God-like Only When Convenient

by Don Boudreaux on March 13, 2012

in Country Problems, Current Affairs, Hubris and humility, Myths and Fallacies, Prices, Reality Is Not Optional, Regulation, Seen and Unseen, Work

Here’s a letter to the Washington Post:

Reporting on voters blaming Pres. Obama for rising gasoline prices, you quote Paul Bledsoe: “This notion that a politician can wave a magic wand and impact the 90-million-barrel-a-day global oil market is preposterous” (“Voters blame president for gas prices, experts say not so fast,” March 13).  Mr. Bledsoe is largely correct.  I say “largely” because, with futures markets for commodities such as oil, credible signals today to ease restrictions on exploration and drilling would indeed begin today to put some downward pressure on fuel prices.

But the thrust of Mr. Bledsoe’s point remains valid – a fact that prompts this observation: if politicians have no magic wand to wave to make gasoline prices more desirable, why do they act as though they have a magic wand to wave to make the wages of low-skilled workers more desirable?  If government can perform no alchemy to change at will the market value of gasoline at the pump, why do so many people and politicians continue to fantasize that government – with the alchemy called “minimum-wage legislation” – can change at will the market value of low-skilled workers?

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

And speaking of the alchemy of minimum-wage legislation, my GMU Econ colleage Walter Williams and I have an essay on this very topic in today’s Wall Street Journal.  Here’s a slice:

Even the loudly and proudly progressive economist Paul Krugman—who called the Card-Krueger result “iffy”—has admitted that raising the minimum wage likely reduces employment prospects for low-skilled workers.

If minimum-wage legislation only destroyed jobs for teenagers, it would be bad enough. But its long-term consequences are more dire. Precisely because the climb to higher wages begins for most workers during their teenage years with entry-level jobs, the minimum wage—by knocking off the bottom rungs of the economic ladder—effectively tells young workers: Unless you can jump immediately to higher rungs on the ladder, you must remain unskilled and unemployed for the indefinite future.

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