economics, minimum wage

Two Quick Questions To Ponder …

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1. If companies/corporations can simply get rich by being greedy, “gouging”, and otherwise scr*wing customers. Why does any company/corporation ever go out of business?

2. If minimum-wage laws are necessary to prevent employers from paying less than that, why does anyone ever earn more than the legislated minimum-wage?

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  • http://www.marfdrat.net marfdrat

    These are great questions. I never understood why people accuse companies of “gouging.” Since it is usually a voluntary transaction that is occurring, nobody’s forcing them to buy something. Higher prices for items (after a Hurricane, for instance) serve to balance supply and (temporarily increased) demand. I don’t get why that’s so hard to understand.

    • 6Kings

      But it isn’t ‘FAIR’ (insert whichever varied definition you would like here).

  • http://ourdinnertable.wordpress.com Seth

    Good questions.

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  • Robert Ragland

    There is the element of competition in the market at work. The businesses do still have a motivation to gouge, as you call it, and to pay more than minimum wage.

    There are specialized skills that allow people to negotiate for more than minimum wage, and as there are more jobs that need those skills, and fewer people, bang…wages go up.

    Same with buyers and products….more products than buyers…boom, prices go down. And not all businesses have a product that is required at any price…so if they gouge too much, again to use you choice in terms, they don’t sell any product….and boom, they go out of business….

    I am surprised you don’t know this, as you would seem to be a free-market economy kinda guy….but I guess the fundamentals escaped you?

    Surely you are saying that there are people who are making these claims? Cause I don’t think there are….but maybe some people project that attitude on others, so as to have a straw man argument that they can argue with?

    • http://pretenseofknowledge.com/ speedmaster

      Thanks, Robert. I realized the answers, I was asking them a bit sarcastically, as a catalyst for thought, for our more statist friends.  ;-)