Unless you're extremely poor, spending twice as much at McDonald's won't affect you (and, consequently economy) in any way but it'll affect people working at McDonald's.
Even if the total amount of money in the economy is fixed, the distribution of that money among people matters a great deal to the health of economy which is something your simplistic argument doesn't address.
In the most extreme example if one uber-rich person has almost all of the money and the rest of the country has just enough to buy food, it doesn't matter how much money that uber-rich person has - the economy will be in the shitters because uber-rich person only needs one house, one car, can eat out only in one restaurant per night etc. but if no-one else can afford a car, the cars will not be made (it's too expensive to make just one car).
If there are millions of people that are only one millionth as wealthy as our uber-rich person but wealthy enough to afford a car, a house, a tv set etc., the economy can develop - if there's market for million cars, someone has to be employed to make those cars, tv sets, serve food to those millions of people and a virtuous cycle develops where people employed to create things and services for wealthy people become wealthy themselves.
So the question is: is raising minimum wage creates more over-all wealth (by transferring more money from rich people who have excess of it) or less over-all wealth (by making services of poor people too expensive for rich people).
I don't know what the answer is but you certainly haven't proven that 20% rise of McDonald's prices would cause McDonald's collapse because of massive "I make my own sandwich" movement. Even if that was purely a matter of price (and not, say, convenience of getting a hamburger and fries in few minutes in the middle of San Francisco), McDonald would probably beat you regardless of what minimum wage is due to massive economies of scale, not to mention that making your own sandwich is like using Linux: it's only free if your time is worth nothing.
> Unless you're extremely poor, spending twice as much at McDonald's won't affect you (and, consequently economy) in any way but it'll affect people working at McDonald's.
Not so fast. I can afford to spend much more at McDonalds, but if I do so, I'm not spending that money somewhere else, regardless of how much money I have. You have to assume that I get no value from spending that money elsewhere to conclude that spending it instead at McDonalds doesn't affect me.
However, even with that assumption, it's absurd to claim that my spending more money at McDonalds and less somewhere else doesn't affect the economy.
You're going to have to argue that the economy benefits from spending money at McDonalds vs somewhere else. The folks who'd otherwise get that spending will be very interested to see that argument.
Moreover, you're making incorrect assumptions about McDonalds customers. They're (typically) not all that well off. More to the point, they're extremely price sensitive, hence the success of the "dollar menu".
We can test your claim in a situation more favorable to it than the real world, namely airports. It's inconvenient to "bag it" and the clientele is reasonably well off. Yet, many folks do, and not just because they don't like airport food. (The Denver airport, for example, has some decent places.)
You're claiming that airport food places could double their prices without affecting what people buy. Do you really believe that? (You can't argue "but airport food is already too expensive" without providing a quantitative argument showing that McDonalds in South San Jose isn't in pretty much the same situation.)
If folks are actually price-insensitive, what limits prices at airport places? (No - competition between restaurants doesn't explain it because the airport could charge them all more money.)
FWIW, I picked "cleaning service" for a reason. The low-end cleaning services in San Jose raised their prices 7-10% about a couple of years ago. (I looked around when mine did.) Mine claimed that she and her competitors lost accounts when they did so and that some went out of biz. She says that there's less money being spent on cleaning services even today.
How do you know that she's wrong?
And no, customers' response to a price increase does not depend on why the price is increasing. (They may be happy with a price increase accomplanied by some other change, but that's not what you're proposing.)
> I don't know what the answer is
You claim to know enough to know that there's no effect from raising the minimum wage.
> but you certainly haven't proven that 20% rise of McDonald's prices would cause McDonald's collapse
I didn't say that it would cause a collapse. I'm pointing out that the "no change" claim is almost certainly wrong.
If you think that McDonalds is cheaper than a sandwich that you make yourself I understand why you want to avoid quantitative arguments.
Comments
Unless you're extremely poor, spending twice as much at McDonald's won't affect you (and, consequently economy) in any way but it'll affect people working at McDonald's.
Even if the total amount of money in the economy is fixed, the distribution of that money among people matters a great deal to the health of economy which is something your simplistic argument doesn't address.
In the most extreme example if one uber-rich person has almost all of the money and the rest of the country has just enough to buy food, it doesn't matter how much money that uber-rich person has - the economy will be in the shitters because uber-rich person only needs one house, one car, can eat out only in one restaurant per night etc. but if no-one else can afford a car, the cars will not be made (it's too expensive to make just one car).
If there are millions of people that are only one millionth as wealthy as our uber-rich person but wealthy enough to afford a car, a house, a tv set etc., the economy can develop - if there's market for million cars, someone has to be employed to make those cars, tv sets, serve food to those millions of people and a virtuous cycle develops where people employed to create things and services for wealthy people become wealthy themselves.
So the question is: is raising minimum wage creates more over-all wealth (by transferring more money from rich people who have excess of it) or less over-all wealth (by making services of poor people too expensive for rich people).
I don't know what the answer is but you certainly haven't proven that 20% rise of McDonald's prices would cause McDonald's collapse because of massive "I make my own sandwich" movement. Even if that was purely a matter of price (and not, say, convenience of getting a hamburger and fries in few minutes in the middle of San Francisco), McDonald would probably beat you regardless of what minimum wage is due to massive economies of scale, not to mention that making your own sandwich is like using Linux: it's only free if your time is worth nothing.
> Unless you're extremely poor, spending twice as much at McDonald's won't affect you (and, consequently economy) in any way but it'll affect people working at McDonald's.
Not so fast. I can afford to spend much more at McDonalds, but if I do so, I'm not spending that money somewhere else, regardless of how much money I have. You have to assume that I get no value from spending that money elsewhere to conclude that spending it instead at McDonalds doesn't affect me.
However, even with that assumption, it's absurd to claim that my spending more money at McDonalds and less somewhere else doesn't affect the economy.
You're going to have to argue that the economy benefits from spending money at McDonalds vs somewhere else. The folks who'd otherwise get that spending will be very interested to see that argument.
Moreover, you're making incorrect assumptions about McDonalds customers. They're (typically) not all that well off. More to the point, they're extremely price sensitive, hence the success of the "dollar menu".
We can test your claim in a situation more favorable to it than the real world, namely airports. It's inconvenient to "bag it" and the clientele is reasonably well off. Yet, many folks do, and not just because they don't like airport food. (The Denver airport, for example, has some decent places.)
You're claiming that airport food places could double their prices without affecting what people buy. Do you really believe that? (You can't argue "but airport food is already too expensive" without providing a quantitative argument showing that McDonalds in South San Jose isn't in pretty much the same situation.)
If folks are actually price-insensitive, what limits prices at airport places? (No - competition between restaurants doesn't explain it because the airport could charge them all more money.)
FWIW, I picked "cleaning service" for a reason. The low-end cleaning services in San Jose raised their prices 7-10% about a couple of years ago. (I looked around when mine did.) Mine claimed that she and her competitors lost accounts when they did so and that some went out of biz. She says that there's less money being spent on cleaning services even today.
How do you know that she's wrong?
And no, customers' response to a price increase does not depend on why the price is increasing. (They may be happy with a price increase accomplanied by some other change, but that's not what you're proposing.)
> I don't know what the answer is
You claim to know enough to know that there's no effect from raising the minimum wage.
> but you certainly haven't proven that 20% rise of McDonald's prices would cause McDonald's collapse
I didn't say that it would cause a collapse. I'm pointing out that the "no change" claim is almost certainly wrong.
If you think that McDonalds is cheaper than a sandwich that you make yourself I understand why you want to avoid quantitative arguments.