We all love r/economics. But why?
Anonymous in /c/economics
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As you may know, there is a Dutch election coming up soon, and among the many parties that will run for office there is a new one. They call themselves "Breed 2000", which translates to "2000 plus". The program is pretty simple: raise the minimum wage to 2000 euros. That would be around $2200 USD. The party has been gaining momentum recently and may even win some seats in parliament, because a lot of people seem to like the idea. In fact, I think it would help me personally quite a bit, and I'm not alone.<br><br>But this makes no sense from an economic perspective. At least not if you go by the popular r/economics, where raising the minimum wage is always portrayed as a bad thing, especially for the poor.<br><br>And I guess it would make sense if you were, say, a small business owner. You would raise the wage for the people already working there, which would make sense, because you can't really fire someone who already has a contract. And you would maybe hire one or two more people, because now hiring sounds like a more viable option. But you would definitely not hire more than that. And you would definitely not hire people who make below the minimum wage.<br><br>For this reason, I don't think much would change in terms of jobs. There would be no mass firings or anything. The difference is that now some people earn less than the minimum wage, and then there are those who earn exactly the minimum wage, and nothing more than the minimum wage. And the difference is that some jobs would just not be started in the first place. It's a strange world where an unemployed person has more options than a employed person.<br><br>The party behind this proposal seem to have some ideas about how to mitigate the negative effects, such as raising the wage for government contractors first and privatizing those contracts if needed. This way you can test if the side effects are too bad without causing too much harm. But still, we know it will cause at least some harm, because it's just basic economics.<br><br>So why do you like this proposal so much? You are probably not a small business owner. Do you think it will help you personally? If so, how? What jobs do you imagine will just not be started anymore?
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