January 26, 2010

Milton Friedman, Supply-Siders Vindicated

Interesting story today in Reuters about youth unemployment hitting an all-time high - particularly among black youths:

CHICAGO (Reuters) - The U.S. economic recession has taken a particularly heavy toll on young Americans, with a record one out five black men aged 20 to 24 neither working nor in school, according to research released on Tuesday.
Now what could have caused, or at least exacerbated, such a development? Was it eeeevil GOP policy? Oil companies? Bankers? "Wall Street?"

Sadly, no. If you want to look for the culprit, look no further than the Fair Minimum Wage Act of 2007. Here's the Wikipedia rundown of the wage increases mandated by law in the Act (passed in 2007)

The act raises the federal minimum wage in 3 increments: to $5.85 per hour 60 days after enactment (2007-07-24), to $6.55 per hour 12 months after that (2008-07-24), and finally to $7.25 per hour 12 months after that (2009-07-24).
Remember that? It was unfortunately (like most bipartisan legislation) signed by Bush and written by the Democrats. Bush, as we will remember, was a lame duck by this time, so he had nothing to lose in a gesture of "bipartisanship."

But what does all that have to do with increased youth unemployment, which is particularly concentrated in the black community?

To this, I submit Milton Fridman's spot-on, bullseye, near-prophetic explanation of what happens in reality when well-intentioned minimum wage legislation actually meets the real world:

Was Friedman prophetic? Clairvoyant? Supernatural? Or did he rather understand how money and markets work, and wasn't in denial about the extent to which government causes more economic problems that it can solve?

Discuss. And watch the whole video when you get a few minutes. It's brilliant.

ADDENDUM: Compare and contrast the education you get from Dr. Friedman to the blustering, incoherent ranting and screaming about "fairness" and "Republicans" from a certain former drunk, lecherous, woman-murdering Massachusetts Democrat who never had to balance a checkbook or meet a payroll, but knows that YOU aren't being forced to give enough of your money to other people:

By Good Lt. at 11:43 AM | Comments |