One of the major criticisms of Bernie Sanders' campaign has been that his supporters are simply chasing after "free stuff." Now, there are probably Sanders supporters out there who would exemplify this faulty line of reasoning, but there are also those who understand that many of Sanders' policies are actually emblematic of liberal economic thought that's built on the idea that consumers are the foundation of a strong economy. In order to better understand these policies, I have chosen to look into some of Bernie's main economics proposals in the coming weeks. Let's start off with the policy that's seen fast food workers take to the streets across the country — raising the minimum wage.
$15/hour
The Argument: If the minimum wage were increased to $15 an hour, not only would it counter the corporate tendency to keep wages as low as possible, it would also offer a massive boost in consumer spending.
With that same logic, shouldn't we cut taxes on the rich, so they can spend more of their money?
The simple answer is no. While some people interpret Sander's advocacy of increasing taxes on the wealthy as a sort of Robin Hood-esque desire to give money to the poor at the expense of the rich, it's actually simpler than that. As people get wealthier, they spend a smaller and smaller percentage of their wealth. In contrast, a minimum wage worker will spend a much higher percentage of their income than a wealthy person will, so giving a raise to lower income people is an economic boost that will not only be larger in impact, but will also benefit a much larger subset of the population.
What about inflation?
This is where the trade-off happens. In theory, any type of increase in wages will simply be offset by an increase in inflation, but that's not what the data shows. It should also be noted that the proposal Bernie Sanders has put forth would gradually increase the minimum wage over a number of years rather than giving it a one-time hike that would definitely be difficult for businesses to bear.
What about businesses?
Okay, the word "businesses" encompasses everything from $400 billion to corporations to the mom and pop store down the street, so let's break that up into corporations and small businesses.
Corporations
When it comes to corporations, there's no argument. A minimum wage increase is the only option if we want corporations like Walmart and McDonald's to raise employee wages. Bernie Sanders often accuses Walmart of being the biggest welfare recipient in the country, and it's true when you add up the amount of welfare their employees are receiving due to their abysmal wages. Tax dollars are literally being used to support the majority of Walmart employees because Walmart simply does not have a financial incentive to do it otherwise.
Small businesses
It's true that small businesses would likely have a harder time than corporations in adjusting to a higher minimum wage, but the broader economic argument here is that the increase in consumer spending would offset the increase in a small business's costs attributed to higher wages. This is controversial and, as with many economic proposals, the only way to see the real effect of a policy change would be to implement it.
So, why all the different opinions?
When it comes to economics, there is no one correct approach to take. The differences in the economic policies of each of the presidential candidates stem from their decisions to focus on different aspects of the economy. Even something as simple as deciding between using GDP growth or wage growth as the principal indicators of a good economy can mean the difference between Jeb Bush's tax cuts for the rich and Bernie Sander's tax increases for the rich. Both approaches are designed to focus on a certain aspect of the economy; the difference lies in what that aspect is.
If you're interested in learning more about the economic thought behind Bernie's proposals, I recommend looking up economist Robert Reich at UC Berkeley. He is a strong supporter of Senator Sanders and has been advocating for these types of reforms even as he served as Labor Secretary under former President Bill Clinton.
