Paul Krugman has made another move in his call for a increase in the minimum wage. This time he calls for an increase in the minimum wage in his NYT column, as opposed to his blog. The use by him of his column to promote his confusion is satisfying. Even more will see how he has trapped himself.
President Obama laid out a number of good ideas in his State of the Union address.[...]One major proposal, however, wouldn’t involve budget outlays: the president’s call for a rise in the minimum wage from $7.25 an hour to $9, with subsequent increases in line with inflation. The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes.
Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems.
But that’s not what’s on the table. And there are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects.He then disses those who argue that empirical data can not disprove the deductive logic that increasing the minimum wage increases unemployment:
Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.BTW, the "dissenters" he is referring to are all free market economists, but especially Murray Rothbard, who nailed Krugman's fallacious reasoning.
So how did Krugman box himself in?
Well, he tells us that there are "many natural experiments." There aren't any, of course, but this is Krugman's argument, so let us run with this for a minute. He says that these "many natural experiments" show that an increase in the minimum wage, from $7.25 an hour to $9.00, have "little if any negative effect of minimum wage increases on employment."
Got that? He is denying the logic of more unemployed at higher minimum wages because of data he says shows otherwise.
So then, how does he make this statement in the same column?
And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems.Does he have some natural experiments to make this statement? No. He is using the logic of minimum wages causing more unemployment.
Thus, Krugman is boxed in. He suddenly starts using logic, as opposed to data, at a $20.00 minimum wage. The same logic that he rejects using at a $9.00 minimum wage.
So now Paulie has to try and get out of this trap by coming up with some goofy argument as to where, between a $9.00 minimum wage and a $20 minimum, wage logic kicks back in. I call checkmate.