I keep getting into the same arguments with friends, family, and anyone who ends up talking to me about politics. Minimum wage. The best way to unbalance any average person’s argument (whether they are for minimum wage or against it) is to ask them to explain money.
I have a simple answer. Money (strictly physical currency now) is the representation of value. Frankly, this is an oversimplified answer. Of course paper or coins have some sort of value separate from what they represent. You can burn paper money, I suppose. That’s a valuable heat source for a few seconds. And there are games you can play with coins, or you can extract the worthwhile metals. Otherwise, money is useless.
But as a representation of value, it suddenly becomes incredibly useful. Say you have a toothache and you need to go to a dentist. You are an apple farmer. You have apples. But so does everyone in your county. The dentist is done accepting apples. There are only so many he can eat, and it isn’t worth his time trying to trade the apples for other things. So he tells you to buzz off and find something better to give him.
Or you sell your apples for an accepted representation of their value, and then give that representation to the dentist to treat your toothache. The money then becomes a representation of the value of his services, which he can then give to someone else for the things that he needs. Still pretty simple stuff, right?
Ultimately, money represents the value of production. You, as an apple farmer, produce goods. The dentist produces a service. These things are value, and the value is represented by the money you and the dentist can get for your production. This can also be called your labor, which you own because you own yourself (another topic we can spend a lot of time on).
So we follow a line of logic. As an apple farmer, you want to make more money selling your apples than you spend to produce them. Theoretically, you should want to save some of your profit. What if you have a bad crop one year, or a fire claims some of your apple trees? Saving profit would help you last through bad times.
Then, for some reason, the wages you offer your employees don’t cover the cost of living. The government declares that it’s time to raise the wages. You do make a profit. You can afford it. But you remember the bad years. One year, a frost came late and your crops were bad. Another year, a fire consumed some of your apple trees. You needed your saved profit for those years. So in order to offset the cost of workers while maintaining your profit, you raise the price of apples.
But here’s the problem: you’re not the biggest apple farmer in town. McApples is way bigger than you. And those jerks have invested money in robot apple-pickers for a farm so huge that they produce countless more apples than you, and therefore profit beyond your wildest dreams. If you raise the price of your apples, your customers will go to McApples instead. If you don’t raise the price of your apples, you either have to fire workers or make less profit and hope the frosts and fires don’t happen too often.
McApples just has to wait you out. You and everyone who controls the price of their goods by way of competition. Minimum wage is actually pretty good for them in the long run. Sure, they whine about it now, but they win in the end because they can survive longer. You can’t.
But the world is never, ever that simple. After all, we never did look at why the cost of living increased, did we?