The reason why interventionist economic policies are generally destructive is that politicians can’t hope to have the information needed to make good decisions. The economy and society are evolved, complex systems, and micromanaging them from a federal government destroys diversity required to keep the system stable and efficient. Ecologists have learned the lessons of interfering in the development of complex systems, and thus came up with the precautionary principle. It’s a shame that the left hasn’t discovered that meddling in complex societies can be equally unpredictable and destructive.
For example, let’s look at California’s new bill AB 5 (the taxicab owners full employment bill) which seeks to punish companies like Uber and Lyfft who use contract drivers. The government says that these poor contract people lack health benefits, worker protections, retirement plans, etc. Therefore, they shouldn’t be allowed to do it.
What is actually happening, though, is that lots and lots of people who PREFER being contract employees on their own schedule will now be forced to be employees. Or more likely, this will break the model of Uber and other companies, and drive them out of the market.
Then you have the problem with freelance writers, who are now allowed to make up to 35 submissions per year before they have to become employees. The people writing the bill were probably thinking of people in their social sphere - columnists, opinion writers for major newspapers, etc. But caught in the crossfire are all the low-paid ‘gig’ workers who write for blogs or online journals, and who get paid very little per submission because the submissions are relatively short and boilerplate. Such people can sell 35 submissions a month, easily. And no one can afford to hire them as employees, because it would kill their business model.
The end result of this particular do-good legislation will be (unless the bill is rescinded or heavily modified) the destruction of the ‘gig’ economy in California, and further flight of internet businesses out of the state. This is the real world result when a simple bill meets a complex world.
Now, let’s look at the $15/hr minimum wage. There is no question that significant bumps in the minimum wage destroy jobs and businesses and competitiveness. The results are in from the places that have done it, and they aren’t good.
But let’s put that aside, as it’s been constantly debated. Let’s look at another effect of a national minimum wage: It will destroy the comparative advantage of places that have a low cost of living. One reason a business might locate in, say Arizona instead of California is because the cost of living is lower, so employees can be paid less and products can be made more cheaply. But if you mandate that everyone must get at least $15/hr, that company loses its advantage, and the value of getting people out of high cost of living areas and relocated where there is more space and lower living costs is diminished, which will help keep lower cost/lower income areas supressed and exacerbate the problem of concentrating people in high-cost regions. That’s ultimately destructive to the economy and to the quality of life of people who don’t live in the most expensive cities.
Is there any logical reason whatsoever why someone who lives in a place where rent is $500/mo and a house can be purchased for $100,000 should have the same minimum wages as someone who lives in a region where rent is $2500 and a house costs $1 million and up?
Democrats always claim ‘diversity’ is good, yet their policies have the effect of reducing real diversity that matters, such as economic and political differences between regions. A national minimum wage is an attempt to eliminate economic differences between different regions of the country - differences that make America stronger and actually more diverse than many countries with strong federal governments. It’s a really bad idea.