The Washington, D.C., City Council last week passed a controversial ordinance 8-5 that requires big box stores (read: Wal-Mart) to pay a minimum wage of $12.50.
That's 50 percent higher than the D.C. minimum wage for every other business - $8.25, which is $1 higher than the federal minimum wage.
The ordinance, if approved by Mayor Vincent Gray, will likely mean the end of Wal-Mart's three-year long effort to locate six stores in the nation's capital. The retail giant says it will cancel plans for three stores and halt construction of three others.
The lead supporter of the legislation, councilman-at-large Vincent Orange, practices the well-worn social engineering rhetoric to make his argument.
"The question here is a living wage; it's not whether Wal-Mart comes or stays."
But what Orange is really doing is substituting his value judgment for the free market. He thinks $12.50 an hour is the minimum Wal-Mart employees should make, which has no connection to the actual value of the work.
As economist Thomas Sowell said in his book, Basic Economics, "There is no collective decision by 'society' as to how much each individual's work is worth. In a market economy, those who get the direct benefit of an individual's work decide how much they are prepared to pay for what they receive."
Orange also arrogantly dismisses the importance of vibrant businesses in communities.
"We're at a point where we don't need retailers," Orange said. "Retailers need us."
Councilman Orange has a degree in business administration, a master's degree in taxation and is a CPA, but somewhere along the line he must have missed Economics 101.
We need both retailers and customers, of course.
The free market is based on the simple concept of the willing exchange of goods and services. It works with remarkable efficiency, at least until the government interferes to the degree to which the D.C. City Council is suggesting.