The first principle of economics is scarcity. There are simply not enough resources in this world to satisfy everyone’s wants at a given time. A harsh truth of life. The first principle of politics is to ignore the first principle of economics.
At the heart of all economics is human action. Without human action, there are no transactions, no market, and thus no economy.
Politicians tend to ignore these crucial details in their policymaking. So, do some of their experts.
Socialists in Seattle in 2014 embarked on an ambitious experiment to try and defy the laws of economics in pursuit of their utopia. And unlike the laws of man, the laws of nature are always properly enforced, whether we agree with the outcome or not. Much can be learned from this plot, especially for this new administration and its goals and objectives. Much more needless suffering, too, would be avoided.
But the winds do not seem to be blowing that way.
Seattle became the first major metropolitan city to pass a “living wage” of $15 an hour back in 2014. Whatever their reasons and intentions were, they set out from the beginning to prove a point. The socialists on the city council’s Income Inequality Advisory Committee (odd name, very bad at their jobs) recruited an economics team from the University of Washington to conduct the broadest and most expansive study ever on minimum wage laws.
It must not have occurred to these politicians that every time the wage floor has been increased since the passage of the Fair Labor Standards Act in the 1930s, it has had zero or negative effects on alleviating poverty. That means it did nothing or made it worse. Something about it clearly does not work when it has not worked 23 other times.
Government may not be the best at affecting efficient markets. Go figure.
Regardless, ignorant of those facts, they persisted. That is, until the data started blowing in the other direction. Though, a foreseeable direction, nonetheless. The socialists on the city council attempted to spike the University of Washington study, but were unable to do so. Instead, they engaged in finding experts that would agree with their perceived delusions—that is, they sought confirmation bias—to conduct a study.
Then the socialist squad engaged in an aggressive PR campaign with two objectives. One, accuse the University of Washington team of misinformation and smear it in the media. Two, beat them to publication and scramble to quash the study. It seems that the socialists are not much in favor of the free marketplace of ideas, but that was not a hard assumption to make when someone’s core ideals do not want a free market for anything.
The poisoning of political policymaking due to preconceived notions of outcomes does not just make bad studies; it has real-world implications for the people they affect when put into place. Furthermore, to smear and attempt to spike a study and then, essentially, make up a study to fit what it is you are looking for. Talk about some real disinformation and misinformation.
The University of Washington study completed its goals of being the most expansive economic study ever done regarding minimum wage laws. They used the right and relevant factors and over the right amount of years to be able to make a model which determined what the Advisory Board’s policy would most likely do. That is, cause a lot of people to lose jobs or to lose a lot of hours. In short, these economists found that the workers in the city affected by such an increase in the minimum wage would lead to making less money overall.
Like I said, the Income Inequality Advisory Board—bad at their jobs.
To go further than the UW study, the Federal Reserve Bank of Chicago found that for every 10% increase in the price floor for labor (minimum wage), goods and services saw a corresponding increase in price by 4%, not accounting for yearly inflation.
Thus, the Income Inequality Advisory Board implemented a policy that not only caused people to make less money in absolute terms. But also caused the money they now make to become less valuable relative to the increase in the prices of goods and services. That is, a loss in real purchasing power. These things of course only apply to the people who keep their jobs.
The problem with prioritizing political expediency to satisfy people’s immediate wants leads to unintended, though foreseeable, real-world consequences.
And typically… those implementing the policies never have to suffer.