Wednesday, December 11, 2013


Here's an economy discussion from an individual who has never worked in business, but only the government sector.

“It was Adam Smith, the father of free-market economics, who once said, “They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”  And for those of you who don’t speak old-English -- (laughter) -- let me translate.  It means if you work hard, you should make a decent living.  (Applause.)  If you work hard, you should be able to support a family.

Now, we all know the arguments that have been used against a higher minimum wage.  Some say it actually hurts low-wage workers -- businesses will be less likely to hire them.  But there’s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.

Others argue that if we raise the minimum wage, companies will just pass those costs on to consumers. 

But a growing chorus of businesses, small and large, argue differently. “

-Barack Obama, December 4, 2013
For this post, I am willing to concede that no solid evidence exists to prove that a higher minimum wage costs jobs.
I hear arguments going both ways, but do not recall many McDonalds or WalMarts shutting their doors when the minimum wage has been raised in the past.
Of course, smaller businesses certainly may have done so, and unless they were record stores, I may not have noticed.
It is the President's second point, about the "chorus of business" who claim that they will not pass their costs on to their customers, that this post is focused on.
Setting aside the lawsuits from the shareholders of these benevolent companies that give away their profits, let me ask our Resident Kenyan one question.
Would the masterminds at the helm of these businesses be the same geniuses who needed government bailouts recently?
You see, Mr. Obama, if a business fails to pass its costs on to its customers, it finds itself in the situation of having expenses that exceed its revenue.
Kind of like if your mortgage was more than four times your weekly salary.
That is not a good position for a business to find itself in. Unlike the Federal government (the ONLY business you are familiar with), when a REAL business spends more than it takes in, it can't just print money and sell debt to China and leave a whole lot of debt for future generations to worry about.
It actually has to come up with a business plan.
And banks frown on lending money to business people who are too stupid to cover their costs.
And even a non-profit who has expenses higher than revenue will find itself in a situation known as bankruptcy.
Or for the President, who obviously is not the sharpest tool in the shed, think of them as OUT OF BUSINESS.


  1. It's not just about expenses. It's about greed, too. My wife used to work at IBM (so I can say this, and trust me - f*** them in every bodily hole they possess). When they wouldn't meet their quarterly goals, they would put the lowest level workers on furlough or they would fire them, all to make back the $500,000 they lost that was not at all related to the low level workers who excelled at their jobs but was related entirely to higher level VPs losing valuable accounts. And guess who would still get their million dollar bonuses? The high level VPs who lost accounts.

    The same thing happens with my mother, who still works for a major grocery store retailer (so I won't say their name). The store fails to bring in more customers, so they cut every checker's hours to 'make back that money.' But then customers stop coming in because there's only two checkers at a time for an entire store and everyone's sick of waiting 30 minutes just to check out, so they lose more customers. Then they cut more hours. The idiot that made this decision, meanwhile, still gets his $500,000 bonus like he always does, because he's "helping the company save money."

    Yeah, explain that one.

    Basically, what I'm saying is that for small businesses - they can't afford to do this, and you're right. They would go under if you tried to force them to pay more when they can't. But the big businesses? They just don't WANT to afford it. And trust me, they won't. The money at the top will ALWAYS stay at the top. So if you raise minimum wage at a big business then it's still like that comic - you fire employees to account for it, because God forbid we dip into John Q. VP's million dollar bonus. You can raise minimum wage all you want, but it's not going to effect him. It's only going to effect the low level workers, as it always does in one way or another.


    Yes, yes they are, and it doesn't matter whether they're working at McDonald's for $7 an hour or a CEO making major decisions for a store they've never even visited in person. We're all too stupid to make this work, and I think the US economy is continual living proof of that.

  2. Bryan-

    I will point out that many businesses (llke grocery stores) operate on pretty low unit margins, so the minimum wage going up really does pose a challenge in how to fund.

    However, I will not disagree that their executives could probably cut their bonuses and not lose their standard of living.

    I am always amazed that no one seems to mind that athletes, entertainers, musicians, and even best selling authors, make a boatload of money, but somehow corporate executives wind everyone up.

    In any event, I did not mean to engage in the "should we raise the minimum wage" debate with this post-I wanted to point out the stupidity of the President's comments.

    I would point out that I do not see the federal government's role to set wages. I would further point out that the people who got this "Savior Of The Common Man" elected were the wealthy CEO's, and I doubt that Obama will bite the hand that fed him.

    1. I don't understand how athletes and entertainers make that kind of money either, trust me. And I don't think of it as a should we raise vs shouldn't we raise, I just think that big corporations will find ways to 'skirt' this even if it does happen, as mentioned above, and that the president is definitely crazy to think that that's not going to happen and that this will just fix everything. Small businesses would suffer. Workers would suffer. But big business won't. Instead of 100 people making $7.00 an hour you'll have 70 people making $10.00 an hour after layoffs. In the end, it just all evens out and nothing's really solved. And that's all I mean by the comment above.

    2. Gotcha.

      I wish I knew the answer, although if American people would act (like by boycotting businesses that pay low wages), that would have an impact.

      The Occupy Wall Street movement was not executed well-it was unclear what the desired outcome was.

      But you take that same organization, but send a clear message to the board of directors of WalMart, or McDonald's, or Safeway-pay a living wage AND cap your executives bonus and don't lay off people-I bet you'd see change.

      But you can't tear Americans away from their television sets.

  3. And here I was just going to remind you that teaching anything above 4th-grade (in my day) math to a Democrat is like teaching Scrappy literature- he might nod and look at times, but he's not really listening, and there's a great deal of doubt what he'd comprehend if he was. Sorry, Scrappy!

    1. CW- don't sell Scrappy short-he's probably smarter than most Republicans, too!


  4. I am going to address the point that I think you were trying to make. The President says things that sound good if you don't think about them. However, anyone living in the Real World hears what comes out of his mouth and recognizes it for the BS it is. Every time that guy speaks I want to throw something.

    1. In general, politicians spend far too much time rabble rousing rather than intelligent discussion.

      I could not find it, but I'd read where Obama also said that the current median wage adjusted for inflation was the same as in 1989, and that Americans were worse off due to higher prices.

      Huh? If I adjust for inflation I've taken the higher prices into consideration!

      If I can find where he said that, I'll have a post on that one.

      Maybe if enough people learn to spot (or at least smell) the BS, we can get closer to factual discussions.