This morning I read a short article regarding a mayor of a small city in California who passed a law to raise the minimum wage by four dollars per hour. On the surface, the mayor’s decision appeared to be a good one, but in practice, his decision was reckless and ignorant. How so, you may ask? Let me tell you. As a result of the mayor’s decision, the two grocery stores in the neighborhood have been forced to close their doors. The problem with many progressive ideas is that in theory, the theory and the reality look the same, but in reality most theories prove to be false. The final result of the mayor’s decision is that 200 people lost their jobs and now everybody in that neighborhood has to go out of their way to buy their groceries. In other words, the pay raise went from four additional dollars to zero dollars and a short trip to the unemployment line for 200 people. Let me give you another personalized example. Let’s pretend that you and I are smart people. I am not saying we are smart. I am only pretending, ok? Great. Let’s say I have $100.00 left every month, and I would like to use my money to pay someone to clean my house. Let’s also say that you need $100.00 every month to be able to pay all your monthly bills. After I pay you the $100.00, I don’t have any more money left, but all my bills are paid off. Similarly, after I pay you the $100.00, you finish the month without getting into debt. In this scenario, we are both happy with the arrangement.
Then, one day the mayor of your city tell you that if you vote for him, he will raise your monthly salary from $100.00 to $125.00. You think to yourself, Hmmm, I can use an extra $25.00 for other incidentals, like eating at McDonalds one a month. So, being the money smart that you are, you vote for the mayor to cash in on the pledge. Sure enough, as soon as the mayor gets into office, he passes a law in which you must get paid $125.00 for cleaning my house. There was one tinzy, whinzie, little problem. I don’t have $25.00 extra dollars to pay you. Since the $25.00 was the law of the land, I have only two options: (1) I could pay the $25.00 that I don't have, or (2) I could fire you to avoid violating the law. Since I don’t have the extra money, the next time you come to work I will congratulate you in getting your pay raise, and I will wish the best of luck finding a different job working for the mayor’s office. The result is that I don't have someone to clean my house, and you don't have the $100.00 to cover your expenses. But think about it this way. At least you feel good that you got a ghost of a pay raise.
The moral of the story is that no everything that sounds like a good idea is, in fact, a good idea. Since we are just pretending that we are smart, you can continue believing that money grows on trees, that the government produces wealth, and that employers exist to make you rich. Ah, I almost forgot. You can also continue believing that it is my job to make you happy. As for me. I just keep the extra $100.00 and start cleaning my own house.