Hiding costs doesn’t make them go away

That’s the point of Don Boudreaux’s letter to the New York Times, apropos of a clueless piece saying that raising the minimum wage is a costless way for the government to redistribute wealth. I copy Don’s letter below, but differ on one thing. We do not expect better work from the Times because that paper long ago gave up every pretense of objectivity in favor of advancing Obama’s statism.

23 December 2013

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

Dear Editor:

Arguing that private businesses pay the full costs of higher minimum wages, Annie Lowrey concludes that “Unlike any other form of wealth redistribution, raising the minimum wage is basically cost-free to Washington” (“Supersize My Wage,” Dec. 18). Ms. Lowrey’s mistakenly formal notion of “cost” blinds her to reality.

The only difference between redistribution through minimum-wage legislation (and other regulatory diktats) and redistribution through tax-and-spend policies is that the dollar costs of the former, unlike the latter, are not recorded in government’s budget. This accounting artifact, however, does not make minimum-wage legislation “basically cost-free.” It makes it only off-budget.

By Ms. Lowrey’s reasoning, all redistribution could be made “basically cost-free” simply by moving it off budget. For example, order federal agents to rob rich people at gun-point and then transfer the cash directly to poor people. Because the dollar value of these transfers would appear neither as tax revenues nor as expenses on Uncle Sam’s budget, direct cash grants arranged by government would thus be rendered “cost-free” in exactly the same way that forced transfers of money from business owners to minimum-wage workers are now, by Ms. Lowrey’s reckoning, “cost-free.” Yet clearly, the true costs of government programs are not eliminated by mere changes in accounting conventions.

One expects better reporting from the New York Times.

Sincerely,
Donald J. Boudreaux
Professor of Economics

2 comments

  1. A doubling of the minimum wage benefits the Government more than it does the poor as FICA and other wage related taxes and withholdings will increase and the receipts will go into Government coffers to be replaced with a Fed IOU

    Comment by Skyler the Weird on December 24, 2013 at 9:46 am

  2. “…advancing Obama’s statism.”

    Wow, George. Your paranoia is staggering.

    Comment by Pops on December 24, 2013 at 12:58 pm

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