I am joining a number of voices to comment on the minimum wage. I am opposed to raising the minimum wage- on the simple grounds that all I expect to happen will be a decrease in employment over the short term and increased prices over the long term and all the arguments in my view point to other problems.

First lets take the notion that the minimum wage should be enough to live on.

First there is the argument it has not kept up with inflation- the people using this argument might point to the claim that the 1968 minimum wage when adjusted for inflation would be about $11.

Depending on how you do the math- the value might even be higher than $11.

This fact shows me two problems and neither of them are an artificially low minimum wage.

The first problem is the fact the buying power of the dollar has dropped about 90% since 1968.

So the first question that needs to be asked – is what causes inflation.

In the Austrian and Chicago schools of economics inflation is viewed as a monetary phenomenon caused by an increased money supply. In fact in the Austrian school- inflation is not defined as rising prices but an increase in the money supply and will refer to the rising prices that would result as rising prices.

So in both of these schools the cause of inflation is a mixture of government overspending and federal reserve policies- like those advocated by the likes of Ben Bernanke which have been designed to keep prices from falling.(http://www.federalreserve.gov/BOARDDOCS/Speeches/2002/20021121/default.htm)

I've seen a lot of arguments that state falling prices are a bad thing- because they indicate a decline in demand and are an indication of the start of a death spiral as people stop spending money and start hording.

In the Austrian school they expect to see falling prices. Falling prices are an indication that supply has increased relative to demand and can be caused by companies finding new and better ways to provide their products and will in turn lead to higher sales. while there might be occational spikes in prices bassed on an economic shock- rising prices are expected to be temporary as consumers will either leave the market or look for cheaper alternatives. If you are expecting gradually increasing standard of living and are seeing the opposite then you need to examine the reasons which is why I yell for tax, tort and regulatory reform.

For example if we take a look at the Big Mac index- when it started September 1986

http://bigmacindex.org/1986/09 The price of a big mac was $1.60 which would be about $3.45 in today's money according to the inflation stats at http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.6&year1=1986&year2=2014. At that point in time the minimum wage was $3.35 according to http://www.dol.gov/whd/minwage/chart.htm which would be worth $7.20 in today's money according to the same inflation page

The price of a big mac according to the big mac index as of Janurary 2014 was $4.62

so the minimum wage is about 5 cents less while the price of a bic mac is $1.17 more.

Either the world has reached peak beef or we are looking at the price of more regulations.

Since a lot of the advocates would make the claim the Australian minimum wage was $15

let's look at the price there. At http://www.economist.com/content/big-mac-index the price of a big mac is $4.57 the Australian price is $4.47.

While the Australian minimum wage is a bit complex and not a flat $15 (http://www.minimum-wage.org/international/en/Australia) the minimum wage in New Zealnd is a little simpler http://www.dol.govt.nz/er/pay/minimumwage/ and starts at around $9 US.

The heritage foundation rank Australia and New Zealand rate 3 and 5 on the heritage foundation's list of nations by economic freedom http://www.heritage.org/index/ranking their official unemployment stats are lower than ours

(http://www.nasdaq.com/article/australian-april-unemployment-rate-steady-at-58-20140507-01790) (https://sg.news.yahoo.com/zealand-unemployment-rate-steady-021756904--finance.html) .

At first glance this would indicate that in both cases a better regulatory code combined with a loser pays legal system allows Australians and New Zealanders to enjoy a better standard of living and if we simply did tort and regulatory reform while leaving the minimum wage alone the economy would finally turn around from the most recent crash.

I have seen people make the argument that doing such reform would only benefit wealthy ceo's.

The basic problem with this notion- is two fold first it assumes there is nothing in the tax or regulatory code that favors and helps big business. That can be blown out of the water- with the fact Warren Buffet claims to pay a lower tax rate than his secretary (http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/) and Mitt Romney allegedly pays around 14% http://money.cnn.com/2012/09/21/pf/taxes/romney-tax-return/

A lot on the left will talk about the need of the rich to pay their fair share in taxes – I would agree with that notion which is one the reasons I support tax reform.

If we were to have an income tax it should be a flat tax, with few if any deductions. The only deductions I could accept over the current would be the following-

1. The first $20 K or so might be tax free.
2. $5K or so per dependent.
3. 3% deduction on capitol gains for every year the asset is held.
4. Charitable deductions

Another option would be the fair tax which is a sales tax that would be applied only to new goods, the purchase of services and be combined with a monthly prebate indexed to the poverty level.

http://www.fairtax.org/images/content/pagebuilder/Prebate_2013_FAQ.png.

Then there is the issue of regulations the argument against regulatory reform tends to be based on the notion that there are no negative side effects that could result in a regulation causing more harm than good. While I have not examined the regulatory code line by line that is still no reason not to do so.

Regulations that kick in after a company hires X amount of people are the most suspicious in my view.

If a practice should be outlawed then it should be outlawed across the board not just for bigger companies.

The supporters of a minimum wage hike will often state that if the minimum wage were higher there would be no need for programs like food stamps.

This would actually be an argument for eliminating the department of agriculture not raising the minimum wage.

The only way a store could afford to double their starting wages with out increasing prices or cutting hours would be if they had a high profit margin and a clear reason not increase their prices.

One of the stated goals of food stamps is to help poor people to buy food, one of the unintended consequences of a program with this goal, could be grocery stores jacking up their prices because they believe the government would pick up the tab.

Raising the minimum wage to $15 today would have been the same as raising the minimum wage to $7.25 in 1987. So why wouldn't lowering the income requirements for food stamps and leaving the minimum wage as is result in lower food prices?

There are also government programs that were designed to increase the price of food- like the renewable food standard. https://www.youtube.com/watch?v=zyNRl-YzX4Q

In this video we see a lobbyist state that the renewable fuel standard keeps corn prices above $2 a bushel. This is a horrible argument for bio-fuel. He tries to justify it by saying it isn't sweet corn.

The type of corn is irrelevant as the only real argument for bio-fuel or any green energy would be it decreased the average person's standard of living by offering a cheaper alternative to fossil fuels.

If that technology existed- the companies paying the lobbyist in the video would be calling oil companies to schedule deliveries. I don't know enough about the science to state if bio-fuel will be the next fuel source- so I am only opposed to subsidies and not bio-fuel.

The basic arguments for increasing the minimum wage are built on the notion that it can be done with out decreasing available hours or increasing prices. The yells for reform are based on the notion that increasing the cost of business will lead to higher unemployment and prices and lowering the cost of business will lead to lower prices and increased sales. As stated- judging from the 1986 Big mac price and minimum wage and adjusting them for inflation and comparing them to modern prices and the modern minimum wage something has changed to increase the price.

So you need to ask which would help the poor the most- reversing those changes and potentially watching prices drop by a little over 25% then conducting other reforms to insure the dollar keeps at least it's current value or do what has been done quite often in the past- increase the minimum wage, continue to add regulations and create more money and watch real incomes fall.