Noam Chomsky lays out some basic economic facts about the suppression of the minimum wage to the Huff Post’s Ryan Grim:
“Part of the neo-liberal assault was the minimum wage in real value started declining, and not growing…As GDP of economy grew, as productivity grew, minimum wage stagnated. So it should be raised considerably…
“In fact it’s a simple economic problem, it’s cutting back economic growth…It means that ordinary people can barely consume, which of course cuts back economic growth.”
Yes folks, it really is that simple. If you pay people only enough money that they can only afford rent and food, chances are they won’t be leasing a new Audi, purchasing the latest iPhone, or taking a trip to Puerto Rico to get some sun. As the middle class erodes, markets for consumer goods get smaller, and producers make less money. Therefore the whole economy contracts. In Republican-Land, the opposite is true – ensuring people have no money to buy things means they actually will buy them, and turn the economy around in the process. Likewise, even though companies don’t use tax breaks to fund new businesses or pay people more money, they actually do if you believe it hard enough.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.