Bryan Caplan  

Economic Creationism

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GMU's former chairman and economic educator extraordinaire Don Boudreaux:
And It said "Let there be higher wages. And there was."

[...]

So why are so many people enthusiastic about statutes such as this one [the living wage]?

Proponents of such legislation are economic creationists. They do not grasp the fact that beneficial economic arrangements emerge - and emerge only - without being designed by an altruistic higher power (namely, government). Widespread prosperity and economic order are taken on faith as resulting from the conscious intercession of a sovereign superior whose incantations, ceremonies, and commands work miracles. And, typically, persons who challenge this creationist dogma are accused by its True Believers of being devils sent from the underworld to disrupt the heavenly work of the creating angels.


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COMMENTS (9 to date)
Al Abbott writes:

Format problem? The text runs off the screen to the right.

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BZ writes:

Don Boudreaux is such fun. It always makes me wonder: Does GMU create great econ writers, or do great econ writers gravitate to GMU?

Last year I was in northern Virginia on a business trip. I'm sitting in this building attending software development meetings and all I could think about was how close by GMU was, and how I would have rather been up the road hunting all those proffs down in order to get autographs.

I really need a life. Where's the market in THAT?

David R. Henderson writes:

@BZ,
The market in THAT is in front of you. Think on the margin. Think of the things you like most and the things you dislike the most. Increase somewhat the amount of time you spend on the former and reduce somewhat the time you spend on the latter.
Best,
David

Steve Sailer writes:

You shouldn't overlook how minimum wage laws can help deter cost-shifting behavior by private parties.

Say I own a huge fruit farm. And say I could either hire migrants for $6 per hour and let the taxpayers and people with health insurance pick up the cost of educating their children, treating their illnesses in emergency rooms, policing and imprisoning them and their children, etc. Or the state could set a minimum wage of $12, which would encourage me to invest in labor-saving machinery, whose maintenance, unlike that of cheap workers, I have to pay for out of my own pocket.

Maniel writes:

Nice take, but I see the minimum wage more as "intelligent design," intended to keep people who can't command that wage out of the market. Those who are out (the poor, less educated, ...) tend to stay out or go underground (dealing drugs, etc), and those who are in are more likely to see their incomes rise commensurate with their experience.

MikeP writes:

Or the state could set a minimum wage of $12, which would encourage me to invest in labor-saving machinery, whose maintenance, unlike that of cheap workers, I have to pay for out of my own pocket.

Are you seriously suggesting that the economy is better off doubling the cost of low skilled labor rather than paying for primary education, emergency health care, and law enforcement for the labor?

Lori writes:

OK so maybe those of us not entirely sold on emergentism are creationists, but what of all the belief in omniscience (strong efficiency), infallibility (signaling theory), mysticism (the Invisible Hand to which I'd so love to deliver a Bionic Handshake), etc. Perhaps Free Market Fundamentalism is an unfair characterization, but is not entirely off the mark.

Patri Friedman writes:

Boudreaux is, as usual, engaging in Political Creationism, who does not grasp that policies emerge from the incentives of political systems, they aren't dictated by a wise authority like an economics professor.

http://athousandnations.com/2010/08/04/political-creationists/

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