David R. Henderson  

Jason Furman at CEA

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Feedback Loops in Government... Monetizing Job Security...

There's a rumor, presumably well-founded, that Jason Furman will become the next Chairman of the Council of Economic Advisers. Given the universe of people from whom President Obama probably chose, I think it's probably a good choice. Four years ago, I posted about Furman's clear understanding of what a boon to consumers Wal-Mart is. He gets basic microeconomics.

Here's the stunning quote:

The price differences are staggering. Wal-Mart prices are, on average, 8 to 40% lower that what people would pay elsewhere. The total annual savings in one recent study for consumers was $263 billion, that's $2,300 for every household in America. There are few public policies I've advocated that would make as big of a difference as that.

There's more. In 2006, he had an excellent debate with Barbara Ehrenreich about whether Wal-Mart is good for the working class. Go here and you can choose to read as much or as little of the debate as you want.

Also, in a refreshing admission from one of the elite, Furman wrote:

If I heard that Wal-Mart was coming to my neighborhood, New York's West Village, I might rush for my mouse. But I wouldn't kid myself into thinking that my opposition had anything to do with helping the poor. If anything, I would feel guilty that I was preventing moderate-income New Yorkers from enjoying the huge benefits that much of the rest of the country already knows so well.

The honesty, as I said, is refreshing. Of course, it would have been even better had he abjured taking steps that he knows would harm lower-income people.

One interesting section, though, relates to his view on the minimum wage. In 2006, when the minimum wage was $5.15 an hour, Furman wrote:

So, what to do now that my solutions are being blocked? One thing we'll hopefully be able to accomplish in the next year is raise the minimum wage to $7.25 per hour--this will give a pay raise to folks at the bottom with, the evidence suggests, little adverse effect on employment. But this won't do much for Wal-Mart workers: Most of them make more than this.

A year earlier, Lee Scott, the CEO of Wal-Mart was advocating a substantial increase in the minimum wage also. I wonder if Furman, who admits that the higher minimum wage would not have been binding on Wal-Mart, wondered why Scott was advocating it. He doesn't say. My first guess is that Scott wanted to price out some of his lower-wage retail competition. My second guess is that Scott wanted to get points with the left and with Americans generally, at virtually zero cost to his employer.

Postscript.

I do find this statement troubling:

I believe that Ben Bernanke and the Federal Reserve decide the total number of jobs nationwide.


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COMMENTS (3 to date)
Paul Crowley writes:

Re saying he'd try to block a Wal-Mart: it may just be good advocacy. "We are all terrible sinners" tends to win audiences over better than "You are all terrible sinners"; by saying "hey, Wal-Mart blockers, I am one of you" he may do more to persuade them to stop it.

David R. Henderson writes:

@Paul Crowley,
Good point. Sometimes I tend to take people too literally. This could be one of those times.

ChrisP writes:

A good economist appointed CEA chair is about as valuable as a good economist banished to Siberia.

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