The CNBC Greg Mankiw interview below is simply stunning. Mankiw in the interview hails Alan Kreuger as a great choice by President Obama to head the White House Council of Economic Advisers.
This despite the fact that Kreuger holds the bizarre belief that an increase in the minimum wage does not increase unemployment. (Mankiw points out this bizarre belief)
Mankiw also tells us that Kreuger does great research. This despite the fact that there has been more written about Kreuger's sloppy research, than has likely been written about the sloppy research of any other living economist.
Further, Kreuger is in favor of a VAT on top of current taxes. Something, Mankiw is most assuredly not in favor of.
It appears Mankiw is backing up Kreuger for one reason only, because Kreuger is part of the establishment club. (Mankiw even taught Kreuger at Harvard.) For Mankiw, it's protect the establishment insiders regardless of how wacky their policy prescriptions are.
The truth is that given Kreuger's view on minimum wage, he isn't fit to run a Taco Bell. What would he do as a manager of a Taco Bell, higher more employees if the minimum wage was increased?
Mankiw the Menace. Eat your heart out, Dennis.
ReplyDeleteAbout the "that an increase in the minimum wage does not increase unemployment". He might refer to a recently published study (forgot where it was discussed) that concluded that depending on the level of the minimum wage, impact of unemployment can be surprisingly low.
ReplyDeleteAlso, high labor cost can be a long-term strategic advantage for a country. Imagine two countries, one that taxes labor and one that taxes capital. The labor-taxing country will tend to attract companies that require lots of capital to operate (e.g. high-tech) while the captial-taxing country will tend create more low-tech jobs (e.g. textile industry). The former is clearly more desirable.
Thanks fellow anonymous 8:10 pm for your assurances about the minimum wage. I'll pass it on to my son whose employer first reduced his hours at work after minimum wage (federal and state) kicked in --True it wasn't unemployment initially (he was let go later), but I wonder if the academic logic will filter through.
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