economists -- 2.7% Libertarian
Dan Klein and Charlotta Stern have recently published an article in PUBLIC CHOICE that surveys the views of economists from the American Economic Association. I've seen similar studies in the past but it never ceases to amaze me. Most economists surveyed supported anti-discrimination laws, environmental protection laws, workplace safety and FDA regulations, monetary and fiscal fine tuning of the economy, redistribution of wealth, public schools, foreign aid, prohibition of drugs, prostitution, and gambling, the use of the militaryoverseas to impose democracy and the rule of law, and the MINIMUM WAGE! The majority opposed tariffs and tighter boarder controls and they were against the government running industrial enterprises. Only 2.7% consider themselves Libertarian politically.
How could you be an economist and support all this nonsense? The minimum wage?
Comments (24)
As for the minimum wage, I would say it's because of the problem that, instead of getting laid off, most existing workers (whose wages were below the new minimum) see a wage increase when the min. wage increases. Hard to reconcile with the "wage floors cause unemployment" claim. I'm not saying they're right to support the min. wage, just giving their reasoning.
Published: May 17, 2006 10:28 AM
Don't you remeber, demand for labor is inelastic. Thus, we can selectively implement price controls throughout the economy to help out our most disadvantaged citizens when the elasticities work to their advantage!
At least socialism isn't popular anymore. Well... it is, just not the extreme version of it.
By the way, what is the percentage of the general population that considers themselves Libertarian politically?
Published: May 17, 2006 10:40 AM
Cognitive dissonance is setting in. My brain is melting, systems shutting down. Thanks a lot Thornton!
In a feeble attempt to save myself... Is there any skew here because of this being economists in the AEA? Are all economists in the AEA? Would libertarian economists be less likely to be in the AEA? Is there any conceivable reason we can come up with to explain this madness? Please help!
Published: May 17, 2006 11:28 AM
I found this over on self-gov.org:
"While the test [World's Smallest Political Quiz] identified 16% of the voting population as libertarian, only 2% of the respondents identified themselves with that label when given a chance."
I wonder if this is what's going on here. Still doesn't make a d--n bit of sense to me though.
Published: May 17, 2006 12:05 PM
Hard to reconcile with the "wage floors cause unemployment" claim.
Except for:
(a) the employees who are, in fact, laid off as the direct result of the wage-fixing;
(b) the companies that go out of business;
(c) the companies that go overseas;
(d) the reduction in the total number of new hires; and
(e) the long-term anti-employee effects of the fixed wage, which negate the short-term inelasticity. Elasticity is a function of time, after all.
See, it's not hard to reconcile at all.
Published: May 17, 2006 12:07 PM
(a) the employees who are, in fact, laid off as the direct result of the wage-fixing;
This is extremely rare.
(b) the companies that go out of business;
I don't know of any business that closed citing that reason, nor where it was reasonably suspected.
(c) the companies that go overseas;
(d) the reduction in the total number of new hires; and
(e) the long-term anti-employee effects of the fixed wage, which negate the short-term inelasticity. Elasticity is a function of time, after all.
These are extremely difficult to discern and isolate from data (the last is even a counterfactual). Now, I happen to agree that these are important effects (the "unseen"), but again, failure to detect is enough for most to reject their significance. So, yes, it is hard to reconcile at all.
Published: May 17, 2006 12:14 PM
Stephen,
"Is there any conceivable reason we can come up with to explain this madness?"
How about: "The regulated mirror the Regulator." ?
"Economics", as widely conceived(as of : JMK, JKG ), is hardly the science it purports to be, but rather, more likely, an advanced frame cobbled together, by practitioners of Ivy Lee's craft, for the advancement of the State.
If you find yourself, different from them, find not fear, find pride( and then start one...).
Published: May 17, 2006 12:18 PM
the last is even a counterfactual
You do not agree that elasticity, to the extent that it measures anything relevant, depends on the time scale that is used?
Published: May 17, 2006 12:43 PM
The demand for labor, and any other resource that is paid for in units that can be consumed, will certainly depend on the time scale. Furthermore, there is a significant transaction cost on the part of both the employer and employee in most hiring decisions (see Coase). In the extremely short term, the demand for labor is very inelastic. The volume of work that is done today isn't going to change drastically as a result of hiring decisions. The availability of the hiring managers' time to interview candidates is a time-limited resource.
Published: May 17, 2006 12:56 PM
George_Gaskell:
You do not agree that elasticity, to the extent that it measures anything relevant, depends on the time scale that is used?
I think you misunderstood what I was calling a counterfactual and what the term means. I was referering to your "e) the long-term anti-employee effects of the fixed wage". The harm cited there is, "employers are willing to offer fewer jobs/worse compensation packages than they would have in the absence of a min. wage hike." The harm is in comparison to something that didn't happen (the counterfactual supposition of the world in which the min. wage doesn't hiked). Therefore, again, it will be hard to ascertain in historical data.
And again, to clarify, I agree about it's effects, I'm just showing why some, even economists, are reluctant to accept it.
Published: May 17, 2006 12:57 PM
Thank the education system. For the past 100 years the socialist education had filled our heads with the power of government over individual choice. I am somewhat suprised that the percentage of truely liberal economists is so high.
Published: May 17, 2006 1:03 PM
Knowing many so-called economists, the majority have more knowledge of STATA (I always thought that software was properly named) or some rare statistical properties, what Paul Krugman is saying, and how to get themselves in the press, then they have knowledge of economic logic and philosophy.
The best professor I ever had couldn't beat his way out of a wet paper bag, so to speak, when it came to having to use logic. It is disgraceful and it certainly is the schools' fault.
Published: May 17, 2006 3:14 PM
If you want to see the effect of minimum wage controls, or (even better) total wage control, come to germany and look at our current strike situation.
We have a union construct that has the control over ALL workforce, not only their members, because they are creatively involved in setting the so called tarif-contracts, which essentially outlines which wages are "legal" and which are not...
The effect is a continual reduction of the workforce in this sectors and an immobility that has already struck VW, Daimler-Chrysler among others.
While SAP is still up and running, because it has closed its doors to the unions.
Published: May 17, 2006 3:56 PM
The harm is in comparison to something that didn't happen (the counterfactual supposition of the world in which the min. wage doesn't hiked).
Therefore, again, it will be hard to ascertain in historical data.
This is true of all economic questions, not merely wage-fixing. Economic factors are not only inherently complex, but they never repeat. There is no laboratory for reproducing results, or for conducting controlled experiments. What is not seen, to use Bastiat's phrase, will never be seen, even though it is essential to fully understanding the effects of any government measure. Therefore, historical data cannot prove economic principles. Only logical reasoning can do so.
Historical data is also guaranteed to be grossly incomplete (the inability to know the full reason for a company going out of business being only one example). Economists who base their conclusions on historical data are likely to be correct, if ever, only by accident. (And no one is that lucky.)
Published: May 17, 2006 4:44 PM
George_Gaskell: It's not true of all economic questions. For example, if you put price caps on some highly-demanded item, there would be a very visible effect for everyone. People would *notice* that item becoming much harder to obtain and far fewer providers of it. Then you could point out to such people, "hey, they put in the price caps, then you couldn't get that item. Not a coincidence." In contrast, with the min. wage, you're essentially telling its proponents, "well, um, okay, nobody fired any workers because of it ... and no businesses have shut down, but like, they would be expanding more and offer better jobs, if just we hadn't hiked the minimum wage. More businesses would be setting up shop here. Trust me." That's far less compelling.
I've argued the merit of minimum wage laws with such people many times, and the effects are much harder to see, so their intuition is that they're not there. It's a hard barrier to break. Understanding this barrier in many people is vital to making the case to others.
Published: May 17, 2006 4:56 PM
I guess I'm the only one here who realistically thinks that 2.7% is a pretty decent number for pure libertarians. Who knows how many are quasi-libertarian
Published: May 17, 2006 5:34 PM
I think Vedran was right. How many people vote for the libertarian candidate on last election?
Published: May 17, 2006 10:27 PM
That's far less compelling.
I see. You are referring to the peculiar demands of an informal political/practical discussion. The arguments I am talking about are of the more rigorous variety. So, when I say that "historical data cannot prove economic principles," I mean "prove" in the more formal, logical sense, not as a euphemism for "what it takes to persuade some people I happen to meet at the coffehouse or on a random internet chat board."
Whatever their relative merits, these two modes of discourse have different parameters.
Published: May 17, 2006 10:36 PM
Yeah, darn those unwashed masses. Darn them to heck.
Published: May 18, 2006 7:55 AM
Yeah, darn those unwashed masses. Darn them to heck.
What on earth for?
I'd rather that everyone simply cooperate on a mutually voluntary basis.
In fact, I'd prefer it if everyone also understood that evaluating the merits of any governmental action requires a comparison of what is seen with what is not seen, but I do not see how anyone's failure to grasp this elementary concept excuses the kind of aggression and moral degeneracy that is at the heart of price and wage-fixing.
Published: May 18, 2006 9:53 AM
George, do you know what sarcasm is?
Published: May 18, 2006 10:22 AM
I happen to be an afficionado of sarcasm. It is a statement in which the literal meaning is the opposite meaning of it's true meaning. When sarcastically attributing a sentiment to another person, it ridicules or otherwise demeans that person's ideas. Some uses are, of course, funnier than others.
In this case, you appeared to be exaggerating and distorting my point (that there is a difference between rigorous analysis of economic questions and informal debates with argumentative coffeehouse socialists). I read that as an implication that I viewed such people as unwashed masses, that I was somehow undemocratic, and that this is bad, or something.
If that is not the case, I humbly beg you to forgive my grievous error and pledge to henceforth endeavor never to transgress upon your delicate sensibilities ever again.
(Incidentally, I actually am exceedingly undemocratic, but I consider that to be a virtue. Nevertheless, I still reject the idea of "unwashed masses," regardless of anyone's general level of hygiene.)
Published: May 18, 2006 10:38 AM
At Wake Forest University about half of the Economics professors leaned heavily libertarian. However, I'm not sure how many would have self-reported that, let alone voted for Badnarik.
Published: May 18, 2006 2:19 PM
Mark misspoke when he said that 2.7% consider themselves Libertarian. Rather the 2.7% result is more significant and more depressing than that. Only 2.7% had an average policy score of 4.5 or above over the 18 issues asked. Each question had response options 1,2,3,4,5, with 1 the most statist and 5 the most libertarian. Only 8.3% had index scores over 4.0. Ugh.
Published: May 20, 2006 7:09 PM