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It All Comes Back to the Minimum Wage Debate

I shared Jeffrey Tucker’s article about Hillary Clinton, and pulled out this quote:

Meanwhile, Hillary’s actual policies on women are a disaster waiting to happen. Consider her support for “equal pay for equal work.” What effect will this have on women in the workforce? It not only puts government in charge of micromanaging every aspect of payroll and personnel of every business in America. It also incentivizes managers to keep women in lower positions in a firm in order to comply with the wage mandates, and disincentivizes advancing women up the ladder by making the costs of ascending too high. The result will be the very “glass ceiling” that mainstream feminism abhors.

An intelligent friend, who shall remain nameless, replied:

I feel like this runs on the same logic that if you raise minimum wage to a livable wage, jobs will be destroyed and small business will crumble, when in fact the opposite has been shown to be true.

Now, this friend is not an economist. What I suspect is that the news sources he typically reads report heavily on the few studies that show positive employment effects of minimum wage increases, and ignore the rest of the literature.  This isn’t exclusively the territory of the left, I’m sure people who read only right-wing or libertarian news sources overestimate the disemployment effects in the other direction.

But look at the conclusion he drew! Since he got the false impression that raising the minimum wage has positive employment effects, he concluded that there is essentially no tradeoff in government artificially boosting any wage; in this case the wages of half (!) the population. But given the initial error, this extreme conclusion naturally follows. (more…)

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Aladdin’s Biggest Anachronism isn’t Genie’s Jack Nicholson Impression…

Jack Nicholson Genie

…it’s Aladdin’s attitude towards wealth and poverty. That’s what struck me while re-watching this thoroughly enjoyable movie. After being called a “street rat,” Aladdin tells Abu, “Someday, Abu, things are gonna change.  We’ll be rich, live in a palace, and never have any problems at all.”

This is an extraordinary view for a peasant orphan in thirteenth century Arabia! It is a thoroughly modern view. Throughout most of history, if you were born into the lower classes, you lived in poverty. Your entire extended family lived in poverty. Everyone you knew, and all their ancestors stretching back as far as anyone could remember, lived in poverty. Imagining life without poverty would have been as fanciful as imagining life without gravity.

It is no coincidence that the rags-to-riches story entered the public consciousness in the nineteenth century. The ongoing industrial revolution had propelled a few people from literal rags to riches, and the majority from rags to nicer, cheaper manufactured clothing. Suddenly, not everyone you knew was poor. For the first time in history, people came to expect a better material standard of living than that of their parents. People even saw a few highly visible individuals rising from humble beginnings to unfathomable wealth.

It was in this context that Horatio Alger Jr. popularized the rags-to-riches story, writing countless young adult novels on the same theme: a poor, lower-class boy achieves middle-class success through hard work, honesty, and a bit of good fortune. Alger’s fiction was emblematic of the attitudes of the day. The unshackling of commerce and the generally rising living standards made raising one’s status a real possibility. It’s an attitude we hold to this day, but it’s entirely anachronistic in Aladdin or in any other work of fiction set before the industrial revolution.

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Aladdin’s Biggest Anachronism isn’t Genie’s Jack Nicholson Impression…

…it’s Aladdin’s attitude towards wealth and poverty. That’s what struck me while re-watching this thoroughly enjoyable movie. After being called a “street rat,” Aladdin tells Abu, “Someday, Abu, things are gonna change.  We’ll be rich, live in a palace, and never have any problems at all.”

This is an extraordinary view for a peasant orphan in thirteenth century Arabia! It is a thoroughly modern view. Throughout most of history, if you were born into the lower classes, you lived in poverty. Your entire extended family lived in poverty. Everyone you knew, and all their ancestors stretching back as far as anyone could remember, lived in poverty. Imagining life without poverty would have been as fanciful as imagining life without gravity. (more…)

The post Aladdin’s Biggest Anachronism isn’t Genie’s Jack Nicholson Impression… appeared first on The Economics Detective.