Take an economy that's growing at a very tepid rate. Add to this an unemployment rate of 7.9%. What do you think would be a great way to boost people's incomes? The President of the US has an idea. He has proposed increasing minimum wages from US$ 7.25 to US$ 9 an hour.

It doesn't require any expertise to figure that this is an extremely counterproductive idea. Already when employment levels are worrisome, increasing minimum wage rates would only make things worse. In order to get going into the workforce, unskilled workers need a first job. But a hike in minimum wages would make employers wary of hiring workers. Employment opportunities would further decline.

The sharpest criticism on this matter comes from Mr Peter Schiff, CEO of Euro Pacific Capital. As per him, what really needs to be done is actually the opposite. There is a need to lower the cost of hiring people. And that can be done by lowering taxes and regulations. In fact, he even suggests that the minimum wages should be abolished. We kind of think that this would be a good idea. For markets alone should determine the price of labour. All that the Government should do is ensure that system is fair and equitable.