Latest news with #pricecontrols
Fox News
02-07-2025
- Business
- Fox News
Politicians push job-killing minimum wage hikes while ignoring the devastating economic reality
Despite it being widely known by anyone who can think two steps ahead that price controls have negative consequences, politicians can't help but continue to promote price controls as policy. With Americans facing increased costs of living, there has been a return to calling for minimum wage hikes from democratic socialists like New York City Democratic mayoral candidate Zohran Mamdani, who wants to raise the minimum wage in the city to $30/hour, to Republican Sen. Josh Hawley, who is bafflingly pushing an increase in the federal minimum wage to $15/hour with additional increases indexed to inflation. If wages could be raised by mandate without negative consequences, why would we stop there? Why not make the minimum wage $100/hour, $100,000/hour or even a cool $1 million/hour? Because in real life, that's not the way things work. The minimum wage has always been an evil policy, rooted in racism. It was passed as legislation precisely to exclude unskilled workers, particularly immigrants, minorities and women, from the workforce. It has the same effect today. But the financially illiterate don't seem to understand basic economics. The minimum wage is not an average wage, median wage, maximum wage or even an expected wage. It is quite literally a floor (although, as economist Thomas Sowell has pointed out, the real minimum wage is zero). As reported by the U.S. Bureau of Labor Statistics ("BLS") via FRED, only 1% of workers report being paid at or below the federal minimum wage, and that data is "based solely on the hourly wage they report (which does not include overtime pay, tips or commissions)." The minimum wage is heavily slanted toward teens and workers entering the workforce with few skills. As the BLS noted, "Minimum wage workers tend to be young. Although workers under age 25 represented one-fifth of hourly paid workers, they accounted for 43% of those paid the federal minimum wage or less." While minimum wage directly impacts a small number of individuals, its effects ripple throughout the economy at large. If teens and unskilled workers have a guaranteed wage floor, those with skills and experience will want to be compensated even more. That increases both wages and taxes paid for a business throughout their labor force, as well as that of all their suppliers, adding substantially to operating costs and reducing what may already be slim operating margins. The businesses will either have to make less money or pass on costs to consumers – or both. This makes products and services more expensive and, in many cases, will put businesses out of business across the economy as every company now competes in a market where nonskilled workers have a high fixed cost set by government. Sometimes, businesses will also reduce product sizes or service offerings – shrinkflation, as we saw under the last administration – but one way or another, that increase in labor cost flows through the economy and impacts what you are able to get for your dollars. It's notable that small business owners, who often work well in excess of 40 hours of week and risk their own capital, don't get a guaranteed wage, but politicians are happy to make entrepreneurial efforts more risky and costly. The minimum wage, particularly the federal proposals, don't take into account different economic costs by region or geographic area, either. Just because bad policy exists doesn't mean that we should keep doubling down on it. Pay should be negotiated between parties based on value and demand for skills and services. An economy cannot function without being able to get people into the workforce and trained. We need to keep jobs where people can enter the workforce, learn skills and, if desired, move on in their career paths. At a time when AI is threatening jobs, and technology is replacing workers, enacting legislation that incentivizes fewer jobs and makes it more costly and difficult to run a business is patently insane. Wages will naturally shift with the market for labor, as we have seen in recent years. Politicians who are trying to "help" will once again find that intentions do not equate to outcomes, and their policies only make the cost-of-living issues worse. If they want to help in a way that drives positive outcomes, make it cheaper and easier to do business by removing costly regulatory barriers and red tape. That is the path to a flourishing economy and better cost of living, not mandated wages.
Reuters
25-06-2025
- Business
- Reuters
EU countries demand stricter controls on new CO2 price
BONN, June 25 (Reuters) - Germany, the Czech Republic and 14 other countries have demanded the European Union introduce stricter price controls to the bloc's new carbon market, over fears the policy will raise consumers' bills, a document seen by Reuters showed. The paper, which has support from enough countries to form the "qualified majority" needed to pass EU laws, aims to pressure the European Commission to change the EU carbon market for transport and heating fuels, which is due to launch in 2027. "To address the legitimate concerns around price uncertainty and social impacts and to strengthen the public acceptance of the system, improvements should be considered already prior to the market's launch," the paper said. The new EU carbon market will impose a CO2 price on suppliers of polluting fuels used in cars and buildings. It is designed so that if the CO2 price hits 45 euros, extra CO2 permits will be released into the market to tame prices. The countries proposed strengthening this, to add more CO2 permits to the market if prices spike. The EU should also strengthen a special "reserve" that adds extra permits to the market if supply is tight, alongside other changes including launching carbon permit auctions early, to give an indication of prices, they said. The document was also signed by Austria, Belgium, Bulgaria, Croatia, Estonia, Italy, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovakia, Slovenia and Spain. Countries including Poland and the Czech Republic have previously warned the policy could stoke a backlash against ambitious climate change measures if it raises fuel bills. The EU has agreed that billions of euros in proceeds from the new market will be set aside to help citizens pay bills, subsidise electric cars and energy-saving home renovations. The EU has scaled back green policies this year, as it attempts to contain a political pushback on its green agenda. The EU has not so far watered down its core emissions-cutting targets. But the Commission is considering weakening a planned climate target for 2040, to attempt to win support from sceptical countries, Reuters previously reported. The Commission is due to propose the 2040 climate target on July 2.
Bloomberg
02-06-2025
- Business
- Bloomberg
Amazon Hit by German Warning Over Price Controls on Marketplace
Inc. was warned by Germany's antitrust watchdog that price controls for retailers on its marketplace are likely to violate national and European Union laws. The Federal Cartel Office said it told Amazon that — in its preliminary assessment — the company's policing of how much retailers charge runs contrary to regulations for the digital economy and fair competition.
Wall Street Journal
18-05-2025
- Business
- Wall Street Journal
Donald Trump Plays Walmart CEO
Which American politician said the following? Item one: 'Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should . . . EAT THE TARIFFS, and not charge valued customers ANYTHING. I'll be watching, and so will your customers!!!' Item two: 'After causing catastrophic inflation, Comrade Kamala announced that she wants to institute socialist price controls . . . Her plan is very dangerous because it may sound good politically . . . This is Communist; this is Marxist; this is fascist.' If you guessed that both are statements by Donald Trump, you have broken the code on the bizarro world of the President's second-term economic policies. Last year he blasted Kamala Harris's proposal for price controls on groceries. But now he is attacking Walmart for warning that it will have to raises prices in the wake of Mr. Trump's tariffs. Mr. Trump's flip-flop on price controls is a rebuttal of his own previous tariff claims. For months he's said that foreign producers pay the full cost of tariffs. But now he's admitting that Walmart, an American retailer, will have to eat some of the costs or pass them on to Americans. Despite his business background, Mr. Trump doesn't know much about retail. Walmart's net profit margin is below 3%, so it doesn't have much room to absorb the higher costs caused by tariffs. Retail competition is intense, and Walmart's longtime comparative advantage has been lower prices. Mr. President is telling a company how to run its business, along with a vague, implicit threat of retribution. Marxist? How would Mr. Trump react if Congress told him how much his family could charge for a Mar-a-Lago fee? Mr. Trump is trying to duck the political fallout for his misguided tariff policy by blaming everyone else. Americans are too smart to fall for it.
National Post
14-05-2025
- Business
- National Post
J.D. Tuccille: Trump channels inner socialist with Soviet-style price controls
Article content In 2010, Obama administration health-care advisers Nancy-Ann DeParle, Ezekiel Emanuel and Robert Kocher boasted about the Affordable Care Act in a letter published by the Annals of Internal Medicine: 'The economic forces put in motion by the act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups.' Article content Trump is embracing that same top-down approach, with medicine — in this case, the pharmaceutical industry — remaining nominally private, but subject to government command. Article content As the Cato Institute's Michael Cannon, who literally wrote the book on reforming U.S. health care from a free-market perspective, points out, 'Trump's executive order is an attempt to impose government price controls on pharmaceuticals.' Cannon recommended regulatory reforms to get the government out of the health-care market. 'Price controls are never the answer,' he added. Article content A major problem with price controls is that government can dictate a price, but it can't guarantee that anybody will produce and sell sufficient quantities of a good at that price. It also can't eliminate the consequences of putting a ceiling on prices and lowering incentives for developing new drugs. Article content Article content West Virginia University economics professor Chris Freiman elaborated on this point, arguing that, 'Drug price controls are a classic example of what is seen versus what is unseen.' What consumers will see, he noted, is cheaper drugs. But what they will never see is 'the drugs we would otherwise have benefited from but aren't created in the first place' because pharmaceutical companies fear price caps will reduce or eliminate the return on their investments. Article content Republicans rightly criticized then-Democratic presidential candidate Kamala Harris when she proposed combating the inflation caused by wild spending during the Biden-Harris administration (and Trump's first term) by fixing prices. She promised to 'bring down prices' by taking on 'big corporations that engage in illegal price gouging and corporate landlords that unfairly raise rents on working families.' Besides rent, she had a particular fixation on dictating grocery prices. Article content Even the Washington Post's Democrat-friendly editorial board called Harris out, saying, 'Thankfully, this gambit by Ms. Harris has been met with almost instant skepticism, with many critics citing President Richard M. Nixon's failed price controls from the 1970s.' Article content Unfortunately, Trump doesn't just share his predecessors' taste for price controls, he also emulates the Biden administration's appetite for government-directed industrial policy, with politicians planning economic development and picking winners and losers. Trump told reporters earlier this month about the supply choking effects of his tariff policies, saying, 'A 10-year-old girl, nine-year-old girl, 15-year-old girl, doesn't need 37 dolls.… She could be very happy with two or three or four or five.' Article content His comments echoed socialist Vermont senator and former Democratic presidential hopeful Bernie Sanders' 2015 dismissal of 'a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers' in a free economy as unnecessary when he saw what he considered greater goals to pursue. Article content Interestingly, Trump's secretary of health and human services, Robert F. Kennedy Jr., said during the announcement of the drug price plan, 'I have a couple of kids who are Democrats or big Bernie Sanders fans, and when I told them that this was going to happen, they had tears in their eyes.' Article content When a Republican president and his Democrat and socialist opponents agree more than they disagree about their desire for a planned economy, it's obvious that our political choices are as severely constrained as they would make our selection of dolls and deodorants. Americans may overwhelmingly reject central planning, but our major politicians are all socialists now. Article content Article content Article content
