Thursday, August 20, 2015

Donald Trump Argues Murray Rothbard Style

The great economist Murray Rothbard used to counter those calling for a minimum wage by employing a reductio ad absurdum and saying, "Well if the minimum wage is so great, why not raise it to $100?"

During an interview with The Holloywood Reporter, Donald Trump employed a similar technique, but this being Trump, he couldn't settle for a measly $100 minimum wage as an example:
[Y]ou know when you start tinkering with the free market and you start having mandates put down, it's a very dangerous subject because we're competing against the world. We have something happening called corporate inversion. Corporations are leaving the U.S. You know, with minimum wage, it's wonderful to say everybody should get $5,000 an hour. The problem is, you have companies leaving now. 



  1. The answer to his question is just to raise import taxes on all companies that leave the US for this reason by 10000%. The problem with minimum wages isn't that the company will go overseas (although this could happen, obviously). This is why it's important to continually point out that minimum wages are about two things: 1) They prevent voluntary association between individuals. 2) They create unemployment for individuals that cannot produce a higher marginal product than the wage. That's what you're for, Robert! Keep it up

  2. Why not raise to $100? Elasticity of demand. Demand for low wage workers is very inelastic. So raising it 10 to 20% will not have reduce demand. Raising it 1000% will destroy demand for these workers. Learn some basic economics. Elasticity is covered in the first month of Econ 1.

    1. Who needs to learn basic economics? Who is disagreeing with you here? Try reading the post again.

    2. "So raising it 10 to 20% will not have reduce(sic) demand." mention of supply in your rant on first month "Econ 1"?

      Maybe you should throw some cold enchilada's at me & Tom as it's more effective in at least shutting Tom up. I'll probably shut up too by eating one even if it's cold. I love enchilada's as long as they are on corn tortilla's and not wheat.


    3. Low wage workers are inelastic? Hardly. Automation and design innovations remove the need for low wage workers on an on-going basis. Today's versions of products take far fewer man hours to build than their predecessors decades ago. A 20% increase will immediately start reducing demand. Now it won't happen instantaneously which is why the mainstream and intellectuals get confused. It will take a year or three or a product life cycle or similar before there is a 20% reduction in man hours but it will happen in response and on top of the 20% increase in wages. So low wage workers can enjoy a temporary boost in pay and then no pay.

  3. I'm not sure why Trump references corporate inversions and the minimum wage in the same sentence. While the oppressive regulatory environment definitely plays a role in businesses leaving America, corporations are inverting and re-domiciling their headquarters to foreign nations to lower their tax rates, it doesn't really have anything directly to do with absurd minimum wage hikes.