Oklahoma voters recently voted 55%-45% against a three-year doubling of the minimum wage from $7.25 an hour to $15. They were partly motivated by the truth contained in economist Thomas Sowell’s pithy remark that the real minimum wage is zero; employers can fire staff instead of paying them more.
Workers who keep their jobs enjoy their increased pay, but higher labor costs kill jobs. The losers get nothing but a harsh lesson in the unsentimental facts of economics. A recent survey from the Employment Policies Institute found that 3 out of every 4 economists thought the Oklahoma wage hike would mean fewer jobs for young people. It’s as if 3 out of every 4 people expected night to follow day.
Yet there are some people who don’t accept the repeatedly proven logic of the turning world. Labor unions, for example, support minimum wage hikes and pretend it’s because they’re on the side of the little guy. The real reason is that if the minimum wage goes up, union wages get bumped higher, too. This benefits those people protected by union agreements, but it hurts the rest down at the bottom of the economic heap. Hypocritical Big Labor is like Robin Hood in reverse, stealing from the poor to give to those with plenty. Unions are on the side of the “haves” against the “have-nots.”
Oklahomans were, of course, less interested in a theoretical “fair” wage — it’s a meaningless idea, though much mentioned — than in the inescapable fact that if the minimum wage doubled, they’d have to pay for it.
It’s a fine and welcome thing when voters see the connection between economic cause and effect. It offers hope that they won’t always swallow cynical promises from politicians and union bosses who know that the cost of higher wages will be paid by consumers. Even workers who keep their minimum wage jobs don’t get something extra for nothing; they won’t get more money for the same amount of work as they did before, they’ll have to work harder and pick up the slack left by colleagues who got sacked.
It is a pure good that Oklahomans were numerate and wise enough to reject the empty fiat offered to them in a ballot measure. But not everyone is like that, and there is a dire need in America today for more people to see cause and effect clearly. Most recent evidence suggests voters on the Left, especially the young, fail to connect the dots. That’s why more of them are turning toward socialism. They picked socialist candidates in recent Democrat primaries in New York City and Denver, and they did so because they blame the wrong thing for their current woes. In fact, for relief they are turning toward the very policies that are at the root of their frustrations.
Perhaps the biggest grievance young adults have is over the cost of housing. The median age of first-time homebuyers has now reached 40 years, which is a record high. Not surprisingly, young men and women who have been excluded from the market for the first 20 years of their adult lives are coming to see property ownership, which used to be part of the American dream, as almost a luxury aspiration. They believe the system is betraying them. And the horrifying fact is that they’re right. Where they are terribly wrong, however, is in identifying the real culprit.
They think it’s “capitalism.” I put it in scare quotes because “capitalism” is a Marxist term that knowingly disparages the thing it refers to, which is simply economic freedom. The truth is that the prices of homes and everything else are rocketing not because there’s too much economic freedom but because there’s too little — because we are already trammeling it with socialist and semi-socialist economic policies.
Home prices are unaffordable because of government red tape. Oppressive rules and regulations make construction too costly, which means too few new homes are being built. Today, there are 3 million to 4 million fewer homes than America needs. That scarcity stokes inflation.
Prices of all goods and services are higher because of government-stoked inflation that took off like one of Elon Musk’s Starships when former President Joe Biden and the Democrats massively increased the money supply by spending trillions of borrowed dollars in such measures as the 2022 Inflation Reduction Act. President Donald Trump’s tariffs, similarly, impede economic freedom and push prices up. Government interventions are not “capitalism.” They have nothing to do with free enterprise. They are its opposite — undue constraint, economic meddling, socialism.
DINOS TAKE OVER THE DEMOCRATIC PARTY
Among Democrats, only 42% view “capitalism” favorably, compared to 66% who like socialism. The hideous irony is that the baneful effects of socialist economic policy are prompting more Americans to seek relief in socialism. It’s the cause of their problems, but many of them think it’s the cure.
What is needed nationwide is a lot more economic sense of the type shown by Oklahomans who realized that one cannot legislate and regulate plenty into existence. We don’t get richer by passing plebiscites forcing us to pay ourselves more. We create wealth not by mandates, especially not by turning to socialist politicians who tell us we can get wealth by taking from other people. We can create wealth, get wealthy, and stay wealthy by stopping governments and socialists getting in the way.