Open Letter to David Sirota

by Don Boudreaux on July 16, 2011

in Myths and Fallacies, Prices, Reality Is Not Optional, Seen and Unseen, Work

Dear Mr. Sirota:

A friend just sent to me a link to your 2006 essay in the Huffington Post accusing journalist John Stossel of being “a pathological liar.”  Your marquee evidence in support of this harsh accusation is Mr. Stossel’s claim that “people on the margins lose jobs when minimum wages go up.”  You combine your own personal astonishment that anyone could possibly say such a “ludicrous” thing with a mention of two empirical studies – one being the famous work by economists David Card and Alan Krueger – to conclude that only a pathological liar would assert that minimum-wage legislation destroys some jobs.

I presume, then, that your epistemology leads you to conclude that the author of the following paragraph, written in 1998, is also a pathological liar:

“So what are the effects of increasing minimum wages?  Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment.  This theoretical prediction has, however, been hard to confirm with actual data.  Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive.  Exactly what to make of this result is a source of great dispute.  Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages ‘do,’ in fact, reduce employment, but that the effects are small and swamped by other forces.”

The author of the preceding paragraph – who went on to describe the conclusion that raising the minimum-wage does not reduce employment as “iffy” – is Prof. Paul Krugman.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030


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