Why I Can't Be Both an Economist and a Liberal
NEW YORK (TheStreet) -- In today's America, I can't be both an economist and a liberal.
Economists should be bound by facts and reason. And I can't do that and embrace liberal positions on the minimum wage, climate change and gender discrimination.
Raising prices for most anything reduces purchases. Simply, if beef or a plumber's visit gets too high, folks eat more chicken and fix their own faucets.
The Congressional Budget Office estimates raising the federal minimum wage to $10.10 an hour, as President Obama proposes, would eliminate 500,000 to 1 million jobs. Businesses would be forced to raise prices, lose customers and lay off employees. Fast-food restaurants will use more machines similar to automated checkout devices at drug stores and supermarkets.
Past increases in the federal minimum wage did not have a large impact on employment, because those were in line with inflation, and businesses adopted strategies expecting such periodic adjustments.
The minimum wage was last reset in 2009 at $7.25, and raising it one dollar to $8.25 to preserve purchasing power would not cost many jobs. Jumping it to $10.10 an hour, however, would fundamentally redefine the tradeoffs businesses face regarding unskilled labor and automation.
The workers left standing would have more spending power, but overall, increasing unemployment by at least 500,000 would take a bite out of the gross domestic product and growth from an already anemic economic recovery.
Economists, fancying themselves liberal and advocates of the working poor, deny the lessons of hundreds of years of economic theory and history. Most act out of expediency to win favor with the media and powerful politicians.
The erosion of the Antarctic ice shelf and glaciers elsewhere should confirm to even casual observers that global temperatures are rising. Scientists arguing CO2 emissions contribute are not quacks, but their prescriptions, and those of the president, have a naive quality bordering on willful and malicious ignorance.