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Human beings are bad drivers for all sorts of reasons. They have to perform other tasks that take their mind off the road; their vision is sometimes impaired; they misjudge their own driving capabilities or the workings of their machines; some are sometimes inclined to show off, while others are dangerously timid. Occasionally, instead of relying on their wits, they drive “under the influence.”
Central bankers, being human, suffer from similar human foibles. They are distracted by the back-seat ululations of commercial bankers, exporters, finance ministers, and union leaders, among others. Their vision is at the same time both cloudy and subject to myopia [4]. Finally, few if any are able to escape altogether the disorienting influence of politics [5]. The history of central banking is, by and large, a history of accidents, if not of tragic accidents, stemming from these and other sorts of human error.
Bob Murphy takes apart both the morality and economics of Robert Reich’s case for a $15-per-hour minimum wage [6]. A slice:
Reich addresses the obvious objection that raising the minimum wage to $15/hour will reduce employment among low-skilled workers. Reich dismisses this as fear-mongering and claims, “More money in people’s pockets means more demand for goods and services, which means more jobs.”
This proves too much. Notice that Reich doesn’t make a nuanced argument, balancing certain quantitative factors where the increased demand for goods and services offset the disemployment effect of more expensive labor up until $15/hour, but then flips if the wage rate were pushed to, say, $16/hour. Given the arguments Reich has presented, it’s a mystery why we are settling for $15/hour. Why not push for a $20/hour minimum wage? It can’t be that such a move would cause disemployment–Reich just told us, with no caveats, that more money in people’s pockets means more demand for goods and services.
Indeed, Reich ends his video saying, “It’s the least we can do.” Okay then, Mr. Reich, what’s the most we can do, according to your worldview? Once you admit that, we can at least see how there are downsides to your proposal, and the viewer can start wondering whether $15/hour–the alleged “least we can do”–is such an unambiguously “moral” proposal after all.
Here are my colleague Dan Klein’s brief comments on the movie “American Sniper. [7]”
I’m delighted that my old professor Randy Holcombe likes my new book, The Essential Hayek [9].