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 plumbers’ 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 1,000,000 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 large impacts 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 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 GDP 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 naïve quality bordering on wilful and malicious ignorance.
The new abundance of natural gas and market forces are already rapidly driving down U.S. CO2 emissions from power plants and other industrial facilities. A forced acceleration imposed by the EPA would cost billions of dollars and make economic and environmental problems worse.
With an economy half the size of the United States, China emits almost twice as much CO2. Raising costs for U.S. manufactures through the president’s program will only send jobs to China where production is dirtier and increase global emissions.
Liberals argue by setting a good example the United States can bring China along.