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The Law of Demand Operates as Advertised, But Only When Politically Convenient

Here’s (a somewhat modified version of) a letter that I sent a few days ago to the New York Times:

Democrats will press hard in 2014 to raise the federal minimum wage by 39 percent (“Democrats Turn to Minimum Wage as 2014 Strategy,” Dec. 30).  In doing so, they deny that a higher minimum wage will destroy jobs.  Their unique economic reasoning assures them that what is effectively a higher tax on employing low-skilled workers will not prompt firms to employ fewer low-skilled workers.

So will Democrats also abandon their calls to tax carbon emissions?  After all, as Berry College economist Frank Stephenson asks,* if firms will respond to a higher tax on employing low-skilled workers in all ways except by employing fewer such workers, shouldn’t we also assume that firms will respond to a higher tax on emitting carbon in all ways except by emitting less carbon?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* In a private e-mail to me.


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