Raising the minimum wage allows business people to stop thinking about workers simply as costs to be cut and allows you to start thinking about workers as customers to be cultivated.
Interpretation
Increasing the minimum wage shifts the perspective of businesses to view workers as valuable consumers rather than just expenses.
Nick Hanauer's quote emphasizes the idea that raising the minimum wage can transform the way businesses perceive their workforce. Instead of seeing employees merely as costs to minimize, businesses can recognize them as potential customers whose purchasing power can drive economic growth. By paying workers more, companies not only invest in their employees' lives but also stimulate broader economic activity by enabling these workers to spend more in the marketplace.
In practice
This quote can be used during discussions on economic policy reforms.
The most powerful forces in economics are not numbers or facts. They are prejudices and preferences. No amount of evidence will ever change the degree to which many of the rich and powerful prefer themselves to be richer and more powerful and others poorer and weaker.
When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.
The most insidious thing about trickle-down economics is not the claim that if the rich get richer, everyone is better off. It is the claim made by those who oppose any increase in the minimum wage that if the poor get richer, that will be bad for the economy. This is nonsense.
You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It's not if, it's when.
The thing I've learned most about poverty is how expensive it is to be poor. It's super easy to pay rent every month if you earn enough to pay rent and have a decent job. It's super hard to pay rent if you need a coupon from the state and then need to go find an apartment that will accept that coupon and only that coupon.
If low taxes were the way that people like me created wealth, then we'd be starting our companies in the Congo or Somalia or Afghanistan, but we're not. We come to places where there are lots and lots of customers.
When inequality gets too extreme, then it becomes useless for growth, and it can even become bad because it tends to lead to high perpetuation of inequality over time and low mobility.
Our economy is the result of millions of decisions we all make every day about producing, earning, saving, investing, and spending.
Library of the Works of Ludwig von Mises”. Here is an article he wrote in 1951, some two years after his magnum opus Human Action appeared, where is lays out his case in a more popular form. The money sentences are “Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too.
When people from organizations like the World Bank descended on Third World countries, they always tried to remove obstacles to development, to reduce economic anxiety and uncertainty.
The benefit of appointing a hawkish central banker is the increased inflation-fighting credibility that such an appointment brings.
Let me put it very forcefully: No large economy has ever recovered from an economic downturn through austerity. It's not going to happen in the United States, and it's not going to happen in Europe.
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