Bryan Caplan  

A Fortune Cookie for Ron Unz

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Ron Unz is crusading to raise the minimum wage.  He also publicly admits that he's never opened an economics textbook.  Most econ professors would be inclined to lecture him about his intellectual irresponsibility.  But under the circumstances, less is more.  So instead of a lecture, here's a fortune cookie:

Every atheist should read the Bible cover to cover - and every critic of economics should read Mankiw cover to cover.


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COMMENTS (33 to date)
john hare writes:

I challenge his assumption that costs would only go up a percent or two. Most of the businesses I am familiar with have labor as a very high percentage of costs. Over 60% of my company costs are labor related when insurance and employee taxes are included. Raising wages by 50% would increase costs by 30% for me and somebody must pay for it if I am to remain in business.

Even the 30% labor percentage suggested in a previous thread for fast food would increase costs in that industry by 15%. I will already spend $12.00-$15.00 in a regular resteraunt, including tip, than $8.00-$10 for fast food when time permits. Raise the fast food costs and lose more of my business.

Another assumption I challenge is that people cannot live on minimum wage. If you are making poor wages, and live as if you are making poor wages, it is quite possible to survive without subsidy. Food you prepare yourself is just not that expensive if you pay attention. Bicycles are cheap transportation. Housing can be quite cheap if addressed properly. Since the bubble burst and a divorce, I have been living in a used travel trailer I paid cash for. Utility costs can be controlled if you realize you are broke. And so on.

I know of several businesses that have already left California due to excessive regulation. If the ones leave that bring in money from elsewhere, then there will be less money to cover the cost increases, which will lead to another round of problems and subsidies.

Since I only post in the early mornings or at night, my comments probably appear as drive by to people that try to address my points or correct my assumptions. I apologize for the annoyance.

Krishnan writes:

Economics can be summarized in four words (Steven Landsburg) "People respond to incentives" (and he goes on to say "The rest is commentary"

All Ron Unz needs is to read "The Armchair Economist" (and he can get educated).

brian h writes:

He is pretty upfront about the fact that he hopes a minimum wage increase will decrease immigration. My guess is that Unz would be ok with some amount of "collateral damage."

Daublin writes:

As a quibble, the best way to learn about what is important to a modern religious person is not to read the Bible. Instead, go to a church service and to go to a church social--at least one of each.

Bostonian writes:

It would be sufficient for the economically illiterate to read and absorb "Economics in One Lesson" by Henry Hazlitt, which is shorter and cheaper than Mankiw's textbook.

Curtis writes:

But again I will ask -- where is the data that supports the model that raising MW also raises unemployment? The studies I've seen looking at correlation between the two have either proved nothing or else that there is a slight nudge in the other direction: that raising MW actually lowers unemployment.

So the question is: what would Hayek say? Would he favor a model over data?

Eli writes:

Seems to me that saying that atheist's should read the bible cover to cover is more like telling economic critics they should watch Bill O'Reilly beginning to end.

The bible is popular, but not necessarily the best case for theism (the bible never attempts to prove God). Economics textbooks are the best case for economics, but they aren't popular like the bible.

So again; saying that economic critics should read Mankiw is more like saying atheists should pick up Augustine, Aquinas, Plantinga, or Owen Anderson's book Clarity of God's Existence.

Aaron Zierman writes:

Just finished my Intro. Macro. class and we used Mankiw. Excellent textbook. Apparently Unz thinks there is such a thing as a free lunch.

David R. Henderson writes:

@Bryan Caplan,
This atheist has tried to read the Bible cover to cover more than once, but I got stuck in the “begats.” I can tell a non-economist in a few paragraphs what he/she can get out of Mankiw. I’d appreciate your telling me in a few paragraphs what I would get out of reading the Bible.

Chris H writes:

@David Henderson

As an atheist myself, I say skip the begets and go to the parts which read more like soap operas (Samuel and Kings is almost a mini-game of thrones). There is some interesting insights into ancient political theory there.

But the basic point that textbooks might be too boring for most people to get through is well taken, yet one would think that a person who isn't willing to read his/her opponents arguments probably shouldn't be taking such strong stances in the first place. And there is a bit of an alternative, before I started looking through text books I read Steven Landsburg's The Armchair Economist which gives a more easily approachable view of the subject. It doesn't give enough for really deep critiques of the field, but it's better than nothing.

@Eli

But isn't the bible not being the best defense of Christian theism a bit of a problem for Christians? After all, the Bible, if they are correct, is the divinely inspired word of God while no subsequent works of apologetics can claim the same level of divine guidance. The most holy work of a religion should be the best evidence in favor of that religion. If it's not isn't that a big problem?

Jeff writes:
Every atheist should read the Bible cover to cover - and every critic of economics should read Mankiw cover to cover.

Not Cowen and Tabarrok? Heresy!

Jon Murphy writes:

@Prof. Henderson and Chris H

While there is a lot of interesting stuff in the Old Testament (skip Numbers and the first half of Chronicles 1, though. That's where all the "begets" are), I think the Bible can be summed up in four sentences:

“Teacher, which commandment in the law is the greatest?” 37 He said to him, “‘You shall love the Lord your God with all your heart, and with all your soul, and with all your mind.’ 38 This is the greatest and first commandment. 39 And a second is like it: ‘You shall love your neighbor as yourself.’ 40 On these two commandments hang all the law and the prophets.” (Matthew 22:36-40)

Jameson writes:

It is surely a sign of the times that more people remark the Bible part of this "fortune cookie" than the economics part.

It is correct, however, to observe that the Bible is not at all a textbook. If the goal is to explain theology, or to argue for the existence of God, or to defend Christianity, I would not refer someone to the Bible.

As for Ron Unz, what I find most disturbing is what he said during that IQ squared debate. I believe it amounted to the following: he doesn't really think anyone knows that much about the economy, so it doesn't really count against him that he's never read any economics.

It seems there's some deeper suspicion of our institutions of higher learning lurking in the background.

Jay writes:

@Curtis

I'm aware of two studies, the Card and Krueger study and one that is based on their data, that show the link you describe. Nearly every other study shows the opposite to varying degrees, hence the consensus among non-political economists. This should make your search pretty easy.

wd40 writes:

Every theist should read the Bible cover to cover. Few do. But if they did, many would give up on the idea that the bible is the word of god. The bible is internally inconsistent (just read Genesis), much of it is poorly written, and the old testament god is self-centered and nasty.

Philo writes:

I think Bryan intended to say that anyone who holds a view that most people reject should have carefully considered the best arguments for rejecting it. And, implicitly: insofar as one holds majority views, there's no comparable need to subject them to critical scrutiny.

Chris writes:

Why the Bible rather than some other religion's sacred text?

I went to a boarding school where attendance at Sunday church services was mandatory. As a silent protest, I sat in the pews reading (an English translation of) the Koran rather than listen to the service. Over the course of a term I read the whole thing from cover to cover. The main impression I got is how repetitive it is (almost as if every other book of the Bible was a Gospel).

drycreekboy writes:

@David R. Henderson:

"I’d appreciate your telling me in a few paragraphs what I would get out of reading the Bible."

As a Christian I want to ask, in totally good faith, what you, as an atheist, want to get out of reading the Bible? Are you coming at it conceptually, aesthetically, trying to understand your crazy fundamentalist relative, or what?

If relatively brief summaries of Christian belief, based on the Bible, is what you're looking for then there are plenty of those -- creeds and confessions Christians have been producing for going on 18 centuries (and there are both popular and academic attacks on the same -- for almost as long). That's not the sense I get from your query to Bryan, however.

If you're reading the Bible to broaden your personal horizons, because it's a central artifact of western culture, etc. then a few paragraphs is not going to do it; any more than Cliff Notes will do it for King Lear or someone humming for Mozart's Requiem.

john hare writes:

I can't prove that minimum wage causes unemployment to the satisfaction of one that disagrees. I can mention that a workforce participation rate of 63% in this country suggests that something is causing the other 37% to not work. Jobs unavailable to some people has to be part of the answer, unless you are one of those that believe that, "they are all just lazy".

Curtis writes:

@Jay

Feel free to mention some of the studies that find anegative correlation between higher MW and employment. The only two authors you name find a positive correlation. There are other studies that find the same correlation as Card and Krueger. I haven't yet found an American one that finds a negative one though.

Jay writes:

@Curtis

http://www.nber.org/papers/w12663

From the paper...

The authors of that paper, after surveying the empirical findings of more than 100 studies from around the world, conclude that “the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.

Curtis writes:

@Jay

Is it not a bit disingenuous to quote so much from the abstract (not the paper) while leaving out this sentence: "Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage."

I know you read it because it immediately precedes what you DID quote. I really hate this cherry-picking that occurs on both sides of the debate. It's academic laziness at best and dishonesty at worst.

But thanks for the link. I'm going to read it.

Pajser writes:

I'd recommend Marx's Economico Philosophical Manuscripts from 1944.

BZ writes:

Politics *and* Religion! Does it get any better?

@ChrisH - (Is philosophy supplementary to scripture, and if so, why is it needed?)
http://www.newadvent.org/summa/1001.htm

@wd40 - (The Bible is so full of contradiction, OMG!)
Needless to say, there are disputes in interpretation. If you choose to put your faith in the contradictory interpretations, that's your business.

Scott Scheule writes:

@David Henderson:

Parts of the Epic of Gilgamesh, of Pliny, of Livy, of Homer, of Milton, of Dante are as tiresome as the list of begats. How far did you get into those before giving up?

Regardless, if you really want to know what you'll get out of the Bible, and you're not just being snarky, here's an--admittedly time-consuming--technique you can try. 1. Go to Wikipedia. 2. Type in Bible. 3. Read.

Maybe eventually you'll get to, e.g., the page on Ecclesiastes, which quotes Thomas Wolfe: ""[O]f all I have ever seen or learned, that book seems to me the noblest, the wisest, and the most powerful expression of man's life upon this earth — and also the highest flower of poetry, eloquence, and truth. I am not given to dogmatic judgments in the matter of literary creation, but if I had to make one I could say that Ecclesiastes is the greatest single piece of writing I have ever known, and the wisdom expressed in it the most lasting and profound."

Alas, Ecclesiastes comes some pages after Genesis' insurmountable begat list.

That being said, Eli is correct. Bryan's analogy is wanting: Bible should be replaced with a work whose purpose is defending or explicating theism. Aquinas or Swinburne would do.

Jay writes:

@Curtis

No I don't, stating there's controversy and a wide range of opinions says nothing of what the authors of that paper believe or found so I didn't include it. It sounds to me like they're merely describing the environment the debate is currently held in.

Silvia Catalina writes:

Having recently completed my first course in Macroeconomics, I am now more aware of the consequences of raising the minimum wage, namely that setting a price floor creates a labor surplus, which in this case is also known as unemployment.

Before I took this class, the image of a single mother trying to make ends meet with a minimum wage made me feel that maybe if the minimum wage was raised that single mother would be better off.

I now realize that the simple act of raising the minimum wage would probably result in raising the price level, which in the end would not help that single mother at all.

Do I still empathize with the millions of people that make up the unskilled labor supply and are trying to make ends meet on a minimum wage? Of course, I do! However, I am now forced to look for a solution elsewhere.

One avenue that comes to mind is trying to decrease the supply of unskilled labor through education and training programs. After all, if I understood it correctly in class, the economic growth we see in the US today is in part due to the proliferation of scientific and technological knowledge that drives innovation.

Reading a book on Macroeconomics, in my case Cowen and Tabarrok, was a big part of my education, however, I believe my lectures made it come to life.

In general, I find that an honest and respectful exchange of ideas goes a long way in promoting the proliferation of knowledge, scientific and otherwise...

Mercer writes:

Unz has seen how economic polices that Mankiw support worked in the real world under our previous president. That probably makes Unz skeptical of the value of Mankiw's economic wisdom.

Jay writes:

@Mercer

Not very constructive, which ones specifically and how did they not work?

Curtis writes:

@Silvia

Your economics course taught you theory and models. Like I've been saying, there is no consensus on if the model you are talking about actually plays out.

See for yourself: http://aneconomicsense.files.wordpress.com/2013/03/minimum-wage-vs-unemployment-rates-1950-jan-2013.png

Mark V Anderson writes:

The studies on the effect of minimum wages that I have read have all been pretty unsatisfactory to me. There have been few significant differences found, and when found, usually the study was flawed. The problem is there are too many confounding factors to make a good study.

An even bigger problem with these studies is they are all looking at short-term effects. Of course doing a study on long-term effects would introduce even more confounding effects, so it may be impossible to do this. But the long-term effects are bound to be more significant, as business and the economy as a whole usually takes a few years to react to any such change.

Since the studies aren't very useful, we must use logical thinking to try to figure out the effect of minimum wages. And this method clearly leads one to the conclusion that minimum wages will lead to fewer hours demanded by business. A clear effect of supply and demand. I don't see how anyone can reject this conclusion without rejecting the basic tenet of decreasing demand upon raising prices.

Curtis writes:

@Mark

A well reasoned response! I appreciate it. My only critique would be that you are arguing for induction over deduction. I don't think that inherently causes problems (induction unfairly gets short shrift a lot of the time), but when a model has no significant empirical data to back it up, we really should take a step back and review our model (which is itself induction).

Maybe, since there are so many confounding effects, and since there is not enough data to make any determination, we should leave the MW/Employment debate (as far as policy goes -- by all means let's continue the research) and shift to areas where more consensus is available. Economic responses to climate change . . . corporate subsidies at the tax payer's expense . . . QE . . . etc.

Miguel Madeira writes:

With the exception of brian h, all of you seems to forget that the goal of Unz is, exactly, making more difficult to hire immigrants and leaving more jobs to US citizens - exactly what almost all economic textbooks will say.

http://www.theamericanconservative.com/articles/immigration-republicans-and-the-end-of-white-america-singlepage/

"But perhaps the obvious escape from this seemingly inescapable political trap is as simple as merely reversing the direction of cause and effect. Consider the consequences of a very substantial rise in the national minimum wage, perhaps to $10 or more likely $12 per hour."

"The automatic rejoinder to proposals for hiking the minimum wage is that “jobs will be lost.” But in today’s America a huge fraction of jobs at or near the minimum wage are held by immigrants, often illegal ones. Eliminating those jobs is a central goal of the plan, a feature not a bug."

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