Why the Minimum Wage Isn’t Enough

I had this image thrown at me in a minimum wage argument recently. What about the cost of producing milk? What about tax rates? Hunh? How do you explain that? If I had real patience with the speaker, I might have explained it this way. A gallon of milk costs one gallon of milk. That is its actual value, because it is a gallon of milk. I didn’t, so that wasn’t my initial argument.

Without refrigeration, milk spoils quickly, which means milk has to be drank quickly.  This is why cheese was so popular before refrigeration, unless you lived on a dairy farm.  Before refrigeration most milk went to make cheese or it was fermented into an alcoholic beverage (try it, it is revolting) because even though you could die from drinking tainted raw milk, it was still an irreplaceable source of protein. What created the market for milk was pasteurization and the discovery of cheap refrigeration (Connections) both of which indirectly impacted farming techniques and allowed farmers to get milk to the stores so that you can enjoy it and the farmer can profit from selling it. No one pays for the knowledge that is utilized to make all this possible. It is gratis, free, part of being in the human community.

However, the cost of educating all these morons so they don’t poison themselves is not factored into the cost of the gallon of milk. Anyone care to guess what that cost would be? I’ll save you the trouble, it can’t be calculated. Why? Because the cost of education raises the cost of production, which in turn raises the cost of education, etc. This incalculable cost is what is known as an externality and people who count beans for a living would like to pretend that externalities don’t exist.

But externalities do exist.  Which is why the cost of a gallon of milk is… one gallon of milk.  Money is a variable that steps into the equation that allows you to get milk without having to raise and milk the cows yourself.  That is really all there is to it.

What we have to decide is, what is money? That is what we need to figure out. If it is a creation of society then we can say everyone gets some, not enough, but some, and if you want enough you have to work for it. That function right now is served (imperfectly) by the minimum wage.  It could easily be served by Universal Basic Income or some other kind of minimum income floor that would allow people to survive without requiring everyone to work all the time. Funds are distributed to everyone or just the poor at a set rate a month, a week or even daily. Not enough money to live lavishly or even easily, just some money for everyone in any given area. What would that do for the economy?

The bogeyman of income tax tacked on at the end of the meme is just that. A bogeyman placed there to scare you. Income tax is a bad vehicle to do what the government wants, and is as subject to change as the minimum wage is. The list of alternatives to progressive taxation is nearly as endless as the numbers of ways that progressive taxation can be calculated. Set dollar amounts should be done away with, in any case. A 99% confiscatory upper tax rate could be set on any income that exceeds 20 times the lowest income in the marketplace. See how fast lower pay increases when you tie upper pay to it. Can the wealthy get by on $160 an hour? That should be an interesting experiment to witness.

Personally I like negative interest rates imposed on money left uninvested. That forces money to be used in the marketplace or lost over time. Impose negative interest rates on all accounts which are not retirement accounts or money market accounts. Invest it, save for retirement, spend it or lose it, Pick one. In any case, the problem is not the minimum wage. The problem is the limits on the imagination of the image creator.

The image was found wild on the internet, and was used in an internet argument against me. Post content written and forgotten on November 13th 2016. I probably had other things on my mind that day.

Author: RAnthony

I'm a freethinking, unapologetic liberal. I'm a former CAD guru with an architectural fetish. I'm a happily married father. I'm also a disabled Meniere's sufferer.

One thought on “Why the Minimum Wage Isn’t Enough”

Leave a Reply

Your email address will not be published. Required fields are marked *