The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken.
Interpretation
Minimum wage laws aimed at reducing poverty can inadvertently harm the very people they intend to help.
Milton Friedman argues that minimum wage laws, while supported by good intentions to alleviate poverty, often lead to unintended consequences that can worsen the economic situation for those they aim to assist. The increased wage floor may lead to fewer job opportunities for the most impoverished individuals, illustrating the complexity of economic policies where well-meaning interventions can sometimes create more harm than good.
In practice
During a discussion about economic policy, one might quote Friedman to illustrate the unintended consequences of minimum wage laws.
The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.
Universities exist to transmit knowledge and understanding of ideas and values to students not to provide entertainment for spectators or employment for athletes.
There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.
There is one and only one social responsibility of business - to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
The great danger to the consumer is the monopoly -whether private or governmental. His most effective protection is free competition at home and free trade throughout the world. The consumer is protected from being exploited by one seller by the existence of another seller from whom he can buy and who is eager to sell to him. Alternative sources of supply protect the consumer far more effectively than all the Ralph Naders of the world.
The strongest argument for free enterprise is that it prevents anybody from having too much power. Whether that person is a government official, a trade union official, or a business executive. If forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, are willing to buy, or else they have to go into a different business.
To restore confidence in our markets and our financial institutions so they can fuel continued growth and prosperity, we must address the underlying problem. The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy.
Eviction is part of a business model at the bottom of the market.
The truth of good economic doctoring is to know the general principles, and to really know the specifics. To understand the context, and also, to understand that an economy may need some tender loving care, not just the so-called hard truths, if it's going to get by.
Close the weak banks and impose serious capital requirements on the strong ones...You see, it may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs.
Today, if you look at financial systems around the globe, more than half the population of the world - out of six billion people, more than three billion - do not qualify to take out a loan from a bank. This is a shame.
There is always some chance of recession in any year. But the evidence suggests that expansions don't die of old age.
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