Laura Bell wrote: > What you didn't mention Jerry, that such an increase in the minimum wage > would increase the black market/underground economy by leaps and bounds. > Thus having a long run effect of shrinking the gnp. I understand the above to mean that a dramatic increase in the minimum wage would cause many capitalists to hire workers at rates lower than the minimum wage thus increasing the amount of workers in the "underground economy." I agree that this would be a likely consequence (in addition to capital flight). However, you go on to say that this would decrease GNP. I would have to agree with you again *but* that is because GNP doesn't (and can't) include the underground economy (since the government can't be expected to have entirely accurate statistics on this sector of the economy). But, does the underground economy increase capital accumulation and growth? I believe a good case can be made for how it does (despite the fact that this isn't reflected in GNP statistics). The impact on the state and the budget deficit, though, of an increased underground economic sector is another (but, interesting) question. Jerry
