Some Links

by Don Boudreaux on January 11, 2016

in Data, Inequality, Legal Issues, Reality Is Not Optional, Seen and Unseen, Work

Found at EconLog: A 27-year-old Milton Friedman levels from the past a germane criticism of a paper on wealth inequality forthcoming in the Quarterly Journal of Economics.

I share my great colleague Walter Williams’s dismay that so many credentialed economists today apparently possess such a poor grasp of economics that they support the minimum wage as a means of helping the worst-off workers.  A slice:

During South Africa’s apartheid era, the secretary of its avowedly racist Building Workers’ Union, Gert Beetge, said, “There is no job reservation left in the building industry, and in the circumstances, I support the rate for the job (minimum wage) as the second-best way of protecting our white artisans.” The South African Economic and Wage Commission of 1925 reported that “while definite exclusion of the Natives from the more remunerative fields of employment by law has not been urged upon us, the same result would follow a certain use of the powers of the Wage Board under the Wage Act of 1925, or of other wage-fixing legislation. The method would be to fix a minimum rate for an occupation or craft so high that no Native would be likely to be employed.”

It is incompetence or dishonesty for my fellow economists to deny these two effects of minimum wages: discrimination against employment of low-skilled labor and the lowering of the cost of racial discrimination.

(I do not believe that dishonesty is the explanation.  I attribute economists’ misunderstanding of the consequences of minimum wages almost exclusively to incompetence – incompetence, in particular, at economics.  Having a PhD in economics or having a mastery of econometric techniques does not a sound economist make.)

One very competent economist is Mark Perry – who here presents some evidence that DC’s minimum wage is dampening job growth in that jurisdiction.

I hope Jeffrey Tucker is correct that the minimum age to drink alcohol in the U.S. will indeed eventually be lowered back to 18.  Perhaps such a lowering will put an end to the absurdity of restaurants, bars, and supermarkets carding the likes of me – literally a gray-beard.  (Whenever I am carded I wonder to myself ‘Suppose I’d wrangled a fake ID that reports my birth year as, say, 1996 – making me, in 2016, too young to legally buy alcohol in the U.S.  Would the bartender or cashier – assuming that he or she isn’t literally blind – trust this ID as valid?’  Of course any bartender or cashier would know immediately and beyond a shred of doubt that an ID that reported me to be under 21 years of age would be fake and fraudulent – which raises the question, ‘Why the nonsense of carding individuals who are obviously old enough to have grandchildren?’)

Let’s hope this opening line of a Wall Street Journal report turns out to be true:

The Supreme Court appeared ready on Monday to weaken public-sector unions by ending their power in more than 20 states to require workers to pay a fee for representation even if they decline to join a union.


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