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Quotation of the Day…
Posted By Don Boudreaux On March 21, 2013 @ 7:56 am In Reality Is Not Optional,Work | Comments Disabled
… is from page 302 of the 2007 collection of some of Joseph Epstein’s essays, In a Cardboard Belt! ; specifically, it’s from Epstein’s 2000 essay, in Commentary, entitled “Intellectuals, Public and Otherwise”:
Even when they have not lent their energies to promoting schemes for human betterment that depend on the mass coercion of real human beings, the intellectuals’ overdependence on ideas, and their consequent detachment from reality, have often turned them into little demons of ignorant subtlety.
One of the many instances of intellectuals acting like little demons of ignorant subtlety occurs in the modern debate over the legislated minimum wage.
Run-of-the-mill intellectuals who are innocent of any economics typically do not practice such subtlety in matters economic. They simply assume that government-inflicted coercion can rather easily mold economic or social reality into whatever forms they fancy. For these intellectuals, the chief constraint upon such happy molding efforts are evil or ignorant (or both) political opponents who block government from transforming intellectuals’ good intentions into actual outcomes. Lots of ignorance here, but no subtlety.
For intellectuals with some familiarity with economics more is needed to justify legislating a minimum wage. Here is where the subtlety enters. For these intellectuals the ‘more’ that is required to justify legislating a minimum wage is some passable explanation for why the law of demand for low-skilled workers – contrary to the law of demand for almost every other good or service or input imaginable – is non-operable over whatever range of change in the minimum wage happens today to be on politicians’ agenda. These economically familiar intellectuals (some of whom are actual certified economists) today turn to textbook stories of monopsony power to create the subtle justification for their faith that minimum-wage legislation will cause little or no reduction in the employment opportunities of low-skilled workers.
But as discussed here  and elsewhere , the assertion that monopsony power exists in the market for low-skilled workers – and, more, that this power exists in a form that can easily be exploited by wise legislators to improve the lot of low-skilled workers – doesn’t pass the smell test. (Or, rather, it doesn’t pass my smell test, and – being an economically informed intellectual – I’m sufficiently arrogant to trust my sniffer on this one.)
Bob Murphy is a very good economist as well as an exceptionally fine expositor of the economic way of thinking . He doesn’t mistake clever subtlety for wisdom. Central to that way of thinking is a keen eye for – and a correspondingly deep suspicion of – arguments that are premised on the proposition that some economic entities, without the benefit of any special privileges or protections granted to them by government, rake in, have raked in for a while, and will continue (in the absence of corrective government action) to rake in for the indefinite future, ‘surplus’ gains.
One odd fact about most of the folks who fall for such arguments (about the alleged reality of the lasting existence of unwarranted surpluses) is that these folks do not doubt that the world is full of grasping, greedy, clever, materialistic capitalist scoundrels who will single-mindedly and heartlessly do anything for a buck. Indeed, the existence of these surpluses – such as the alleged difference between the value of workers’ marginal products to their employers and the lower wages that these employers pay to their low-skilled workers – is often ‘explained’ by the assumed greed and heartlessness of the surplus-fattened exploiters.
I leave it to the reader to figure out why I describe this fact as “odd” – so odd that economically informed intellectuals, such as Alan Krueger , talk themselves into denying foundational economic principles in order to accept and lend credence to unsubtle man-in-the-street myths about the power of government diktats to uplift and improve society.
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URL to article: http://cafehayek.com/2013/03/quotation-of-the-day-581.html
URLs in this post:
 In a Cardboard Belt!: http://www.amazon.com/Cardboard-Belt-Essays-Personal-Literary/dp/B005ZOE3TU/ref=sr_1_20?s=books&ie=UTF8&qid=1363864701&sr=1-20
 here: http://cafehayek.com/2013/02/quotation-of-the-day-558.html
 elsewhere: http://consultingbyrpm.com/blog/2013/02/even-more-thoughts-on-the-minimum-wage.html
 Bob Murphy is a very good economist as well as an exceptionally fine expositor of the economic way of thinking: http://consultingbyrpm.com/blog/2013/03/a-different-explanation-of-the-productivity-and-wage-divergence.html
 such as Alan Krueger: http://www.pbs.org/newshour/rundown/2013/02/president-obama-is-pushing-a.html
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