They said it couldn’t be done. It would cause mass job losses and economic melt down. It undermined the morals of the poor. So screeched a whole bevy of right wing “news”papers, magazines and think tanks when Tony Blair’s Government introduced the UK’s minimum wage policy in 1999.[1] We’ll let the excellent Philip Inman of the Guardian give you the details. Our own gloss will be a little more historic.
Scholars scrabbling over the rubble of the Great Crash of 1929 soon discovered one simple, outstanding truth. The boom of the 1920s had held a fatal weakness. Wages stayed low, while tax reforms had ignited an unstable credit and spend boom among the rich. Demand was suppressed, and as the factories filled with unsellable goods, the stocks of the companies that made them were seen to be based on sand. The resulting crash became much worse, for the poor had no reserves to build in the good times to see them through. The message was an is clear to all of us who have managed to move beyond the simple verities of first year undergraduate economics. Helping the poor makes everyone richer.
So to all the pearl-clutchers, and to those who have their own reasons to conveniently believe in free market economics, we would observe this. Study the history of things like minimum wages, working hours directives and the abolition of serfdom. You disparage them not at your own peril, but at everyone’s.
#demand #economics #great depression #wall street crash #jm keynes #minimum wage
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