It is not merely a fallacy, therefore, but a sham humanitarianism, and a cruel deception, always to insist on wage-rate increases whether or not conditions justify them, and always to resist wage-rate reductions whether or not conditions require them.
From Hazlitt’s fantastic dissection of the whole system of Keynesian fallacies, in The Failure of the “New Economics.” This is important for us to realize as Mr. Obama continues to advocate for an increase in the minimum wage, despite high unemployment rates among low-skilled workers. It may indeed be good politics, but from an economic standpoint, it is “a sham humanitarianism, and a cruel deception.” While the populist message plays well with the man in the street, who knows almost nothing of basic economics (since this siren song goes against one of the most basic economic truths, the Law of Demand), we should demand our leaders know better. And our leaders should not deliberately fan the flames of populism to gain partisan advantage with policies that hurt the most vulnerable in our society (no matter how misguided they are–even when they endorse the policies that hurt themselves). Hazlitt is once again spot on.