Sunday, February 17, 2013

The Wrong Way to Argue Against Minimum Wage Laws

Don Boudreaux reproduces a letter he sent to a woman who objected to his anti-minimum wage position.

The problem with the letter is that he buys into the notion that empirical studies can somehow prove or disprove logical deductions. He attacks the empirical studies of those who claim minimum wages do not decrease employment by listing other empirical studies that point in a different direction. He does this rather than recognize the fact that you can't conduct empirical studies in the science of economics, in the first place, the way you can in the physical sciences. He is getting sucked into the trap.

The simple fact is that if you force people to pay more for something, they will buy less of it. No empirical tests, required. It's basic logic.

This is a basic supply and demand curve, graphically making the point.

Here's a graph showing the shortages and over-supplies that would occur at prices different from the market price. The market price being where supply and demand are equal. A minimum wage increase above the market price would occur where instead of a market clearing wage of p*, the wage would be above p*. At all minimum wage levels above p*, the quantity of  workers hired would fall. 

There are no empirical studies that can refute this. It is pure logic. And no empirical studies are needed to prove the argument. They can't.

Anyone using empirical data to try and prove or disprove logic is a quack. 

Although it appears he wasn't familiar with the proper (deductive) methodology for the sciences of human action, developed by the Austrian school, Richard Feynman understood at a gut level that the empirical testing being done in the social sciences is hocus pocus.


  1. Arthur Krolman, CFAFebruary 17, 2013 at 3:19 PM

    Way to go Wenzel. You're dead right about empiricism. I believe it's an evil intellectual trap that is used repeatedly to justify the welfare state. And certainly libertarians should beware of falling into it.

    Hoppe really opened my eyes to the fallacy of empirical arguments:
    "This is empiricism's central claim: Empirical knowledge must be verifiable or falsifiable by experience...What then is the status of this fundamental statement of empiricism?"

  2. What about the graphical representation of a monopsony market? Most textbooks that advocate for the minimum wage hail monopsonies as an example of where the minimum wage 'works'. I never really understood the argument in the first place, but I still don't get it.

    1. Why bother with it? The sort of markets where the minimum wages are instituted are as far away from monopsonies as one could imagine. The entire concept of monopsony is as much gibberish as that of monopoly. Labour is THE non-specific factor of production. Whilst there are scenarios where the bargaining power can shift decidedly in the employer's favour, these are rare and are most likely to be state cartels/monopolies where the government has shut down all other alternatives to work. The need to retrain may also limit an employee's opportunities whilst they're retraining, but to go from this to arguing monopsonies are prevalent is intellectual dishonesty.

      All in all, low wage environments like restaurants, retail stores etc. are not monopsonies so don't even bother with that shitty attempt at rationalising the MW. You'd be wasting your time.

    2. Arthur Krolman, CFAFebruary 17, 2013 at 4:13 PM

      Of course! Monop-Sony is the key. Let's try it. By executive order, all markets will be converted to Monop-Sony Betamax markets to confirm that making it illegal for kids to work at gas stations for less than $20/hr "works". And after a few decades, if we fail, we can try Monop-Sony Bluray markets everywhere (or something else the unions might want us to test)... /sarc

      You see the fallacy of empirical approaches? I'm also poking fun at the never ending new vocabulary of statist economists who throw sand in your eyes. A priori logic is unshakable -- and they hate it. Higher prices mean less demand. The shortest distance between two points is a straight line. All the empirical testing and observations in the world won't change this truth.

    3. Lets not confuse this. The empirical studies at worst are outright flawed tripe based on very selective samples and poor research methods or are studying whether ceteris was not paribus. Whilst the latter is a valid exercise, it of course is not a "test" of the theory that increasing a minimum wage will lead to the factor's under- or dis-employment. Calling these things "tests" assumes that there is an hypothesis to be "tested" to begin with.

    4. In other words, it can get worse than "outright flawed tripe," it implies that there is an hypothesis to be "tested".

    5. Well in both cases that assumption is made. Except in the former, in addition to it being made, the research is shoddy.

  3. Though it's good to "fight the good fight" by combatting economic fallacy, I think it's important to recognize that mainstream Economics is not about economics, it's about state apologetics. That's it.

    Anyone truly seeking truth, as in "science", would have to come to the realization that study of volitional human action cannot be done through empiricism, as the Austrians have pointed out for years. Also, because of the fact that value is subjective, and only individuals act (methodological individualism), you cannot draw "aggregate" conclusions that have any meaning. These are all very basic, fundamental concepts, and the fact that mainstream Economics completely ignores, and fundamentally contradicts them, is proof enough that pursuit of truth cannot be the purpose.

    Why would any intelligent person who is serious about studying the truth of human economic activity not first recognize these very simple truths and adjust their methodology accordingly? It's perplexing. But that's only because of the generous presumption held by many that "economists" are actually interested in studying/discovery truth.

    Rather, I think the work of Mises, Rothbard, and others about the role of the intellectuals in supporting the state is a much more convincing explanation. The only purpose of the mainstream "Economist" is to provide rational for the state's existence and for its expansion. This is not a claim that every economist is actively aware of that purpose. Only that institutionally, this is the purpose of the endeavor and the demonstrated lack of basic intellectual rigor and/or moral conviction of those economists involved makes them complicit.

    Though I suspect a more sinister motivation at-large (the desire to exploit without individual consequence), the truth is that the publicly expressed justification for the state is purely an economic one. Regardless of how one arrives at their ethics (natural rights, designed rights, religion, culture, peer pressure, etc.), it is virtually universal that people proclaim the Non-Agression Principle. I say "virtually universal" since of course there are outliers, but the overwhelming majority of people are unwilling to outright claim they feel violating the consent of others is justified in order to get what they want. Thus, the morality that most profess (the degree of their sincerity is irrelevant), is in conflict with the state.

    This is where economics comes in. Since morality alone is incompatible with institutionalized aggression, another rational must be introduced. That of market failure. Without some form of central authority, we'd all suffer catastrophic consequences. Chaos. Starvation. Serfdom. Endless war of all against all. These predictions all boil down to claims regarding human action and the consistent premise is that the state is necessary to prevent these horrific outcomes. Thus morality must take second-stage to practicality, and in fact, due to the horrific consequence of not having a state, further rationalization transforms moral transgression into moral imperative.

    That these unfounded claims are fatally flawed in premise and in methodology, is not even considered by the populace at large due to their reverence of "experts". After all, the people promoting these claims are all PHDs with tenure and prestige within the field of "Economics". Certainly, those who have made the study of such things their life's work can't possibly be so completely wrong!

    And yet, that's their purpose. The study and promotion of a field of science known as "Economics" that is solely designed to provide endless rationale for violating the NAP. And as a tactic by the state, it's worked amazingly well.

  4. Logical deductions rest on assumptions. Empirical studies test those assumptions. So what you say here makes no sense. Either economic assumptions tells us something about the world, or they do not. If they tell us something about the world – then, yes, it might be exceeding hard to test them, given the complexity of the situation, but they are in principle testable.

    You don't think there were real tangible things that happened in the economy when the minimum wage was raised?

    The problem with Freudian psychology was it couldn't be tested. Freud was always right. The hallmark of science is a person who opens their ideas up to be questioned – especially empirical testing. It's a non-authoritarian methodology.

    As Hayek notes in his essay, "Degrees of Explanation", economic theories do tell us something about the world. You can't have your cake and eat it, too. Either these theories tell you something about the world, or they don't. The problem with your analysis is that you fail to understand how science works even in the physical sciences. Physical theories about the world are *designed* – to use your terminology – but if they don't hold up to testing, they are left behind. So the theories we end up with come more and more closely to resemble the physical world. It's as if we keep trying harder and harder to *force* human laws onto the physical world. We test, then throw out the *laws* that don't survive the testing and try new ones. The *laws* that seem to be empirically irrefutable for now are what consists of the current body of science.

    But these laws can't be substantiated. After all they are true for all time and all space. How can you prove such a law? You can't, but you can test it. An exception will show the law doesn't always hold. In economics, it's much harder to find such exceptions, because the exceptions can very often be blamed away on some other law. It wasn't my theory that was wrong, it was this other guy's theory. This makes the task much *harder* but not impossible.

    So economic theory is *harder* to test by its very nature. There may be no overcoming such a problem here given the complexity of any given economy. However, do you think that if the minimum wage were raised to $1000 tomorrow, there would be no grave effect? Or how about just $15?
    To castigate someone for trying to look at empirical data is breathtaking. It's like saying, rest on your own certainty my friend, it's foolish to try and open your ideas up to questioning and criticism – just have faith.

    Keynesian economics, of course, is empirical falsified if we just look at some of it's underlying assumptions about human behavior. So, it's clear they aren't doing science. It's a sort of flimflam. They manipulate the data using strange aggregates and questionable statistical methods. They need to be called out on this, but for the right reasons.

    Someone who wants to practice non-authoritarianism needs to be willing to open their claims up to as much empirical criticism as possible. Hayek clearly paints a picture of how he would expect this to proceed in his essay, "Degrees of Explanation."

    Feynman would have thought far less of the notion of someone who says he has theories about the world – theories that tell us how the world operates, yet *in principle* tells us those theories aren't subject to empirical criticism. Of course, Feynman knew that no theory can be ultimately *proved*; theories are *tested*. So long as they keep surviving tests, they stay on the drawing board.

    Logic is entirely empty unless it has something to rest on. What it rests on are assumptions that either you take an authoritative stand on – or you open up to criticism. Empirical criticism is the hallmark of science. If theory is true, something we can't ultimately prove, it will ultimately continue to resist whatever criticism we throw at it.

    1. I suggest reading Hoppe's "A Theory of Socialism and Capitalism" for a much more thorough handling of this subject.

      But just off the cuff, how is it possible to do any empirical studying of economics? In order to do empirical studies, you must control variables. The number of variables in human society is virtually infinite. That's why deductive economic laws are stated "ceteris paribus". All other things held equal/the same. There is no way to hold all other things equal/the same to test deductively arrived-at economic law empirically.

      Empiricism doesn't work with describing human behavior because such behavior is volitional. You can never have a controlled study that produces useful information because too many things are dynamic. It seems those most truly hostile towards empiricism are those who advocate its use in cases where it is clearly incapable. How can you say you support empiricism when you suggest drawing conclusions from observations where literally millions of highly volatile variables are in play?

      Deductive methodology is not the claim that decrees of an authority are not subject to validation/falsification (e.g., Freud cannot be wrong), only that empiricism cannot do this. The rigors of logic are the tools available. That is why Mises' (et al) praxeology starts with statements that cannot be false without performative contradiction (primarily "man acts") and then proceeds using deduction. Each step is open to validation/falsification, but only through logic, not appeals to observation.

      You can no more falsify solid praxeology through empiricism than you can empirically falsify a 4-sided triangle.

      I find that one end result of this, correct, methodology is a limiting of knowledge. In other words, logic can tell us what we cannot know. As in the example of the 4-sided triangle. I can logically tell you that any empirical effort to prove/disprove a 4-sided triangle is an impossible endeavor.

      Interpersonal-comparison of utility is, for a more relevant example, something we logically know we cannot do (doesn't stop people from "trying"). Value is subjective, it therefore cannot be measured or quantified, and thus is not comparable. Go waste your time with a 1000 clinical studies and you won't have changed this.

      Like it or not, there are things about economic activity that are just logically unknowable and thus need no empirical testing. Logic also dictates that by the very rules of empiricism, it cannot be applied to the highly dynamic realm of economics.

      The best we can do is "illustrate" economic law through example, but even then that must be done with intentional caution.

    2. Matt, I think you misunderstand the Misesian tradition of Austrian economics.

      The deductive method of Austrian economics rests on premises. If these premises are correct, and valid logic is uses, then the conclusion must be correct as well. Chains of reasoning can be formed by using the previous conclusion as a new premise, and then again using valid logic, and so on.

      Empirical evidence is necessary to test inductive theory, not deductive theory. We can look at the world around us, and if the evidence makes our deductive theory look like it's incorrect, it can serve as motivation for us to go back to the theory and check the logic, but it does not falsify the theory on its own. Logic must be handled on its own terms: it can only be falsified by logic.

      Empirical criticism is not the hallmark of science. Falsifiability is. And the science of (Austrian) economics is falsifiable just like any science.

      So what are the weaknesses in trying to use empirical testing when it comes to human behavior that are not present in the physical sciences? Well for one, there is no deductive methodology we can choose for the physical sciences instead. Secondly, we cannot control variables in the social sciences. Events are not reproducible. Etc. etc.

      You could consistently see empirical evidence point to opposite and incorrect conclusions than deductive theory tells us would occur in human action. This is because we simply cannot control for variables like we can in the natural sciences. And that is precisely why getting caught up in the game of empirical evidence is so dangerous.

    3. Brian,

      >>I suggest reading Hoppe's "A Theory of Socialism and Capitalism" for a much more thorough handling of this subject.

      When it comes specifically to epistemology, I disagree with what Hoppe has written in that essay – and, I think, completely against his better intentions, Hoppe has taken up an authoritarian epistemology. Perhaps he would disagree and laugh at me for saying this. He might have an animus against Popper, because he clearly blames Popper for leading him in the direction of social democracy – something I reject, and something clearly he now rejects. See his interview here:

      He doesn't seem to give Popper a fair hearing – or to grasp Popper's fundamental anti-authoritarianism. In fact, he buys into the academic version of Popper which is nothing but pure bunk. It's very frustrating reading his remarks in this regard.

      >>But just off the cuff, how is it possible to do any empirical studying of economics? In order to do empirical studies, you must control variables.

      I think this is kind of a stereotypical view of how science carries out its experiments. This is the view Hayek seems to maintain in _The Counter Revolution of Science_. Karl Popper criticized this view in his book _The Poverty of Historicism_ by noting the situation for the physical science is just as much fraught with this problem as is the social sciences. It's just not as obvious.

      The logic of the situation though is identical.

      The issue is over testing. Say my theory is "all swans are white." Now I come across a black swan. Well, that is an exception to my theory, so I should reject it, right?

      There's an infinite number of counter theories that could save my theory. For example, maybe the swan is just dirty. Or maybe the swan was painted to look black. … You can *always* save any theory by adjusting *other* theories involved. This is a trivial logical point. It's commonly formulated as the Duhem-Quine thesis:–Quine_thesis

      If you read about the discovery of Neptune, this is actually how the planet was discovered. It appeared that Newton's theories were in error … they didn't account for the up-to-date calculations on planetary movements. However, someone *saved* the theory by adding a new hypothesis that there was actually a mysterious, unseen planet out there. Bizarre, right? Let's just imagine a whole other planet out there to *save* our theory. But they turned out to be right! That planet was Neptune.

      Of course, when it was noted that Mercury didn't move according to Newton's law of universal gravitation, many alternative theories were presented. From these, we got Einstein's general relativity theory of gravitation.

      The main things as I see it, is that even as new theories are presented, those are brought under critical scrutiny and an attempt is made to test those as well. There's never any *objective* certainty. That is, each person is entitled to their own opinion. You might be certain, but that doesn't mean I have to be. I might have a viewpoint you never considered. That's why this is non-authoritarian. However, there is an ethic at work, which says, put up or shut up. Try to make your ideas accessible to me, so I can judge them for myself. It's true many ideas in their infancy can't be tested, we just don't know how yet. But that's a bit of a demerit, not a merit. If a theory can't be tested but is always right – as Freud's theories were, then rightly, we should be a little suspicious.

      The problems this presents for economics is well discussed in Hayek's essay, "Degrees of Complexity." The logical problem is exactly the *same* – the *practical* problem is that in this case the complexity is so up front it seems to overwhelm us. I can't recommend that essay enough.

    4. >> "The number of variables in human society is virtually infinite"

      The number of variables when it comes to any theory is virtually infinite. So at minimum you should recognize that the physical sciences face the same problem. This was Popper's criticism of Hayek's early views. I recommend you read Hayek's original views, Popper's criticism, and then Hayek's reformulation.

      >>You can no more falsify solid praxeology through empiricism than you can empirically falsify a 4-sided triangle.

      The ultimate point here is that economic theories say things about the real world. Either they do or they don't. If they do, then in principle they are testable – even if practically speaking it's a daunting task.

      As far as this geometry stuff goes, Newton's theories utilized Euclidian mathematics. Einstein's didn't. Euclidian geometry is always right when it refers to nothing but itself. It's theories are just exercise in logical deduction. However, Euclidian geometry is now generally regarded as in error when it refers to the world, because it's not the type of geometry that Einstein made use of. Your example of something unquestionable is not only questionable, but when applied as a physical theory is generally regarded as falsified these days.

      That should suggest to you that you are barking up the wrong tree.

      We can take Rothbard's _Man, Economy, and State_ and treat his ideas about human action exactly as we would treat Euclidian geometry. In that sense, yes, what he says logically follows – it's just an exercise in deductive thinking. But that doesn't mean we can presume to be right for anyone else but ourselves. More importantly, if we take these theories and apply them to the world, we are arguing they have empirical content – which mean in principle they are testable whatever the practical barriers.

    5. just another anonymousFebruary 18, 2013 at 2:31 AM

      Matt D., you could at least tell why the action axiom is not true or why it needs an empirical test.

    6. Matt, I can both agree and disagree with your post.

      For one, I completely dismiss the notion of "epistemological authoritarianism". All prescriptive forms of epistemology concern themselves with "how to" acquire knowledge and therefore will speak against certain ways of doing so, including what you have outlined (the irony of an epistemology warding against "authoritarian" epistemologies is that that itself is one.)

      I do agree that trying to determine whether a theory is applicable is an empirical matter - and this applies to geometry as much as to praxeology. However, revisions to geometry are still done a priori. Same with any revisions to praxeology. The content of the axioms of praxeology is both empirical as in known from experience to apply to the real world and justifiable a priori. Therefore, the notion of praxeological theories being on par with geometry in this respect is nonsense.

      Moreover, as the above posters have stated, praxeology -is- revisable, at the logical level. If a theory repeatedly fails to explain a phenomenon, one may question if it incorporates all the necessary postulate and axioms or whether its deductions have gone awry somewhere. This is a far cry from the notion of "testing" though, particularly in a domain so very removed from the physical sciences, where agents can adapt behaviour and where the underlying motivating force are subjective valuations.

      If anything counts as true epistemological authoritarianism, it is the view that if something is not "testable" then it is not science, or at least a valid domain of inquiry. I don't think Mises would disagree with you that economics is in some very abstract sense, in principle, testable. His argument is that in practice it simply is not as we do not approach it with a God's eye point of view. Someone who could read what was going on in agent's minds and who could perfectly isolate the veriables they seek to understand could perhaps approach it from the POV of testing.

    7. Inquisitor,

      "All prescriptive forms of epistemology concern themselves with "how to" acquire knowledge …"

      Critical rationalism to which Hayek endorsed denies there's any way to acquire knowledge, if by knowledge we mean knowledge that has been validated in some manner. For critical rationalism there is no validation, *a priori* or *a posteriori*. To state there is ultimate leads to the liar's paradox. In other words, either any means you have to validate is either without validation, and therefore of no use, or it validates itself in which case is simply circular reasoning.

      Popper's falsifiability criterion needs to be viewed as an ethical statement, much as we suggest people should be honest. If a person consistently tries to avoid empirical testing, we can admonish them. However, just as we never know if a person is honest or not – we can't look inside their heads – we can't ever know for sure whether someone is avoiding testing or not. It's less about the theory in this case, and more about the ethic. This is something that is entirely missed by people who study Popper.

      For Popper *all* science is deductive, and *only* deductive. There is no induction. There is no empirical validation.

      Each person must decide for themselves about any respective theory. That decision is subject to revision as we learn more. All that can be done is to lay the theory out as best as possible before others so they can decide about it themselves. It's clear large parts of our knowledge can't be tested or is hard to test ... but science should, as an ethic, seek to test as much as possible. So if I say a theory can't be tested, that should be regarded as problematic, not as some how virtuous.

      In this limited sense, Popper is suggesting a more severe form of praxeology than even most Austrian economists. Though I'm not sure he'd want to view things that way … moreover, there's *no* validation in this case *a priori* or *a posteriori*.

      All theories are *a priori* in that they are all human inventions. If the theory says something about the world, then it should prohibit a set of facts. To the extent we can test this by looking at those prohibited facts, this helps any individual in judging the theory.

      Note even in a Popperian context, the demand curve can never ever be validated. All the data can ever do is either *attack* the theory or attack its competitors. How we respond to the data is a human choice, of course. The data can't *force* our hand as the data, itself, is theory tinged. The refutation of a theory is always a choice in favor of one of its competitors.

      Nothing is free of viewpoint for Popper, and again, only in that very limited sense, for Popper everything would have to be regarded as praxeology. Popper, of course, never used terminology like this. He was arguing with positivists, and unfortunately, often adopted their terminology.

    8. " So if I say a theory can't be tested, that should be regarded as problematic, not as some how virtuous."

      I say it is neither. It is simply a reflection of the fact that there is no possible way to control the variables in order to arrive at a particular conclusion. Trying to confirm or disconfirm various hypotheses with data (that itself must be defined by prior theory) when the data cannot even be

      "moreover, there's *no* validation in this case *a priori* or *a posteriori*."

      We simply have to take certain starting points of knowledge - such as the law of non contradiction (the most basic law of thought, although arguably the law of identity is even more basic as the LNC requires it) - as given. Yes, you cannot validate these starting points of knowledge but there are well known regression problems with epistemological approaches that do not take a foundationalist approach.

    9. Inquisitor,

      >>I say it is neither. It is simply a reflection of the fact that there is no possible way to control the variables in order to arrive at a particular conclusion.

      Logically speaking that's *always* the case. Read up on the Duhem-Quine thesis.

      Just to help you here, consider this statement: "All swans are white."

      A universal theory has to be true in all places for all time. Science searches for universal theories. I'm not sure how you would want to word it, but ultimately the demand curve constitutes a type of universal theory. It's not just true some of the time and in some places. (In cases where it does not *appear* to hold, we say that the conditions weren't met, but the theory remains the same, right?)

      Now if a universal theory is true for all times and in all places, how could it ever be verified? I know, you want to talk about *a priori* we know certain things about humans … just put that aside for a minute, because I'm only responding to your quoted statement above and talking about physical theories.

      Now even if we can't *verify* the theory, we can *test* it, right? All we need is one *black* swan and we can then classify the theory as incorrect, right?

      Look at the statement, "this is a black swan." It contains universal terms, *black* and *swan*. These constitute implicit theories. After all, what we are looking at might not be a swan, it might be something else. It might not be black, but perhaps dirty. So even the simplistic statement, "this is a black swan" can't be verified, in other than some pragmatic sense. I mean, as long as no one is disputing the observation, we'll go with it. However, if someone disputes it, we have to examine our implicit theories ...

      So, this problem that you see existing for *just* certain types of theories exists for all theories!

      When you deal with Euclidian geometry as a self-contained system, it's pretty flawless – though I would guess Hilbert might argue he cleaned it up a bit. It can't be wrong. However, let's say you try to try to fit it onto reality – that is you treat it like an empirical theory. Well, it works as an approximation, but logically it is incompatible with some very specific observations that no one is disputing. Instead, we now have alternative ways to look at fundamental geometry …

      Kant arguably thought that we simply had *no* choice but to think along the lines of Euclidian geometry – clearly though, we now know this is wrong. So to me, this actually shows that if you attempt some type of self-evident/a priori argument for the demand curve, you can't just presume to be right *because* you can't think of it any other way.

      When Popper talks about testing he's not talking about what most people think he is talking about.

      >(the most basic law of thought, although arguably the law of identity is even more basic as the LNC requires it)

      We can hold x=x as true because there are no exceptions to it. That is, we can't verify it, but we can ask someone to try and provide an exception and watch them fail. There are modern alternative systems of logic, but I guess one could argue they include law of identity implicitly. But to me saying there are *laws* my mind must follow isn't how I view the situation. I see logical truth as existing independent of my mind. It's the fact that the world is real that we can learn anything about it or about ourselves.

      I should let this be my last comment here, if you are anyone else would like to discuss this off line, please feel free to email me at:
      matt at anarchyjapan dot com

  5. Bob,

    There are more than enough empirical studies which show the anti-minimum wage position is correct. 50 years of them, in fact.

    So, we have the intuitive position based on deduction to support us and the empirical evidence for those who aren't convinced.

  6. Mr. Wenzel,

    Did you read his post carefully and are you familiar with Mr. Boudreaux. He quotes Sowell to explain to the lady, that even if there are studies on both sides, that the studies are hocus pocus, as you mention lastly.


    1. You are the one who needs to do rereading. He quotes Sowell to dispute the empirical method used, not that empirical work itself is wrong.

      Wenzel understands Bodreaux's post better than you do.

    2. Have you read Sowell or Boudreaux at all? If you have you would know they are clearly on the side of Mr. Wenzel. If you want to explain to someone who believes that empirical evidence is the wrong way to look at things you can't take a giant leap and tell her you should not believe it. Baby steps. Show her why her "evidence" could be wrong, move to a more general view that all research can be manipulated and then try to have people use logic and common sense such as Mr. Wenzel put forth. I realize this is easier said than done.

  7. Also, what are the elasticities of demand in the various occupations and sectors of the economy that a minimum wage might effect? I could see the effects being ambiguous depending on random situations and the elasticity of demand, and thus some studies may show the MW has no effect on employment, and some studies may say that the MW does have an effect.

  8. "The simple fact is that if you force people to pay more for something, they will buy less of it. No empirical tests, required. It's basic logic."

    That's not always true. It depends on the consumer and what's happening in their situation. Usually people will tolerate price increases until a point, and then change their behavior when they feel that the price is too high. A business might tolerate a MW increase, it might not (meaning that it may decide to cut hours or lay people off, etc) depending on that infinite number of variables that factor into its decisions.

    1. So you're essentially arguing the disemployment will occur in ways other than the factor's direct unemployment. This is true, that can occur. However to argue that increasing the MW has no or, even worse, a positive impact on labour employment is sheer nonsense.

  9. He does this rather than recognize the fact that you can't conduct empirical studies in the science of economics, in the first place, the way you can in the physical sciences. He is getting sucked into the trap.

    Perhaps you missed his post from two days previous where he said exactly this:

    "That’s the way it is with social-science (including economic) data: they almost never speak for themselves clearly and without significant exceptions."

  10. Let's just make this real simple. Minimum wage laws are ILLEGAL.

  11. Ah, I see, if I draw intersecting lines and then label them with economicsy-sounding things, it proves I'm right! No fuss, no muss.