Monday, July 31, 2006

Minimum Wage and Maximum Wealth, Part 1

As noted before, some Republicans seem to think that they did something clever when they coupled a hike in the minimum wage with a reduction in the estate tax in H.R. 5970, which came to the House floor late Friday night. Congressman Zach Wamp (R-Tennessee) cackled, "You've seen us really outfox you."
Apart from the legislative manuevering, how do we compare the economic value of these two very different proposals?
The question is not very interesting on the bumper sticker level. Democrats cry that Republicans care only about rich folks. Republicans accuse Democrats of class warfare.
The two proposals represent opposite visions of what good economic policy should be. In its starkest terms, the argument of opponents of the minimum wage and the estate tax is:

1. There should be no floor on wages.
2. There should be no limits on wealth.
In this new series, we will more fully explore the economics and politics of these issues. Stay tuned.

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