November 19, 2015
The three remaining candidates for the Democrat Party had a long discussion about the minimum wage and what it should be raised to during their last debate. Former Maryland governor Martin O’Malley and Vermont senator Bernie Sanders supported raising the minimum wage nationwide to $15 per hour. Former Secretary of State Hillary Clinton played the role of the (relative) grown-up in the room by supporting a raise in the federal minimum wage to “only” $12 per hour. What all three Democrats showed is that they either don’t understand economics or simply cannot speak the truth to the people they need as supporters and voters.
Sanders made clear the more liberal stance on the minimum wage: “You have no disposable income when you make 10, 12 bucks an hour. When we put money into the hands of working people, they’re going to go out and buy goods, they’re going to buy services and they’re going to create jobs in doing that.” This is the first mistake that liberals make—believing that money in the hands of poor people is better for the economy than the same money in the hands of rich people.
People can do three things with their money: Spend it, save it, or use it to pay taxes
People can do three things with their money: Spend it, save it, or use it to pay taxes. Tax money is co-mingled, so everybody’s tax dollars do equal good (or bad) for the economy. Spending has either an equal impact no matter who does it, or may even be more beneficial when done by the rich. Because the rich spend more money on services, the money tends to stay local; in contrast, the poor buy more products, many of which are imported, meaning that their spending may have a smaller effect on the economy (creating jobs overseas instead of at home). That leaves saving.
Read the full article at Forbes.com: What Bernie Sanders Got Wrong About Raising The Minimum Wage (Part I)