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The U.S should abolish the Minimum Wage

Thanks to my opponent for accepting the debate. I think this debate will be a great learning experience for me :) Framework & BOP My arguments will mostly be running via a utilitarian framework; placing emphasis on doing the most good for the most amount of people. Of course if my opponent accepts a utilitarian framework, he will need to prove why the minimum wage does not benefit the most number of people, as well as why its abolition would prove to be more beneficial to society. Intro So the first part of my arguments are going to be attacking some of the common reasons put forth as arguments against the minimum wage, and demonstrate why they do not justify its abolition. The next part of my arguments are going to highlight the benefits of the MW, and explain why removing the MW would result in a net detriment to society. To remind the voters, the majority of my arguments are going to tie back to the utilitarian framework, as the well-being of society is of the utmost concern with respect to this debate. (1) The Inflation Argument against the MW A correlation between overall inflation and minimum wage can’t be used to prove that the the MW caused the inflation. Moreover, if my opponent does put forth this argument, he would not only need to prove that the MW causes inflation, but that the effects of whatever minimal inflation caused by it are enough to offset the benefits that come from the MW. (2) The Market is not ‘Objectively’ Fair The ‘fairness’ of free market wages is questionable at best. This is especially true since fairness isn’t exactly the goal of the market anyways - it’s profit. Since this is the typical desire of all businesses in the free market, it becomes clear that the competitive nature of the market is not necessarily enough to overcome the incentive of businesses to cut production costs (as much as possible) while also maximizing revenue, to yield a maximized profit. This desire of the market pretty much tells you that there needs to be some regulating factor - apart from free market competition, to keep minimal wages at healthy levels. (3) Access to Basic Goods Essentially, the minimum wage allows for more disposable income to those on the lower end of the ‘class spectrum’. This, in turn, allows those who receive minimal wages to access more of the basic living essentials that they would not otherwise be able to afford, should the minimum wage cease to exist. This does have positive effects on the economy as a whole. Providing more people with the ability purchase more basic goods increases demand in those markets and in turn results in more production, leading to more economic growth. This is in many cases referred to as the consumption function, which is a mathematical formula developed by Keynes, which goes like: [4] C = A + MD A represents the level of spending at zero income M is the ratio of the rise in pay a person will spend D is disposable income C is total consumption spending So, all other things equal, if the level of disposable income were to be increased, there would be a higher level of consumption spending. Of course this does not warrant a MW rise of, say, $50, but reasonable MW levels would promote healthy levels of consumption in the economy. (4) Productivity Benefits A rather strong theory applied to the Minimum Wage argument is known as the efficiency-wage theory. In a nutshell, the theory is that setting a wage higher than the one set by the basic supply & demand mechanism would in turn have positive benefits to the productivity of that business.[1] The application of this theory to the MW allows us to notice that the MW does most likely have a net positive effect on the productivity of a business. (5) Income inequality While I will agree that income inequality is not inherently bad, as it is probably an inevitable byproduct of a growing capitalist economy, that does not mean it can’t grow to unhealthy levels. As indicated in Thomas Piketty’s Capital in The Twenty-First Century, development in widely available capital such as modern technology does play a role in today’s inequality. Piketty points out that when the rate of returns on capital investment outperform the rate of overall economic growth, inequality is bound to rise. [3] It can’t keep rising without eventually becoming a problem, and although technological advancements are pretty much inevitable today, we need to take alternative steps to somewhat alleviate the issues of inequality on low-wage workers. The minimum wage does in fact send a strong counterbalancing effect to that rising inequality. An MIT economics paper studying this very issue concludes that: “...between 1979 and 1989, the decline in the real value of the minimum wage is responsible for 30 to 55 percent of the growth of lower tail inequality in the female, male, and pooled wage distributions” [2] So to conclude, the MW is a necessary policy to combat the effects of rising inequality in the modern economy, making the effects of its abolition completely counterproductive and detrimental in terms of inequality. Sources [1] http://tinyurl.com... [2] http://tinyurl.com... [3] Capital in The Twenty-First Century by Thomas Piketty [4] http://tinyurl.com... *Note: Given how famous the book in source #3 is, simply looking up “Capital in the twenty-first century forces for divergence” would be enough to read about the source. Here is one article that explains it: http://tinyurl.com...