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>>So trust the 101-level dogma It's not dogma. It's a very strongly supported economic principle. In the absence of definitive proof either way, we ought to tr

>>So trust the 101-level dogma It's not dogma. It's a very strongly supported economic principle. In the absence of definitive proof either way, we ought to trust well-tested and supported economic principles. Price controls == bad >>it's also quite clear that actual economic and sociological systems are far more complicated than its models? This is a strawman. Economists are fully aware of the imprecision of predictions made based on theories relating to generalizations and simplifications of the economy, and also that this doesn't change the fact that these theories do a good job of approximating the effects of government interevention on real world economies, and that it is far better to legislate in accordance with them than in conflict with them. The idea that some cookie-cutter price floor, recklessly imposed on a diverse landscape of economic actors, based on utopianist left-wing drivel pushed to the public by rent-seeking labor unions and left-wing demagogues, is going to do more good than harm, is very very misguided.

tablespoon 6y ago
> It's not dogma. It's a very strongly supported economic principle. In the absence of definitive proof either way, we ought to trust well-tested and supported economic principles. We're talking about economics here, the social science where it's notoriously difficult to conduct controlled experiments? > This is a strawman. Economists are fully aware of the imprecision of predictions made based on theories relating to generalizations and simplifications of the economy, and also that this doesn't change the fact that these theories do a good job of approximating the effects of government interevention on real world economies, and that it is far better to legislate in accordance with them than in conflict with them. You really should read the whole article I linked above: https://www.theatlantic.com/business/archive/2017/01/economism-and-the-minimum-wage/513155/ https://www.theatlantic.com/business/archive/2017/01/economi... > [A repetition of anti-minimum wage dogma from popular persuasive economics books and places like the WSJ and AEI.] > The real impact of the minimum wage, however, is much less clear than these talking points might indicate. Looking at historical experience, there is no obvious relationship between the minimum wage and unemployment: adjusted for inflation, the federal minimum was highest from 1967 through 1969, when the unemployment rate was below 4 percent—a historically low level. When economists try to tackle this question, they come up with all sorts of results. In 1994, David Card and Alan Krueger evaluated an increase in New Jersey’s minimum wage by comparing fast-food restaurants on both sides of the New Jersey-Pennsylvania border. They concluded, “Contrary to the central prediction of the textbook model ... we find no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.” > Card and Krueger’s findings have been vigorously contested across dozens of empirical studies. Today, people on both sides of the debate can cite papers supporting their position, and reviews of the academic research disagree on what conclusions to draw. David Neumark and William Wascher, economists who have long argued against the minimum wage, reviewed more than one hundred empirical papers in 2006. Although the studies had a wide range of results, they concluded that the “preponderance of the evidence” indicated that a higher minimum wage does increase unemployment. On the other hand, two recent meta-studies (which pool together the results of multiple analyses) have found that increasing the minimum wage does not have a significant impact on employment. In the past several years, a new round of sophisticated analyses comparing changes in employment levels between neighboring counties also found “strong earnings effects and no employment effects of minimum wage increases.” (That is, the number of jobs stays the same and workers make more money.) Not surprisingly, Neumark and Wascher have contested this approach. The profession as a whole is divided on the topic: When the University of Chicago Booth School of Business asked a panel of prominent economists in 2013 whether increasing the minimum wage to $9 would “make it noticeably harder for low-skilled workers to find employment,” the responses were split down the middle.... > ...Nevertheless, when the topic reaches the national stage, it is economism’s facile punch line that gets delivered, along with its all-purpose dismissal: people who want a higher minimum wage just don’t understand economics (although, by that standard, several Nobel Prize winners don’t understand economics). Many leading political figures largely repeat the central theses of economism, claiming that they have only the best interests of the poor at heart.... > ...This conviction that the minimum wage hurts the poor is an example of economism in action. Economists have many different opinions on the subject, based on different theories and research studies, but when it comes to public debate, one particular result of one particular model is presented as an unassailable economic theorem. (Politicians advocating for a higher minimum wage, by contrast, tend to avoid economic models altogether, instead arguing in terms of fairness or helping the poor.) This happens partly because the competitive market model taught in introductory economics classes is simple, clear, and memorable....
- CryptoPunk 6y ago
  >>We're talking about economics here, the social science where it's notoriously difficult to conduct controlled experiments? Yes. All sciences besides physics, chemistry and biology cannot test theories with controlled experiments. This extends to epidemiology and climatology too. It doesn't mean we dismiss the scientific consensus on vaccines, climate change or price controls. >>A repetition of anti-minimum wage dogma from popular persuasive economics books and places like the WSJ and AEI If you want to keep calling widely accepted scientific principles, like price controls creating economic deadweight losses, a "dogma", we can just end the discussion. >>Looking at historical experience, there is no obvious relationship between the minimum wage and unemployment: adjusted for inflation, the federal minimum was highest from 1967 through 1969, when the unemployment rate was below 4 percent—a historically low level. Because minimum wage almost always is extremely mild in its application, in only affecting something on the order of 4% of jobs. Combined with the challenges to measuring impact that come from labor mobility, minimum wage restrictions don't create easily observable effects. Any significant application would have effects that couldn't be ignored or obscured by left-wing ideologues. In any case, my point is that the principle of price controls being harmful is widely accepted in economics, due to a century of empirical observations. It's unsound to create legislation that conflicts with the principle.
- epivosism 6y ago
  I appreciate the research you've put into this and you are making good arguments. You've provided some study-based arguments that low-skilled market participation hasn't been harmed by historical changes - my question for you is, do you think this is an absolute rule, or just a happenstance due to the regions under study not making minimum wage high enough to be really detectable? i.e. that few workers are actually being paid minimum wages, so changes don't hit large parts of the population. To clarify this, I'm curious about your opinion on a thought experiment - and I'm not setting this up to trap you - I also favor some type of living wage and a fair society, and don't support absolute free market capitalism by any means. But the question - with a 50$ minimum wage, can you see how someone would think that a lot of low-skilled workers would be out of a job? I can make the number as high as necessary; the point is to check whether you think that this change, given employers freedom to hire or not hire, would result in lower skilled workers losing jobs preferentially. To me, at high minimum wages, this is obvious - but at lower wages, this wouldn't be a prominent effect, and the net life quality gain of the minimum wage law may be positive. Just trying to get us on the same page here finding a balance between the gains from ensuring living wages, but admitting that minimum wages also have a disproportionate effect on lower skilled workers, which becomes more prominent as you set the minimum wage higher; if you're willing to admit that a 50$ minimum conceptually hits lower skilled workers harder, just on the face of it, this applies even lacking empirical studies of an actual implementation of it. Given that, we just need to balance the tradeoffs on the top and bottom here; personally, I think solutions like EITC can dodge most of the skill-based discrimination high minimum wages might generate, and also put the onus on the population to pay taxes to support this. I think the opponents of minimum wages, regardless of their ideological rationale, would be persuaded more easily by an admission that there are costs as well as gains of high minimum wages; attempts (like EITC) to reduce distortion would undercut a lot of their objections, and might allow improved systems to actually be implemented (since businesses have much less reason to oppose EITC than direct minimum wages); this would actually improve the general quality of life.

tablespoon 6y ago

> It's not dogma. It's a very strongly supported economic principle. In the absence of definitive proof either way, we ought to trust well-tested and supported economic principles. We're talking about economics here, the social science where it's notoriously difficult to conduct controlled experiments? > This is a strawman. Economists are fully aware of the imprecision of predictions made based on theories relating to generalizations and simplifications of the economy, and also that this doesn't change the fact that these theories do a good job of approximating the effects of government interevention on real world economies, and that it is far better to legislate in accordance with them than in conflict with them. You really should read the whole article I linked above: https://www.theatlantic.com/business/archive/2017/01/economism-and-the-minimum-wage/513155/ https://www.theatlantic.com/business/archive/2017/01/economi... > [A repetition of anti-minimum wage dogma from popular persuasive economics books and places like the WSJ and AEI.] > The real impact of the minimum wage, however, is much less clear than these talking points might indicate. Looking at historical experience, there is no obvious relationship between the minimum wage and unemployment: adjusted for inflation, the federal minimum was highest from 1967 through 1969, when the unemployment rate was below 4 percent—a historically low level. When economists try to tackle this question, they come up with all sorts of results. In 1994, David Card and Alan Krueger evaluated an increase in New Jersey’s minimum wage by comparing fast-food restaurants on both sides of the New Jersey-Pennsylvania border. They concluded, “Contrary to the central prediction of the textbook model ... we find no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.” > Card and Krueger’s findings have been vigorously contested across dozens of empirical studies. Today, people on both sides of the debate can cite papers supporting their position, and reviews of the academic research disagree on what conclusions to draw. David Neumark and William Wascher, economists who have long argued against the minimum wage, reviewed more than one hundred empirical papers in 2006. Although the studies had a wide range of results, they concluded that the “preponderance of the evidence” indicated that a higher minimum wage does increase unemployment. On the other hand, two recent meta-studies (which pool together the results of multiple analyses) have found that increasing the minimum wage does not have a significant impact on employment. In the past several years, a new round of sophisticated analyses comparing changes in employment levels between neighboring counties also found “strong earnings effects and no employment effects of minimum wage increases.” (That is, the number of jobs stays the same and workers make more money.) Not surprisingly, Neumark and Wascher have contested this approach. The profession as a whole is divided on the topic: When the University of Chicago Booth School of Business asked a panel of prominent economists in 2013 whether increasing the minimum wage to $9 would “make it noticeably harder for low-skilled workers to find employment,” the responses were split down the middle.... > ...Nevertheless, when the topic reaches the national stage, it is economism’s facile punch line that gets delivered, along with its all-purpose dismissal: people who want a higher minimum wage just don’t understand economics (although, by that standard, several Nobel Prize winners don’t understand economics). Many leading political figures largely repeat the central theses of economism, claiming that they have only the best interests of the poor at heart.... > ...This conviction that the minimum wage hurts the poor is an example of economism in action. Economists have many different opinions on the subject, based on different theories and research studies, but when it comes to public debate, one particular result of one particular model is presented as an unassailable economic theorem. (Politicians advocating for a higher minimum wage, by contrast, tend to avoid economic models altogether, instead arguing in terms of fairness or helping the poor.) This happens partly because the competitive market model taught in introductory economics classes is simple, clear, and memorable....

CryptoPunk 6y ago
>>We're talking about economics here, the social science where it's notoriously difficult to conduct controlled experiments? Yes. All sciences besides physics, chemistry and biology cannot test theories with controlled experiments. This extends to epidemiology and climatology too. It doesn't mean we dismiss the scientific consensus on vaccines, climate change or price controls. >>A repetition of anti-minimum wage dogma from popular persuasive economics books and places like the WSJ and AEI If you want to keep calling widely accepted scientific principles, like price controls creating economic deadweight losses, a "dogma", we can just end the discussion. >>Looking at historical experience, there is no obvious relationship between the minimum wage and unemployment: adjusted for inflation, the federal minimum was highest from 1967 through 1969, when the unemployment rate was below 4 percent—a historically low level. Because minimum wage almost always is extremely mild in its application, in only affecting something on the order of 4% of jobs. Combined with the challenges to measuring impact that come from labor mobility, minimum wage restrictions don't create easily observable effects. Any significant application would have effects that couldn't be ignored or obscured by left-wing ideologues. In any case, my point is that the principle of price controls being harmful is widely accepted in economics, due to a century of empirical observations. It's unsound to create legislation that conflicts with the principle.
epivosism 6y ago
I appreciate the research you've put into this and you are making good arguments. You've provided some study-based arguments that low-skilled market participation hasn't been harmed by historical changes - my question for you is, do you think this is an absolute rule, or just a happenstance due to the regions under study not making minimum wage high enough to be really detectable? i.e. that few workers are actually being paid minimum wages, so changes don't hit large parts of the population. To clarify this, I'm curious about your opinion on a thought experiment - and I'm not setting this up to trap you - I also favor some type of living wage and a fair society, and don't support absolute free market capitalism by any means. But the question - with a 50$ minimum wage, can you see how someone would think that a lot of low-skilled workers would be out of a job? I can make the number as high as necessary; the point is to check whether you think that this change, given employers freedom to hire or not hire, would result in lower skilled workers losing jobs preferentially. To me, at high minimum wages, this is obvious - but at lower wages, this wouldn't be a prominent effect, and the net life quality gain of the minimum wage law may be positive. Just trying to get us on the same page here finding a balance between the gains from ensuring living wages, but admitting that minimum wages also have a disproportionate effect on lower skilled workers, which becomes more prominent as you set the minimum wage higher; if you're willing to admit that a 50$ minimum conceptually hits lower skilled workers harder, just on the face of it, this applies even lacking empirical studies of an actual implementation of it. Given that, we just need to balance the tradeoffs on the top and bottom here; personally, I think solutions like EITC can dodge most of the skill-based discrimination high minimum wages might generate, and also put the onus on the population to pay taxes to support this. I think the opponents of minimum wages, regardless of their ideological rationale, would be persuaded more easily by an admission that there are costs as well as gains of high minimum wages; attempts (like EITC) to reduce distortion would undercut a lot of their objections, and might allow improved systems to actually be implemented (since businesses have much less reason to oppose EITC than direct minimum wages); this would actually improve the general quality of life.