EDITORIAL : FEWER JOBS, HIGHER TAXES LIVING-WAGE ORDINANCE IS A FEEL-GOOD FANTASY.

FOR a good example of what's broken at City Hall, look at the debate over the Los Angeles living-wage ordinance.

The City Council voted 12-0 Tuesday to pass the feel-good measure amid much self-congratulatory rhetoric.

But, the clueless council is lost in a fantasy world with good intentions running amok, and doing more harm than good for the working poor.

The living-wage ordinance - which Mayor Richard Riordan thankfully has vowed to veto - will require certain employers (including private businesses that have city contracts worth $25,000 or more) to sharply inflate their minimum wage from the current $5 an hour to $8.50 an hour (or $7.25 with paid holidays and other benefits).

Consider: How many L.A. households and businesses would pay 70 percent more than the usual price for minimum-wage workers simply out of a belief that it will help the workers? Obviously, few would.

And, since the ordinance will increase the city's own costs for those contracts in future years, the council's action doesn't constitute responsible management of public funds.

Even worse, supporters of the ordinance admit that it will result in the elimination of hundreds of minimum-wage jobs. By forcing employers to pay sharply more for labor, it forces employers to examine workers' output and value. They will hire fewer, better workers.

Will minimum-wage workers find more and better jobs as a result of the council's action? No, in fact the opposite will be true. The measure tells businesses that are thinking of expanding in Southern California to go to other cities, rather than high-tax L.A. (where the governing council is hostile to business, ignorant of basic economics and wasteful with public dollars).

What's more, L.A. cannot afford this. The city faces a multimillion-dollar deficit, and many city agencies are doing less for the public than ever before, while the taxpayers' costs are as high as ever.

The greatest good that the city government can do to help the working poor is to provide them with safer streets, better schools and a healthy climate for business and industry to grow and thrive. That will provide better-paying jobs, and more of them.

That tenet of market economics, of American society, and of the free-enterprise system has won acceptance all over the world including the former Soviet bloc - everywhere, it seems, except here in fantasy land.