The new
apologist is at it again! I'm referring, of course to Walter Williams, who has
apparently become the new Black Conservative op-ed "go-to guy" since
the unlamented retirement of Dr. Thomas Sowell. Of course like Dr. Sowell,
Williams is also older than I, and I am 74.
Like Dr. Sowell, he should remember the Civil Rights movement and
recognize which political movement in
America was largely responsible for such improvements in the condition of Black
Americans as came from that movement. Alas he does not.
Like Sowell,
Williams has a degree in economics. Like Sowell, he is given far too much credit
for wisdom because of it.
Walter Williams' latest farcical column, entitled
"What's the Cost of a Higher Minimum Wage" posits that increasing the
minimum wage categorically damages the economy by increasing unemployment. He
then extrapolates is as being even worse for Black Americans. He actually goes
so far as to cite a "study" done in, of all places, South Africa in
1925.The hubris displayed in such a ploy
is exceeded only in the belief that it
will be believed. Alleging that 91 year
old data from a nation mired in post war depression and Apartheid relevant is
mind bogglingly naive.
A bit about
Economics before we get too far into this. When an individual studies most
mathematically based pursuits, for example, Trig, Calculus, Algebra, there is
the basic bedrock on which these subjects are founded. That is that by
following accepted and established procedures, with the possible exception
of Quantum Physics, it is possible to
take numbers, use them in formulae and arrive at actual, factual results, which
will be the same result every time one
does so. The same is true for Chemistry, most Physics, Biochem, etc. They are
sciences, and while new breakthroughs
may change what we perceive as factual truth, there is little hesitance among
rational people to embrace new information as it is proven factual.
Then we move
to the "soft" sciences, such as Psychology and Sociology, where the
primary measurement device used is statistics. While mathematically based,
there is no factual or "right"
answer in these areas, simply probability. But then we have the soft science so
soft that it is unworthy of even that classification. I am referring to, as you
already knew I would to the study of Economics. True, there are formulae,
mathematical processes and quantification, but.....there is no such thing as
truth in Economics.
In
mathematics, two plus two will equal four today, next week, next year and in
every language. Economists, however,
still labor, to a degree, under
"rules" (observations really) which are based on trade in a
mercantile society of just over 250 years ago, in a world of unregulated greed
and commerce. An economist's best effort on the two plus two example should be
more like "two plus two should equal four, if we didn't forget
anything." And yet, we have pundits
such as Walter Williams making positive statements such as: "There is
little question in most academic research that increases in the minimum wage
lead to increases in unemployment."
This
statement alone would lead the ingenuous reader to assume that there actually
are hard data examples which support the allegation. In fact, most
"studies" on the effect of increasing the minimum wage aren't really
studies in the academic sense of the scientific world. If I cite a drug study
(any one, pick one) of a drug approved for prescription the approval is based
on "studies." In these cases, the manufacturer actually does double
blind statistical analysis on patient trial groups who get either the real drug
or a placebo. they them collate the data, analyze for side effects, results,
disregard the placebo effect, etc. Even so,
what they provide to the FDA is
frequently, just a probability study that the drug has enough potential to cure
that side effects and any other risks are justified if approval is granted.
If drug
studies were done in the same fashion as Economic "studies" the
process would be more like, "let's ask a bunch of doctors what they think
will happen if people take this drug." Why? because most studies, such as
Williams refers to re: raising the minimum wage are really the opinions of
Economists who are asked the question, "What do you think will happen if
we raise the minimum wage." I know,
I know, "Mike, you're kidding ,
right?" Nope.
Another close
analogy was the introduction of the HPV vaccine. There was an instant outcry from various
groups, most religious, all Conservative, that if we protected young women from
HPV at an early age, they'd be more likely to have sex outside of marriage. The
obvious conclusion, which escaped these loonies was that they were actually
saying, "Regardless of what moral lessons and guidance we try to give our
daughters, they'll chuck it all because we allow them to have a shot which will
prevent a disease." This is, of course also the same logic which says
don't give out information on contraception because it'll lead to more
pre-marital sex and unwanted pregnancy. Of course as we all know now, the
inverse has proven true, not in opinion polls, but in real life.
So, are
Economists ever right? That depends on
the definition and the scope of "right." A classic example of an
"everybody knows that....." Economic fallacy is one that all of us
who actually took Econ in high school, or like me, took Micro and Macro in grad
school, have heard. It is the famous, and proven mostly false, time and time
again, "Trickle Down Theory." this theory has also been characterized
by an Australian politician as "the rich pissing on the poor"
As often
as tax cuts for the upper classes have been enacted, the most recent (as of
yet) by Bush 43, the effects of this
increase in the pockets of the rich has resulted in .....wait for
it.......more money in the pockets of the rich! (and Grand Cayman, and
Switzerland, etc.)
Studies cited
by talking heads such as Williams are shot through with "if x, then "perhaps" y"
types of analysis. There are many predictions based on the bias of the
person being questioned, but precious little data to justify them. It's almost
as if they think we're so stupid that simply waving the word
"Economist" in our face will make us believe anything which follows.
His use of three paragraphs of quotes from white
supremacists from 1920s South Africa shows the true dearth of contemporary data
to bolster his proposition.
So what do real studies, you know
analyses of real data, show? Below is a quote from a conservative economist.
Note the lack of real numbers and the obvious bias of the author.
"Many poor Americans are unemployed and are obviously
not helped by increasing the minimum wage. Among people who do work, only a
tiny fraction of them are employed in minimum wage jobs, and many of those are
teenagers from middle-class families. Of all the workers who will benefit from
an increase in the minimum wage, only around one in ten lived in poor
households in 2007. About two-thirds of those who will gain are second or third
earners in a household, and many are teenagers in families who earn well above
the median household income in the United States. If the goal of raising the
minimum wage is to make the labor market more fair, then giving a raise to
middle-class teenagers hardly seems like the best way to achieve it.
Wow! people who are unemployed don't get paid! And he
thought it up all by himself!
Did you spot the biases based on belief, rather than fact?
first, the numbers: (data remember?)
People at or below the federal minimum are: Note, this does
not include 23 states where the minimum wage is even 25 cents higher than the
national minimum
Disproportionately young: 50.4% are ages 16 to 24; 24% are
teenagers (ages 16 to 19).
§ Mostly (77%) white;
nearly half are white women.
§ Largely part-time
workers (64% of the total).
First Bias : Disproportionally young. Really? only 24% are
teenagers, and for too many, their pay supplements the family income by
necessity. Barely under half are over 24, adult and in many cases family
breadwinners.
Second Bias: Citing gains among "second and third
earners" is a statement which could only be made by a person who has a job
which allows a single earner household.
In fact over 60% of American homes have two or more earners. Again the
author's lack of real world knowledge colors his opinions.
Third Bias: There is a reason that 64% are part time
employees. In some cases, as I am fairly sure the author believes is true for
the majority, the worker is a student, ergo has to attend school as well as
work. This still leaves the inconvenient truth that 76% of these workers are not teens. So why the
part time? Could it be so the employer doesn't need to pay medical benefits? I
think we know the answer.
Now on the
other hand what do those supporting raising the minimum wage say?
A study by Arindrajit
Dube, T. William Lester, and Michael Reich examines the impact of minimum wage
changes on county-level employment and labor turnover from 2001 through 2008.
Specifically, the authors’ analysis covered a period when there were two increases
in the federal minimum wage during a recession, one in 2007 and one in 2008.
This study’s finding of significantly reduced turnover among low-wage sections
of the labor market offers a clear explanation for why they observed that
employment does not fall in response to a minimum wage hike. Further, because
their data was at the county level, there were numerous counties suffering high
unemployment when minimum wage increases went into effect.
In short, the academic research suggests that even during hard
economic times, raising the minimum wage doesn’t reduce employment.
Academic research, you know, like numbers?
Now for another
interesting factoid,. In an actual analysis performed on a theoretical
"average" fast food restaurant, actually MacDonalds, the question
was, "What would be the effect of a 15% increase in the minimum wage on
the cost of product assuming that the entire cost of doing so was simply added
to the product. In other words, not a loss of profit. The results were (again,
this is simply math, not opinion or blind prediction based on bias) a 4.3% increase in price. In easy to understand
terms: your $5 meal would cost $5.21! Would that deter you from going there?
Walter Williams says it probably would.
In any case, here are a couple of examples of why it's hard
to find a rational discussion of this issue.
To be a $12 hamburger it would have had to be an $11.50
burger before! This is Walter Williams worthy.
Perhaps the most disturbing thing about this is that none of
those who scream loudest re: minimum wage don't have to work for it.
A close second is the judgmental nature of those who place
less value on the nature of the work than the diligence with which it is performed.
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