Malkiel

Minimum Wage Hikes vs. Tax Rebates - What's More Effective?

I had to laugh when I read your recitation of Friedman's comment and the description of how people actually behave, which is what popped into my head before I had gotten to that paragraph. Economists must be the only "science" that doesn't require actual analysis of data to confirm a theory, just the backing of a political party that likes what it hears.

I have a theory that an enterprise that can't afford to pay minimum wage is a marginal enterprise that's probably parasitically drawing money away from healthy enterprises, and if increasing the minimum wage drives some of them out of business that's better for the overall economy because the money flows instead to the good businesses paying higher (over the table) wages and taxes. I don't have direct evidence for this theory, but if Friedman doesn't need evidence why should I?...