by Lawrence Wilson

© July 2019, LD Wilson Consultants, Inc.


All information in this article is solely the opinion of the author and for educational purposes only.  It is not for the diagnosis, treatment, prescription or cure of any disease or health condition.


In economics, there are only two basic ways to run things:

1. Individuals choose how to run their businesses and their economic lives.  This is called a free market system.

            This system built Western society and works wonderfully when given the chance.  America was the model for a free market society, but has drifted away from it for the past 100 years or so.  As this has occurred, the vitality of the nation has declined. 


2. The government imposes the rules for buying and selling.  This is called a command and control economy, socialism, communism, monarchy, or rule by the elites. 

This system always fails wherever it has been tried.  The reasons are that no government is smart enough to control an entire economy.  Also government power always brings waste, fraud and corruption or abuse.  This has to do with the nature of human beings.

The Soviet Union was a modern example of total government control of the economy.  The economy was a terrible failure.  Europe has embraced many aspects of socialism, especially in the past 70 years, and its economies are a mess.


Definition.  Minimum wage laws say that there will be a minimum wage paid to everyone, regardless of the circumstances.   Essentially, the government fixes the minimum price of labor, an important input for any economy.  Price-fixing in this way is pure  communism or socialism. 




            1. John is 18 years old and has no job experience.  He lives with his parents, and earning money is not important to him now.  What he wants is to get some experience at a job.

He approaches a business, looking for a job.  The boss says to him, “I would love to hire you, but right now your labor is only worth $8.00 per hour and that is all I can pay.  The all-wise (but really stupid) government says I must pay you at least $12.00 an hour, so I cannot hire you -  even though I would like to and you would be happy to work for $8.00 an hour to get some job experience and learn a trade.  IT IS A TOTAL LOSE-LOSE SITUATION.

2. Another common situation is that of a housewife who wants to learn about computers, or education, or something else.  Her husband works, so she doesn’t really need much money.  What she needs is to use her brain in a work setting.

So she approaches a computer company and asks for a job.  She tells the employer that the wage or salary is not important.  What she wants is to be in the work force and bring in a little money and to learn a skill. 

The employer shakes his head and says, I would love to hire you but I can only pay you $10.00 per hour based on your knowledge and experience and perhaps other conditions such as she needs special work hours so she can be with her children when they come from school.

Once again, thanks to the minimum wage law, he cannot hire her.  Once again, IT IS A COMPLETE LOSE-LOSE SITUATION – the business loses out and the employee loses out.




No.  Exploitation is possible in a work situation, even with a minimum wage.  But working for low pay is not necessarily exploitation:

-  Giving a young person the opportunity to get work experience is not exploitation. 

- Giving someone the opportunity to learn a new trade is not exploitation.

- Giving someone the opportunity to use their brain in a new way is not exploitation.

What people need and want is simply the freedom to set up any work arrangement that employer and employee can agree upon. 




An economic and political concept that is poorly understood and not taught any longer in schools is that freedom or liberty is an absolute positive value.

The definition of freedom or liberty is the ability to do as one wishes, provided one does not violate the right of others to do as they wish.

Freedom presumes that people are smart enough to make their own decisions in many areas of life such as work, education, and health care.  Also, these decisions will be better than having the rulers make the decisions because people understand their own lives much better than distant (and usually not the smartest) government bureaucrats.

The presumption of socialism is that people are too stupid to make their own decisions.  Actually, it is more sinister than that.  In reality, the rulers or elites want to control everyone. They don’t want people making their own decisions.  Furthermore, the elites really don’t care if their decisions are wise, as long as they, the elites, remain in control.

You will never hear that coming from the mouth of a socialist candidate for public office, but that is the truth.  Socialists, communists and other elitists can never tell the truth because if they did, they would never get elected.

Freedom works because it gives souls many opportunities to learn and mature.  Government control does not afford the souls nearly as much opportunity for learning and maturing, so this way of running an economy or a nation does not work as well.




Minimum wage laws fix the price of a product – people’s labor.  This is never a good idea. 

Imagine if the government suddenly fixed the minimum price for a car at $10,000.00.  One would be unable to buy many cars such as used cars because they should cost under $10,000.00.  However, that would no longer be allowed. 

What if the government fixed the minimum price of coats at $40.00.  One would also not be allowed to buy a used coat that should cost less than $40.00, even though it might keep you warm in the winter.  What a waste that would be.

Everyone loses:  The people that sell used cars and used clothing lose out, and more importantly, the people who want and need an inexpensive car and an inexpensive coat also lose out. 

Those harmed the most by minimum wage laws are the poor – the very people the minimum price laws are supposed to protect.




One might say, “If minimum wage laws are not a good idea, then why do governments pass such laws?”

There exists today a deliberate attack on the principle of freedom – whether in the economic sphere, the political sphere, the health sphere, or others.  This is important to know so that you will question any type of government imposition of rules.

Today, anything that gives people freedom is under attack.  Sometimes this is obvious, and sometimes it is subtle such as minimum wage laws and government or “universal” health care laws like Obamacare in America.




In America, the government has no authority to pass minimum wage laws.  If you doubt this, read Article I, Section VIII of the US Constitution.  This section, and similar sections of each American State Constitutions, enumerate the powers delegated to the government.  They do not include regulating the economy.

Indeed, they say that the government may not pass any law that abridges the right to contract.  Minimum wage laws are a direct violation of the right to contract for work.

This has been circumvented by inventing doctrines, such as regulating interstate commerce, but this is a fudge and clearly twists the intent of the Constitution, which is to have a government with limited power.




The purpose of the American government is to protect the people’s rights and the freedom to run their lives as they see fit.  For example, one might choose to be “exploited” for a while, meaning not paid too much, so that one can learn a new skill or a new business.  That is an example of liberty that occurs every day in every modern society.  By stopping it, the government destroys jobs and destroys lives, as well.

For example, one might decide to take on an internship.  This is a temporary position or job in which you learn a new skill or trade.  It is very important for students and anyone entering the workforce or who is changing careers.  Minimum wage laws have already eliminated many internships and thus damage society in an important way.



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