Do people really not understand economic cause and effect?

Question

We see it all the time. Calls to fight greed through increased taxation and minimum wage. Why do people believe that these things will combat what they view as greed? The reality that any first year business student understands is that increased costs of doing business in turn leads to increased costs of good and services to cover the shortfall produced in profits. These costs are always passed along to the consumer. Maybe I am wrong, but all I see resulting from this result of this type of legislation is more damage to the very people who they claim to be trying to help. The only people I see benefiting are politicians at election time based on creating a false perception of helping the working man.

Thoughts?

Answer 1

I agree.  We do not have a free market economy anymore, and that's why it's in the toilet.  Part of a free market is no minimum wage.  It's not a very popular viewpoint, but I believe that it should be abolished.  As far as taxing businesses, corporations certainly are not going to eat that cost themselves, they will pass it along to us. Translation--worse for the economy.  

Answer 2

If you give expendable cash to the masses it will go back into the economy. We are not a buisness but a Country. Your BUISNESS model does not work there. Look at history, trickle down economics DOES NOT WORK! Im sorry if the facts still wont prove it to you hard core pubs.

Answer 3

Agreed. It's as silly as everyone jumping on the "let's raise the minimum wage" bandwagon and failing to realize that prices go up when that happens so they end up no better off then they were in the first place.

xx

Answer 4

No I do not believe most understand this reality.  The really sad part is even OUR POLITICIANS DO NOT UNDERSTAND THIS!!!!!

Answer 5

What you state about minimum wage hikes are technically true,  and it is if someone was attempting to hike the minimum wage to $12 an hour. However the rise in the minimum wage to seven bucks an hour or so won't cause economic collapse.  

As far as taxes go, tax hikes suck, but if you don't want to raise taxes then you can't expand the size of the government.  8 years of tax breaks to the wealthy have resulted in high gas prices, high food prices, declining wages, record home foreclosures, declining consumer purchases, loss of manufacturing, a weak dollar, and corruption never seen since the days of the robber barons. Meanwhile the federal government is larger than it's ever been. State and local governments are raising revenue by raising fees, cutting services, and raising tolls, all tax hikes in another form.



Tax cuts need to be pay as you go. And you can't expand the government without costs, either taxed or borrowed. And if you borrow money you have to pay it back. And if you sell off chunks of your own country to foreigners the foreigners control your country.

Answer 6

I agree.  Taxation is only going to decrease the incentive to produce and work, yet our politicians still make false claims about what they will do with taxes.  Albeit, sometimes you have to raise taxes (to pay for a large debt, for example) but it still won't help the actual economy.  There is always a cause and effect...give and a take.  If you increase taxes, you do give it back to the consumers, but you also raise prices.  If you increase minimum wage (which is still beyond me...why does an unskilled job position need more money with the economic cycle in its current state?) it will also cause inflation.  But, again, it is always a give and take: do you begin paying off a tremendous debt...or do you try to stimulate the economy more.  Since curbing spending is, apparently, out of the question this election...I would suspect it will be one or the other.  Good question and observations...

Answer 7

No, I dont really understand it, but this is what I see.

People behind this type of legislation expect the business owners to take the money for the higher wages and extra benefits out of their own profit.  

Problem is, the majority of companies, the bigger corps, like WalMart, are not gonna do that.  They are just gonna raise prices on crappier products and poorer services.

And bottom line, the people who are already paying min wage are not gonna take profits for the raises.  They are gonna raise prices.to accomodate it.

But, if thats not the answer, what is?

Answer 8

TRY ASKING THIS QUESTION ON A REAL FROUM LIKE MSN Q/A WHERE THERE ARE ADULTS WHO ARE STRUGGLE TO TAKE CARE OF THIER FAMILY ON A DAY TO DAY BASES WHY ASK A BUNCH OF YA KIDS WHO HAVE NEVER HELD A JOB IN THIER LIVES AND ONLY REPEAT THING  THEY HAVE READ IN GRADE SCHOOL OR ON FIXED NEWS . I TOTLAY DISAGREE WITH YOU FRIEND