27th February 2013

“When considering the truth of a proposition, one is either engaged in an honest appraisal of the evidence and logical arguments, or one isn't. Religion is one area of our lives where people imagine that some other standard of intellectual integrity applies.”

Sam Harris

15 Responses to “27th February 2013”

  1. The Heretic Says:

    People apply different standards of intellectual integrity to more than just religion. I am not certain what can be said of a people that doesn’t need facts or evidence anymore. Feelings are all that matter. The question isn’t ‘what do you think about something?’. It is ‘how do you feel about something?’. No thought required. We have a society of instant gratification, constant entertainment, and endless propaganda. Facts need not apply.

  2. Jeff Says:

    I have to agree with TH on this, and we’ve got a current prime example thereof: President Obama’s proposal to raise minimum wage. Within a day of it being made, there were squeals that doing so would cause unemployment. The problem with those squealing is that it has NEVER done so in the past, and this is something we’ve been measuring since we created the minimum wage. In every case since its creation, unemployment has either held steady afterwards, or gone down. That is a measurable fact, yet we still hear the fiction.

  3. Sinjin Smythe Says:

    Jeff that is why I think we shouldn’t stop at just a couple of bucks and hour, heck if “its worked before” is all the reason needed, go hog wild and set the mark at $250 per hour?

    Just imagine if the least amount of money anyone could be paid was more than half a million and we’d all be 1%-ers.

    And hey, before you say we don’t have enough fiat currency to cover that nut well then we just get Treasury to print more.

    Face it our labor market problems aren’t the same as they typically are. Even if you accept the reimagined unemployment statistics as valid they still show an unusual number of people unemployed.

    We need more jobs for the available workforce is obvious, what isn’t quite so obvious is that if we had more manufacturing jobs, say enough to create a labor shortage, wages would rise out of the natural market forces for labor.

    Now I’m not advocating government creating jobs or businesses but protecting and promoting commerce. Address the 3 year backlog at the patent office, change the SBA’s definition of small business to 150 max employees, use the unemployment agencies across the nations to help direct the unemployed to job opportunities through a coordinating super-agency that has under its umbrella the patent office, SBA, FTC, essentially become pro-market. NOT pro-business, I’m not advocating for large corporations either. (I despise large corporations)

    Adding more employment opportunities than there are citizens to fill the positions will drive wages and that is a far more constructive way to get more money into the hands of the average Joe’s.

    These quick fixes have perverse unintended consequences, treating symptoms not problems. Then the old Keynesian short term cliches will come next I suppose?

    Sovereign nations don’t live forever we ought to remember that when we blather on about how personal economics and nations economics are not the same: The reality is while they aren’t the same the are similar enough.

    The US is a “Borderline” failed nation http://www.foreignpolicy.com/failed_states_index_2012_interactive


  4. Dan Says:

    I hate to point it out that raising the price floor for wages should, according to the law of supply and demand, attract more workers to the pool and reduce the availability of payroll – thereby creating a shortage of work positions. The net effect, one would logically expect, is that unemployment would go up.

  5. Dan Says:

    More for Jeff –
    Here are some good reasons explaining why a modest minimum-wage hike might not affect employment levels much.

    1) Employers can respond by cutting back on benefits or hours or training
    2) Employers can respond by cutting wages for other, higher-paid workers
    3) Companies can raise their prices in response
    4) Companies can just settle for fewer profits

    Basically, as I hope you understand, there’s no such thing as a free lunch. If you raise wages artificially (i.e. via a min. wage), the money for this has to come from somewhere – you’re not solving the problem, just moving money around.

    Source: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/14/why-economists-are-so-puzzled-by-the-minimum-wage/

  6. Jeff Says:


    I am completely aware of the concept of TANSTAFL, but I was just pointing out that there is SOMETHING other than supply and demand that is working in this instance, and the unemployment argument that is raised every time a min wage increase is propose is specious, and has been falsified by the data. I’m tired of fact free zones in political argument, just as I’m tired of them when it comes to religion.

    There may be a lot of good arguments against a minimum wage hike, but I haven’t heard any of them here or in the regular media – all I hear is that it’s going to cause unemployment, which we know it is not going to do based upon all available data.

    As to the “old Keynesian cliches”, I hate to point out that they worked REALLY well for about 60 years, until they were dismissed by Mr. Reagan, because “Government is the problem”. I wonder what happened to the data. It showed that regulation slowed the economy, but it also kept it out of bubble conditions (runaway).

  7. Jeff Says:


    All of the effects that you postulate are (and have been) measured over much of the last 75 years. I have yet to see any correlations of the type you postulate in the data. So far you are arguing from theory, when the facts are already available. Get the facts and lets see you argue from them rather than from theory.

  8. Dan Says:

    You obviously know as well as I do that there are a wide number of mainstream economists who dispute the conclusions of such studies.

    And I stand by the assertion that there is no such thing as a free lunch.

  9. Dan Says:

    More for you:

    In the absence of special conditions, we have every reason to expect the law of demand to hold, such that raising the minimum wage will make it harder for inexperienced workers—workers whose output is worth less to employers than the mandated wage, and especially teenagers from low-income families looking to get a first footing in the labour market—to find work. And this is, in fact, what empirical studies tend to conclude. A comprehensive 2008 survey of the empirical literature from David Neumark, a professor of economics at the University of California, Irvine, and William Wascher, an economist for the Federal Reserve, found that, as one would expect, “[M]inimum wages reduce employment opportunities for less-skilled workers, especially those who are most directly affected by the minimum wage.”

    Again, it doesn’t have to work this way. Employers can cut hours rather than hiring fewer workers. They can turn down the air-conditioner, strictly police the length of breaks, and otherwise reduce the cost of amenities previously enjoyed by employees. They can shift to off-the-books employees willing to work for less than the legally-mandated minimum. They can raise prices, passing on increased labour costs to consumers. It’s conceivable that the only consequence would be that a larger share of profits gets distributed to low-wage workers. Conceivable and exceedingly unlikely. In reality, we probably get small adjustments along each of these dimensions.

    Of course, there is some newish empirical research contesting the disemployment effect of increases in the minimum wage, and then there is even newer research debunking it. I’m not about to offer a blow-by-blow of this tedious and technical debate for the same reason I’m not inclined to delve into the “debate” over the reality of global warming. The basic science is sound, and I don’t think it is at this juncture especially fruitful to “teach the debate” when deliberating about policy.

    That was co-authored by an economics professor at UC Irvine and a top economist for the Federal Reserve, not by GOP activists. So, please, continue to pretend that mainstream economists agree that the moderate min. wage increases help employment, because there is no such agreement. There is a lot of uncertainty amongst economists on this issue.

    Source: http://www.economist.com/blogs/democracyinamerica/2013/02/minimum-wage?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e

  10. Dan Says:

    Also, Jeff, to make it clear, I’m NOT saying that I think that the theory proves that min. wage increases raise unemployment. I’m saying that the evidence against that position is tenuous and such studies you cite are based on flawed methodologies. But maybe those studies are right nonetheless. Or not. Who knows.

    But one thing I do know is that you should question anyone who claims to be sure on this subject, either way.

  11. Jeff Says:

    All I’m saying is that it doesn’t take a PhD to do the research – anyone with an internet connection and the desire can do it themselves. UNLESS of course, the economists involved are questioning the methods of the Bureau of Labor Statistics, and the only person I’ve ever heard do that is Jack Welch. BLS has yearly data that goes back to 1942 on-line, and you can request it in greater detail from them. Don’t rely on studies – do it yourself and make up your own mind.

  12. Dan Says:


    Okay, so obviously you’ve only researched one side of the story and accepted it’s conclusions uncritically.

  13. Dan Says:

    To elaborate on why I just responded dismissively:

    Seriously Jeff, if you think I’m questioning the statistics, you’re a fool. I’m not at all sure that it’s worthwhile having a discussion with someone who reads the BLS statistics, and the reviews of that data, and fails to think critically about those statistics. There are simply too many alternative plausible explanations for the results.

    Now please, if you want to discuss this further, please actually read through the Economist article above, and the article that it cites, and come back to respond to what I’m saying. Because it’ll get very frustrating very quickly if you insist on responding to what I’m not saying.

  14. Jeff Says:


    I have not been failing to think critically about the data. First of all, let me point out the most significant fact that all of your arguments and articles ignore: To whit, there is a demand side of the equation that does NOT involve the demand for labor. It is the additional demand that is created by a sudden 20% increase (give or take with taxes) in the purchasing power of a bunch of folks who can’t afford to just let it sit in stocks, bonds or a bank. Given where most minimum wage jobs are situated in the economy, that demand tends to come right back into the folks who are paying the minimum wage, and create a spike in demand that either offsets the increased labor cost (remember just how small a part of total cost is labor) or MORE than offsets it, resulting in more minimum wage jobs.

    Having read both the Economist article, and the underlying to statistical studies that it sites, I was quite amused to find that the author of the article exactly the same mistake. First of all, his second study claims to refute the first, but appears to do so by statistical trickery for which I can find no justification. Second, the first study just basically says that BLS got it right. Both of them are arguing the data, rather than what it means.

    What I’ve been saying, admittedly in my poor way, is that there is another explanation which takes into account both the increase in cost and the increase in purchasing power (AKA both supply and demand). It doesn’t require statistical legerdemain, nor does it require distrust of BLS’s work product. It merely requires looking at the data, and thinking about it’s implications. Remember, the US economy is CONSUMER driven. If you put money in consumer pockets, PARTICULARLY those whose pockets are most likely to be empty, it will go back into the economy as quickly as possible, thereby creating demand for the very products and services that aren’t moving. Henry Ford (no Keynesian by any means) understood that when he endeavored to pay his workers enough that they could buy his cars.


  15. Dan Says:

    To your paragraph on the demand side, first part – this is implicit, IF you’re talking about the larger effect on the economy. But we’re not. We’re talking about what its effect on unemployment is. And, all matters of demand-side economics aside, a 20% increase in the incomes of already employed workers may do little to help unemployed workers. They don’t need the scraps of increased wages to others, they need wages themselves. Period.

    Which brings me to your other point in that paragraph – that a positive feedback might work to create more jobs from min. wage workers spending their increased disposable incomes on their employers’ businesses. It’s plausible, but how many jobs would it create? Probably not nearly enough, because they wouldn’t be spending it all on their employers’ businesses, and the feedback would be watered down with every spending cycle. This makes me think that it would be much more effective to reduce unemployment through public works projects than min. wage increases.

    To your second paragraph, I still have yet to understand what BLS study you’re referring to. The BLS does very little in the way of interpretations of its data – its job is to gather statistics and report them, not to interpret that data through the lens of macroeconomics. Thus it sounds as though your confusing the BLS stats with the studies citing the BLS stats as the starting point for their studies. To that point – the studies supporting the non-effect on unemployment of min. wage hikes (the ones that you’re referring to) aren’t written by the BLS, they cite the BLS.

    So would you please stop with this nonsense that the BLS got anything right other than counting numbers?

    What you meant to say, in your sophomoric manner, is that economists like John Schmitt of CEPR got it right. (see citation in the WaPo article).

    On another point, where you suggest that they’re just manipulating the statistics… sort of, that’s true. But these are real questions that economists have to consider – and the trouble is that you do need a PhD in economics to understand what parts are bullsh*t and what parts aren’t. I’m not there yet, so I’m on the fence, but I understand it well enough to suspect anyone who claims to be able to tell which group of economists is right and which are wrong.

    And I think it’d be fair to call me a New Keynesian, more than any other label I’ve come across for economic schools of thought. So I think I’d agree with the statement that we need to increase disposable incomes in effective ways. But I also agree that, given the mounting debt, we have to maximize the mileage we get on government spending plans. Is this the best that Obama’s team of economic advisers can come up with, to raise the minimum wage at a time when unemployment levels are high? It seems a safer bet to create “shovel-ready” public works projects to get people back to work.