Law of Demand Operates, Whether You Like It

"The Law of Demand, which operates whether we like it or not, says that when the price of something goes up, people buy less of it. That's why environmentalists like higher gasoline taxes, and anti-smoking activists back higher cigarette taxes."

"The Law of Demand works in the labor market, too. If government mandates a higher minimum wage, some workers will get a raise. Some. But something else will happen. Employers will hire fewer low-skilled workers. Others will let some current workers go. Some will choose not to expand their businesses. A few will close altogether. If an employer believes a worker creates only $5 worth of value on the job, he won't pay $7, even if the government demands it."

"Let's face it. The higher minimum wage is a feel-good law. A slight increase will pass because politicians and poverty activists will be able to say they have "done something" for the poor, while the victims of the policy go unnoticed. Those who can't find jobs because they produce too little are not likely to blame the law or the politicians who tried to "help" them. Then the resulting unemployment will justify expansion of the welfare state."

As George Mason University economist Walter Williams says, "It's tempting to think of higher minimum wages as an anti-poverty weapon, but such an idea doesn't even pass the smell test. After all, if higher minimum wages could cure poverty, we could easily end worldwide poverty simply by telling poor nations to legislate higher minimum wages."

From a recent column by ABC 20/20's John Stossel, who probably never had an economics class, but apparently understands the Law of Demand better than most politicians.