"The most important single central fact about a free market is that no exchange takes place unless both parties benefit"
Milton Friedman
Milton Friedman
Well, they are at it again. Those playful kids from the SEIU are trying to organize (ready for this), fast food workers. There is going to be a mass "walk out" soon at a number of fast food restaurants in a handful of major cities. They are going to protest these jobs do not pay a "livable wage", nor have good benefits. The SEIU has their eyes on a huge prize - 4,000,000 non-union workers in this sector, just waiting to be unionized.
Most enlightened economists know a simple truth - tinkering with market forces seldom turns out well. The SEIU wants ALL fast food workers to have minimum pay of $15/hour. In addition, paid sick days, vacation days, and a slew of other benefits. One might ask "Why not? These folks have to live also." Many of us in our youth worked at slinging burgers. These jobs are low or no skill and are meant to be "starter" jobs. They were never intended to be "raise a family, buy a house in the burbs, drive two cars" jobs.
Lets look for a minute on what happened earlier this month with Washington D.C. and Wal Mart. The left leaning bureaucrats who run the Washington decided if Wal Mart was going to build a super store inside city limits, ALL jobs at that store would have to pay at least $15/hour - a "livable wage". At first, Wal Mart responded politely - they explained that type of salary was not in their business model. They went on to explain many who start at the bottom have done well and risen though the ranks to have a good career at Wal Mart. The fine folks on the D.C. board responded by saying "So what? You want to build here, you pay everyone a livable wage". Wal Mart's response - "See you later - we will build our store elsewhere".
What anyone who has taken the most rudimentary of economics courses knows this - wages are the biggest cost driver in organizations. If the wages go up, so do the prices. Wal Mart could no longer compete with other mass retailers if they paid everyone, regardless of skill, $15/hour. Online stores like Amazon have already taken market share from "big box" stores like Wal Mart.
If McDonald's had to pay everyone a livable wage, there would no longer be a "dollar menu" - there would be a "$5 menu" for the budget watchers. Big Macs would sell for way over $5. Sales would drop, and then would the workforce. Everyone would lose. What the market "tinkerers" do not understand is an age old adage - "You can lead a horse to water, but you can't make him drink". In other words, people don't have to pay high prices at fast food restaurants - they can just walk away.
One final example. In the paper this morning was a story about the city of Minneapolis wanting to take over the management of utilities within the city. Exel Energy, who supplies electricity and natural gas to eight states, is headquartered in Minneapolis. Exel's response to this hair brained idea - if Minneapolis decides to take this course of action, Exel will pull its headquarters out of Minneapolis and go elsewhere. It will cut loose the 2,000 people it employees in Minneapolis.
Once again to quote Milton Friedman, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." That is a lesson from Friedman many the Left just can't learn.
Lets look for a minute on what happened earlier this month with Washington D.C. and Wal Mart. The left leaning bureaucrats who run the Washington decided if Wal Mart was going to build a super store inside city limits, ALL jobs at that store would have to pay at least $15/hour - a "livable wage". At first, Wal Mart responded politely - they explained that type of salary was not in their business model. They went on to explain many who start at the bottom have done well and risen though the ranks to have a good career at Wal Mart. The fine folks on the D.C. board responded by saying "So what? You want to build here, you pay everyone a livable wage". Wal Mart's response - "See you later - we will build our store elsewhere".
What anyone who has taken the most rudimentary of economics courses knows this - wages are the biggest cost driver in organizations. If the wages go up, so do the prices. Wal Mart could no longer compete with other mass retailers if they paid everyone, regardless of skill, $15/hour. Online stores like Amazon have already taken market share from "big box" stores like Wal Mart.
If McDonald's had to pay everyone a livable wage, there would no longer be a "dollar menu" - there would be a "$5 menu" for the budget watchers. Big Macs would sell for way over $5. Sales would drop, and then would the workforce. Everyone would lose. What the market "tinkerers" do not understand is an age old adage - "You can lead a horse to water, but you can't make him drink". In other words, people don't have to pay high prices at fast food restaurants - they can just walk away.
One final example. In the paper this morning was a story about the city of Minneapolis wanting to take over the management of utilities within the city. Exel Energy, who supplies electricity and natural gas to eight states, is headquartered in Minneapolis. Exel's response to this hair brained idea - if Minneapolis decides to take this course of action, Exel will pull its headquarters out of Minneapolis and go elsewhere. It will cut loose the 2,000 people it employees in Minneapolis.
Once again to quote Milton Friedman, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." That is a lesson from Friedman many the Left just can't learn.
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