Irrationality and the Minimum Wage

I have found that the hardest point to get across to students is the many adverse consequences of price controls, primarily because of their attachment to the idea of the minimum wage. Bryan Caplan has the best rejoinder I have ever read for this criticism from students:

What happens when my outraged students reach the "Salary Requirements" line on job applications? They could ask for a million dollars a year, but they don't. When their future rides on it, students honor the economic truism that labor demand slopes down.

The rest of the book is excellent, but would have been worth the read for that statement alone. Raising the wage, ceteris paribus, lowers employment.

McMillionaires

In an excellent article on the fastfood industry, George Will makes a statement about the McDonalds franchise system that shocked me for a second before I realized that it should have been obvious that this would be true:

McDonald's exemplifies the role of small businesses in Americans' upward mobility. The company is largely a confederation of small businesses: 85 percent of its U.S. restaurants -- average annual sales, $2.2 million -- are owned by franchisees. McDonald's has made more millionaires, and especially black and Hispanic millionaires, than any other economic entity ever, anywhere.

I would bet that many of the McMillionaires started out with McJobs.

Benjamin Franklin and Self-Interest

B. Franklin has been my favorite historical persona since my 5th grade history report, and in light of an upcoming trip to Philadelphia I have returned to a biography on him written by Walter Isaacson. In it he describes what economists mean when we talk of self-interest and how it benefits society better than I think I ever could have. Here is the excerpt:

A fundamental aspect of Franklin's life, and of the American society he helped to create, was that individualism and communitarianism, so seemingly contradictory, were interwoven. The frontier attracted barn-raising pioneers who were ruggedly individualistic as well as fiercely supportive of their community Franklin was the epitome of this e of self-reliance and civic involvement, and what he exemplified became part of the American character.

A great description of self-interest and its results for society!