects will be the increased demand for goods and services by tens of millions of Americans who will finally be getting a raise. A higher minimum wage doesn’t lower economic activity so much as rearrange it slightly. (emphasis added)

Theres Keynes again – at the altar of consumption.

If you raise my wages, I will spend more – or so the story goes, according to the General Theory of Employment, Interest, and Money. But income, and consumption are not as inextricably linked as Keynes Pearlstein would have us believe. But I digress – this increased consumption spending, will be able to purchase more goods and service and re-employ the few who are displaced in order to provide for my “raise.” Provided the prices of those goods have not also increased – an important assumption that Pearlstein entirely dismisses with his patently retarded price/wage escalation game. If everyone increases the wages, and everyone passes the costs along to consumers – who, I might add, are responsible for the bulk of the “consumption spending” – then nobody is any better off. Aren’t you capable of seeing that if all prices change, then there has been no real change?

Of course not everyone needs to raise their offered wages. The big boys like Wal*Mart don’t have to, because they already pay more than the new minimum. They’re insulated to a degree, against ham-fisted legislation like this, but if local stores close down, leaving the Wal*Marts as the only game in town, they’ll be next on the chopping block. And because the trade Unions (also insulated against these new rules) are so in bed with the political left, it’s pretty easy to see through this shitstorm of ideology for what it is: utopian fantasy.

What’s missing from all of this is not exactly insignificant. Before you can look me in the eye and tell me that you want things “rearranged,” and that you alone know how best to do so, you must first convince me that the status quo is not only inefficiently wrong, but also morally depraved. In order to “rearrange” jobs, from Peter, to Paul – you must first convince me that Peter doesn’t deserve his job, and that Paul does. But Pearlstein, and the Real Democrats ™ don’t bother to go this far. They dismiss any notion of social justice with the caveat, “it doesn’t affect that many people so let’s not worry about it.”

Pearlstein’s hubris is revealed: “Real Democrats know that raising the minimum wage is the right thing to do — economically, politically, morally.”

That’s right. Real Democrats ™ are omniscient and perfectly infallible in their knowledge about who deserves what, when and where. Only Real Democrats ™ are capable of properly allocating scarce economic resources. No nonsensical argument would be complete without a total bait & switch. Pearlstein has tossed out his Left-liberal, high-minded utilitarianism, in favor of categorical imperatives, like “morality.” There is nothing “moral” about telling people they’re no longer allowed to earn what they’re worth. And to posit that there is some objective minimum value that an individual is capable of contributing is absolutely dishonest. To insist that individuals be paid more than they can contribute is a crack-pipe dream; a world where everything is found in superabundant quantities.