Economic Genius! Let’s Have a $50 Minimum Wage!

Everything is easy, as long as you don’t have to consider reality. 

A while back, I wrote about Biden’s Chairman of the Council of Economic Advisors, Jared Bernstein, who literally couldn’t explain what money is, where it comes from, or why the federal government didn’t just print as much as it wants and not borrow any. 

He had no idea and said so on camera. It was both glorious and frightening. 

Barbara Lee, who retired from Congress as a very powerful Congresswoman, ran and lost in the race to replace Dianne Feinstein in the Senate, so she has settled herself in as the Mayor-elect of Oakland, California. 

It’s appropriate enough. Oakland is what Donald Trump would call a “s**thole,” and deserves yet another Mayor who is full of it. 

Why not $100? 🤔 https://t.co/QaaZAU8TIM

— Ted Cruz (@tedcruz) April 22, 2025

Like Bernstein, Lee understands economics the way I understand Zoroastrianism–not at all. I would not call myself an economic genius by any means, but I understand the basics, and one of the most basic things is that money doesn’t grow on trees. It is, in fact, made out of Levi’s Jeans denim scraps. But that isn’t important right now. 

What is important is that money is an abstraction, and it is abstracted from value. Ultimately, the value of money is tied to the goods and services that can be purchased with it, so if you expand the money supply without expanding the goods and services, the only thing that changes is the dollar’s value. Nobody gets any richer unless more actual wealth is created. 

That’s why increases in the minimum wage are a fool’s solution to a perennial problem: some people make more money than others, and people whose labor or contribution is low on the value scale–say, fry cooks whose sole skill is being surly while making fries–will not make sufficient money to satisfy their desires. 

People in Oakland are not poor because they aren’t paid enough. They are poor because they produce little of value compared to those around them in one of the wealthiest places in the world–San Francisco and the Silicon Valley region. When you are competing with Googlers for resources, being a minimum wage worker is a real problem. You are competing for limited resources with people who can outbid you by a wide margin. 

That doesn’t make you a bad person–although there are LOTS of bad people in Oakland, which truly IS a s**thole–it just means that you live in the wrong place and have the wrong skills and likely temperament to thrive there. Economically speaking, Oakland’s land would be put to better use providing housing for people who are more productive, but economics is not the only factor in this world, nor should it be. 

Poor people have to live somewhere, and Oakland is where poor people live in the Bay Area. But their poverty will not be relieved by magic bullets like an increase in the minimum wage. If the wage goes to $50/hour, those people will become unemployed tomorrow, and businesses will bail immediately. 

Now they will be even poorer with no place to shop. I suppose they could take the BART–an aging, decrepit, and ever-less-reliable subway that is failing–to somewhere else less insane, but they will have little money in a region where a LOT of money is necessary to get by. I’m not sure that Whole Foods or some Co-Op will be thrilled to see them either. 

What Oakland needs is much better governance, schools, and a lot more fathers in the families. Increasing wages without vastly increasing the value that minimum wage workers bring to the table is a recipe for disaster. 

Unfortunately, the fact that Barbara Lee succeeds another truly awful mayor shows that Oakland is toast. 

Which is, I suppose, as it ever was.