Monday, December 2, 2013

This is Why Paul Krugman Should No Longer Be Considered and Economist

He doesn't think wage earners face a negatively sloped demand curve. I am not making this up. He writes at NYT:
[T]he evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.
Yup,  Krugman completely ignores the fact that we no longer have attendants who pump our gas and wash our windshields for us, and why it is near impossible to find a sales clerk in a department store. These potential hires have already been frozen out of the job market by the minimum wage.


  1. So Bob, you are just now figuring out Krugman shouldn't be considered an economist? ;)

    1. Have you noticed we're in a depression? Please present a sensible case, for this blog, explaining why when bottom 90% incomes are declining across the board it is the minimum wage that causes decline. Then, please, demonstrate how reducing or eliminating the minimum wage will create growth and austerity. Krugman's wrong about a lot of things, but both his thinking and yours founders on the same shoal: you don't see how the economy shrinks with growing concentration of incomwes and wealth.

    2. Yes, i'm sure that in a time of high unemployment, the wisest thing to do would be to raise (or even to keep) the minimum wage. Businesses will be clamoring, CLAMORING i tell you, to start hiring employees they will have to pay even more, when up to now they won't hire them with the minimum wage levels that already existed.

      In other words, yes we've noticed we're in a depression. But according to you, apparently it is better for currently unemployed people to stay unemployed, and for businesses who have had to cut back to not even bother thinking about hiring people because the government (whom through intervention in the economy caused the depression in the first place) sticks its nose in the wage business.

      You want both the economy to be healthy and incomes to grow? Promote the slashing of all taxes and the government staying out of the economy, and promote the FED to be ended.

    3. jmh, "you don't see", or are pretending not to see, how governmental rigging of commerce leads to "growing concentration of incomwes and wealth", esp. among the politically well connected and among those willing to play ball with the racket.

    4. If my business is profitable when paying $30,000 per year for simple jobs like floor sweeping and loading and unloading trucks, and the minimum wage is $10,000 per year, I will have three people doing that work. If you raise the minimum wage to $15,000 per year, I will fire one person and try to get the work done with two people or lose money. It's that simple. Nothing about whether I, the owner make $50,000 a year or $50,000,000 a year. It's still about the cost of workers to my bottom line.

    5. JimH,
      I'll go ahead and try to give a long answer to explain it.

      The minimum wage defines the minimal employable productivity. The lower this wage the more jobs there will be. Tasks that are below the value of the minimum wage A) are assigned as additional work to more productive employees. If hourly it's just more they are expected to get done in their normal day or if salaried it doesn't matter. B) Are automated. Machines do the task, the machines are overseen by more productive employees as additional work. C) not done for hire. (someone has to pump the gas, might as well be the customer... although I would always do that myself personally for typical car-guy reasons)

      Another example is grocery stores where the baggers have been eliminated, either putting the task on to the checkers or customers.

      In this depression the downside is that experienced workers on the first rung or two of the job ladder may cut their price below the old minimum to obtain employment starting a downward spiral. Now the question becomes how far will people cut their price? But like most if not all downsides to libertarian solutions the problem is that we are looking at one piece of a system and trying to make it work in the present system while everything else is unchanged.

      Here we have to look at what caused the depression and what forces more people to seek employment and acts to keep more people on the bottom rungs. Government intereference in the economy. One interference begets another. The minimum wage is a patch on the economy to treat the symptoms of other interferences. Ones that prevent people from starting their own businesses, ones which increase the supply of labor, central banking, etc.

      So long as we have such vast restrictions on how people may make a living based on their social/political connections and abilities we need some sort of patch. The minimum wage is part of that patch currently. But it too results in making some people unemployable, so then we have lifers on welfare... keep patching symptoms but not fixing problems.

      One usually doesn't rip off a patch until the real repair is at hand, but we should at least recognize the minimum wage is a patch.

  2. It's fascinating to watch a Nobel prize winning economist discard the basic economic notion of the existence of supply and demand curves.

    Seriously, at what point in time does he start to lose credibility to even the most ignorant of bobble headed MSM interviewers?

    Krugman has sacrificed any notion of being an economist on the altar of political ideology. Sadly, most of the population is unable to recognize it.