Please to calm down about the minimum wage

As we all know, President O has called for raising the Federal minimum wage to $9.00 an hour. This has caused many of my friends to get fairly upset and argue that this is a bad policy that will raise unemployment.

But....

(1) In truth, we don't really know what the minimum wage does to unemployment. Studies are mixed at best on that issue. It's just not that easy to isolate causal effects here.

(2) We just don't live in a principles of micro world where markets are perfectly competitive and firms have no market power / economic profits, so any wage above an individual's marginal product is impossible to sustain.  Besides the difficulty of identification, this is probably the main reason why it's so hard to find employment effects of minimum wage changes.

(3) A better reason to object to the minimum wage increase is that there are much more efficient ways to help the working poor. It doesn't seem to be well appreciated, but a substantial fraction of workers earning the minimum wage do NOT live in poor households. They are teenagers living at home or second workers in a household. If we wish to aid the working poor, increasing the earned income tax credit (EITC) is a much more effective approach.

(4) It is also good to remember that there are still a lot of jobs out there where the minimum wage does not apply (some classes of young worker, workers who earn tips).

(5)  This is a bit of a stretch but if the higher minimum wage did price someone out of the labor market, perhaps it would propel them into upgrading their human capital, with a GED or some vocational training or community college.

Finally, I'd like to ask my conservative friends to stop making the "if a higher minimum wage is good why stop at $9, why not make it $90 and everyone would be rich" argument.

It's just silly.

Obviously, we could find a minimum wage that would have serious employment effects. But it's not in the $9.00 neighborhood, and no one is proposing even a doubling of the current minimum wage.

If Reid & Pelosi (in 2014 after the Dems take back the House) propose a $20 minimum wage, then I'll join y'all on the ramparts.

Otherwise, let's consider giving it a rest. There are far far far worse policies that are actually in effect which deserve our attention and effort.

Jeff Sachs never gives up

Sachs has taken it on the chin recently with his Lancet piece being widely attacked and partially retracted. But he's not been humbled. Check out segments of this recent interview:


Q: Well, do you have evidence the approach is working? 


 JS: It depends what you mean by evidence. Some of my critics say we need to do these ‘randomized controlled trials’ (aka RCTs) as if what we’re doing is testing a red pill against a blue pill. What we’re doing has nothing to do with anything like that. It cannot be reduced down to such a simple and narrow test. We have been working with these communities for years to figure out how best to improve food production, get more kids in school, deliver clean drinking water, build infrastructure and encourage business development. This is not a randomized controlled trial; it’s a learning process.

Nice Bill Clinton (it depends on what you mean by "is") there Jeffrey!

Also an impressive summary of how RCTs work. They are science fiction, right out of the Matrix.

People, you know there's more:

Tumblr o the day: grading season edition.

Students of America! Even the animals cry out against your wily ways.

Competing views on education

"Education is not the filling of a bucket but the starting of a fire."

W.B. Yeats


"There is no idea so stupid that you can’t find a professor who will believe it."

H.L. Mencken

Should movies be subsidized?

Michael Kinsley says no. Interfluidity says yes.

Interfluidity is quite right that subsidies will increase the supply of movies, and seems to consider that a good thing.

I have to differ. The motion picture industry is a huge rent seeking contest that is socially inefficient, just like professional sports. A large number of people dedicate themselves to trying to get a desirable position and the vast majority of them will (a) fail, and (b) be quite unprepared to do something else.

Increasing the number of movies, just like expanding a professional sports league will most likely draw many more people into the rent seeking contest than it will provide positions for, thus making matters worse.

Los Angeles and New York are already teeming with waitress / cab-driver / hobo "actors" and "screenwriters" who are smart, talented individuals, well prepared for jobs they'll never get and generating large social losses by not having gotten a more general preparation and more productive jobs. Do we really want to encourage these kinds of wasteful outcomes in New Mexico and Michigan as well?

Occupations that generate rent seeking contests should be taxed, not subsidized!

We should be nudging people OUT not in to the motion picture industry.

Why I love the NBA

Exhibit A:

Exhibit B:

Exhibit C (pay close attention starting at the 0.40 second mark here):

Markets in everything: Holiday gift card edition

Mrs. Angus suggested I title this post, "for the woman who has everything"! But I figured, why be sexist?

Is Tyler Cowen an Exhibitionist?

Judge for yourselves people:

Check out this tweet, and this one, and this one (the last was a re-tweet by TC), and this blog post, and this one too.

When I contacted him for comments before running this story, Tyler said:

"In my view in the long run better scans mean fewer pat-downs!

I would encourage people to start by calculating the "p" that, twenty years from now, the major airlines get nationalized. Work backwards from there and compute the liberty-maximizing policy."

I, on the other hand, would encourage people to calculate the "p" that, twenty years from now we all have microchips implanted in our body that allow the Feds to track all our movements and conversations. Working backwards from there and computing the liberty-maximizing policy might lead to a differing conclusion than does Tyler's thought experiment!

BFFs

Today in Moscow, Prime Minister Putin and President Medvedev appeared at a joint news conference:

We are all criminals

From the comments on the Freedom Update post:

"Saying illegal immigrants have less freedom is like saying people in jail have less freedom. Of course they do, they're criminals for cryin' out loud!"

People, we are all criminals! All of us have broken the speed limit or maybe smoked a reefer, or hired a worker that we didn't pay taxes for, or bought something on the internet without forwarding a sales tax payment to our state of residence, or brought Cuban cigars back from Europe, or didn't declare everything we bought abroad on our customs form.

Saying someone is a criminal is kind of meaningless. There is a big difference between being a criminal and actively doing harm to others.

Sorry for this rant, but I get really tired of this selective labeling and at times demonizing of groups that some people don't like. I am not accusing the commenter of demonizing, but many people do, with a label that could just as well be applied to themselves.

So maybe we should all look in the miror and say, "Hi, my name is (state your name), and I am a criminal".

Music News

1. Wayne Coyne tweets!

2. Versus is back (really!) with a new album.

3. New No Age drops September 28th.

4. Tennis anyone?

preciousssssssssss

Apparently, Sammy likes Johnny!

BTW, how did Cassell NOT get to play Gollum in LOTR?