Criticism of Maximum Wages
Critics of a maximum wage such as Milton Friedman argue that such a policy would reduce incentive to innovate and for highly skilled workers to pursue demanding jobs. This decline in innovation would be problematic as innovation is one source of economic growth.
Austrian economists and Libertarian think-tank from the Mackinac Center for Public Policy, argue that inflation is not caused by wages but by governments printing money. In addition, they highlight the fact money is a commodity whose value is subject to supply and demand. They argue likewise that the increased demand for labour brought about by a maximum wage will prevent an economy running at its most effective because people will try to circumvent a situation where wages are kept below free-market levels.
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