This is a big moment for the MW which I'd want to celebrate, but even better, I want to celebrate it with my good ole buddy, Scott Sumner. However, his latest post is not about this big victory for the MW-unsurprisingly-but yet another post gloating about how those who doubted the powers of QE have egg all over their faces.
http://www.themoneyillusion.com/?p=29437
Scott gloats 'Whatever happened to the QE skeptics?' Mostly he's attacking straw men. However, the question I'd like to ask in his honor is whatever happened to all the minimum wage skeptics? Oh, I understand they're still out there-Scott, Bob Murphy, the GOP Congress, it's just that no one is heeding them.
Sumner always says 'There is no such thing as public opinion in economics' which is a pretty condescending attitude to take about public opinion. He is basically the Rush Limbaugh of monetary economics and what his claim is here is that the public is so ignorant of economic matters that there is no point listening to their opinion on economics-as you can show them to have any opinion if you phrase the question the right way.
The economists call this the framing effect-which rational expectations says shouldn't have any effect. Conservatives like Sumner think that the markets are rational but voters aren''t. Bryan Caplan has written a book to this effect.
http://www.amazon.com/Myth-Rational-Voter-Democracies-Policies-ebook/dp/B007AIXLDI/ref=sr_1_1?s=books&ie=UTF8&qid=1432174278&sr=1-1&keywords=bryan+caplan
The question that begs is if Caplan thinks democracies choose bad policies what kind of government would choose better policies?
This is at the crux of Monetarists-of any stripe-like Scott. How else do you understand his religious opposition to ever using fiscal policy for demand stabilization?
When people push him on the effectiveness of monetary policy he comes back with 'Well, if the Fed buys up everything in the world are you telling me the price level won't rise?'
However, the question that he can never answer is why wouldn't that be fiscal policy then? Why must it be monetary policy-I think it's teh opposition to democracy in economic matters. He strongly believes that the American people have no business deciding questions about their own economy-just alleged know it alls like him.
Today's story of the biggest victory for MW advocates yet demonstrates his frustration. No matter how many times he piously intones that the 'standard economic theory has shown that the MW costs jobs' the public doesn't head the economists-after all, if the American people had listened to economists in the 30s there would never have been a MW.
Today was a huge win for the MW-in Los Angeles! That's the second largest country in the country-and they now have a $15 minimum wage!
"The city council in Los Angeles has passed a bill to increase the minimum wage in the nation’s second-largest city to $15 an hour, in stages between now and 2020. While similar increases were recently passed in San Francisco and Seattle, L.A.’s size alone — it has a population of almost 4 million, four and a half times as large as San Francisco and almost six times as large as Seattle — makes this the most significant development in the growing movement for an increase in the minimum wage."
http://www.themoneyillusion.com/?p=29437
Scott gloats 'Whatever happened to the QE skeptics?' Mostly he's attacking straw men. However, the question I'd like to ask in his honor is whatever happened to all the minimum wage skeptics? Oh, I understand they're still out there-Scott, Bob Murphy, the GOP Congress, it's just that no one is heeding them.
Sumner always says 'There is no such thing as public opinion in economics' which is a pretty condescending attitude to take about public opinion. He is basically the Rush Limbaugh of monetary economics and what his claim is here is that the public is so ignorant of economic matters that there is no point listening to their opinion on economics-as you can show them to have any opinion if you phrase the question the right way.
The economists call this the framing effect-which rational expectations says shouldn't have any effect. Conservatives like Sumner think that the markets are rational but voters aren''t. Bryan Caplan has written a book to this effect.
http://www.amazon.com/Myth-Rational-Voter-Democracies-Policies-ebook/dp/B007AIXLDI/ref=sr_1_1?s=books&ie=UTF8&qid=1432174278&sr=1-1&keywords=bryan+caplan
The question that begs is if Caplan thinks democracies choose bad policies what kind of government would choose better policies?
This is at the crux of Monetarists-of any stripe-like Scott. How else do you understand his religious opposition to ever using fiscal policy for demand stabilization?
When people push him on the effectiveness of monetary policy he comes back with 'Well, if the Fed buys up everything in the world are you telling me the price level won't rise?'
However, the question that he can never answer is why wouldn't that be fiscal policy then? Why must it be monetary policy-I think it's teh opposition to democracy in economic matters. He strongly believes that the American people have no business deciding questions about their own economy-just alleged know it alls like him.
Today's story of the biggest victory for MW advocates yet demonstrates his frustration. No matter how many times he piously intones that the 'standard economic theory has shown that the MW costs jobs' the public doesn't head the economists-after all, if the American people had listened to economists in the 30s there would never have been a MW.
Today was a huge win for the MW-in Los Angeles! That's the second largest country in the country-and they now have a $15 minimum wage!
"The city council in Los Angeles has passed a bill to increase the minimum wage in the nation’s second-largest city to $15 an hour, in stages between now and 2020. While similar increases were recently passed in San Francisco and Seattle, L.A.’s size alone — it has a population of almost 4 million, four and a half times as large as San Francisco and almost six times as large as Seattle — makes this the most significant development in the growing movement for an increase in the minimum wage."
"What’s remarkable is how dynamic this issue is, as the range of options we debate keeps changing and politicians try to catch up to what grassroots activists are pushing for. Not long ago, when fast-food and other low-wage workers began demanding a $15 minimum wage, it seemed like an unrealistic request, at a time when people were talking about raising the federal minimum of $7.25 to something like eight or nine dollars an hour."
"But the ground keeps shifting."
"We see it happening again and again: Politicians endorse a modest increase. Activists pressure them to go further. The politicians realize that the public is in favor of a more significant increase and that the debate has changed. And they follow along."
"For instance, in his 2013 State of the Union address, President Obama proposed a $9 minimum wage; in his 2014 SOTU he endorsed a bill in Congress to raise it to $10.10; and now his administration has come on boardwith a new bill that would it to $12. Something similar happened in Los Angeles: Mayor Eric Garcetti had proposed raising the minimum to $13.25 by 2017, but at the urging of activists the city council went all the way to $15, and now Garcetti says he’ll sign the bill they just passed."
http://www.washingtonpost.com/blogs/plum-line/wp/2015/05/20/the-minimum-wage-movement-gets-its-biggest-victory-yet/
The political momentum for the MW is unstoppable. If Sumner, Bob Murphy, Greg Mankiw, et. al are right then we should expect the sky to fall in LA. After all, it's one thing to argue that a rise in the MW from $7.25 to $9 or $10 is not a big shock, but to $15?
That's at least getting in the ballpark of a livable wage-though this does depend on the price level of the cities in question. I mean, I live near the biggest city in the country-NYC-and things are awfully expensive there-I live on Long Island.
If LA is anything like NYC I'm not sure if $15 is quite a livable wage though it's a sharp move in the right direction.
If nothing else, this is going to give economists that rare thing they crave: a natural experiment. Sumner and friends predict that firms will go out of business because they can't afford $15 an hour or at least cut employment. It will be very interesting to behold.
P.S. There will be lots of naysayers. What a shock that Bloomberg doesn't approve.
http://www.bloombergview.com/articles/2015-05-20/los-angeles-s-15-minimum-wage-will-hurt-workers
I'm sure, the writer, Megan McArdle, would be happy to work for $7.25 an hour. One thing the MW haters try to do is hide behind 'life cycle effects'-basically, that the MW is just for kids starting out in the workplace. If only this were the case and maybe there was a time when that was more true-pre 1980 maybe-but certainly not today. Many adults, including those with a fmaily to support are forced to take MW jobs these days.
It'd be nice to live as sheltered a life as Ms. McArdle, or John Tammy:
"If the above isn't properly understood, imagine a life that is the norm in much of the world whereby our daily work were solely directed at survival as opposed to building on our talents? What a cruel life. In the U.S. some become financiers, yoga instructors and film directors, while others pursue careers as chefs, accountants, and technology entrepreneurs. So rich and free trading is our economy that we have choices. As opposed to spending our lives surviving, we're able to focus on what we're best at. Survival is a given. Figure more than a few Americans support themselves in a spare way (by American standards) such that they can devote the lion's share of their time to luxurious pursuits such as skiing. Readers may ask themselves how many ski bums hail from Myanmar, Peru and Zimbabwe."
http://diaryofarepublicanhater.blogspot.com/2015/05/on-tpp-investors-business-daily-not.html
P.S.S. Another suprise: Forbes is against a $15 MW too. Bloomberg and Forbes, who would have thunk it? Tim Worstall feels there is 'no just price'-'just let the market handle it, baby! If you can't live off that, oh well.'
http://www.forbes.com/sites/timworstall/2015/05/20/las-15-minimum-wage-error-there-is-no-such-thing-as-a-just-price/
I thought that Morgan Warstler says that $1 is a fair price?
http://www.morganwarstler.com/post/44789487956/guaranteed-income-choose-your-boss-the-market
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