“Free Money” experiments are underway in several places: Canada,
California, and Finland.
“Living wage” advocates are elated.
Ongoing Free Money Experiments
The alleged studies are all fatally flawed because they do not scale. It’s
one thing to give a few hundred people or a few thousand people free money,
but it’s another thing to scale the experiment across an entire nation.
Free Money – Dauphin, Canada Experiment
Huffington Post author Zi-Ann Lum proclaims A Canadian City Once Eliminated Poverty And Nearly Everyone
Forgot About It.
The problem with superficial analysis by Lum and others is they only focus
on half the equation. Yes, citizens of Dauphin benefited, but it was at the
direct expense of everyone in all of Manitoba that had to contribute “free
money” to the residents of Dauphin.
Were the same scheme available to everyone in Manitoba, the money would
have had to come from all of Canada.
And for all Canadians, the money would have had to come from Martians.
Nonetheless, in spite of such obvious flaws, economic illiterates have
latched on to the free money scheme.
Living Wage Idiocy
Reader Gary asks: Why does everyone deserve a “living wage”?
His own answer, widely believed, but easily rebutted follows: “Because
without it the nation is weakened. Our nation is getting weaker. Automation
will kill labor, but it will also kill capitalism. Without labor, you have no
- If you pay people to do nothing, there will be masses of
people doing nothing and getting paid for doing nothing.
- The globe is already overpopulated with people doing
- The necessary “living wage” would increase monthly,
along with the number of people getting free benefits. Imagine giving
everyone in Africa, India, and China a “living wage”.
- People from Africa, the Mideast and anywhere else not
getting a “living wage” will all want to migrate to places paying a
living wage for doing nothing. Look no further than Syrian refugees all
wanting to go to Germany and Sweden because those nations offered the
most free benefits.
- Any living wage experiment purported to have worked,
didn’t. The experiments were flawed because they did not scale and will
The idea that the government needs to redistribute money to make things
affordable is ridiculous in both theory and practice.
Thousands of affordable home programs, tuition programs, and Obamacare
prove the ridiculousness of the concept.
If the Fed and governments would just get the hell out of the way, prices
would naturally find the right level.
But no! The Fed does not want prices to go down, and when prices go up,
economic illiterates scream for “living wages”, attacking a symptom of the
The problem is not insufficient wages. The problem is fractional
reserve lending coupled with a Fed hell-bent on creating inflation in a
technologically deflationary world.
Misguided minimum wages hikes, public unions, and political corruption all
exacerbate the problem.
Challenge to Keynesians
My Challenge to Keynesians “Prove Rising Prices Provide an
Overall Economic Benefit” remains unaddressed.
The BIS did a study and found routine deflation was not any problem at
all. For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are
Anyone wishing to rebut my challenge to Keynesians also needs to address
the detailed BIS study.
Meanwhile, economically illiterate writers bemoan deflation, as do most
economists, central banks, and academia. The final irony in this ridiculous
mix is central bank policies stimulate the massive wealth inequality all of
the above rail about.
It would behoove “living wage” advocates to consider the possibility the
real problem is central bank sponsored inflation, not a failure of government
to provide a “living wage” to those doing nothing.
Mike “Mish” Shedlock